CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Sep. 25, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Statements of Operations | |||
Revenue from product sales | $10,482 | $13,064 | $11,816 |
Service revenue | 6,755 | 7,135 | 6,661 |
Net revenue | 17,237 | 20,199 | 18,477 |
Cost of product sales | 7,584 | 9,200 | 8,495 |
Cost of services | 3,559 | 3,923 | 3,722 |
Selling, general and administrative expenses | 4,657 | 4,906 | 4,776 |
Class action settlement, net | (10) | 2,862 | |
Separation costs | 4 | 105 | |
Goodwill and intangible asset impairments (See Note 10) | 2,705 | 10 | 59 |
Restructuring, asset impairment and divestiture charges, net (See Notes 2 and 3) | 219 | 225 | 190 |
Operating (loss) income | (1,487) | 1,941 | (1,732) |
Interest income | 44 | 110 | 104 |
Interest expense | (301) | (396) | (313) |
Other expense, net | (7) | (224) | (255) |
(Loss) income from continuing operations before income taxes and minority interest | (1,751) | 1,431 | (2,196) |
Income tax expense | (78) | (335) | (324) |
Minority interest | (4) | (1) | (4) |
(Loss) income from continuing operations | (1,833) | 1,095 | (2,524) |
Income from discontinued operations, net of income taxes | 35 | 458 | 782 |
Net (loss) income | ($1,798) | $1,553 | ($1,742) |
Basic earnings per share: | |||
(Loss) income from continuing operations | -3.87 | 2.26 | -5.1 |
Income from discontinued operations | 0.07 | 0.95 | 1.58 |
Net (loss) income | -3.8 | 3.21 | -3.52 |
Diluted earnings per share: | |||
(Loss) income from continuing operations | -3.87 | 2.25 | -5.1 |
Income from discontinued operations | 0.07 | 0.94 | 1.58 |
Net (loss) income | -3.8 | 3.19 | -3.52 |
Weighted-average number of shares outstanding: | |||
Basic | 473 | 484 | 495 |
Diluted | 473 | 488 | 495 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Sep. 25, 2009
| Sep. 26, 2008
|
Current Assets: | ||
Cash and cash equivalents | $2,354 | $1,519 |
Accounts receivable, less allowance for doubtful accounts of $173 and $173, respectively | 2,629 | 2,986 |
Inventories | 1,443 | 1,877 |
Prepaid expenses and other current assets | 972 | 1,238 |
Deferred income taxes | 413 | 541 |
Assets held for sale | 156 | 268 |
Total current assets | 7,967 | 8,429 |
Property, plant and equipment, net | 3,497 | 3,493 |
Goodwill | 8,791 | 11,619 |
Intangible assets, net | 2,647 | 2,681 |
Other assets | 2,651 | 2,582 |
Total Assets | 25,553 | 28,804 |
Current Liabilities: | ||
Loans payable and current maturities of long-term debt | 245 | 555 |
Accounts payable | 1,244 | 1,608 |
Accrued and other current liabilities | 2,476 | 2,717 |
Deferred revenue | 590 | 594 |
Liabilities held for sale | 161 | 211 |
Total current liabilities | 4,716 | 5,685 |
Long-term debt | 4,029 | 3,709 |
Deferred revenue | 1,134 | 1,187 |
Other liabilities | 2,720 | 2,715 |
Total Liabilities | 12,599 | 13,296 |
Commitments and Contingencies (see Note 15) | ||
Minority interest | 13 | 14 |
Shareholders' Equity (See Note 17) | ||
Preference shares, Nil at September 25, 2009 and $4 par value, 31,250,000 shares authorized, none outstanding as of September 26, 2008 | 0 | 0 |
Common shares, CHF 7.60 par value, 814,801,671 shares authorized; 479,346,720 shares outstanding as of September 25, 2009; $0.80 par value, 1,000,000,000 shares authorized; 477,667,844 shares issued, net of 21,952,786 shares owned by subsidiaries as of September 26, 2008 | 3,122 | 382 |
Common shares held in treasury, 5,182,984 and 4,882,081 shares, as of September 25, 2009 and September 26, 2008, respectively | (214) | (192) |
Capital in excess: | ||
Share premium | 9,236 | |
Contributed surplus | 10,940 | 4,711 |
Accumulated (deficit) earnings | (820) | 1,125 |
Accumulated other comprehensive (loss) income | (87) | 232 |
Total Shareholders' Equity | 12,941 | 15,494 |
Total Liabilities and Shareholders' Equity | $25,553 | $28,804 |
CONSOLIDATED BALANCE SHEETS PAR
CONSOLIDATED BALANCE SHEETS PARENTHETICAL DISCLOSURES (USD $) | ||
In Millions, except Share data | Sep. 25, 2009
| Sep. 26, 2008
|
Balance Sheets | ||
Allowance for doubtful accounts of $173 and $173, respectively (in dollars) | $173 | $173 |
Preference shares, par value (in dollars per share) | $4 | |
Preference shares authorized | 0 | 31,250,000 |
Preference shares outstanding | 0 | 0 |
Common shares, par value, USD per share (in dollars per share) | 0.8 | |
Common shares, par value, CHF per share (in CHF per share) | 7.6 | |
Common shares authorized | 814,801,671 | 1,000,000,000 |
Common shares outstanding | 479,346,720 | |
Common shares issued | 477,667,844 | |
Common shares owned by subsidiaries | 21,952,786 | |
Common shares held in treasury | 5,182,984 | 4,882,081 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | |||
In Millions | 12 Months Ended
Sep. 25, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Cash Flows From Operating Activities: | |||
Net (loss) income | ($1,798) | $1,553 | ($1,742) |
Income from discontinued operations, net of income taxes | (35) | (458) | (782) |
(Loss) income from continuing operations | (1,833) | 1,095 | (2,524) |
Adjustments to reconcile net cash provided by operating activities: | |||
Depreciation and amortization | 1,133 | 1,154 | 1,148 |
Non-cash compensation expense | 103 | 99 | 173 |
Deferred income taxes | (83) | (94) | (16) |
Provision for losses on accounts receivable and inventory | 156 | 135 | 94 |
(Gain) loss on the retirement of debt | (2) | 258 | 259 |
Goodwill and intangible asset impairments | 2,705 | 10 | 59 |
Non-cash restructuring and asset impairment charges, net | 23 | 36 | 11 |
Losses on divestitures | 13 | 4 | |
(Gains) losses on investments, net | (9) | 13 | (10) |
Debt and refinancing cost amortization | 25 | 59 | 7 |
Other non-cash items | 56 | 29 | 31 |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | |||
Accounts receivable, net | 207 | (176) | (136) |
Contracts in progress | 106 | (26) | (44) |
Inventories | 367 | (138) | (163) |
Other current assets | 11 | 11 | 154 |
Accounts payable | (352) | (16) | 65 |
Accrued and other liabilities | (52) | (152) | (68) |
Income taxes, net | (148) | (95) | (250) |
Class action settlement liability | (3,020) | 2,992 | |
Other | 3 | (54) | 28 |
Net cash provided by (used in) operating activities | 2,429 | (872) | 1,814 |
Net cash (used in) provided by discontinued operating activities | (8) | (18) | 2,498 |
Cash Flows From Investing Activities: | |||
Capital expenditures | (709) | (734) | (666) |
Proceeds from disposal of assets | 13 | 28 | 23 |
Accounts purchased from ADT dealer program | (543) | (376) | (409) |
Acquisition of businesses, net of cash acquired | (48) | (347) | (31) |
Divestiture of businesses, net of cash retained | 2 | 1 | 8 |
Class action settlement escrow | 2,960 | (2,960) | |
Liquidation of rabbi trust investments | 271 | ||
Decrease in investments | 17 | 32 | 4 |
(Increase) decrease in restricted cash | (17) | 5 | |
Other | (1) | (1) | 15 |
Net cash (used in) provided by investing activities | (1,269) | 1,546 | (3,740) |
Net cash provided by (used in) discontinued investing activities | 66 | 911 | (810) |
Cash Flows From Financing Activities: | |||
Proceeds from issuance of short-term debt | 26 | 16 | 1,517 |
Repayment of short-term debt | (552) | (377) | (1,151) |
Proceeds from issuance of long-term debt | 3,424 | 3,864 | 308 |
Repayment of long-term debt, including debt tenders | (2,890) | (4,050) | (6,602) |
Proceeds from exercise of share options | 1 | 49 | 406 |
Dividends paid | (388) | (292) | (791) |
Repurchase of common shares by subsidiary | (3) | (854) | (727) |
Repurchase of common shares held in treasury | (192) | ||
Transfer from discontinued operations | 58 | 897 | 8,585 |
Other | 9 | (72) | 12 |
Net cash (used in) provided by financing activities | (315) | (1,011) | 1,557 |
Net cash used in discontinued financing activities | (58) | (893) | (950) |
Effect of currency translation on cash | (10) | (38) | 70 |
Effect of currency translation on cash related to discontinued operations | 33 | ||
Net increase (decrease) in cash and cash equivalents | 835 | (375) | 472 |
Less: net increase in cash related to discontinued operations | (771) | ||
Cash and cash equivalents at beginning of year | 1,519 | 1,894 | 2,193 |
Cash and cash equivalents at end of year | 2,354 | 1,519 | 1,894 |
Supplementary Cash Flow Information: | |||
Interest paid | 294 | 313 | 317 |
Income taxes paid, net of refunds | 291 | 501 | 649 |
Supplementary Non-Cash Financing Activities: | |||
Conversion of debt to common shares | $10 | $3 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | ||||||||
In Millions | Common Stock at Par Value (See Note 17)
| Common Stock $0.80 Par Value
| Treasury Stock
| Share Premium
| Contributed Surplus
| Accumulated Earnings (Deficit)
| Accumulated Other Comprehensive Income (Loss)
| Total
|
Balance, shares issued at Sep. 29, 2006 | 498 | |||||||
Balance at Sep. 29, 2006 | $398 | $8,787 | $14,493 | $10,692 | $1,017 | $35,387 | ||
Comprehensive income: | ||||||||
Net (loss) income | (1,742) | (1,742) | ||||||
Currency translation | 883 | 883 | ||||||
Unrealized gain (loss) on marketable securities and derivative instruments, net of income taxes of $5 million in 2009 | 3 | 3 | ||||||
Minimum pension liability, net of income taxes | 249 | 249 | ||||||
Total comprehensive income (loss) | (607) | |||||||
Change of Domicile (see Note 17) | ||||||||
Dividends declared (see Note 17) | (668) | (668) | ||||||
Share options exercised, including tax expense of $23 in 2007 and tax benefit of $2 in 2008, value | 4 | 402 | 23 | 429 | ||||
Share options exercised, including tax benefit, shares | 5 | |||||||
Repurchase of common shares by subsidiary, value | (5) | (722) | (727) | |||||
Repurchase of common shares by subsidiary, shares | (7) | |||||||
Compensation expense | 295 | 295 | ||||||
Exchange of convertible debt, value | 1 | 1 | ||||||
Distribution of Covidien and Tyco Electronics | (8,651) | (8,248) | (1,476) | (18,375) | ||||
