ADT 2002 Annual Report Download - page 113

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
20. Commitments and Contingencies (continued)
$248 million, of which $221 million is included in accrued expenses and other current liabilities and
$27 million is included in other long-term liabilities on the Consolidated Balance Sheet. Included within
the $248 million is $193 million related to the acquisition of Mallinckrodt. In view of the Company’s
financial position and reserves for environmental matters of $248 million, the Company has concluded
that any potential payment of such estimated amounts will not have a material adverse effect on its
financial position, results of operations or liquidity.
We believe that we and our subsidiaries have substantial indemnification protection and insurance
coverage, subject to applicable deductibles, with respect to asbestos claims. These indemnitors and the
relevant carriers typically have been honoring their duty to defend and indemnify. We believe that we
have valid defenses to these claims and intend to continue to defend them vigorously. Additionally,
based on our historical experience in asbestos litigation and an analysis of our current cases, we believe
that we have adequate amounts accrued for potential settlements and judgments in asbestos-related
litigation. While it is not possible at this time to determine with certainty the ultimate outcome of these
asbestos-related proceedings, we believe that the final outcome of all known and anticipated future
claims, after taking into account our substantial indemnification rights and insurance coverage, will not
have a material adverse effect on our results of operations, financial position or cash flows.
21. Retirement Plans
Defined Benefit Pension Plans—The Company has a number of noncontributory and contributory
defined benefit retirement plans covering certain of its U.S. and non-U.S. employees, designed in
accordance with conditions and practices in the countries concerned. Net periodic pension cost is based
on periodic actuarial valuations which use the projected unit credit method of calculation and is
charged to the Consolidated Statements of Operations on a systematic basis over the expected average
remaining service lives of current employees. Contribution amounts are determined in accordance with
the advice of professionally qualified actuaries in the countries concerned or is based on subsequent
formal reviews. The Company’s funding policy is to make contributions in accordance with the laws and
customs of the various countries in which it operates. The benefits under the defined benefit plans are
based on various factors, such as years of service and compensation. The following tables exclude
amounts related to the discontinued operations of CIT for all periods presented.
The net periodic pension cost (income) for all U.S. and non-U.S. defined benefit pension plans
includes the following components ($ in millions):
U.S. Plans
2002 2001 2000
Service cost .............................................. $ 19.2 $ 28.2 $ 12.1
Interest cost ............................................. 134.2 127.7 84.6
Expected return on plan assets ................................ (123.4) (170.6) (112.8)
Recognition of initial net obligation ............................ (1.0) (1.0) (1.0)
Recognition of prior service cost .............................. 0.8 0.6 0.7
Recognition of net actuarial loss (gain) .......................... 8.8 (11.3) (6.4)
Curtailment/settlement loss (gain) ............................. 1.4 (56.8) (4.6)
Cost of special termination benefits ............................ 1.6 0.6 1.9
Net periodic benefit cost (income) ............................. $ 41.6 $ (82.6) $ (25.5)
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