ADT 1999 Annual Report Download - page 61

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within this range is $53.7 million, $29.4 million of such amount is
included in accrued expenses and other current liabilities and
$24.3 million is included in other long-term liabilities in the Consoli-
dated Balance Sheet. Based upon information available to the Com-
pany, at those sites where there has been an allocation of the liability
for cleanup costs among a number of parties, including the Company,
and such liability could be joint and several, management believes it
is probable that other responsible parties will fully pay the cost allo-
cated to them, except with respect to one site for which the Company
has assumed that one of the identified responsible parties will be
unable to pay the cost apportioned to it and that such party’s cost will
be reapportioned among the remaining responsible parties. In view of
the Company’s financial position and reserves for environmental mat-
ters of $53.7 million, the Company has concluded that its payment of
such estimated amounts will not have a material effect on its financial
position, results of operations or liquidity.
The Company is a defendant in a number of other pending legal
proceedings incidental to present and former operations, acquisitions
and dispositions. The Company does not expect the outcome of these
proceedings, either individually or in the aggregate, to have a mater-
ial adverse effect on its financial position, results of operations or liq-
uidity.
18. Retirement Plans
The Company adopted SFAS No. 132, “Employers’ Disclosures about
Pensions and other Postretirement Benefits,” which revises financial
statement disclosure requirements for pension and other postretire-
ment benefit plans but does not change the measurement or recogni-
tion of those plans.
Defined Benefit Pension Plans
The 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 prac-
tices in the countries concerned. Contributions are based on periodic
actuarial valuations which use the projected unit credit method of cal-
culation and are charged to the consolidated statements of operations
on a systematic basis over the expected average remaining service
lives of current employees. The net pension expense is assessed in
accordance with the advice of professionally qualified actuaries in the
countries concerned or is based on subsequent formal reviews for the
purpose. The Company’s funding policy is to make annual contribu-
tions to the extent such contributions are tax deductible as actuarially
determined. The benefits under the defined benefit plans are based on
years of service and compensation.
Voluntary Early Retirement Programs
In the fourth quarter of Fiscal 1998, AMP offered enhanced retirement
benefits to targeted groups of employees. The cost of these benefits
totaled $138.3 million and was recorded as part of AMP’s fourth quar-
ter restructuring charge. This amount has not been included in the
determination of net periodic pension cost presented below. The net
periodic pension (income) cost for all U.S. and non-U.S. defined ben-
efit pension plans includes the following components:
U.S. Plans
(in millions) 1999 1998 1997
Service cost $ 37.8 $ 44.7 $ 29.5
Interest cost 86.2 93.3 64.8
Expected return on plan assets(96.1) (109.9) (75.6)
Recognition of initial net asset (0.9) (1.9) (1.2)
Amortization of prior service cost 3.0 3.2 1.4
Recognized net actuarial gain (0.6) (7.1) (0.9)
Curtailment/settlement gain (102.6) (48.6) —
Net periodic benefit (income) cost $ (73.2) $ (26.3) $ 18.0
Non-U.S. Plans
(in millions) 1999 1998 1997
Service cost $ 47.4 $ 35.6 $ 25.8
Interest cost 48.0 43.1 32.3
Expected return on plan assets(56.8) (53.6) (39.3)
Recognition of initial net obligation 0.1 — 0.1
Amortization of prior service cost 0.6 0.6 (0.2)
Recognized net actuarial loss (gain) 1.1 (0.8) 0.6
Curtailment/settlement loss 1.2 6.7 —
Net periodic benefit cost $ 41.6 $ 31.6 $ 19.3
The curtailment/settlement gains in Fiscal 1999 relate primarily
to the termination of employees at AMP and the freezing of AMP’s pen-
sion plan. The curtailment/settlement gains in Fiscal 1998 relate pri-
marily to the freezing of the ADT pension plan. These
curtailment/settlement gains have been recorded in selling, general
and administrative expenses.