Cumulative effect of adopting a new accounting principle (see Note 16, Note 6 and Note 16, respectively) | (111) | (111) | ||||||
Balance at Sep. 28, 2007 | 397 | 9,189 | 5,439 | 34 | 565 | 15,624 | ||
Balance, shares issued at Sep. 28, 2007 | 496 | |||||||
Comprehensive income: | ||||||||
Net (loss) income | 1,553 | 1,553 | ||||||
Currency translation | (307) | (307) | ||||||
Unrealized gain (loss) on marketable securities and derivative instruments, net of income taxes of $5 million in 2009 | (5) | (5) | ||||||
Retirement plans, net of income tax benefit of $107 million in 2009 (see Note 19) | (21) | (21) | ||||||
Total comprehensive income (loss) | 1,220 | |||||||
Change of Domicile (see Note 17) | ||||||||
Dividends declared (see Note 17) | (313) | (313) | ||||||
Share options exercised, including tax expense of $23 in 2007 and tax benefit of $2 in 2008, value | 2 | 47 | 2 | 51 | ||||
Share options exercised, including tax benefit, shares | 2 | |||||||
Repurchase of common shares by subsidiary, value | (17) | (837) | (854) | |||||
Repurchase of common shares by subsidiary, shares | (20) | |||||||
Repurchase of common shares held in treasury, value | (192) | (192) | ||||||
Repurchase of common shares held in treasury, shares | (5) | |||||||
Compensation expense | 97 | 97 | ||||||
Exchange of convertible debt, value | 10 | 10 | ||||||
Cumulative effect of adopting a new accounting principle (see Note 16, Note 6 and Note 16, respectively) | (79) | (79) | ||||||
Other (see Note 2) | (70) | (70) | ||||||
Balance at Sep. 26, 2008 | 382 | (192) | 9,236 | 4,711 | 1,125 | 232 | 15,494 | |
Balance, shares issued at Sep. 26, 2008 | 473 | |||||||
Comprehensive income: | ||||||||
Net (loss) income | (1,798) | (1,798) | ||||||
Currency translation | (203) | (203) | ||||||
Unrealized gain (loss) on marketable securities and derivative instruments, net of income taxes of $5 million in 2009 | 9 | 9 | ||||||
Retirement plans, net of income tax benefit of $107 million in 2009 (see Note 19) | (220) | (220) | ||||||
Total comprehensive income (loss) | (2,212) | |||||||
Change of Domicile (see Note 17) | ||||||||
Reclassification of shares owned by subsidiaries and cancellation of common shares held in treasury | 1 | (54) | 53 | |||||
Reverse share split and issuance of fully paid up shares | 3,498 | (382) | (3,116) | |||||
Reallocation of share premium to contributed surplus | (6,120) | 6,120 | ||||||
Dividends declared (see Note 17) | (377) | (95) | (472) | |||||
Shares issued from treasury for vesting of share-based equity awards and other related tax effects, value | 32 | (38) | (6) | |||||
Shares issued from treasury for vesting of share-based equity awards and other related tax effects, share | 1 | |||||||
Repurchase of common shares by subsidiary, value | (3) | (3) | ||||||
Compensation expense | 103 | 103 | ||||||
Cumulative effect of adopting a new accounting principle, net of income tax benefit of $2 million in 2009 (see Note 16, Note 6 and Note 16, respectively) | (5) | |||||||
Cumulative effect of adopting a new accounting principle, net of income taxes of $28 million in 2009 (see Note 16, Note 6 and Note 16, respectively) | 0 | 61 | ||||||
Cumulative effect of adopting a new accounting principle, net of income taxes (see Note 16, Note 6 and Note 16, respectively) | 0 | 56 | ||||||
Other (see Note 2) | (6) | (47) | 34 | (19) | ||||
Balance at Sep. 25, 2009 | $3,122 | ($214) | $10,940 | ($820) | ($87) | $12,941 | ||
Balance, shares issued at Sep. 25, 2009 | 474 |
1_CONSOLIDATED STATEMENTS OF SH
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY PARENTHETICAL DISCLOSURES (USD $) | ||||
In Millions | Contributed Surplus
| Accumulated Earnings (Deficit)
| Accumulated Other Comprehensive Income (Loss)
| Total
|
Shares options exercised, tax expense of $23 million in 2007, tax benefit of $2 million in 2008 | $23 | $23 | ||
Shares options exercised, tax expense of $23 million in 2007, tax benefit of $2 million in 2008 | (2) | (2) | ||
Retirement plans, income tax benefit of $107 million in 2009 (see Note 19) | 107 | 107 | ||
Unrealized gain on marketable securities and derivative instruments, income taxes of $5 million in 2009 | 5 | 5 | ||
Cumulative effect of adopting a new accounting principle, income tax benefit of $2 million in 2009 (see Note 16) | 2 | 2 | ||
Cumulative effect of adopting a new accounting principle, income taxes of $28 million in 2009 (see Note 16) | $28 | $28 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Basis of Presentation and Summary of Significant Accounting Policies | 1.Basis of Presentation and Summary of Significant Accounting Policies Basis of PresentationThe Consolidated Financial Statements include the consolidated accounts of Tyco InternationalLtd., a corporation organized under the laws of Switzerland, and its subsidiaries (Tyco and all its subsidiaries, hereinafter collectively referred to as the "Company" or "Tyco"). Effective March17, 2009, following shareholder and Board of Director approval on March12, 2009, the Company ceased to exist as a Bermuda corporation and continued its existence as a Swiss corporation under articles620 et seq. of the Swiss Code of Obligations (the "Change of Domicile"). The rights of holders of the Company's common shares are now governed by Swiss law, the Company's Swiss articles of association and its Swiss organizational regulations. The financial statements have been prepared in United States dollars ("USD") and in accordance with generally accepted accounting principles in the United States ("GAAP"). Certain information described under article663-663h of the Swiss Code of Obligations has been presented in the Company's Swiss statutory financial statements for the period ended September25, 2009. Unless otherwise indicated, references in the Consolidated Financial Statements to 2009, 2008 and 2007 are to Tyco's fiscal year ended September25, 2009, September26, 2008 and September28, 2007, respectively. Effective June29, 2007, Tyco completed the spin-offs of Covidien and Tyco Electronics, formerly the Healthcare and Electronics businesses, respectively, into separate, publicly traded companies (the "Separation") in the form of a distribution to Tyco shareholders. The distribution was made on June29, 2007, to Tyco shareholders of record on June18, 2007. Each Tyco shareholder received 0.25 of a common share of each of Covidien and Tyco Electronics for each Tyco common share held on the record date. Tyco shareholders received cash in lieu of fractional shares for amounts of less than one Covidien or Tyco Electronics common share. The distribution was structured to be tax-free to Tyco shareholders except to the extent of cash received in lieu of fractional shares. While the Company is a party to a Separation and Distribution, Tax Sharing and certain other agreements, it has determined that there is no significant continuing involvement between it and Covidien or Tyco Electronics. Therefore, the Company has classified Covidien and Tyco Electronics as discontinued operations for all periods prior to the Separation. Additionally, on the distribution date, the Company, as approved by its Board of Directors, effected a reverse stock split of Tyco's common shares, at a split ratio of 1-for-4. Shareholder approval for the reverse stock split was obtained at the March8, 2007 Special General Meeting of Shareholders. Share and per share data for all periods presented have been adjusted to reflect the reverse stock split. During 2008 and 2007, the Company incurred pre-tax costs related to the Separation of $275million and $1,083million, respectively. The costs include loss on early extinguishment of debt, debt refinancing, tax restructuring, professional services an |
Divestitures
Divestitures | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Divestitures | 2.Divestitures The Company continued to assess the strategic fit of its various businesses and will pursue divestiture of businesses that do not align with its long-term strategy. Held for Sale and Reflected as Continuing Operations During the fourth quarter of 2009, the Company approved a plan to sell a business in its ADT Worldwide segment. This business has been classified as held for sale; however, its results of operations are presented in continuing operations as the criteria for discontinued operations have not been met. The Company has assessed and determined that the carrying value of this business is recoverable and will continue to assess recoverability based on current fair value, less cost to sell, until the business is sold. Fair value used for the impairment assessment was based on existing market conditions. The Company expects to complete the sale during fiscal 2010. During the third quarter of 2008, the Company approved a plan to sell a business in its Safety Products segment. This business had been classified as held for sale in the Company's historical Consolidated Balance Sheets. During the second quarter of 2009, due to a change in strategy by management, the Company decided not to sell the business. As a result, the business no longer satisfied the requirements to be classified as held for sale in the Company's Consolidated Balance Sheet as of March27, 2009. Accordingly, the Consolidated Balance Sheet as of September26, 2008 was recast to reclassify the business from held for sale to held and used. The Company measured the business at the lower of its (i)carrying amount before it was classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the business been continuously classified as held and used, or (ii)fair value at the date the decision not to sell was made. The Company recorded a charge of $8million in the second quarter of 2009 relating to the amount of depreciation and amortization expense that would have been recorded had the asset been continuously classified as held and used. Discontinued Operations As previously reported in Tyco's periodic filings, in July 2008, the Company substantially completed the sale of its Infrastructure Services business, which met the criteria to be presented as discontinued operations. In order to complete the sale of Earth Tech BrasilLtda. ("ET Brasil") and Earth Tech UK businesses and certain assets in China, the Company was required to obtain consents and approvals to transfer the legal ownership of the business and assets. On January22, 2009, the Company received the necessary consents and approvals to transfer the legal ownership of its ET Brasil business to Carioca Christiani-Nielsen EngenhariaS.A. and received cash proceeds of $13million. During the fourth quarter of 2008, the Company sold its Earth Tech UK business and received net cash proceeds of $53million. However, the gain was deferred until receipt of the necessary consents and approvals. On May12, 2009, the Company received the necessary consents and approvals to transfer the legal ownership of its Earth Tech UK business to AECOM Technolog |
