UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended December 31, 2003 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
001-13836
(Commission File Number)
TYCO INTERNATIONAL LTD.
(Exact name of Registrant as specified in its charter)
| Bermuda (Jurisdiction of Incorporation) |
98-0390500 (I.R.S. Employer Identification Number) |
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Second Floor, 90 Pitts Bay Road, Pembroke, HM 08, Bermuda (Address of Registrant's principal executive office) |
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441-292-8674 (Registrant's telephone number) |
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Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý No o
The number of common shares outstanding as of February 5, 2004 was 1,999,909,073.
TYCO INTERNATIONAL LTD.
INDEX TO FORM 10-Q
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| Part I—Financial Information: | |||
Item 1—Financial Statements |
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Consolidated Statements of Operations (Unaudited) for the quarters ended December 31, 2003 and 2002 |
1 |
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Consolidated Balance Sheets (Unaudited) as of December 31, 2003 and September 30, 2003 |
2 |
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Consolidated Statements of Cash Flows (Unaudited) for the quarters ended December 31, 2003 and 2002 |
3 |
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Notes to Consolidated Financial Statements (Unaudited) |
4 |
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Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations |
25 |
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Item 3—Quantitative and Qualitative Disclosures About Market Risk |
49 |
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Item 4—Controls and Procedures |
49 |
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Part II—Other Information |
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Item 1—Legal Proceedings |
52 |
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Item 5—Other Information |
54 |
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Item 6—Exhibits and Reports on Form 8-K |
55 |
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Signatures |
56 |
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TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
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For the Quarters Ended December 31, |
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2003 |
2002 |
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| Revenue from product sales | $ | 7,789.7 | $ | 7,158.2 | ||||
| Service revenue | 1,911.0 | 1,769.2 | ||||||
| Net revenue | 9,700.7 | 8,927.4 | ||||||
| Cost of product sales | 5,168.3 | 4,793.3 | ||||||
| Cost of services | 1,057.7 | 938.7 | ||||||
| Selling, general and administrative expenses | 2,208.7 | 2,148.6 | ||||||
| Restructuring and other charges (credits), net | 5.3 | (3.5 | ) | |||||
| Charges for the impairment of long-lived assets | 23.1 | — | ||||||
| Operating income | 1,237.6 | 1,050.3 | ||||||
| Interest income | 25.8 | 25.8 | ||||||
| Interest expense | (265.2 | ) | (289.0 | ) | ||||
| Other (expense) income, net | (7.7 | ) | 1.4 | |||||
| Income from continuing operations before income taxes and minority interest | 990.5 | 788.5 | ||||||
| Income taxes | (267.9 | ) | (221.9 | ) | ||||
| Minority interest | (3.4 | ) | (0.7 | ) | ||||
| Income from continuing operations | 719.2 | 565.9 | ||||||
| Income from discontinued operations of Tyco Capital, net of $0 tax | — | 20.0 | ||||||
| Net income | $ | 719.2 | $ | 585.9 | ||||
| Basic earnings per common share: | ||||||||
| Income from continuing operations | $ | 0.36 | $ | 0.28 | ||||
| Income from discontinued operations of Tyco Capital, net of tax | — | 0.01 | ||||||
| Net income per common share | 0.36 | 0.29 | ||||||
| Diluted earnings per common share: | ||||||||
| Income from continuing operations | $ | 0.34 | $ | 0.28 | ||||
| Income from discontinued operations of Tyco Capital, net of tax | — | 0.01 | ||||||
| Net income per common share | 0.34 | 0.29 | ||||||
| Weighted-average number of common shares outstanding: | ||||||||
| Basic | 1,997.1 | 1,994.6 | ||||||
| Diluted | 2,210.8 | 2,000.4 | ||||||
See Notes to Consolidated Financial Statements (Unaudited).
