ADT 1999 Annual Report Download - page 59

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57
The cost of announced workforce reductions of $433.7 million
includes the elimination of 8,585 positions in the United States, 4,216
positions in Europe, 2,019 positions in the Asia-Pacific region and
1,319 positions in Canada and Latin America, consisting primarily of
manufacturing and distribution, administrative, research and develop-
ment and sales and marketing personnel. Included in the severance
charges of $433.7 million are enhanced pension and other post-retire-
ment benefit costs of $136.2 million provided to terminated employ-
ees. The cost of facility closures of $171.2 million includes the
shut-down and consolidation of 60 facilities in the United States, 16
facilities in Europe, 6 facilities in the Asia-Pacific region and 5 facilities
in Canada and Latin America, consisting primarily of manufacturing
plants, distribution centers, administrative buildings, research and
development facilities and sales offices. At September 30, 1999, 8,410
employees had been terminated and 45 facilities had been shut down.
The other charges of $236.9 million consist of transaction costs
of $67.9 million for legal, printing, accounting, financial advisory ser-
vices and other direct expenses related to the AMP merger; $78.9 mil-
lion related to the write-down of inventory used in AMP’s operations
which is included in cost of sales; lease termination costs following the
merger of $9.6 million; a credit of $50.0 million related to a litigation
settlement with AlliedSignal Inc. (Note 26); and other costs of $130.5
million relating to the consolidation of certain product lines and other
non-recurring changes related to the AMP merger.
The remaining balance at September 30, 1999 of $277.9 million
consists of $232.0 million in other current liabilities and $45.9 million
in other non-current liabilities. The Company currently anticipates that
the restructuring and other non-recurring activities to which all of these
charges relate will be substantially completed within Fiscal 2000,
except for certain long-term contractual obligations.
The Healthcare and Specialty Products segment recorded
merger, restructuring and other non-recurring charges of $431.4 mil-
lion, consisting of a $434.9 million charge primarily related to the
merger with USSC and a $3.5 million credit representing a revision of
estimates related to Tyco’s 1997 restructuring/non-recurring accruals
discussed below. The following table provides information about these
charges:
Sever
ance Facili
ties Other
Number of Number of
($ in millions) Employees Reserve Facilities Reserve Reserve Total
Fiscal 1999 charges 1,467 $124.8 45 $ 51.8 $ 258.3 $ 434.9
Fiscal 1999 activity (1,282) (99.3) (20) (18.3) (217.6) (335.2)
Ending balance at September 30, 1999 185 $ 25.5 25 $ 33.5 $ 40.7 $ 99.7
The other charges of $258.3 million consist of transaction costs
of $53.3 million for legal, printing, accounting, financial advisory ser-
vices and other direct expenses related to the USSC merger, lease ter-
mination costs following the merger of $156.8 million and other costs
of $48.2 million relating to the consolidation of certain product lines
and other non-recurring charges primarily related to the USSC
merger.
The remaining balance at September 30, 1999 of $99.7 million is
included in other current liabilities. The Company currently anticipates
that the restructuring and other non-recurring activities to which all of
these charges relate will be substantially completed within Fiscal
2000, except for certain long-term contractual obligations.
The cost of announced workforce reductions of $124.8 million
includes the elimination of 932 positions in the United States, 470 posi-
tions in Europe, 34 positions in Canada and Latin America and 31 posi-
tions in the Asia-Pacific region, consisting primarily of manufacturing
and distribution, sales and marketing, administrative and research
and development personnel. The cost of facility closures of $51.8 mil-
lion includes the shut-down and consolidation of 25 facilities in
Europe, 9 facilities in the United States, 8 facilities in the Asia-Pacific
region and 3 facilities in Canada and Latin America, consisting pri-
marily of manufacturing plants, distribution centers, sales offices,
administrative buildings and research and development facilities. At
September 30, 1999, 1,282 employees had been terminated and 20
facilities had been shut down.