Restructuring and Asset Impairm
Restructuring and Asset Impairment Charges, Net | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Restructuring and Asset Impairment Charges, Net | 3.Restructuring and Asset Impairment Charges, Net During the first quarter of 2007, the Company launched a restructuring program (the "2007 Program") across all of the Company's segments, including the corporate organization, to streamline some of the businesses and reduce its operational footprint. Upon initiation of the 2007 Program, the Company expected to incur aggregate charges related to the program of approximately $350million to $400million primarily through the end of calendar 2008. As of December26, 2008, the Company had substantially completed this program. During fiscal 2009, the Company identified additional opportunities for cost savings through restructuring activities and workforce reductions in fiscal 2009 and 2010. The Company incurred restructuring and restructuring related charges of approximately $236million in fiscal 2009. The Company expects to incur restructuring and restructuring related charges of approximately $100million to $150million in fiscal 2010. Restructuring and asset impairment charges, net, during the years ended September25, 2009, September26, 2008 and September28, 2007 are as follows ($ in millions): 2009 2008 2007 ADT Worldwide $ 80 $ 93 $ 76 Flow Control 25 8 25 Fire Protection Services 46 25 24 Electrical and Metal Products 22 43 7 Safety Products 53 73 22 Corporate and Other 10 4 40 236 246 194 Charges in cost of sales and selling, general and administrative expenses (32 ) (22 ) (7 ) Restructuring and asset impairment charges, net $ 204 $ 224 $ 187 During the years ended September25, 2009, September26, 2008 and September28, 2007, restructuring and asset impairment charges, net were included in the Company's Consolidated Statements of Operations as follows ($ in millions): 2009 2008 2007 Cost of sales $ 27 $ 20 $ 7 Selling, general and administrative expenses 5 2 Restructuring, asset impairment and divestiture charges, net 204 224 187 $ 236 $ 246 $ 194 2009 Net Restructuring Net restructuring and asset impairment charges during the year ended September25, 2009 were $236million, which include $32million of accelerated depreciation of assets directly related to the underlying restructuring actions. The remaining charge of $204million consists of $10million of asset impairments, $174million of employee severance and benefits and $38million of facility exit and other charges, offset by $18million of restructuring reversals resulting from the Company completing restructuring activities announced in prior years for amounts less than originally estimated. Activity in the Company's 2009 restructuring reserves related to actions initiated in 2009 is summarized as follows ($ in millions): Employee Severanceand Benefits Facility ExitOther Charges Total Balance as of September26, 2008 |
Acquisitions
Acquisitions | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Acquisitions | 4.Acquisitions Acquisitions During the year ended September25, 2009, cash paid for acquisitions totaled $50million, which primarily related to the acquisition of Vue Technology,Inc., a provider of radio frequency identification (RFID) technology, by the Company's Safety Products segment. During the year ended September26, 2008, the Company acquired Winner Security ServicesLLC ("Winner"), Sensormatic Security Corp. ("SSC"), FirstService Security ("FirstService"), as well as various other acquisitions within its ADT Worldwide and Safety Products segments. On June5, 2008, the Company's ADT Worldwide segment acquired substantially all of the assets of Winner for $90million. The franchise was originally granted by Sensormatic Electronics Corporation ("Sensormatic") and granted Winner rights to sell, install and service certain Sensormatic products and entitled Winner to commissions on Sensormatic products sold, installed or shipped into its franchise territories. Sensormatic products are sold through the Company's ADT Worldwide and Safety Products segments. On July9, 2008, the Company's ADT Worldwide segment acquired substantially all of the assets of SSC, including franchise rights, and agreed to settle a related legal matter for total consideration of approximately $86million. SSC was a franchisee of Sensormatic in the states of Virginia and Maryland and in the District of Columbia. It was the last remaining major Sensormatic franchise. Under the original franchise agreement, SSC was granted rights to sell, install and service certain Sensormatic products and was entitled to commissions on Sensormatic products sold, installed or shipped into its franchise territories. Sensormatic and SSC also settled the previously reported litigation between the parties related to the SSC franchise for $6million in connection with the transaction. The value ascribed to the settlement of the legal matter was determined based on the consideration paid in excess of the fair value of the franchise and franchise rights acquired. These transactions were accounted for as business combinations. However, the Company and Winner and SSC had a preexisting relationship. As a result, the Company was required to assess and account for the business combination separately due to the preexisting relationship between the Company and Winner and SSC. After assessing the specific facts and circumstances related to these transactions, the Company recorded charges of $38million and $20million for Winner and SSC, respectively, during 2008 for the reacquisition of franchise rights that were deemed to be unfavorable to the Company when compared to pricing for current market transactions for similar arrangements. The Company utilized an income method valuation approach in measuring the value of the preexisting relationship. Since these charges related to a change in the manner in which the Company conducts business in these territories, they were reflected as restructuring charges. The remaining purchase price for Winner was $52million, which consisted of a $46million indefinite-lived intangible asset, $1million of customer lists which are amortizable over a 10-year |
Other Expense, Net
Other Expense, Net | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Other Expense, Net | 5.Other Expense, Net Other expense, net was $7million in 2009 compared to $224million in 2008 and $255million in 2007. Other expense, net in 2009 primarily relates to a $14million charge recorded as a result of a decrease in the receivables due from Covidien and Tyco Electronics under the Tax Sharing Agreement, which was partially offset by income of $5million relating to a gain on derivative contracts used to economically hedge the foreign currency risk related to the Swiss franc denominated dividends. Other expense, net during 2008, includes $258million on extinguishment of debt related to the consent solicitation and exchange offers and termination of the bridge loan facility offset by income of $6million recorded in connection with the settlement of its 3.125% convertible senior debentures and related financial instruments. See Notes12 and 14. The Company also recorded other-than-temporary impairments and realized losses on the sale of investments of $6million related primarily to investments in corporate debt. See Note9. Additionally, the Company recorded $40million of income as a result of an increase in the receivables due from Covidien and Tyco Electronics under the Tax Sharing Agreement in connection with the adoption of the guidance pertaining to the accounting for uncertain income taxes. The Company also recorded $6million of expense for other activity in accordance with the Tax Sharing Agreement during 2008. During 2007, other expense, net consisted primarily of a $259million loss on early extinguishment of debt incurred in connection with debt tender offers undertaken in connection with the Separation, for which no tax benefit is available. This charge consists primarily of premiums paid and the write-off of unamortized debt issuance costs and discounts. The total loss on early extinguishment of debt was $647million, with $259million included in continuing operations and $388million allocated to Covidien and Tyco Electronics and included in discontinued operations. |
Income Taxes