1
TYCO INTERNATIONAL LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share data)
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December 31, 2003 |
September 30, 2003 |
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|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 2,764.6 | $ | 4,186.7 | ||||||
| Restricted cash | 86.9 | 141.8 | ||||||||
| Accounts receivable, less allowance for doubtful accounts ($702.6 at December 31, 2003 and $726.2 at September 30, 2003) | 6,135.5 | 5,714.8 | ||||||||
| Inventories | 4,456.6 | 4,292.2 | ||||||||
| Deferred income taxes | 780.2 | 855.2 | ||||||||
| Other current assets | 2,111.1 | 2,048.8 | ||||||||
| Total current assets | 16,334.9 | 17,239.5 | ||||||||
| Property, Plant and Equipment, Net | 10,308.7 | 10,299.8 | ||||||||
| Goodwill | 26,309.9 | 25,938.7 | ||||||||
| Intangible Assets, Net | 5,755.9 | 5,790.0 | ||||||||
| Other Assets | 4,092.0 | 4,277.0 | ||||||||
| Total Assets | $ | 62,801.4 | $ | 63,545.0 | ||||||
| Liabilities and Shareholders' Equity | ||||||||||
| Current Liabilities: | ||||||||||
| Loans payable and current maturities of long-term debt | $ | 1,387.1 | $ | 2,718.4 | ||||||
| Accounts payable | 2,751.0 | 2,716.7 | ||||||||
| Accrued expenses and other current liabilities | 4,265.4 | 4,326.7 | ||||||||
| Deferred revenue | 823.1 | 810.5 | ||||||||
| Total current liabilities | 9,226.6 | 10,572.3 | ||||||||
| Long-Term Debt | 17,519.8 | 18,250.7 | ||||||||
| Other Long-Term Liabilities | 8,110.7 | 8,239.7 | ||||||||
| Total Liabilities | 34,857.1 | 37,062.7 | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||||
| Minority Interest | 102.9 | 113.3 | ||||||||
| Shareholders' Equity: | ||||||||||
| Preference shares, $1 par value, 125,000,000 shares authorized, one share outstanding at December 31, 2003 and September 30, 2003 | — | — | ||||||||
| Common shares, $0.20 par value, 4,000,000,000 shares authorized; 1,999,376,025 and 1,998,189,621 shares outstanding, net of 20,403,639 and 21,144,265 shares owned by subsidiaries at December 31, 2003 and September 30, 2003, respectively | 399.9 | 399.6 | ||||||||
| Capital excess: | ||||||||||
| Share premium | 8,171.6 | 8,161.4 | ||||||||
| Contributed surplus, net of deferred compensation of $48.7 at December 31, 2003 and $45.5 at September 30, 2003 | 15,126.4 | 15,120.1 | ||||||||
| Accumulated earnings | 3,655.3 | 2,961.2 | ||||||||
| Accumulated other comprehensive income (loss) | 488.2 | (273.3 | ) | |||||||
| Total Shareholders' Equity | 27,841.4 | 26,369.0 | ||||||||
| Total Liabilities and Shareholders' Equity | $ | 62,801.4 | $ | 63,545.0 | ||||||
See Notes to Consolidated Financial Statements (Unaudited).
