ADT 2001 Annual Report Download - page 73

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The other charges of $49.9 million consist primarily of contract cancellation costs and non-recurring charges relating to an
environmental remediation project.
The Healthcare and Specialty Products segment recorded restructuring and other non-recurring charges of $21.7 million, of
which charges of $9.0 million are included in cost of revenue, related primarily to the closure of manufacturing plants. The follow-
ing table provides information about the restructuring and other non-recurring charges related to the Healthcare and Specialty
Products segment recorded in Fiscal 2001:
SEVERANCE FACILITIES-RELATED OTHER
NUMBER OF NUMBER OF
($ IN MILLIONS) EMPLOYEES RESERVE FACILITIES RESERVE RESERVE TOTAL
Fiscal 2001 charges 1,100 $15.2 5 $ 5.4 $1.1 $21.7
Fiscal 2001 utilization (444) (4.2) (2) (0.2) — (4.4)
Ending balance at September 30, 2001 656 $11.0 3 $ 5.2 $1.1 $17.3
Included in the $16.9 million restructuring and other non-
recurring charges are the cost of announced workforce reduc-
tions of $4.9 million for the elimination of 941 positions
primarily in Brazil; the cost of facility closures of $4.8 million for
the shut-down and consolidation of 3 facilities; and other
charges of $7.2 million consisting of the write-off of non-facility
assets and other direct costs. At September 30, 2001, substan-
tially all of these restructuring activities were completed. The
remaining balance at September 30, 2001 of $4.2 million, of
which $1.0 million is included in accrued expenses and other
current liabilities and $3.2 million is included in other long-
term liabilities on the Consolidated Balance Sheet, is primarily
for payments on non-cancelable lease obligations.
In Fiscal 2000, the Fire and Security Services segment
recorded restructuring and other non-recurring credits of
$11.2 million related to revisions in estimates of the Company’s
1997 restructuring activities for amounts lower than originally
recorded. Actions under the Company’s 1997 restructuring
plans have been completed.
In Fiscal 2000, the Healthcare and Specialty Products seg-
ment recorded a net merger, restructuring and other non-recur-
ring credit of $10.9 million. The $10.9 million net credit consists
of charges of $11.1 million related to U.S. Surgical’s suture busi-
ness and charges of $7.9 million, of which charges of $6.4 mil-
lion are included in cost of revenue, related to exiting U.S.
Surgical’s interventional cardiology business. All of these
restructuring activities have been completed. Also recorded was
a credit of $29.9 million representing a revision in estimates of
prior years’ merger, restructuring and other non-recurring
accruals, of which $19.7 million related primarily to the merger
with U.S. Surgical and $10.2 million related to the Company’s
1997 restructuring accruals. The $19.7 million credit relates to a
revision in estimates of severance reserves of $4.2 million, facil-
ity reserves of $4.5 million and other reserves of $11.0 million.
In Fiscal 2000, the Telecommunications segment recorded a
non-recurring charge of $13.1 million incurred in connection
with the TyCom IPO.
In addition to segment charges (credits), the Company
recorded non-recurring charges of $275.0 million in Fiscal 2000
as a reserve for certain claims relating to a merged company in
The cost of announced workforce reductions of $15.2 mil-
lion includes the elimination of 1,100 positions primarily in the
United States consisting primarily of manufacturing and sales
personnel. The cost of facility closures of $5.4 million consists of
the shut-down of 5 manufacturing and administrative facilities
in the United States. At September 30, 2001, 444 employees had
been terminated and 2 facilities had been shut down.
The other charges of $1.1 million consist primarily of the
cost for lease buyouts and distributor termination fees. In addi-
tion to the charges above, the Healthcare and Specialty Products
segment recorded a non-recurring charge of $35.0 million
related to the sale of inventory, which had been written-up
under purchase accounting. The $35.0 million non-recurring
charge has been included in cost of revenue.
In addition to segment charges, the Company recorded a
net credit of $163.4 million, consisting of a non-recurring credit
of $166.8 million related to the settlement of litigation in which
the Company was provided with an ongoing OEM arrangement
valued at $166.8 million and a non-recurring charge of $3.4 mil-
lion related to severance. At September 30, 2001, $35.5 million of
the $275.0 million litigation reserve established in Fiscal 2000
remains in accrued expenses and other current liabilities on the
Consolidated Balance Sheet, and $1.4 million relating to the
$3.4 million severance charge remains in accrued expenses and
other current liabilities on the Consolidated Balance Sheet.
2000 CHARGES AND CREDITS
In Fiscal 2000, the Electronics segment recorded a net merger,
restructuring and other non-recurring credit of $90.9 million,
which consists of credits of $107.8 million and charges of $16.9 mil-
lion. The merger, restructuring and other non-recurring credit of
$107.8 million, of which a credit of $6.3 million is included in cost
of revenue, is related to the merger with AMP and costs associated
with AMP’s profit improvement plan. The $107.8 million credit
consists of a revision in estimates of severance reserves of
$55.2 million, facility reserves of $7.8 million and other reserves of
$44.8 million. The restructuring and other non-recurring charges
of $16.9 million, of which $0.9 million is included in cost of rev-
enue, is related to restructuring activities in AMP’s Brazilian oper-
ations and wireless communications business.