ADT 2002 Annual Report Download - page 154

The following table provides information about the fiscal 2002 restructuring and other charges
related to the Healthcare segment:
Facilities- Inventory-
Severance Related Related Other Total
Fiscal 2002 charges .......................... $24.0 $14.1 $ 0.5 $10.1 $ 48.7
Fiscal 2002 reversals ......................... (0.8) — — (2.4) (3.2)
Fiscal 2002 utilization ........................ (9.4) (2.1) (0.5) (7.7) (19.7)
Balance at September 30, 2002 .................. $13.8 $12.0 $ — $ — $ 25.8
As a result of the charges recorded within the Healthcare segment during fiscal 2002, we estimate
that our overall cost structure will be reduced due to the impact of these charges by approximately
$40 million (approximately $30 million cash and $10 million non-cash) on an annualized basis, of which
$30 million relates to other selling, general and administrative expenses and $10 million to cost of sales.
However, since business conditions do not remain constant, the actual reductions in cost may
significantly differ from these amounts.
Net revenues increased 61.4% in fiscal 2001 over fiscal 2000, including a 60.3% increase in product
revenue and a $55.0 million increase in service revenue, primarily due to acquisitions. These
acquisitions included: General Surgical Innovations, Inc. in November 1999; Radionics in January 2000;
Mallinckrodt in October 2000; and InnerDyne in December 2000. Excluding the $121.9 million
decrease from foreign currency exchange fluctuations, the impact of the acquisitions and the divestiture
listed above and all other acquisitions with a purchase price of $10 million or more, pro forma revenue
(calculated in the manner described above in ‘‘Overview’’) increased an estimated 3.6%.
The 40.4% increase in operating income and the slight decrease in operating margins in fiscal 2001
compared to fiscal 2000 was primarily due to the acquisition of Mallinckrodt, which generally has lower
operating margins than other businesses in this segment, partially offset by a decrease in operating
income due to a charge for the write-off of purchased in-process research and development in fiscal
2001.
Operating income and margins for fiscal 2001 include net restructuring and other charges of
$48.4 million primarily related to the closure of several manufacturing plants. Included within the
$48.4 million are charges of $64.0 million, of which charges of $35.0 million for the write-up of
inventory under purchase accounting and inventory write-downs of $5.0 million are included in cost of
sales, partially offset by credits of $15.6 million related to the merger with U.S. Surgical. Operating
income and margins also include a charge of $184.3 million for the write-off of purchased in-process
research and development associated with the acquisition of Mallinckrodt and charges of $14.2 million
for the impairment of property, plant and equipment related to the closure of the manufacturing
plants.
Operating income and margins for fiscal 2000 includes charges of $99.0 million for the impairment
of property, plant and equipment and net merger, restructuring and other credits of $10.9 million.
Included within the $10.9 million are net credits of $29.9 million primarily related to exiting U.S.
Surgical’s interventional cardiology business, partially offset by charges of $6.4 million included in cost
of sales related to the write-down of inventory.
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