2
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
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For the Quarters Ended December 31, |
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|---|---|---|---|---|---|---|---|---|---|---|
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2003 |
2002 |
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| Cash Flows From Operating Activities: | ||||||||||
| Income from continuing operations | $ | 719.2 | $ | 565.9 | ||||||
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||||
| Non-cash restructuring and other credits, net | (17.3 | ) | — | |||||||
| Charges for the impairment of long-lived assets | 23.1 | — | ||||||||
| Depreciation | 376.5 | 360.4 | ||||||||
| Intangible assets amortization | 175.4 | 168.9 | ||||||||
| Deferred income taxes | 107.8 | 252.6 | ||||||||
| Provision for losses on accounts receivable and inventory | 70.2 | 106.4 | ||||||||
| Debt and refinancing cost amortization | 20.7 | 29.2 | ||||||||
| Loss on the early extinguishment of debt | 4.9 | — | ||||||||
| Other non-cash items | 20.7 | 15.8 | ||||||||
| Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | ||||||||||
| Accounts receivable | (163.4 | ) | 36.2 | |||||||
| Decrease in sale of accounts receivable programs | (46.9 | ) | (80.4 | ) | ||||||
| Contracts in progress | 7.5 | (19.8 | ) | |||||||
| Inventories | (63.8 | ) | (139.0 | ) | ||||||
| Other current assets | 8.0 | 40.4 | ||||||||
| Accounts payable | (59.2 | ) | (473.5 | ) | ||||||
| Accrued expenses and other current liabilities | (185.3 | ) | (184.9 | ) | ||||||
| Income taxes | 22.0 | 82.6 | ||||||||
| Deferred revenue | (17.6 | ) | (52.0 | ) | ||||||
| Other | 38.5 | 67.5 | ||||||||
| Net cash provided by operating activities | 1,041.0 | 776.3 | ||||||||
| Cash Flows From Investing Activities: | ||||||||||
| Purchase of property, plant and equipment, net | (207.8 | ) | (304.8 | ) | ||||||
| Construction of Tyco Global Network | — | (86.5 | ) | |||||||
| Acquisition of businesses | (13.9 | ) | (2.9 | ) | ||||||
| Acquisition of customer accounts (ADT dealer program) | (70.4 | ) | (194.6 | ) | ||||||
| Cash paid for purchase accounting and holdback/earn-out liabilities | (48.4 | ) | (111.8 | ) | ||||||
| Disposal of businesses | 0.7 | 3.6 | ||||||||
| Cash invested in short-term investments | (0.4 | ) | (159.8 | ) | ||||||
| Net (purchase) sale of long-term investments | (3.1 | ) | 42.2 | |||||||
| Decrease (increase) in current and non-current restricted cash | 212.4 | (296.6 | ) | |||||||
| Other | (8.1 | ) | 59.2 | |||||||
| Net cash used in investing activities | (139.0 | ) | (1,052.0 | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||||
| Net repayments of debt | (2,336.1 | ) | (153.9 | ) | ||||||
| Proceeds from exercise of options | 10.2 | 1.9 | ||||||||
| Dividends paid | (25.0 | ) | (25.2 | ) | ||||||
| Other | (11.5 | ) | (2.1 | ) | ||||||
| Net cash used in financing activities | (2,362.4 | ) | (179.3 | ) | ||||||
| Effect of foreign currency translation on cash | 38.3 | — | ||||||||
| Net decrease in cash and cash equivalents | (1,422.1 | ) | (455.0 | ) | ||||||
| Cash and cash equivalents at beginning of period | 4,186.7 | 6,185.7 | ||||||||
| Cash and cash equivalents at end of period | $ | 2,764.6 | $ | 5,730.7 | ||||||
See Notes to Consolidated Financial Statements (Unaudited).
3
TYCO INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
Basis of Presentation—The unaudited Consolidated Financial Statements include the consolidated accounts of Tyco International Ltd., a company incorporated in Bermuda, and its subsidiaries (Tyco and all its subsidiaries, hereinafter "we," the "Company" or "Tyco").
The financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by Generally Accepted Accounting Principles in the United States. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2003.
The Consolidated Financial Statements included herein have not been audited by independent auditors in accordance with Generally Accepted Auditing Standards, but in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Company's financial position and results of operations. Certain prior period amounts have been reclassified to conform with the current period presentation. All references in this Form 10-Q to "$" are to U.S. dollars.
