ADT 1999 Annual Report Download - page 60

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The Company recorded a credit of $15.0 million, including
$11.5 million in the Fire and Security Services segment and $3.5 mil-
lion in the Healthcare and Specialty Products segment referred to
above, representing a revision of estimates related to Tyco’s 1997
restructuring and other non-recurring accruals. Most of the actions
under Tyco’s 1997 restructuring and other non-recurring plans are
completed or near completion and have resulted in total estimated
costs being less than originally anticipated.
1998 Charges
During the fourth quarter of Fiscal 1998, AMP recorded charges of
$185.8 million associated with its profit improvement plan, which
includes the reduction of support staff throughout all its business units
and the consolidation of manufacturing plants and other facilities, in
addition to certain sales growth initiatives. These charges include the
cost of staff reductions of $172.1 million involving the voluntary retire-
ment and involuntary termination of approximately 2,700 staff support
personnel and 700 direct manufacturing employees, and the cost of
consolidation of certain facilities of $13.7 million relating to six plant
and facility closures and consolidations. At September 30, 1999, these
restructuring activities were substantially completed. See Note 18 for
discussion of the voluntary early retirement program.
During the first quarter of Fiscal 1998, AMP recorded a credit of
$21.4 million to merger, restructuring and other non-recurring charges
representing a revision of estimates related to its 1996 restructuring
activities, which were completed in Fiscal 1998.
During the fourth quarter of Fiscal 1998, USSC recorded certain
charges of $80.5 million. These charges include $70.9 million of costs
to exit certain businesses representing the write down of assets from
earlier purchases of technology that had minimal commercial applica-
tion and the adjustment to net realizable value of certain assets. In
addition, merger costs of $9.6 million were recorded that represent
legal and insurance costs related to the merger consummated in the
first quarter of Fiscal 1999. During the first quarter of Fiscal 1998,
USSC recorded restructuring charges of $12.0 million related to
employee severance costs, facility disposals and asset write-downs
as part of USSC’s cost cutting program. USSC substantially com-
pleted its 1998 restructuring activities during Fiscal 1999.
1997 Charges
In connection with the mergers consummated in Fiscal 1997 (Note 2),
the Company recorded merger, restructuring and other non-recurring
charges of $917.8 million. These charges include transaction costs of
$239.8 million for legal, accounting, financial advisory services, sev-
erance and other direct costs related to the mergers. Also included are
costs required to combine ADT’s electronic security business, Key-
stone’s valve manufacturing and distribution business and Inbrand’s
disposable medical products business with the related businesses of
Former Tyco. These costs consist of the cost of workforce reductions
of $130.3 million including the elimination of approximately 4,000 posi-
tions; the costs of combining certain facilities of $194.2 million involv-
ing the closure of 18 manufacturing facilities and the consolidation of
sales and service offices, electronic security system monitoring cen-
ters, warehouses and other locations; the costs of disposing of excess
equipment and other assets of $133.5 million; and other costs of
$220.0 million relating to the consolidation of certain product lines, the
satisfaction of certain liabilities and other non-recurring charges.
Approximately $34.6 million of accrued merger and restructuring costs
are included in other current liabilities and $41.1 million in other non-
current liabilities at September 30, 1999. These restructurings are
substantially complete. The remaining accruals primarily relate to
future payments on non-cancelable lease obligations.
During Fiscal 1997, USSC recorded restructuring charges of
$5.8 million related primarily to employee severance costs associated
with the consolidation of manufacturing and certain marketing opera-
tions, which was substantially completed during Fiscal 1998. USSC
also recorded charges of $24.3 million during Fiscal 1997 for litigation
and other related costs relative to patent infringement litigation, which
was settled as of September 30, 1999.
17. Commitments and Contingencies
The Company occupies certain facilities under leases that expire at
various dates through the year 2030. Rental expense under these
leases and leases for equipment was $381.0 million, $331.7 million
and $242.9 million for Fiscal 1999, Fiscal 1998 and Fiscal 1997,
respectively. At September 30, 1999, the minimum lease payment
obligations under noncancelable operating leases were as follows:
$405.3 million in Fiscal 2000, $211.6 million in fiscal 2001, $151.3 mil-
lion in fiscal 2002, $117.3 million in fiscal 2003, $82.6 million in fiscal
2004 and an aggregate of $347.9 million in fiscal years 2005 through
2030.
In the normal course of business, the Company is liable for con-
tract completion and product performance. In the opinion of manage-
ment, such obligations will not significantly affect the Company’s
financial position or results of operations.
The Company is involved in various stages of investigation and
cleanup related to environmental remediation matters at a number of
sites. The ultimate cost of site cleanup is difficult to predict given the
uncertainties regarding the extent of the required cleanup, the inter-
pretation of applicable laws and regulations and alternative cleanup
methods. Based upon the Company’s experience with environmental
remediation matters, the Company has concluded that there is at least
a reasonable possibility that remedial costs will be incurred with
respect to these sites in an aggregate amount in the range of
$35.6 million to $124.8 million. At September 30, 1999, the Company
has concluded that the most probable amount that will be incurred