ADT 2001 Annual Report Download - page 75

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Mallinckrodt. In view of the Company’s financial position and
reserves for environmental matters of $268.5 million, the Com-
pany has concluded that any potential payment of such esti-
mated amounts will not have a material adverse effect on its
financial position, results of operations or liquidity.
TYCO CAPITAL
The following table summarizes Tyco Capital’s contractual
amounts of credit-related commitments.
AT SEPTEMBER 30, 2001
DUE TO EXPIRE
TOTAL
WITHIN AFTER OUTSTANDING
($ IN MILLIONS) ONE YEAR ONE YEAR 2001
Unused commitments to
extend credit:
Financing and leasing assets $1,997.4 $389.4 $2,386.8
Letters of credit and
acceptances:
Standby letters of credit 267.3 — 267.3
Other letters of credit 365.5 1.5 367.0
Acceptances 9.1 — 9.1
Guarantees 714.5 — 714.5
In the normal course of meeting the financing needs of its
customers, Tyco Capital enters into various credit-related com-
mitments. These financial instruments generate fees and
involve, to varying degrees, elements of credit risk in excess of
the amounts recognized on the Consolidated Balance Sheet. To
minimize potential credit risk, Tyco Capital generally requires
collateral and other credit-related terms and conditions from
the customer. It is Tyco Capital’s policy that, at the time
credit-related commitments are granted, the fair value of the
underlying collateral and guarantee must approximate or
exceed the contractual amount of the commitment. In the event
a customer defaults on the underlying transaction, the maxi-
mum potential loss to Tyco Capital will be the contractual
amount outstanding less the value of all underlying collateral
and guarantees.
During 2001, Tyco Capital entered into an agreement with
The Boeing Company to purchase 25 aircraft with a list price of
more than $1.3 billion, with options to purchase an additional
five units. Deliveries are scheduled to take place from 2003
through 2005. In prior years, Tyco Capital entered into agree-
ments with both Airbus Industrie and The Boeing Company to
purchase a total of 88 aircraft (at an estimated cost of approxi-
mately $5 billion), with options to acquire additional units,
and with the flexibility to delay or terminate certain positions.
Deliveries of these new aircraft are scheduled to take place
over a five-year period, which started in the first quarter of
Fiscal 2001. Outstanding commitments to purchase aircraft,
rail and other equipment to be placed on operating lease totaled
approximately $5.3 billion at September 30, 2001. Outstanding
commitments relating to Fiscal 2002 totaled $901.2 million,
of which $840.2 million have agreements in place to lease to
third parties.
23. RETIREMENT PLANS
DEFINED BENEFIT PENSION PLANS
The Company has a number of noncontributory and contribu-
tory defined benefit retirement plans covering certain of its U.S.
and non-U.S. employees, designed in accordance with condi-
tions and practices in the countries concerned. Contributions
are based on periodic actuarial valuations which use the pro-
jected unit credit method of calculation and are charged to the
Consolidated Statements of Operations on a systematic basis
over the expected average remaining service lives of current
employees. The net pension expense is assessed in accordance
with the advice of professionally qualified actuaries in the coun-
tries concerned or is based on subsequent formal reviews for the
purpose. The Company’s funding policy is to make annual con-
tributions to the extent such contributions are tax deductible as
actuarially determined. The benefits under the defined benefit
plans are based on years of service and compensation.
The net periodic pension (income) cost for all U.S. and
non-U.S. defined benefit pension plans includes the following
components:
U.S. PLANS
($ IN MILLIONS) 2001 2000 1999
Service cost $ 32.3 $ 12.1 $ 37.8
Interest cost 131.9 84.6 86.2
Expected return on plan assets (175.2) (112.8) (96.1)
Recognition of initial net asset (1.0) (1.0) (0.9)
Amortization of prior service cost 0.6 0.7 3.0
Recognized net actuarial gain (11.2) (6.4) (0.6)
Curtailment/settlement gain (56.8) (4.6) (102.6)
Net periodic benefit income $ (79.4) $ (27.4) $ (73.2)
NON-U.S. PLANS
($ IN MILLIONS) 2001 2000 1999
Service cost $ 65.5 $ 60.9 $ 47.4
Interest cost 79.4 75.1 48.0
Expected return on plan assets (97.0) (85.3) (56.8)
Recognition of initial net obligation 0.2 0.2 0.1
Amortization of prior service cost 1.7 0.8 0.6
Recognized net actuarial loss 0.5 2.3 1.1
Curtailment/settlement loss (gain) 3.0 (2.7) 1.2
Net periodic benefit cost $ 53.3 $ 51.3 $ 41.6