Income Taxes | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Income Taxes | 6.Income Taxes Significant components of the income tax provision for 2009, 2008 and 2007 are as follows ($in millions): 2009 2008 2007 Current: United States: Federal $ (60 ) $ 139 $ 100 State 8 4 36 Non-U.S. 155 320 163 Current income tax provision 103 463 299 Deferred: United States: Federal 22 96 94 State (11 ) (5 ) 3 Non-U.S. (36 ) (219 ) (72 ) Deferred income tax provision (25 ) (128 ) 25 $ 78 $ 335 $ 324 Non-U.S. income (loss) from continuing operations before income taxes was $138million, $1,010million and $(2,587) million for 2009, 2008 and 2007, respectively. The reconciliation between U.S. federal income taxes at the statutory rate and the Company's provision for income taxes on continuing operations for the years ended September25, 2009, September26, 2008, and September28, 2007 is as follows ($in millions): 2009 2008 2007 Notional U.S. federal income tax (benefit) expense at the statutory rate $ (613 ) $ 501 $ (769 ) Adjustments to reconcile to the income tax provision: U.S. state income tax provision, net 18 34 23 Non-U.S. net earnings(1) (279 ) (240 ) (58 ) Nondeductible charges 885 46 1,176 Valuation allowance 9 (70 ) (129 ) Non-deductible loss on retirement of debt 91 Other 58 64 (10 ) Provision for income taxes $ 78 $ 335 $ 324 (1) Excludes nondeductible charges and other items which are broken out separately in the table. Included in the nondeductible charges for 2009 is the loss driven by the goodwill impairment charges of $2.6billion, for which almost no tax benefit is available. Included in income taxes for 2008 is a benefit from increased profitability in operations in lower tax rate jurisdictions partially offset by enacted tax law changes that negatively impacted non-U.S. deferred tax assets. The valuation allowance benefit includes a tax impact of $70million associated with business restructurings, which increased the Company's profitability in certain jurisdictions. Included in the nondeductible charges for 2007 is the class action settlement, net of $2.862billion. Additionally, the nondeductible charges include $105million associated with Separation costs which were not fully deductible as well as a write-off of deferred tax assets in entities that were liquidated as part of the Separation. The loss on retirement of debt includes charges related to the early extinguishment of debt of $259million for which no tax benefit is available. The valuation allowance benefit includes a tax impact of $72million associated with identification of tax planning to ensure realization of certain deferred ta |
Earnings Per Share
Earnings Per Share | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Earnings Per Share | 7.Earnings Per Share As discussed in Note1, in 2007 the Company effected a reverse stock split of Tyco's common shares, at a split ratio of 1-for-4. The reconciliations between basic and diluted earnings per share for 2009, 2008 and 2007 are as follows ($ in millions, except per share data): 2009 2008 2007 Loss Shares Per Share Amount Income Shares Per Share Amount Loss Shares Per Share Amount Basic earnings per share: (Loss) income from continuing operations $ (1,833 ) 473 $ (3.87 ) $ 1,095 484 $ 2.26 $ (2,524 ) 495 $ (5.10 ) Share options, restricted share awards and deferred stock units 3 Exchange of convertible debt 1 1 Diluted earnings per share: (Loss) income from continuing operations, giving effect to dilutive adjustments $ (1,833 ) 473 $ (3.87 ) $ 1,096 488 $ 2.25 $ (2,524 ) 495 $ (5.10 ) The computation of diluted earnings per share for 2009 excludes the effect of the potential exercise of options to purchase approximately 27million shares and excludes restricted share awards and deferred stock units of approximately 5million shares because the effect would be anti-dilutive. The computation of diluted earnings per share for 2008 and 2007 excludes the effect of the potential exercise of options to purchase approximately 19million and 29million shares, respectively, and excludes restricted share awards and deferred stock units of approximately 4million and 5million, respectively, because the effect would be anti-dilutive. Additionally, the computation of diluted earnings per common share for 2007 excludes the impact of convertible debt of approximately 6million shares because the effect would be anti-dilutive. |
Sale of Accounts Receivable
Sale of Accounts Receivable | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Sale of Accounts Receivable | 8.Sale of Accounts Receivable Certain of Tyco's international businesses utilize the sale of accounts receivable as short-term financing mechanisms. The aggregate amount outstanding under the Company's remaining international accounts receivable programs was $55million, $65million and $76million as of September25, 2009, September26, 2008 and September28, 2007, respectively. |
Investments
Investments | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Investments | 9.Investments As of September25, 2009 and September26, 2008, the Company had available-for-sale investments with a fair value of $340million and $303million, and a cost basis of $334million and $317million, respectively. The cost and fair market value of the Company's investments by type of security and classification in the Company's Consolidated Balance Sheets are as follows ($ in millions): As of September25, 2009: Consolidated Balance Sheet Classification Type of Security Cost Basis Gross Unrealized Gain Gross Unrealized Loss Other- Than- Temporary Impairment Fair Value Prepaid expenses and Other Current Assets Other Assets Corporate debt securities $ 103 $ 4 $ (1 ) $ $ 106 $ 36 $ 70 U.S. Government debt securities 228 3 231 13 218 Other debt securities 3 3 3 $ 334 $ 7 $ (1 ) $ $ 340 $ 49 $ 291 As of September26, 2008: Consolidated Balance Sheet Classification Type of Security Cost Basis Gross Unrealized Gain Gross Unrealized Loss Other- Than- Temporary Impairment Fair Value Prepaid expenses and Other Current Assets Other Assets Corporate debt securities $ 166 $ $ (11 ) $ (5 ) $ 150 $ 41 $ 109 U.S. Government debt securities 142 2 144 26 118 Other debt securities 9 9 9 $ 317 $ 2 $ (11 ) $ (5 ) $ 303 $ 67 $ 236 Investments with continuous unrealized losses for less than 12months and 12months or greater and their related fair values are as follows ($ in millions): As of September25, 2009: Type of Security Fair Value Less Than 12 Months Unrealized Losses Fair Value 12 Months or Greater Unrealized Losses Total Fair Value Total Unrealized Losses Corporate debt securities $ 2 $ $ 4 $ (1 ) $ 6 $ (1 ) As of September26, 2008: Type of Security Fair Value Less Than 12 Months Unrealized Losses Fair Value 12 Months or Greater Unrealized Losses Total Fair Value Total Unrealized Losses Corporate debt securities $ 63 $ (4 ) $ 62 $ (7 ) $ 125 $ (11 ) The Company recorded an other-than-temporary impairment of $5million for the year ended September26, 2008. The other-than-temporary impairment related to investments in corporate debt of Lehman Brothers Holding, Inc ("Lehman"), which filed a petition under Chapter11 of the U.S. Bankruptcy Code on September15, 2008. The Company did not record any other-than-temporary impairments in the years ended September25, 2009 and September28, 2007. The maturities of the Company's investments in debt securities as of September25, 2009 are as f |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Goodwill and Intangible Assets | 10.Goodwill and Intangible Assets As previously reported, the Company began to experience a decline in revenue during the first quarter of 2009 in its ADT Worldwide, Fire Protection Services and Safety Products segments as a result of a slowdown in the commercial markets including the retailer end market as well as a decline in sales volume at its Electrical and Metal Products segment. Although the Company considered and concluded that these factors did not constitute triggering events during the first quarter of 2009, the continued existence of these conditions during the second quarter of 2009, along with downward revisions to forecasted results, restructuring actions and weaker industry outlooks, caused the Company to conclude that sufficient indicators of impairment existed for certain reporting units. Reporting units within ADT Worldwide, Fire Protection Services and Safety Products segments continued to be negatively impacted as a result of a slowdown in the commercial markets including the retailer end market. Additionally, the Company's Electrical and Metal Products reporting unit continued to be negatively impacted by a decline in sales volume due to the downturn in the non-residential construction market. During the second quarter of 2009, the Company determined that these underlying events and circumstances constituted triggering events for six reporting units where such events would more-likely-than-not reduce the fair value below their respective carrying amounts. Specifically, the Company concluded that its Europe, Middle East and Africa ("EMEA") Security and EMEA Fire reporting units within the ADT Worldwide and Fire Protection Services segments, respectively, Electrical and Metal Products reporting unit within the Electrical and Metal Products segment and Access Control and Video Systems ("ACVS"), Life Safety and Sensormatic Retail Solutions ("SRS") reporting units within the Safety Products segment experienced triggering events. As a result of the triggering events, the Company assessed the recoverability of the reporting unit's long-lived assets and concluded that the carrying amounts were recoverable as of March27, 2009. Subsequently, the Company performed the first step of the goodwill impairment test for the reporting units. To perform the first step of the goodwill impairment test for the six reporting units with triggering events, the Company compared the carrying amounts of these reporting units to their estimated fair values. The Company utilized a discounted cash flow analysis for determining the fair value of each of the reporting units where triggering events had occurred. Based on the factors described above, actual and anticipated reductions in demand for the reporting unit's products and services as well as increased risk due to current economic uncertainty, the estimates of future cash flows used in the second quarter of 2009 discounted cash flow analyses were revised downward from the Company's most recent test conducted during the fourth quarter of 2008. The range of the weighted-average cost of capital utilized was increased to reflect increased risk due to current economic volatility and uncertai |
