ADT 2002 Annual Report Download - page 81

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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Restructuring and Other Charges (Credits), Net (continued)
2002 Charges and Credits
The Fire and Security Services segment recorded net restructuring and other charges of
$94.9 million. The net $94.9 million charge consists of charges of $113.5 million, of which charges of
$19.4 million are included in cost of sales, related primarily to severance and facility closures associated
with streamlining the business, partially offset by a credit of $18.6 million related to current and prior
years’ restructuring charges. The following table provides information about the restructuring and other
charges (excluding impairments of long-lived assets which are discussed in Note 6) related to the Fire
and Security Services segment recorded in fiscal 2002 ($ in millions):
Severance Facilities-Related
Number of Number of
Employees Amount Facilities Amount Inventory Other Total
Fiscal 2002 charges ............ 3,100 $ 43.5 109 $15.7 $ 19.4 $34.9 $113.5
Fiscal 2002 reversals ........... — (0.3) — (3.0) — (0.8) (4.1)
Fiscal 2002 utilization .......... (1,754) (23.8) (6) (0.1) (19.4) (2.7) (46.0)
Ending balance at September 30,
2002 ..................... 1,346 $ 19.4 103 $12.6 $ — $31.4 $ 63.4
The cost of announced workforce reductions of $43.5 million includes the elimination of 3,100
positions primarily in the United States, Latin America, Europe and Australia consisting primarily of
manufacturing, general and administrative, technical, and sales and marketing personnel. The cost of
facility closures of $15.7 million consists of the shutdown of 109 facilities primarily in Australia and
Europe consisting primarily of sales offices and manufacturing plants. At September 30, 2002, 1,754
employees had been terminated and 6 facilities had been shut down.
The other charges of $34.9 million consist primarily of an accrual for anticipated resolution and
disposition of various labor and employment matters.
The Electronics segment recorded net restructuring and other charges of $1,504.5 million. The
$1,504.5 million net charge consists of charges totaling $1,530.8 million (of which charges of
$608.2 million are included in cost of sales and a bad debt provision of $115.0 million is included in
selling, general and administrative expenses) primarily related to facility closures, inventory reserves and
purchase commitment cancellations due to the significant downturn in the telecommunications business
and certain electronics end markets. These charges were partially offset by restructuring credits of
$26.3 million primarily related to a revision of estimates of current and prior years’ severance and
facility charges. The following table provides information about the restructuring and other charges
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