ADT 1999 Annual Report Download - page 63

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The projected benefit obligation, accumulated benefit obligation,
and fair value of plan assets for U.S. pension plans with accumulated
benefit obligations in excess of plan assets were $186.7 million,
$173.4 million and $130.7 million, respectively, as of September 30,
1999 and $767.4 million, $643.7 million and $558.0 million, respec-
tively, as of September 30, 1998.
The projected benefit obligation, accumulated benefit obligation,
and fair value of plan assets for non-U.S. pension plans with accumu-
lated benefit obligations in excess of plan assets were $563.5 million,
$517.1 million and $314.6 million, respectively, as of September 30,
1999 and $430.9 million, $396.0 million and $265.4 million, respec-
tively, as of September 30, 1998.
The Company also participates in a number of multi-employer
defined benefit plans on behalf of certain employees. Pension
expense related to multi-employer plans was $7.5 million, $1.7 million
and $1.5 million for Fiscal 1999, Fiscal 1998 and Fiscal 1997, respec-
tively.
Defined Contribution Retirement Plans
The Company maintains several defined contribution retirement
plans, which include 401(k) matching programs, as well as qualified
and nonqualified profit sharing and stock bonus retirement plans. Pen-
sion expense for the defined contribution plans is computed as a per-
centage of participants’ compensation and was $73.2 million,
$57.1 million and $43.1 million for Fiscal 1999, Fiscal 1998 and Fiscal
1997, respectively. The Company also maintains an unfunded Sup-
plemental Executive Retirement Plan (“SERP”). This plan is nonqual-
ified and restores the employer match that certain employees lose due
to IRS limits on eligible compensation under the defined contribution
plans. Expense related to the SERP was $6.9 million, $3.7 million and
$2.2 million in Fiscal 1999, Fiscal 1998 and Fiscal 1997, respectively.
Post-retirement Benefit Plans
The Company generally does not provide post-retirement benefits
other than pensions for its employees. Certain of Former Tyco’s
acquired operations provide these benefits to employees who were
eligible at the date of acquisition. In addition, ADT’s electronic secu-
rity services operation in the United States sponsors an unfunded
defined benefit post-retirement plan which covers both salaried and
non-salaried employees and which provides medical and other bene-
fits. This post-retirement health care plan is contributory, with retiree
contributions adjusted annually. The Company recorded a gain of
$8.8 million related to the curtailment of this plan in Fiscal 1998 which
was included in selling, general and administrative expenses.
AMP provides post-retirement health care coverage to qualifying
U.S. retirees. As a result of the merger with Tyco, a $13.7 million
adjustment was recorded to conform AMP’s accounting method for
post-retirement benefits to Tyco’s method, regarding the initial recog-
nition of such benefits upon adoption of SFAS No. 106 “Employers’
Accounting for Postretirement Benefits Other Than Pensions.”
In the second quarter of Fiscal 1999, AMP offered enhanced
post-retirement benefits to terminated employees totaling $16.0 mil-
lion, which was recorded as part of AMP’s second quarter restructur-
ing charge. This amount has not been included in the determination of
net periodic benefit cost presented below.
Net periodic post-retirement benefit cost reflects the following
components:
Nine Months
Ended
Year Ended September 30,
September 30,
(in millions) 1999 1998 1997
Service cost (with interest) $ 3.5 $ 3.2 $ 2.0
Interest cost 12.0 9.5 7.0
Amortization of prior service cost (2.2) (2.5) (3.2)
Amortization of net (gain) loss (0.7) (1.4) 0.1
Curtailment gain (5.8) (8.8) —
Net periodic post-retirement
benefit cost $ 6.8 $ — $ 5.9
The components of the accrued post-retirement benefit obliga-
tion, all of which are unfunded, are as follows:
September 30,
(in millions) 1999 1998
Benefit obligation at beginning of year $ 174.1 $ 157.1
Service cost 3.5 3.2
Interest cost 12.0 10.0
Amendments 4.5 (2.6)
Actuarial (gain) loss (4.1) 8.8
Acquisition 11.2 —
Curtailment gain (15.3) —
Special termination loss — 7.3
Expected net benefits paid (17.8) (9.4)
Currency fluctuation loss (gain) 0.1 (0.3)
Benefit obligation at end of year $ 168.2 $ 174.1
Funded status $(168.2) $(174.1)
Unrecognized net (gain) loss (24.5) 5.5
Unrecognized prior service cost (13.8) (21.0)
Accrued postretirement benefit cost $(206.5) $(189.6)