ADT 2000 Annual Report Download - page 48

FORTY SIX
SEVERANCE FACILITI ES OTHER
NUMBER OF NU M BER OF
($ IN M I LLIONS) EMPLOYEES RESERVE FACILITIES RESERVE RESERVE
Original reserve established 5,620 $ 234.3 183 $174.8 $116.3
Fiscal 1999 activity (3,230) (55.9) (95) (48.2) (46.0)
Fiscal 2000 activity (1,969) (158.6) (81) (86.3) (63.5)
Changes in estimates 964 28.7 65 47.5 13.8
Reversal to goodwill in Fiscal 2000 (250) (5.7) (45) (17.7) (2.4)
Ending balance at September 30, 2000 1,135 $ 42.8 27 $ 70.1 $ 18.2
FISCAL 1999
In addition to the pooling of interests transactions discussed in Note
2, during Fiscal 1999, the Company purchased businesses for an
aggregate cost of $6,923.3 million, consisting of $4,546.8 million
in cash, net of cash acquired, the issuance of 32.4 million common
shares valued at $1,449.6 million and the assumption of $926.9 mil-
lion in debt. In addition, $354.4 million of cash was paid during the
year for purchase accounting liabilities related to 1999 and prior
years’ acquisitions. The cash portions of the acquisition costs were
funded utilizing cash on hand, the issuance of long-term debt and
borrowings under the Company’s commercial paper program. Each
of these acquisitions was accounted for as a purchase, and the
results of operations of the acquired companies have been included
in the consolidated results of the Company from their respective
acquisition dates.
In connection with these acquisitions, the Company recorded
purchase accounting liabilities of $525.4 million for transaction
costs and the costs of integrating the acquired companies within the
various Tyco business segments. Details regarding these purchase
accounting liabilities are set forth below. During Fiscal 1999, the
Company spent a total of $4,901.2 million in cash related to the
acquisition of businesses, consisting of $4,546.8 million of
purchase price (net of cash acquired) plus $354.4 million of cash
paid out during the year for purchase accounting liabilities related
to 1999 and prior years’ acquisitions.
The following table summarizes the purchase accounting
liabilities recorded in connection with the Fiscal 1999 purchase
acquisitions:
plan for the exiting of activities and the involuntary termination of
employees in connection with the 1999 acquisition and integration
of Raychem, and as a result recorded $90.0 million of purchase
accounting liabilities.
During Fiscal 2000, the Company sold certain of its businesses
for net proceeds of approximately $74.4 million in cash that consist
primarily of certain businesses within the Healthcare and Specialty
Products segment.
The following unaudited pro forma data summarize the results
of operations for the periods indicated as if the Fiscal 2000 acqui-
sitions and divestitures had been completed as of the beginning of
the periods presented. The pro forma data give effect to actual oper-
ating results prior to the acquisitions and divestitures. Adjustments
to interest expense, goodwill amortization and income taxes related
to the Fiscal 2000 acquisitions are reflected in the pro forma data.
No effect has been given to cost reductions or operating synergies
in this presentation. These pro forma amounts do not purport to be
indicative of the results that would have actually been obtained if
the acquisitions and divestitures had occurred as of the beginning
of the periods presented or that may be obtained in the future.
YEAR ENDED SEPTEMBER 3 0 ,
(I N MILLI ONS, EXCEPT PER SHARE DATA) 2 0 0 0 1 9 9 9
Net sales $30,383.6 $25,633.3
Income before extraordinary items 4,478.2 976.8
Net income 4,478.0 931.1
Net income per common share:
Basic 2 .6 5 0.57
Diluted 2 .6 1 0.56
The $174.8 million of exit costs are associated with the closure
and consolidation of facilities involving 183 facilities located pri-
marily in the Asia-Pacific region and the United States. These facil-
ities include manufacturing plants, sales offices, corporate
administrative facilities and research and development facilities.
Included within these costs are accruals for non-cancelable leases
associated with certain of these facilities. Approximately 176 facil-
ities had been closed or consolidated at September 30, 2000. The
remaining facilities include primarily large manufacturing plants,
which are expected to be shut down in Fiscal 2001. Expenses in con-
nection with the closure of these remaining facilities, as well as the
expiration of non-cancelable leases (less any expected sublease
income for facilities already closed), comprise the approximately
$70.1 million for facility related costs remaining in the Consolidated
Balance Sheet as of September 30, 2000.
Purchase accounting liabilities recorded during Fiscal 1999
consist of $234.3 million for severance and related costs, $174.8
million for costs associated with the shut down and consolidation of
certain acquired facilities and $116.3 million for transaction and
other direct costs. The $234.3 million of severance and related costs
covers employee termination benefits for approximately 5,620
employees located throughout the world, consisting primarily of
manufacturing and distribution employees to be terminated as a
result of the shut down and consolidation of production facilities
and, to a lesser extent, administrative, technical and sales and mar-
keting personnel. At September 30, 2000, 5,199 employees had
been terminated and $42.8 million in severance and related costs
remained in the Consolidated Balance Sheet. The Company expects
that the remaining employee terminations will be completed in
Fiscal 2001.