Related Party Transactions
Related Party Transactions | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Related Party Transactions | 11.Related Party Transactions The Company has amounts due related to loans and advances issued to employees in prior years under the Company's Key Employee Loan Program, relocation programs and other advances made to executives. Loans were provided to employees under the Company's Key Employee Loan Program, which is now discontinued, except for outstanding loans for the payment of taxes upon the vesting of shares granted under our Restricted Share Ownership Plans. During the fourth quarter of 2002, the Board of Directors and new senior management adopted a policy under which no new loans are allowed to be granted to any officers of the Company and existing loans are not allowed to be extended or modified. There have been no loans made to any of our current executives. The outstanding loans are not collateralized and bear interest, payable annually, at a rate based on the six-month LIBOR, calculated annually as the average of the rates in effect on the first day of each of the preceding 12months. Loans are generally repayable in ten years; however, earlier payments are required under certain circumstances, such as when an employee is terminated. In addition, the Company made mortgage loans to certain employees under employee relocation programs. These loans are generally payable in 15years and are collateralized by the underlying property. During 2009 and 2008, the maximum amount outstanding under these programs was $22million and $24million, respectively. Loans receivable under these programs, as well as other unsecured advances outstanding, were $22million and $24million as of September25, 2009 and September26, 2008, respectively. The total outstanding loans receivable includes loans to L. Dennis Kozlowski, the Company's former Chairman and Chief Executive Officer (until June 2002). The amount outstanding under these loans, plus accrued interest, was $27million and $27million as of September25, 2009 and September26, 2008, respectively, and the rate of interest charged on such loans was 1.9% and 3.0% for 2009 and 2008, respectively. Interest income on these interest bearing loans totaled nil, $1million and $1million in 2009, 2008 and 2007, respectively. Certain of the above loans totaling $1million and $4million as of September25, 2009 and September26, 2008, respectively, are non-interest bearing. During 2009, 2008 and 2007, the Company engaged in commercial transactions in the normal course of business with companies where the Company's Directors were employed and served as officers. Purchases from these companies during each year aggregated less than 1percent of consolidated net revenue. The Company filed civil complaints against Messrs.Kozlowski and Swartz for breach of fiduciary duty and other wrongful conduct relating to alleged abuses of our Key Employee Loan Program and relocation program, unauthorized bonuses, unauthorized payments, self-dealing transactions and other improper conduct. In June 2002, the Company filed a civil complaint against Frank E. Walsh, Jr., a former director, for breach of fiduciary duty, inducing breaches of fiduciary duty and related wrongful conduct involving a $20million payment by Tyco, $10 |
Debt
Debt | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Debt | 12.Debt Debt as of September25, 2009 and September26, 2008 is as follows ($ in millions): 2009 2008 Commercial paper(1) $ 200 $ 116 364-day senior bridge loan facility due 2008 6.125% public notes due 2008(2) 300 6.125% public notes due 2009(2) 215 6.75% public notes due 2011 516 516 6.375% public notes due 2011 849 849 Revolving senior credit facility due 2011 Revolving senior credit facility due 2012 286 6.0% public notes due 2013 655 655 8.5% public notes due 2019 750 7.0% public notes due 2019 434 435 6.875% public notes due 2021 716 717 7.0% public notes due 2028 14 16 6.875% public notes due 2029 21 23 Other(1)(2) 119 136 Total debt 4,274 4,264 Less current portion 245 555 Long-term debt $ 4,029 $ 3,709 (1) Commercial paper, plus $45million of the amount shown as other, comprise the current portion of long-term debt as of September25, 2009. (2) These instruments, plus $40million of the amount shown as other, comprise the current portion of long-term debt as of September26, 2008. The carrying amount of Tyco's debt subject to the fair value disclosure requirements as of September25, 2009 was $4,155million. The Company has determined the fair value of such debt to be $4,578million as of September25, 2009. The Company utilizes various valuation methodologies to determine the fair value of its debt which is primarily dependent on the type of market in which the Company's debt is traded. When available, the Company uses quoted market prices to determine the fair value of its debt which is traded in active markets. As of September25, 2009, the fair value of the Company's debt which is actively traded was $4,338million. When quoted market prices are not readily available or representative of fair value, the Company utilizes market information of comparable debt with similar terms, such as maturities, interest rates and credit risk to determine the fair value of its debt which is traded in markets that are not active. As of September25, 2009, the fair value of the Company's debt which is not actively traded was $40million. Additionally, the Company believes the carrying amount of its commercial paper of $200million approximates fair value based on the short-term nature of such debt. Commercial Paper In May 2008, Tyco International FinanceS.A. ("TIFSA") commenced issuing commercial paper to U.S. institutional accredited investors and qualified institutional buyers. Borrowings under the commercial paper program are available for general corporate purposes. As of September25, 2009 and September26, 2008, TIFSA had $200million and $116million, respectively, of commercial paper outstanding, which bore interest at an average rate of 0.33% and 2.95%, respectively. As of September25, 2009, the Company classified its outstanding commercial paper balance of $200million as short-term as t |
Guarantees
Guarantees | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Guarantees | 13.Guarantees Certain of the Company's business segments have guaranteed the performance of third-parties and provided financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from 2009 through the completion of such transactions. The guarantees would typically be triggered in the event of nonperformance and performance under the guarantees, if required, would not have a material effect on the Company's financial position, results of operations or cash flows. There are certain guarantees or indemnifications extended among Tyco, Covidien and Tyco Electronics in accordance with the terms of the Separation and Distribution Agreement and the Tax Sharing Agreement. The guarantees primarily relate to certain contingent tax liabilities included in the Tax Sharing Agreement. At the time of the Separation, Tyco recorded a liability necessary to recognize the fair value of such guarantees and indemnifications. In the absence of observable transactions for identical or similar guarantees, the Company determined the fair value of these guarantees and indemnifications utilizing expected present value measurement techniques. Significant assumptions utilized to determine fair value included determining a range of potential outcomes, assigning a probability weighting to each potential outcome and estimating the anticipated timing of resolution. The probability weighted outcomes were discounted using the Company's incremental borrowing rate. The liability necessary to reflect the fair value of the guarantees and indemnifications under the Tax Sharing Agreement is $554million, which is included in other liabilities on the Company's Consolidated Balance Sheets as of September25, 2009 and September26, 2008. The guarantees primarily relate to certain contingent tax liabilities included in the Tax Sharing Agreement. See Note6 for further discussion of the Tax Sharing Agreement. In addition, Tyco historically provided support in the form of financial and/or performance guarantees to various Covidien and Tyco Electronics operating entities. In connection with the Separation, the Company worked with the guarantee counterparties to cancel or assign these guarantees to Covidien or Tyco Electronics. To the extent these guarantees were not assigned prior to the Separation date, Tyco assumed primary liability on any remaining such support. The estimated fair value of these obligations is $4million and $7million, which are included in other liabilities on the Company's Consolidated Balance Sheets as of September25, 2009 and September26, 2008, respectively, with an offset to shareholders' equity on the Separation date. In disposing of assets or businesses, the Company often provides representations, warranties and/or indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. The Company has no rea |
Financial Instruments
