ADT 2002 Annual Report Download - page 157

Net revenues for the Plastics and Adhesives segment increased 7.5%, or $130.9 million in fiscal
2002 over fiscal 2001. The increase was solely due to the effect of acquisitions. In addition, revenues
for fiscal 2001 included $9.9 million related to our ADT Automotive business which was sold in
October 2000. Excluding the $4.5 million increase from foreign currency exchange fluctuations and the
acquisition of Linq Industrial Fabrics, Inc. in December 2001, and all other acquisitions with a purchase
price of $10 million or more, pro forma revenues (calculated in the manner described above in
‘‘Overview’’) for the Plastics and Adhesives segment decreased an estimated 13.0%. We expect revenues
for the next fiscal year to increase, due to higher sales volume and increased selling prices.
Operating income decreased 30.5% in fiscal 2002 compared to fiscal 2001 primarily due to
decreased margins as a result of volume shortfalls, a shift in the product mix, lower selling prices in
certain areas and unfavorable manufacturing variances. In addition, the segment incurred increased
expenses mostly relating to inventory write-downs and uncollectable accounts receivable. We expect
operating income to increase for the next fiscal year due to higher sales volume, in addition to cost
savings initiatives implemented.
Operating income and margins for fiscal 2002 reflect net restructuring and other charges of
$10.1 million. The $10.1 million net charge of which inventory write-downs of $1.1 million are included
in cost of sales. These charges primarily relate to severance associated with the consolidation of
operations and facility-related costs due to exiting certain business lines. Operating income and margins
for fiscal 2002 also include a charge for the write-off of long-lived assets of $2.6 million primarily
related to the impairment of long-lived assets.
The following table provides information about the fiscal 2002 restructuring and other charges
related to the Plastics and Adhesives segment:
Facilities- Inventory-
Severance Related Related Other Total
Fiscal 2002 charges .......................... $ 4.2 $ 3.0 $1.1 $ 1.8 $10.1
Fiscal 2002 utilization ........................ (0.2) (0.1) (1.1) (1.8) (3.2)
Balance at September 30, 2002 .................. $ 4.0 $ 2.9 $ — $ — $ 6.9
As a result of the charges recorded within the Plastics and Adhesives segment during fiscal 2002,
we do not estimate any reductions in our overall cost structure.
Net revenues decreased 16.4% in fiscal 2001 over fiscal 2000. The revenue decrease was somewhat
offset by the sale of our ADT Automotive business. Excluding the $8.5 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’’) decreased an estimated 9%.
The 17.2% decrease in operating income and the slight decrease in operating margins in fiscal
2001 compared to fiscal 2000 was due to $114.8 million of operating income derived from ADT
Automotive in fiscal 2000. ADT Automotive was sold in the beginning of the first quarter of fiscal
2001.
Operating income and margins for fiscal 2001 include net restructuring and other charges of
$8.3 million primarily related to the closure of several manufacturing plants. Included within the
$8.3 million are charges of $4.0 million to adjust to fair value inventory under purchase accounting,
which has been included in cost of sales. Operating income and margins also include a charge of
$1.2 million for the impairment of long-lived assets related to the closure of the manufacturing plants.
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