ADT 2011 Annual Report Download - page 204

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Acquisitions
Fiscal 2011
Acquisitions
During the year ended September 30, 2011, cash paid for acquisitions included in continuing
operations totaled $656 million, net of cash acquired, which primarily related to the acquisitions of
Oceania Capital Partners Limited’s Signature Security Group (‘‘Signature Security Group’’), KEF
Holdings Ltd. (‘‘KEF’’), and Chemguard Inc. (‘‘Chemguard’’). Signature Security Group is an electronic
security company operating in Australia and New Zealand primarily in small business and residential
markets. Cash paid for Signature Security Group totaled approximately $184 million, net of cash
acquired of $2 million by the Company’s Tyco Security Solutions segment on April 29, 2011. On
June 29, 2011 (the ‘‘KEF closing date’’), the Company’s Tyco Flow Control segment acquired a 75%
equity interest in privately-held KEF, a vertically integrated valve manufacturer in the Middle East for
approximately $295 million, net of cash acquired of $1 million. In accordance with the terms and
conditions of the KEF acquisition agreement, beginning the first full fiscal quarter following the third
anniversary of the KEF closing date, the Company can exercise a call option and the noncontrolling
interest stakeholder can exercise a put option, which would require the Company to purchase the
remaining 25% equity interest for the greater of $100 million or a multiple of KEF’s average earnings
before income taxes, depreciation and amortization (‘‘EBITDA’’) for the prior twelve consecutive fiscal
quarters. As the put option is redeemable at the option of the noncontrolling interest stakeholder, the
remaining 25% equity interest has been accounted for as a redeemable noncontrolling interest. See
Note 20. On September 1, 2011, the Company’s Fire Protection segment completed the acquisition of
Chemguard for approximately $130 million in cash, net of cash acquired of $1 million. Chemguard is a
provider of firefighting foam concentrates and equipment, foam systems, services and specialty
chemicals.
On September 15, 2011, the Company agreed to acquire Visonic Ltd. (‘‘Visonic’’), a global
developer and manufacturer of electronic security systems and components, for approximately
$100 million in cash. The transaction is expected to close during the first quarter of fiscal 2012.
Following the close of the transaction, the Company intends to combine Visonic with the Company’s
Tyco Security Solutions segment.
Acquisition and Integration Related Costs
Acquisition and integration related costs are expensed as incurred. During the year ended
September 30, 2011, the Company incurred acquisition costs of $6 million, primarily in connection with
its acquisitions of Signature Security Group, KEF, and Chemguard. Such costs are recorded in selling,
general and administrative expenses in the Company’s Consolidated Statements of Operations. During
the year ended September 30, 2011, the Company incurred integration costs of $33 million, primarily in
connection with the integration of Brink’s Home Security Holdings, Inc (‘‘BHS’’ or ‘‘Broadview
Security’’) into the Tyco Security Solutions segment. Of these costs, $31 million is recorded within
selling, general and administrative expenses and $2 million is recorded within cost of product sales
within the Company’s Consolidated Statements of Operations.
ADT Account Acquisitions
During the year ended September 30, 2011, the Company paid $614 million of cash to acquire
approximately 565,000 customer contracts for electronic security services in the Tyco Security Solutions
segment.
2011 Financials 101