ADT 2011 Annual Report Download - page 215

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Income Taxes (Continued)
deferred tax liabilities for temporary differences related to investments in subsidiaries, since the
earnings are expected to be permanently reinvested, the investments are essentially permanent in
duration, or the Company has concluded that no additional tax liability will arise as a result of the
distribution of such earnings. A liability could arise if amounts are distributed by such subsidiaries or if
such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes
related to permanently reinvested earnings or the basis differences related to investments in
subsidiaries.
8. Earnings Per Share
During the first quarter of fiscal 2010, the Company adopted the authoritative guidance for
determining whether instruments granted in share-based payment transactions are participating
securities. The Company historically issued certain restricted stock awards that vest over a period of
three years which contained non-forfeitable rights to dividends and should be treated as participating
securities. These types of awards were last issued during fiscal 2006. Awards containing such rights that
are unvested are considered to be participating securities and are included in the computation of
earnings per share pursuant to the two-class method. All of these awards were vested as of
September 25, 2009. As a result, the Company was not required to compute earnings per share for
fiscal 2011 and 2010 using the two-class method unless new awards are granted. The retrospective
application of this guidance did not have an impact on the Company’s historically reported earnings per
share for 2009 as the effects would be anti-dilutive because the Company reported a loss from
continuing operations.
112 2011 Financials