ADT 2002 Annual Report Download - page 71

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Acquisitions and Divestitures (continued)
The following table summarizes the purchase accounting liabilities recorded in connection with the
fiscal 2001 purchase acquisitions ($ in millions):
Severance Facilities-Related Distributor &
Number of Number of Supplier
Employees Amount Facilities Amount Cancellation Fees Other Total
Original liabilities established ........ 10,270 $ 413.3 349 $302.2 $179.9 $ 224.6 $1,120.0
Liabilities of discontinued operations . . . (354) (47.2) — (19.3) — (32.2) (98.7)
Original liabilities continuing operations . 9,916 366.1 349 282.9 179.9 192.4 1,021.3
Fiscal 2001 utilization ............. (7,847) (203.2) (172) (21.6) (94.3) (140.9) (460.0)
Ending balance at September 30, 2001 . . 2,069 162.9 177 261.3 85.6 51.5 561.3
Additions to fiscal 2001 acquisition
liabilities .................... 8,570 179.4 493 85.3 25.9 48.8 339.4
Fiscal 2002 utilization ............. (7,060) (180.7) (328) (69.6) (44.5) (50.7) (345.5)
Reclassifications ................. — 5.7 — (29.3) (3.0) (2.7) (29.3)
Reduction of estimates of fiscal 2001
acquisition liabilities ............. (1,383) (37.6) (242) (40.2) (35.3) (17.8) (130.9)
Ending balance at September 30, 2002 . . 2,196 $ 129.7 100 $207.5 $ 28.7 $ 29.1 $ 395.0
Purchase accounting liabilities recorded during fiscal 2001 consist of $366.1 million for severance
and related costs; $282.9 million for costs associated with the shut down and consolidation of certain
acquired facilities, including unfavorable leases, lease terminations and other related fees, and other
costs; $179.9 million for distributor and supplier contractual cancellation fees; and $192.4 million for
transaction and other costs. These purchase accounting liabilities relate primarily to the acquisitions of
Mallinckrodt Inc. in October 2000, LPS, Simplex Time Recorder Co. in January 2001 and the electronic
security systems businesses of Cambridge Protection Industries, LLC in July 2001 (‘‘SecurityLink.’’)
During fiscal 2001, the Company made payments totaling $20.0 million to Mr. Frank Walsh, a
director of Tyco at the time of the CIT acquisition, and to a charitable organization specified by such
director. The payments were direct and incremental costs incurred in connection with the acquisition of
CIT and, accordingly, were included as part of the purchase price for CIT (see Note 17).
In connection with the fiscal 2001 purchase acquisitions, the Company began to formulate plans at
the date of each acquisition for workforce reductions and the closure and consolidation of an aggregate
of 349 facilities. The costs of employee termination benefits relate to the elimination of 6,297 positions
in the United States, 1,559 positions in Europe, 1,354 positions in the Asia-Pacific region and 706
positions in Canada and Latin America, consisting primarily of manufacturing and distribution,
administrative, technical, and sales and marketing personnel. Facilities designated for closure include
226 facilities in the United States, 54 facilities in Europe, 48 facilities in the Asia-Pacific region and 21
facilities in Canada and Latin America, consisting primarily of manufacturing plants, distribution
facilities, sales offices, corporate administrative facilities and research and development facilities. At
September 30, 2002, 14,907 employees had been terminated and 500 facilities had been closed or
consolidated.
During fiscal 2002, we recorded additions to purchase accounting liabilities as we continued to
formulate the integration plans of fiscal 2001 acquisitions, such as LPS, Microser S.L. (integrated within
the Electronics segment), DAAG, Edison and SecurityLink, among others. Finalization of components
of integration plans associated with acquisitions resulted in additional purchase accounting liabilities of
$339.4 million and a corresponding increase to goodwill and deferred tax assets. These additions reflect
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