Employee Share Option Plans—Tyco measures compensation cost in connection with employee share option plans using the intrinsic value based method and accordingly, does not recognize compensation expense for the issuance of options with an exercise price equal to or greater than the market price at the time of grant. Had the fair value based method been adopted by Tyco, the effect on net income and earnings per common share for the quarters ended December 31, 2003 and 2002 would have been as follows ($ in millions):
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For the Quarters Ended December 31, |
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2003 |
2002 |
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| Net income—as reported | $ | 719.2 | $ | 585.9 | ||||
| Add: Share-based employee compensation expense included in reported net income, net of tax | 1.2 | — | ||||||
| Less: Total share-based employee compensation expense determined under fair value based method for all awards, net of tax(1) | (54.5 | ) | (59.7 | ) | ||||
| Net income—pro forma | $ | 665.9 | $ | 526.2 | ||||
Net income per share: |
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| Basic—as reported | $ | 0.36 | $ | 0.29 | ||||
| Basic—pro forma | 0.33 | 0.26 | ||||||
| Diluted—as reported | 0.34 | 0.29 | ||||||
| Diluted—pro forma | 0.31 | 0.26 | ||||||
4
Accounting Pronouncements—In November 2003, the Emerging Issues Task Force ("EITF") reached a consensus on EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments," regarding the issue of disclosures for marketable equity securities and debt securities accounted for under Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The EITF requires additional quantitative disclosure related to unrealized losses, specifically presentation of the aging of such losses. It also requires additional qualitative disclosures to help users understand why the quantitative disclosures are not other-than-temporarily impaired. The adoption of these disclosure requirements are effective for companies with years ending after December 15, 2003.
In December 2003, the Financial Accounting Standards Board ("FASB") issued a revision to SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," to improve financial statement disclosure for defined benefit plans. This statement requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined pension plans and other defined benefit postretirement plans. It also requires reporting of various elements of pension and other postretirement benefit costs on a quarterly basis. Generally, the disclosures required are effective for interim periods beginning after December 15, 2003, however, information about foreign plans are effective for fiscal years ending after June 15, 2004.
In December 2003, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. ("SAB") 104, "Revenue Recognition," which supercedes SAB 101, "Revenue Recognition in Financial Statements." SAB 104's primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superceded as a result of the issuance of EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." The issuance of SAB 104 reflects the concepts contained in EITF 00-21; the other revenue recognition concepts contained in SAB 101 remain largely unchanged. The issuance of SAB 104 did not have a material impact on our results of operations or financial position.
2. Consolidated Segment Data
During the first quarter of fiscal 2004, our Precision Interconnect business was transferred from the Healthcare segment to the Electronics segment. In addition, the results of the Tyco Global Network ("TGN") business held for sale are presented within Corporate and Other. The Company has conformed its segment reporting accordingly and has reclassified comparative prior period information to reflect these changes.
5
Selected information for the Company's five segments is presented in the following table ($ in millions). Operating income by segment shown below includes net restructuring and other charges (credits) and charges for the impairment of long-lived assets as described in Note 3.
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For the Quarters Ended December 31, |
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2003 |
2002 |
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| Net Revenue: | |||||||||
| Fire and Security | $ | 2,962.1 | $ | 2,759.3 | |||||
| Electronics | 2,838.1 | 2,563.1 | |||||||
| Healthcare | 2,180.5 | 1,969.2 | |||||||
| Engineered Products and Services | 1,255.6 | 1,183.8 | |||||||
| Plastics and Adhesives | 459.7 | 450.6 | |||||||
| Corporate and Other(1) | 4.7 | 1.4 | |||||||
| Net revenue from external customers | $ | 9,700.7 | $ | 8,927.4 | |||||
| Operating income: | |||||||||
| Fire and Security | $ | 251.6 | $ | 217.2 | |||||
| Electronics | 424.0 | 322.8 | |||||||
| Healthcare | 537.8 | 443.1 | |||||||
| Engineered Products and Services | 106.2 | 121.0 | |||||||
| Plastics and Adhesives | 10.7 | 43.4 | |||||||
| Corporate and Other(2) | (92.7 | ) | (97.2 | ) | |||||
| Operating income | $ | 1,237.6 | $ | 1,050.3 | |||||
6
3. Restructuring Activities and Impairment Charges
Restructuring activities and impairment charges are as follows ($ in millions):