Financial Instruments | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Financial Instruments | 14.Financial Instruments Derivative Instruments The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, investments, accounts payable, debt and derivative financial instruments. The fair value of cash and cash equivalents, accounts receivable and accounts payable approximated book value as of September25, 2009. See below for the fair value of derivative financial instruments. See below and Note9 for Investments and Note12 for Debt. In the normal course of business, Tyco is exposed to market risk arising from changes in currency exchange rates, interest rates and commodity prices. The Company uses derivative financial instruments to manage exposures to foreign currency and interest rate risks. The Company's objective for utilizing derivative financial instruments is to manage these risks using the most effective methods to eliminate or reduce the impacts of these exposures. The Company does not utilize derivative financial instruments to hedge its exposure attributable to changes in commodity prices but may consider such strategies in the future. The Company manages foreign currency exchange rate risk through the use of derivative financial instruments comprised principally of forward contracts on foreign currency which are not designated as hedging instruments for accounting purposes. The objective of those derivatives instruments is to minimize the income statement impact and potential variability in cash flows associated with intercompany loans and accounts receivable, accounts payable and forecasted transactions that are denominated in certain foreign currencies. Effective March17, 2009, Tyco changed its jurisdiction of incorporation from Bermuda to Switzerland. Until January1, 2011 Tyco intends to make dividend payments in the form of a reduction of capital, denominated in Swiss francs. However, the Company expects to actually pay dividends in U.S. dollars, based on exchange rates in effect shortly before the payment date. Fluctuations in the value of the U.S. dollar compared to the Swiss franc between the date the dividend is declared and paid will increase or decrease the U.S. dollar amount required to be paid. The Company manages the potential variability in cash flows associated with the dividend payments by entering into derivative financial instruments used as economic hedges of the underlying risk. The Company manages interest rate risk through the use of interest rate swap transactions with financial institutions acting as principal counterparties, which are designated as fair value hedges for accounting purposes. During 2009, the Company entered into interest rate swap transactions with the objective of managing the exposure to interest rate risk by converting the interest rates on $1.4billion of fixed-rate debt to variable rates. In these contracts, the Company agrees with financial institutions acting as principal counterparties to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated on an agreed-upon notional principal amount. For derivative instruments that are designated and qualify as fair value hedges, |
Commitments and Contingencies
Commitments and Contingencies | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Commitments and Contingencies | 15.Commitments and Contingencies The Company has facility, vehicle and equipment leases that expire at various dates through the year 2027. Rental expense under these leases was $392million, $415million and $406million for 2009, 2008 and 2007, respectively. The Company also has facility and equipment commitments under capital leases. Following is a schedule of minimum lease payments for non-cancelable leases as of September25, 2009 ($ in millions): Operating Leases Capital Leases 2010 $ 253 $ 22 2011 203 28 2012 147 7 2013 89 8 2014 51 7 Thereafter 123 50 $ 866 122 Less: amount representing interest 31 Total minimum lease payments $ 91 The Company also has purchase obligations related to commitments to purchase certain goods and services. As of September25, 2009, such obligations were as follows: $90million in 2010 and $5million in 2011 and $3million thereafter. In the normal course of business, the Company is liable for contract completion and product performance. In the opinion of management, such obligations will not significantly affect the Company's financial position, results of operations or cash flows. In connection with the Separation, the Company entered into a liability sharing agreement regarding certain legal actions that were pending against Tyco prior to the Separation. Under the Separation and Distribution Agreement, the Company, Covidien and Tyco Electronics are jointly and severally liable for the full amount of any judgments resulting from the actions subject to the agreement, which generally relate to legacy matters that are not specific to the business operations of any of the companies. The Separation and Distribution Agreement also provides that the Company will be responsible for 27%, Covidien 42% and Tyco Electronics 31% of payments to resolve these matters, with costs and expenses associated with the management of these contingencies being shared equally among the parties. In addition, under the agreement, the Company will manage and control all the legal matters related to assumed contingent liabilities as described in the Separation and Distribution Agreement, including the defense or settlement thereof, subject to certain limitations. Additionally, at the time of the Separation, the Company, Covidien and Tyco Electronics agreed to allocate responsibility for certain legacy tax claims pursuant to the same formula under the Tax Sharing Agreement. See Note6. Class Action Settlement and Legacy Securities Matters As previously reported, Tyco, and some members of the Company's former senior corporate management were named as defendants in a number of lawsuits alleging violations of the disclosure provisions of the federal securities laws. In June2007, the Company settled 32 purported securities class action lawsuits arising from actions alleged to have been taken by prior management for $2.975billion. Of this amount, the Company contributed $803million, representing its share under th |
Retirement Plans
Retirement Plans | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Retirement Plans | 16.Retirement Plans The Company sponsors a number of pension plans. The Company measures its pension plans as of its fiscal year end. The following disclosures exclude the impact of plans which are immaterial individually and in the aggregate. Defined Benefit Pension PlansThe Company has a number of noncontributory and contributory defined benefit retirement plans covering certain of its U.S. and non-U.S. employees, designed in accordance with conditions and practices in the countries concerned. Net periodic pension benefit cost is based on periodic actuarial valuations which use the projected unit credit method of calculation and is charged to the Consolidated Statements of Operations on a systematic basis over the expected average remaining service lives of current participants. Contribution amounts are determined based on local regulations and the advice of professionally qualified actuaries in the countries concerned. The benefits under the defined benefit plans are based on various factors, such as years of service and compensation. In connection with the Separation, the Company legally separated certain pension plans that included participants of Tyco Healthcare, Tyco Electronics and other subsidiaries. As a result, the Company remeasured the assets and projected benefit obligation of the separated pension plans. The impact of the remeasurement on continuing operations was immaterial. Also, during 2007, the Company completed the merger of certain pension plans in the United Kingdom, which resulted in an increase to the minimum pension liability with a corresponding decrease to accumulated other comprehensive (loss) income of $10million, net of income taxes. The net periodic benefit cost for all U.S. and non-U.S. defined benefit pension plans for 2009, 2008 and 2007 is as follows ($ in millions): U.S. Plans Non-U.S. Plans 2009 2008 2007 2009 2008 2007 Service cost $ 9 $ 8 $ 9 $ 28 $ 45 $ 46 Interest cost 49 47 47 69 82 73 Expected return on plan assets (49 ) (58 ) (56 ) (61 ) (82 ) (74 ) Amortization of initial net asset (1 ) (1 ) Amortization of prior service cost (credit) 1 1 1 (2 ) (3 ) (3 ) Amortization of net actuarial loss 9 5 12 15 19 30 Plan settlements, curtailments and special termination benefits (1 ) (2 ) 2 Net periodic benefit cost $ 19 $ 3 $ 13 $ 48 $ 58 $ 73 Weighted-average assumptions used to determine net periodic pension cost during the year: Discount rate 7.6 % 6.3 % 6.0 % 6.5 % 5.6 % 4.9 % Expected return on plan assets 8.0 % 8.0 % 8.0 % 7.0 % 7.1 % 7.0 % Rate of compensation increase 4.0 % 4.0 % 4.0 % 4.5 % 4.4 % 4.1 % The estimated net loss and prior service cost for U.S. pension benefit plans that will be amortiz |
Shareholders' Equity
