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84
5.
Restructuring and Other (Credits) Charges, Net
Restructuring and other (credits) charges, net, are as follows
($ in millions):
YEAR ENDED SEPTEMBER 30, 2003 2002 2001
Fire and Security $«««9.7 $÷÷«94.9 $÷«84.1
Electronics (90.5) 1,504.5 383.8
Healthcare (9.2) 44.8 48.4
Engineered Products
and Services 7.8 50.8 57.3
Plastics and Adhesives (1.0) 10.1 8.3
Corporate (1.6) 169.6 3.4
(84.8) 1,874.7 585.3
Less:
Inventory-related amounts
credited (charged) to
cost of sales 10.5 (635.4) (184.9)
Bad debt provision charged
to selling, general and
administrative expenses —(115.0) —
Restructuring and other
(credits) charges, net $(74.3) $1,124.3 $«400.4
2003 CHARGES AND CREDITS
The Company has engaged in a series of restructuring programs
in which we have attempted to make our operations more
efficient through exiting certain non-core businesses or business
lines, or streamlining general operations.
The Fire and Security segment recorded net restructuring
and other charges of $9.7 million, of which charges of $3.5 mil-
lion are included in cost of sales and $2.8 million relates to other
non-cash charges. The remaining $3.4 million net charge con-
sists of charges of $19.4 million associated with streamlining
the business, partially offset by a credit of $16.0 million related
to changes in estimates of charges recorded in prior periods.
The $19.4 million charge is primarily comprised of $16.0 million
for employee severance in connection with the elimination of
1,367 positions primarily relating to general and administrative,
manufacturing, technical, and sales and marketing personnel in
the United States, Canada, Asia, Europe and Australia. During
fiscal 2003, the Company incurred costs of $5.4 million related
to this restructuring program, consisting primarily of $5.0 mil-
lion in severance for the termination of 553 employees.
The Electronics segment recorded restructuring and other
credits of $90.5 million, of which credits of $19.9 million are
included in cost of sales. These restructuring credits primarily
related to severance costs being less than originally anticipated
due to employee attrition and redeployment and termination
fees being less than anticipated due to negotiated settlements.
The Healthcare segment recorded restructuring and other
credits of $9.2 million, of which credits of $0.2 million are
included in cost of sales.
The Engineered Products and Services segment recorded
net restructuring and other charges of $7.8 million (excluding
impairments of long-lived assets which are discussed in Note
6), of which charges of $6.1 million are included in cost of sales.
The remaining $1.7 million net charge consists of charges of
$12.1 million associated with streamlining the business, partially
offset by a credit of $10.4 million primarily related to changes
in estimates of charges recorded in prior periods. The $12.1 mil-
lion includes $9.5 million for severance associated with the
elimination of 113 positions primarily manufacturing and sales
personnel in the United States and Europe; $2.0 million related
to the shutdown of 2 manufacturing facilities located in the
United States and Europe; and other costs of $0.6 million. At
September 30, 2003, all employees had been terminated and
both facilities had been shut down. In addition, these restruc-
turing accruals were fully utilized by September 30, 2003.
During fiscal 2003, Corporate recorded net restructuring
and other credits of $1.6 million consisting of charges of $17.1
million, of which $7.9 million relates to non-cash charges
(excluding impairments of long-lived assets which are discussed
in Note 6), offset by credits of $18.7 million related to changes
in estimates of charges recorded in prior periods. The remaining
charges of $9.2 million includes $5.8 million for the elimination
of 33 administrative positions primarily in the United States
and $3.4 million for the shutdown of 1 administrative office in
the United States. At September 30, 2003, 32 employees had
been terminated and the facility had been closed; and, there
remained $4.4 million and $3.3 million of severance and facility-
related restructuring accruals, respectively, on the Consolidated
Balance Sheet.
2002 CHARGES AND CREDITS
The Fire and Security segment recorded net restructuring and
other charges of $94.9 million, of which charges of $19.4 million
are included in cost of sales. Additionally, the net charge
includes charges totaling $94.1 million 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.
TYCO INTERNATIONAL LTD.
Notes to Consolidated Financial Statements