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For the Quarters Ended December 31, |
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2003 |
2002 |
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Net Restructuring Charges (Credits) |
Asset Impairments |
Total Restructuring and Impairment Expenses |
Total Restructuring Expenses |
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| Fire and Security | $ | 14.9 | $ | 1.0 | $ | 15.9 | $ | — | |||||
| Electronics | (20.1 | ) | — | (20.1 | ) | (2.5 | ) | ||||||
| Healthcare | 2.9 | — | 2.9 | (1.0 | ) | ||||||||
| Engineered Products and Services | 1.2 | — | 1.2 | — | |||||||||
| Plastics and Adhesives | 8.3 | 22.1 | 30.4 | — | |||||||||
| Corporate and Other | (1.9 | ) | — | (1.9 | ) | — | |||||||
| Total | $ | 5.3 | $ | 23.1 | $ | 28.4 | $ | (3.5 | ) | ||||
Fiscal 2004 Charges and Credits
The Fire and Security segment recorded net restructuring charges of $14.9 million including charges of $16.6 million associated with streamlining the business, partially offset by a credit of $1.7 million. The $16.6 million includes $11.1 million for employee severance in connection with the elimination of 1,025 positions primarily relating to manufacturing, technical, general and administrative and sales and marketing personnel in the United States, Latin America, Europe, Australia and Asia, and $5.1 million for facility closures in connection with the elimination of 43 facilities in Europe, the United States, Latin America and Australia. During the quarter ended December 31, 2003, the Fire and Security segment paid cash of $9.4 million related to the utilization of fiscal 2004 restructuring liabilities, consisting primarily of $8.1 million in severance for the termination of 876 employees.
The Electronics segment recorded net restructuring credits of $20.1 million. The $20.1 million net restructuring credit consists of credits of $24.4 million related to changes in estimates for severance, facility-related charges, and distribution and supplier cancellation fees recorded in prior periods, partially offset by charges of $4.3 million for employee severance in connection with the elimination of 399 positions primarily relating to manufacturing personnel in the United States and Europe.
The Plastics and Adhesives segment recorded restructuring charges of $8.3 million. The $8.3 million charge consists of $5.7 million for employee severance in connection with the elimination of 447 positions primarily relating to manufacturing, distribution and sales and marketing personnel in the United States and $2.6 million for facility closures in connection with the elimination of 4 facilities in the United States. During the quarter ended December 31, 2003, the Plastics and Adhesives segment paid cash of $2.4 million related to the utilization of fiscal 2004 restructuring liabilities, consisting primarily of $2.3 million in severance for the termination of 87 employees.
7
During the quarter ended December 31, 2003, the Plastics and Adhesives segment also recorded impairment charges for long-lived assets of $22.1 million related to property, plant and equipment associated with management's decision in the quarter to close these facilities.
At December 31, 2003, there remained liabilities totaling $21.3 million related to fiscal 2004 restructuring and other charges on the Consolidated Balance Sheet, of which $17.2 million is included in accrued expenses and other current liabilities and $4.1 million is included in other long-term liabilities.
Fiscal 2003 Charges and Credits
The disclosures in the Company's fiscal 2003 Annual Report on Form 10-K discuss net restructuring and other credits of $74.3 million recorded during fiscal 2003 and the related activity with respect to these charges through September 30, 2003. The remaining liability was $21.7 million as of September 30, 2003. Following is a summary of the activity with respect to these liabilities during the quarter ended December 31, 2003.
During the quarter ended December 31, 2003, the Fire and Security segment paid cash of $4.9 million related to the utilization of fiscal 2003 restructuring liabilities, consisting primarily of $4.6 million in severance for the termination of 757 employees.
During the quarter ended December 31, 2003, Corporate paid cash of $3.1 million related to the utilization of fiscal 2003 restructuring liabilities, consisting primarily of $2.0 million in facility-related costs.
At December 31, 2003, there remained liabilities totaling $12.0 million related to fiscal 2003 restructuring and other charges on the Consolidated Balance Sheet, of which $11.4 million is included in accrued expenses and other current liabilities and $0.6 million is included in other long-term liabilities.
Fiscal 2002 Charges and Credits
The disclosures in the Company's fiscal 2003 Annual Report on Form 10-K discuss net restructuring and other charges of $1,124.3 million recorded during fiscal 2002 and the related activity with respect to these charges through September 30, 2003. The remaining liability was $247.3 million as of September 30, 2003. Following is a summary of the activity with respect to these liabilities during the quarter ended December 31, 2003.