Shareholders' Equity | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Shareholders' Equity | 17.Shareholders' Equity As discussed in Note1, effective March17, 2009, the Company changed its jurisdiction of incorporation from Bermuda to the Canton of Schaffhausen, Switzerland. In connection with the Change of Domicile, the par value of the Company's common shares increased from $0.80 per share to 8.53 Swiss francs (CHF) per share (or $7.21 based on the exchange rate in effect on March17, 2009). The Change of Domicile was approved at a special general meeting of shareholders held on March12, 2009. The following steps occurred in connection with the Change of Domicile, which did not result in a change to Total Shareholders' Equity: (1) approximately 21million shares held directly or indirectly in treasury were cancelled; (2) the par value of common shares was increased from $0.80 to CHF8.53 through an approximate 1-for-9 reverse share split, followed by the issuance of approximately eight fully paid up shares so that the same number of shares were outstanding before and after the Change of Domicile, which reduced share premium and increased common shares; and (3) the remaining amount of share premium was eliminated with a corresponding increase to contributed surplus. Preference SharesIn connection with the Change of Domicile, all authorized preference shares were cancelled. At September26, 2008 Tyco had authorized 31,250,000 preference shares, par value of $4 per share, none of which were issued and outstanding. Common SharesAs of September25, 2009 the Company's share capital amounted to CHF3,867,911,465.07 or 479,295,101 registered common shares with a par value of CHF8.07 per share. Until March12, 2011, the Board of Directors may increase the Company's share capital by a maximum amount of CHF1,933,955,728.50 by issuing a maximum of 239,647,550 shares. In addition, until March12, 2011, (i)the share capital of the Company may be increased by an amount not exceeding CHF386,791,145.70 through the issue of a maximum of 47,929,510 shares through the exercise of conversion and/or option or warrant rights granted in connection with bonds, notes or similar instruments including convertible debt instruments and (ii)the share capital of the Company may be increased by an amount not exceeding CHF386,791,145.70 through the issue of a maximum of 47,929,510 shares to employees and other persons providing services to the Company. Although the Company states its par value in Swiss francs it continues to use the U.S. dollar as its reporting currency for preparing its Consolidated Financial Statements. Shares Owned by Subsidiaries and Common Shares Held in TreasuryPrior to the Change of Domicile, approximately 21million shares held by the Company directly or indirectly in treasury were cancelled. As of September25, 2009 there were approximately 5million shares held in treasury. As of September26, 2008 there were approximately 22million shares held by a subsidiary and 5million shares held directly in treasury. Share Premium and Contributed SurplusAs of September26, 2008, Tyco InternationalLtd. was incorporated under the laws of Bermuda. In accordance with the Bermuda Companies Act 1981, when Tyco issued shares for cash at a pr |
Share Plans
Share Plans | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Share Plans | 18.Share Plans In connection with the Separation in 2007, share options were modified through the issuance of Covidien and Tyco Electronics share options. As a result of the one for four share split, share option exercise prices for the Tyco awards were adjusted. Generally, employee share options converted into share options of the employer with the exception of corporate employees whose awards converted into share options of all three companies. The revisions made to the share options as a result of the Separation constituted a modification which required a comparison of fair values of the share options immediately before the Separation and the fair values immediately after the Separation. In certain instances, the fair value immediately after the Separation was higher. As a result, the modification resulted in incremental compensation cost of $15million. Of this amount, $0.3million, $1million and $13million ($11million in discontinued operations) were recorded in 2009, 2008 and 2007, respectively. The 2009 and 2008 amounts are included in selling, general and administrative expenses while the 2007 amount is included in separation costs on the Company's Consolidated Statements of Operations. The remaining balance will be recorded in continuing operations over the remaining vesting period of the share options. Except for the changes described, the principal terms of the share options remain unchanged from the original grant. Also in connection with the Separation, Tyco employee restricted share awards and restricted stock units (collectively, "restricted share awards") were modified through the issuance of Covidien and Tyco Electronics restricted shares or the conversion to shares of the employer. Restricted shares and restricted share units held by employees in the company in which they were not employed were subject to accelerated vesting provisions and vested 50% on the first day of trading after the Separation and 50% six months thereafter. This accelerated vesting resulted in $14million of accelerated compensation expense for Tyco's continuing operations. Tyco recorded $12million as selling, general and administrative expenses in the fourth quarter of 2007 and recorded the remaining expense in the first quarter of 2008. Equity awards under the UK Save-As-You-Earn Plan (the "SAYE Plan") were not modified in connection with the Separation and resulted in additional compensation expense of $14million. Of this amount, $2million, $7million ($1million in discontinued operations) and $5million ($2million in discontinued operations) were recorded in 2009, 2008 and 2007, respectively. Except for the changes described, the principal terms and conditions of restricted shares, restricted units and deferred stock units of the employees remain unchanged from the original grant. Also in connection with the Separation, the Company amended the terms of performance based awards granted on November22, 2005 to provide for vesting of the remaining awards without regard to the original performance measures. The original performance awards, which were previously adjusted to reflect the attainment of performance metrics through fiscal year 2006 |
Comprehensive
Comprehensive (Loss) Income | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Comprehensive (Loss) Income | 19.Accumulated Other Comprehensive (Loss) Income The components of accumulated other comprehensive (loss) income are as follows ($ in millions): Currency Translation(1) Unrealized (Loss) Gain on Securities Unrealized (Loss) Gain on Derivative Instruments Minimum Pension Liability Retirement Plans Accumulated Other Comprehensive Income (Loss) Balance as of September29, 2006 $ 1,805 $ (2 ) $ (1 ) $ (785 ) $ $ 1,017 Cumulative effect of adopting a new accounting principle (see Note16) 215 (396 ) (181 ) Pre-tax current period change 883 3 1 368 1,255 Income tax expense (1 ) (119 ) 70 (50 ) Distribution of Covidien and Tyco Electronics (1,797 ) 321 (1,476 ) Balance as of September28, 2007 891 (326 ) 565 Pre-tax current period change (307 ) (9 ) (32 ) (348 ) Income tax expense 4 11 15 Balance as of September26, 2008 584 (5 ) (347 ) 232 Cumulative effect of adopting a new accounting principle (see Note16) 89 89 Pre-tax current period change (203 ) 14 (327 ) (516 ) Income tax expense (5 ) 79 74 Other(2) 34 34 Balance as of September25, 2009 $ 415 $ 4 $ $ $ (506 ) $ (87 ) (1) During the years ended September25, 2009, September26, 2008 and September28, 2007, $21million, $58million and $6million, respectively, were transferred from currency translation adjustments as a result of the sale of foreign entities. These amounts are included in income from discontinued operations. (2) Adjustment to accumulated (deficit) earnings recorded to correct the distribution amount to Covidien and Tyco Electronics at the date of the Separation. See Note2. |
Consolidated Segment and Geogra
Consolidated Segment and Geographic Data | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Consolidated Segment and Geographic Data | 20.Consolidated Segment and Geographic Data Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. In connection with the Separation, the Company realigned its management and segment reporting structure effective March31, 2007. The segment data presented reflects this new segment structure. The Company operates and reports financial and operating information in the following five segments: ADT Worldwide designs, sells, installs, services and monitors electronic security systems for residential, commercial, industrial and governmental customers. Flow Control designs, manufactures, sells and services valves, pipes, fittings, valve automation and heat tracing products for the oil, gas and other energy markets along with general process industries and the water and wastewater markets. Fire Protection Services designs, sells, installs and services fire detection and fire suppression systems for commercial, industrial and governmental customers. Electrical and Metal Products designs, manufactures and sells galvanized steel tubing, armored wire and cable and other metal products for non-residential construction, electrical, fire and safety and mechanical customers. Safety Products designs, manufactures and sells fire suppression, electronic, security and life safety products, including fire suppression products, breathing apparatus, intrusion security, access control and video management systems. In addition, Safety Products manufactures products installed and serviced by ADT Worldwide and Fire Protection Services. Tyco also provides general corporate services to its segments and these costs are reported as Corporate and Other. The Company, from time to time, will realign businesses and management responsibility within its operating segments that possess similar characteristics such as product and service offerings. These realignments are designed to more fully leverage existing capabilities and enhance development for future products and services. Effective September27, 2008, certain businesses were transferred from the Company's ADT Worldwide segment to the Company's Fire Protection Services segment, from the Company's Fire Protection Services segment to the Company's Flow Control segment and from the Company's Electrical and Metal Products segment to the Company's Safety Products segment. The realignment of these businesses results in segment data being presented in line with management's view of segment operating results. The revenue and operating income for 2008 and 2007 has been recast to reflect the realignment of the Company's ADT Worldwide businesses to the Company's Fire Protection Services segment. All the other business realignments were not recast because the changes were immaterial. Selected information in the new segment structure is presented in the following tables for 2009, 2008 and 2007 ($ in millions): 2009 2008 2007 Net revenue(1): ADT Worldwide $ 7,015 $ 7,731 $ 7,288 Flow Control 3,850 4,418 3, |
