ADT 2002 Annual Report Download - page 85

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Restructuring and Other Charges (Credits), Net (continued)
The cost of announced workforce reductions of $13.0 million includes the elimination of 972
positions primarily in the United States and Europe consisting primarily of manufacturing, general and
administrative and sales and marketing personnel. The cost of facility closures of $47.6 million consists
of the shutdown of 176 facilities in the United States, Europe and Canada consisting primarily of sales
offices and manufacturing plants. At September 30, 2002, 643 employees had been terminated and 153
facilities had been shut down.
The other charges of $19.7 million consist primarily of contract cancellation costs and charges
relating to an environmental remediation project. The total remaining balance at September 30, 2002 of
$35.1 million, of which $20.1 million is included in accrued expenses and other current liabilities and
$15.0 million is included in other long-term liabilities on the Consolidated Balance Sheet, is primarily
for payments on non-cancelable lease obligations.
In fiscal 2001, the Electronics segment recorded restructuring and other charges of $383.8 million,
of which charges of $125.8 million are included in cost of sales, related primarily to facility closures and
related employee terminations within the computer and consumer electronics and communication
industries. The following table provides information about the restructuring and other charges
(excluding impairments of long-lived assets, which are discussed in Note 6) related to the Electronics
segment recorded in fiscal 2001 ($ in millions):
Severance Facilities-Related
Number of Number of
Employees Amount Facilities Amount Inventory Other Total
Fiscal 2001 charges ......... 10,375 $177.1 38 $ 44.4 $ 125.8 $ 36.5 $ 383.8
Fiscal 2001 utilization ....... (6,020) (70.5) (12) (10.2) (125.8) (17.5) (224.0)
Ending balance at
September 30, 2001 ....... 4,355 106.6 26 34.2 — 19.0 159.8
Fiscal 2002 reversals ........ (573) (14.1) (2) (0.5) — (0.8) (15.4)
Fiscal 2002 utilization ....... (3,524) (82.9) (22) (18.2) — (11.1) (112.2)
Ending balance at
September 30, 2002 ....... 258 $ 9.6 2 $15.5 $ — $ 7.1 $ 32.2
Included in the $383.8 million restructuring and other charges are the cost of announced workforce
reductions of $177.1 million for the elimination of 10,375 positions primarily in the United States and
Latin America consisting primarily of manufacturing personnel; the cost of facility closures of
$44.4 million include building lease termination fees and other contract cancellation costs for the
shutdown of 38 facilities; and other charges of $36.5 million consisting of purchase commitment
cancellations and payments on non-cancelable machinery and equipment leases. The inventory charges
of $125.8 million include $74.1 million related to inventory write-downs associated with exiting locations
and scrapping amounts in excess of forecasted demand and a charge of $51.7 million related to the sale
of inventory, which had been written up under purchase accounting. The remaining balance at
September 30, 2002 of $32.2 million, of which $27.7 million is included in accrued expenses and other
current liabilities and $4.5 million is included in other long-term liabilities on the Consolidated Balance
Sheet, is primarily for severance and payments on non-cancelable lease obligations.
In fiscal 2001, the Healthcare segment recorded a net restructuring and other charge of
$48.4 million. The $48.4 million net charge consists of charges of $64.0 million, of which charges of
83