ADT 2001 Annual Report Download - page 74

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the Healthcare business and $1.2 million for other non-recurring
charges. In Fiscal 2001, the Company recorded a credit of
$166.8 million related to the settlement of litigation in which the
Company was provided with an ongoing OEM arrangement val-
ued at $166.8 million. At September 30, 2001, $35.5 million of the
$275.0 million non-recurring charge remains in accrued
expenses and other current liabilities on the Consolidated Bal-
ance Sheet.
1999 CHARGES AND CREDITS
In Fiscal 1999, the Electronics segment recorded net merger,
restructuring and other non-recurring charges of $643.3 mil-
lion, of which charges of $106.4 million are included in cost of
revenue, related primarily to the merger with AMP and costs
associated with AMP’s profit improvement plan. These charges
include the cost of workforce reductions of $433.7 million for the
elimination of 16,139 positions primarily in the United States
and Europe, consisting primarily of manufacturing and distri-
bution, administrative, research and development and sales and
marketing personnel, and the cost of facility closures of
$68.6 million relating to the shut-down and consolidation of 87
facilities primarily in the United States and Europe. It also
includes other charges of $141.0 million consisting of $88.1 mil-
lion related to the write-down of inventory; transaction costs of
$67.9 million for direct expenses related to the AMP merger;
other costs of $25.4 million relating primarily to the consolida-
tion of certain product lines and other non-recurring charges
related to the AMP merger; lease termination costs following
the merger of $9.6 million; and a credit of $50.0 million related
to a litigation settlement with AlliedSignal Inc. At Septem-
ber 30, 2001, these restructuring activities were substantially
completed. The remaining balance of $13.6 million at Septem-
ber 30, 2001 relates to payments on non-cancelable lease oblig-
ations and is included in other long-term liabilities on the
Consolidated Balance Sheet.
In Fiscal 1999, the Healthcare and Specialty Products seg-
ment recorded net merger, restructuring and other non-recurring
charges of $419.1 million, consisting of a $423.8 million charge
related primarily to the merger with U.S. Surgical and a $4.7 mil-
lion credit representing a revision of estimates related to the
Company’s 1997 restructuring and other non-recurring accruals.
The $423.8 million charge includes workforce reductions of
$124.8 million for the elimination of 1,467 positions primarily in
the United States and Europe, consisting primarily of manufac-
turing and distribution, sales and marketing, administrative and
research and development personnel. In addition, these charges
include the cost of facility closures of $51.8 million for the
shut-down and consolidation of 45 facilities primarily in Europe
and the United States. The charges also include other charges
of $247.2 million consisting of lease termination costs follow-
ing the merger of $156.8 million relating to the U.S. Surgical
North Haven facility that was purchased by the Company sub-
sequent to the merger (see Note 3); transaction costs of
$53.3 million related to the U.S. Surgical merger; and other costs
of $37.1 million relating to the consolidation of certain product
lines and other non-recurring charges related primarily to the
U.S. Surgical merger. At September 30, 2001, these restructuring
activities were completed.
In Fiscal 1999, the Company recorded a credit of $31.9 mil-
lion, including $27.2 million in the Fire and Security Services
segment and $4.7 million in the Healthcare and Specialty Prod-
ucts segment referred to above, representing a revision of esti-
mates related to the Company’s 1997 restructuring and other
non-recurring accruals. The actions under the Company’s 1997
restructuring plans have been completed.
22. COMMITMENTS AND CONTINGENCIES
The Company occupies certain facilities under leases that expire
at various dates through the year 2031. Rental expense under
these leases and leases for equipment was $652.5 million,
$442.7 million and $381.0 million for Fiscal 2001, Fiscal 2000 and
Fiscal 1999, respectively. At September 30, 2001, the minimum
lease payment obligations under noncancelable operating leases
were as follows: $666.6 million in Fiscal 2002, $590.3 million in
Fiscal 2003, $471.5 million in Fiscal 2004, $350.3 million in Fis-
cal 2005, $286.3 million in Fiscal 2006 and an aggregate of
$1,499.0 million in Fiscal years 2007 through 2031.
In the normal course of business, the Company is liable for
contract completion and product performance. In the opinion of
management, such obligations will not significantly affect the
Company’s financial position or results of operations.
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 material adverse effect on its financial posi-
tion, results of operations or liquidity.
TYCO INDUSTRIAL
Tyco Industrial 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 interpretation of applicable laws and
regulations and alternative cleanup methods. Based upon Tyco
Industrial’s experience with environmental remediation mat-
ters, Tyco Industrial has concluded that there is at least a
reasonable possibility that we will incur remedial costs in the
range of $186.0 million to $492.1 million. As of September 30,
2001, Tyco Industrial concluded that the best estimate within
this range is $268.5 million, of which $206.2 million is included
in accrued expenses and other current liabilities and $62.3 mil-
lion is included in other long-term liabilities on the Consolidated
Balance Sheet. The increase in the environmental remediation
reserve at September 30, 2001 compared to the $68.3 million
reserve at September 30, 2000 is due to the acquisition of