ADT 2011 Annual Report Download - page 207

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Acquisitions (Continued)
awards and Tyco’s closing stock price for the restricted and deferred stock unit awards. The fair
value of outstanding BHS stock-based compensation awards that immediately vested at the
effective time of the acquisition, was attributed to pre-combination service and was included in the
consideration transferred. In addition, there were certain BHS stock-based compensation awards
that did not immediately vest upon completion of the acquisition. For those awards, the fair value
of the awards attributed to pre-combination service was included as part of the consideration
transferred and the fair value attributed to post-combination service is being recognized as
compensation expense over the requisite service period in the post-combination financial
statements of Tyco.
Fair Value Allocation of Consideration Transferred to Assets Acquired and Liabilities Assumed
The consideration transferred for BHS has been allocated to identifiable assets acquired and
liabilities assumed as of the acquisition date. The following amounts represent the final determination
of the fair value of the identifiable assets acquired and liabilities assumed ($ in millions):
Net current assets(1) ......................................... $ 78
Subscriber systems ......................................... 624
Other property, plant and equipment ........................... 49
Total property, plant and equipment .......................... 673
Contracts and related customer relationships (10-year weighted-average
useful life) ............................................. 738
Other intangible assets (4-year weighted-average useful life) ........... 12
Total intangible assets ..................................... 750
Net non-current liabilities(2) .................................... (459)
Net assets acquired ........................................ 1,042
Goodwill(3) ................................................ 932
Purchase price ............................................. $1,974
(1) As of the acquisition date, the fair value of accounts receivable approximated book value.
Included in net current assets is $32 million of accounts receivable. The gross contractual
amount receivable was approximately $35 million of which $3 million was not expected to
be collected.
(2) Included in net non-current liabilities is approximately $456 million of deferred tax
liabilities which are recorded in other liabilities in the Company’s Consolidated Balance
Sheet.
(3) The goodwill recognized is primarily related to expected synergies and other benefits that
the Company believes will result from combining the operations of BHS with the
operations of Tyco Security Solutions. All of the goodwill has been allocated to the
Company’s Tyco Security Solutions segment. None of the goodwill is expected to be
deductible for tax purposes.
104 2011 Financials