During the quarter ended December 31, 2003, the Electronics segment paid cash of $15.8 million related to the utilization of fiscal 2002 restructuring liabilities, consisting primarily of $5.3 million in facility-related costs, $4.8 million of distributor and supplier cancelation fees and $2.6 million in severance for the termination of 239 employees.
At December 31, 2003, there remained liabilities totaling $206.5 million related to fiscal 2002 restructuring and other charges on the Consolidated Balance Sheet, of which $74.2 million is included in accrued expenses and other current liabilities, and $132.3 million is included in other long-term liabilities. The remaining liabilities relate to future payments on certain long-term contractual obligations primarily rent under non-cancelable leases for vacated premises and distributor and supplier cancelation fees.
8
Fiscal 2001 and Prior Years' Charges and Credits
At September 30, 2003, there remained liabilities totaling $24.6 million related to fiscal 2001 and prior years' restructuring and other charges on the Consolidated Balance Sheet. At December 31, 2003, $20.5 million of these liabilities remained on the Consolidated Balance Sheet of which $12.7 million is included in accrued expenses and other current liabilities and $7.8 million is included in other long-term liabilities. These remaining liabilities relate to future payments on certain long-term contractual obligations.
4. Discontinued Operations of Tyco Capital (CIT Group Inc.)
During the quarter ended December 31, 2002, Tyco recorded income from discontinued operations of $20.0 million, representing a restitution payment made by Frank E. Walsh Jr., a former director, which was received in January 2003.
5. Earnings Per Common Share
The reconciliations between basic and diluted earnings per common share are as follows (in millions, except per share data):
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For the Quarter Ended December 31, 2003 |
For the Quarter Ended December 31, 2002 |
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Income |
Shares |
Per Share Amount |
Income |
Shares |
Per Share Amount |
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| Basic earnings per common share: | |||||||||||||||||
| Income from continuing operations | $ | 719.2 | 1,997.1 | $ | 0.36 | $ | 565.9 | 1,994.6 | $ | 0.28 | |||||||
| Stock options, restricted shares and deferred stock units | — | 10.9 | — | 3.4 | |||||||||||||
| Exchange of convertible debentures | 27.1 | 202.8 | 0.2 | 2.4 | |||||||||||||
| Diluted earnings per common share: | |||||||||||||||||
| Income from continuing operations, giving effect to dilutive adjustments | $ | 746.3 | 2,210.8 | $ | 0.34 | $ | 566.1 | 2,000.4 | $ | 0.28 | |||||||
The computation of diluted earnings per common share for the quarter ended December 31, 2003 excludes the effect of the potential exercise of options to purchase approximately 98.5 million shares because the effect would be anti-dilutive.
The computation of diluted earnings per common share in the quarter ended December 31, 2002 excludes the potential exercise of options to purchase approximately 138.9 million shares because the effect would be anti-dilutive. Dilutive earnings per common share for the quarter ended December 31, 2002 also excludes 47.5 million and 21.1 million shares, respectively, related to the Company's zero coupon convertible debentures due 2020 and 2021, respectively, because conversion conditions had not been met.
6. Acquisitions
At September 30, 2003, $199.0 million in purchase accounting liabilities remained on the Consolidated Balance Sheet. A total of $173.4 million of purchase accounting liabilities related to
9
acquisitions remained on the Consolidated Balance Sheet at December 31, 2003, of which $60.4 million are included in accrued expenses and other current liabilities and $113.0 million are included in other long-term liabilities. These liabilities relate to facility-related costs (principally for rent under non-cancelable leases for vacated premises), employee severance (principally for payments to employees already terminated with severance paid out over time), and other costs.
7. Assets Held for Sale
The following table presents balance sheet information for the TGN business held for sale ($ in millions):
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December 31, 2003 |
September 30, 2003 |
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|---|---|---|---|---|---|---|---|
| Accounts receivable | |||||||