ADT 2002 Annual Report Download - page 88

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Restructuring and Other Charges (Credits), Net (continued)
facilities in the United States. At September 30, 2002, all employees had been terminated and all
facilities had been shut down.
The inventory charges of $4.0 million is related to the sale of inventory, which had been adjusted
to fair value under purchase accounting. The other charges of $1.5 million consist primarily of the cost
for lease buyouts and distributor termination fees.
In addition to segment charges, the Company recorded a charge of $3.4 million, related to
severance. In addition, $0.7 million relating to the $3.4 million severance charge remains in accrued
expenses and other current liabilities on the Consolidated Balance Sheet at September 30, 2002.
2000 Charges and Credits
In fiscal 2000, the Fire and Security Services segment recorded restructuring and other credits of
$11.2 million related to revisions in estimates of the Company’s 1997 restructuring activities for
amounts lower than originally recorded. Actions under the Company’s 1997 restructuring plans have
been completed.
In fiscal 2000, the Electronics segment recorded a net merger, restructuring and other credit of
$77.8 million, which consists of credits of $107.8 million and charges of $30.0 million. The merger,
restructuring and other credit of $107.8 million, of which a credit of $6.3 million is included in cost of
sales, is related to the merger with AMP and costs associated with AMP’s profit improvement plan.
The $107.8 million credit consists of a revision in estimates of severance liabilities of $55.2 million,
facility liabilities of $7.8 million and other liabilities of $44.8 million primarily as a result of certain
facilities remaining open due to changes in market conditions. The restructuring and other charges of
$30.0 million, of which $0.9 million is included in cost of sales includes $16.9 million related to
restructuring activities in AMP’s Brazilian operations and wireless communications business and a
charge of $13.1 million incurred in connection with the TyCom IPO.
Included in the $16.9 million AMP restructuring and other charges are the cost of announced
workforce reductions of $4.9 million for the elimination of 941 positions primarily in Brazil; the cost of
facility closures of $4.8 million for the shut-down and consolidation of 3 facilities; and other charges of
$7.2 million consisting of the write-off of non-facility assets and other direct costs. At September 30,
2002, substantially all of these restructuring activities were completed. The remaining balance at
September 30, 2002 of $3.0 million, of which $0.6 million is included in accrued expenses and other
current liabilities and $2.4 million is included in other long-term liabilities on the Consolidated Balance
Sheet, is primarily for payments on non-cancelable lease obligations.
In fiscal 2000, the Healthcare segment recorded a net merger, restructuring and other credit of
$10.9 million. The $10.9 million net credit consists of charges of $11.1 million related to U.S. Surgical’s
suture business and charges of $7.9 million, of which charges of $6.4 million are included in cost of
sales, related to exiting U.S. Surgical’s interventional cardiology business. All of these restructuring
activities have been completed. Also recorded was a credit of $29.9 million representing a revision in
estimates of prior years’ merger, restructuring and other accruals, of which $19.7 million related
primarily to the merger with U.S. Surgical and $10.2 million related to the Company’s 1997
restructuring accruals. The $19.7 million credit relates to a revision in estimates of severance liabilities
of $4.2 million, facility liabilities of $4.5 million and other liabilities of $11.0 million.
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