Supplementary Consolidated Bala
Supplementary Consolidated Balance Sheets Information | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Supplementary Consolidated Balance Sheets Information | 21.Supplementary Consolidated Balance Sheets Information Selected supplementary Consolidated Balance Sheets information as of September25, 2009 and September26, 2008 is as follows ($ in millions): 2009 2008 Deferred tax assetnon-current $ 1,113 $ 1,101 Other non-current assets 1,538 1,481 Other assets $ 2,651 $ 2,582 Accrued payroll and payroll related costs $ 555 $ 627 Deferred income tax liabilitycurrent 46 51 Income taxes payablecurrent 87 241 Other 1,788 1,798 Accrued and other current liabilities $ 2,476 $ 2,717 Long-term pension and postretirement liabilities $ 825 $ 559 Deferred income tax liabilitynon-current 273 542 Income taxes payablenon-current 221 249 Other 1,401 1,365 Other liabilities $ 2,720 $ 2,715 |
Inventory
Inventory | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Inventory | 22.Inventory Inventories consisted of the following ($ in millions): September25, 2009 September26, 2008 Purchased materials and manufactured parts $ 514 $ 681 Work in process 207 272 Finished goods 722 924 Inventories $ 1,443 $ 1,877 Inventories are recorded at the lower of cost (primarily first-in, first-out) or market value. |
Property, Plant and Equipment
Property, Plant and Equipment | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Property, Plant and Equipment | 23.Property, Plant and Equipment Property, plant and equipment consisted of the following ($ in millions): September25, 2009 September26, 2008 Land $ 156 $ 151 Buildings 788 754 Subscriber systems 5,309 5,102 Machinery and equipment 2,398 2,303 Property under capital leases(1) 62 70 Construction in progress 164 132 Accumulated depreciation(2) (5,380 ) (5,019 ) Property, plant and equipment, net $ 3,497 $ 3,493 (1) Property under capital leases consists primarily of buildings. (2) Accumulated amortization of capital lease assets was $28million and $23million as of September25, 2009 and September26, 2008, respectively. |
Summarized Quarterly Financial
Summarized Quarterly Financial Data (Unaudited) | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Summarized Quarterly Financial Data (Unaudited) | 24.Summarized Quarterly Financial Data (Unaudited) Summarized quarterly financial data for the years ended September25, 2009 and September26, 2008 is as follows ($ in millions, except per share data): 2009 1stQtr.(1) 2ndQtr.(2) 3rdQtr.(3) 4thQtr.(4) Net revenue $ 4,426 $ 4,150 $ 4,240 $ 4,421 Gross profit 1,557 1,435 1,495 1,607 Income (loss) from continuing operations 272 (2,555 ) 243 207 Income (loss) from discontinued operations, net of income taxes 5 (12 ) 44 (2 ) Net income (loss) 277 (2,567 ) 287 205 Basic earnings per share: Income (loss) from continuing operations $ 0.57 $ (5.40 ) $ 0.51 $ 0.44 Income (loss) from discontinued operations, net of income taxes 0.02 (0.02 ) 0.10 (0.01 ) Net income (loss) 0.59 (5.42 ) 0.61 0.43 Diluted earnings per share: Income (loss) from continuing operations 0.57 (5.40 ) 0.51 0.44 Income (loss) from discontinued operations, net of income taxes 0.01 (0.02 ) 0.09 (0.01 ) Net income (loss) 0.58 (5.42 ) 0.60 0.43 (1) Income from continuing operations includes restructuring, asset impairment and divestiture charges, net of $8million and legacy legal charges of $8million. (2) Loss from continuing operations includes goodwill impairments of $2.6billion, restructuring, asset impairment and divestiture charges, net of $102million, legacy legal charges of $101million and intangible asset impairments of $64million. (3) Income from continuing operations includes restructuring and asset impairment charges, net of $37million. (4) Income from continuing operations includes restructuring, asset impairment and divestiture charges, net of $104million. 2008 1stQtr.(1) 2ndQtr.(2) 3rdQtr.(3) 4thQtr.(4) Net revenue $ 4,837 $ 4,863 $ 5,215 $ 5,284 Gross profit 1,680 1,678 1,851 1,867 Income from continuing operations 360 272 199 264 Income from discontinued operations, net of income taxes 3 8 277 170 Net income 363 280 476 434 Basic earnings per share: Income from continuing operations $ 0.73 $ 0.56 $ 0.41 $ 0.56 Income from discontinued operations, net of income taxes 0.01 0.02 0.58 0.35 Net income 0.74 0.58 0.99 0.91 Diluted earnings per share: Income from continuing operations 0.72 0.56 0.41 0.55 Income from discontinued operations, net of income taxes 0.01 0.01 0.57 0.36 Net income 0.73 0.57 0.98 0.91 (1) Net revenue excludes $425million of revenue related to discontinued operations. Income from continuing operations includes restructuring, asset impairment and divestiture char |
Tyco International Finance S.A.
Tyco International Finance S.A. | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Tyco International Finance S.A. | 25.Tyco International FinanceS.A. TIFSA, a wholly-owned subsidiary of the Company, has public debt securities outstanding (see Note12) which are fully and unconditionally guaranteed by Tyco. TIFSA, which was formed in December 2006, is a holding company established in connection with the Separation as the successor company to TIGSA. During the third quarter of 2007, TIGSA's assets and liabilities were contributed to TIFSA, Covidien and Tyco Electronics. TIGSA was put into liquidation on June1, 2007. TIFSA directly and indirectly owns substantially all of the operating subsidiaries of the Company, performs treasury operations and has assumed the indebtedness of TIGSA. The following tables present condensed consolidating financial information for Tyco, TIFSA and all other subsidiaries. Condensed financial information for Tyco and TIFSA on a stand-alone basis is presented using the equity method of accounting for subsidiaries. During the second quarter of 2008, the Company completed a tax-free restructuring involving the transfer of certain investments from Tyco to TIFSA. Since the transactions were entirely among wholly-owned subsidiaries of Tyco, there was no impact on the Company's consolidated financial position, results of operations or cash flows. The transactions did, however, result in an increase to TIFSA's investment in subsidiaries of $1.9billion. Since these transactions were among entities under common control, their effects have been reflected as of the beginning of the earliest period presented. CONSOLIDATING STATEMENT OF OPERATIONS For the Year Ended September25, 2009 ($ in millions) Tyco International Ltd. Tyco International FinanceS.A. Other Subsidiaries Consolidating Adjustments Total Net revenue $ $ $ 17,237 $ $ 17,237 Cost of product sales 7,584 7,584 Cost of services 3,559 3,559 Selling, general and administrative expenses 152 5 4,500 4,657 Goodwill and intangible asset impairments 2,705 2,705 Restructuring, asset impairment and divestiture charges, net 4 215 219 Operating loss (156 ) (5 ) (1,326 ) (1,487 ) Interest income 44 44 Interest expense (288 ) (13 ) (301 ) Other (expense) income, net (13 ) 2 4 (7 ) Equity in net loss of subsidiaries (239 ) (1,425 ) 1,664 Intercompany interest and fees (1,425 ) 129 1,296 (Loss) income from continuing operations before income taxes and minority interest (1,833 ) (1,587 ) 5 1,664 (1,751 ) Income tax benefit (expense) 63 (141 ) (78 ) Minority interest (4 ) (4 ) Loss from continuing operations (1,833 ) (1,524 ) (140 ) 1,664 (1,833 ) Income from discontinued operations, net of income taxes 35 32 35 (67 ) |
Subsequent Events
Subsequent Events | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Subsequent Events | 26.Subsequent Events The Company has evaluated subsequent events through the time it filed its annual report on Form10-K on November16, 2009. On October1, 2009, the Company granted Tyco employees 4.1million share options with a weighted-average grant-date fair value of $9.17 per share at the date of grant. Additionally, the Company granted 1.3million and 0.8million restricted stock units and performance share units with a fair value of $33.75 and $40.19 per share on the date of grant, respectively. On September30, 2009, TIFSA issued $500million aggregate principle amount of 4.125% notes due 2014, which are fully and unconditionally guaranteed by the Company. TIFSA received net proceeds of approximately $496million after underwriting discounts and estimated offering expenses. The net proceeds may be used for general corporate purposes which may include repayment of indebtedness, acquisitions, additions to working capital, repurchase of common shares, capital expenditures and investments in the Company's subsidiaries. Also on September30, 2009, TIFSA entered into interest rate swap contracts to hedge $500million notional amount of the 6.0% public notes due 2013. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Schedules | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | TYCO INTERNATIONALLTD. SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS (in millions) Description Balance at Beginning of Year Additions Charged to Income Divestitures and Other Deductions Balance at End of Year Accounts Receivable: Year Ended September28, 2007 $ 198 $ 50 $ 12 $ (78 ) $ 182 Year Ended September26, 2008 182 85 11 (105 ) 173 Year Ended September25, 2009 173 111 5 (116 ) 173 |
DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION (USD $) | |||
12 Months Ended
Sep. 25, 2009 | Nov. 06, 2009
| Mar. 27, 2009
| |
Document and Entity Information | |||
Entity Registrant Name | TYCO INTERNATIONAL LTD /BER/ | ||
Entity Central Index Key | 0000833444 | ||
Document Type | 10-K | ||
Document Period End Date | 2009-09-25 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-25 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $9,230,189,013 | ||
Entity Common Stock, Shares Outstanding | 474,672,165 |