ADT 2003 Annual Report Download - page 88

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Workforce reductions primarily relate to the elimination of
manufacturing personnel across all regions. Facilities-related
costs include building lease termination fees and other contract
cancellation costs primarily for the shutdown of manufacturing
plants in the United States. The supplier contract termination fees
are primarily the result of the sudden and significant decrease in
demand for our products and services, primarily in the telecom-
munications end markets. Also, as a result of the uncertainty
related to the continued financial viability of a certain customer
in the telecommunications industry, a bad debt provision of
$115.0 million was recorded to selling, general and administrative
expenses, which is included in the “Other”column above. In addi-
tion to the $115.0 million bad debt provision, the remaining other
charges also include a write off of an uncollectible receivable of
$5.7 million as a result of the downturn in the telecommunica-
tions industry. To the extent that any of the bad debt provisions
are not utilized, the excess amounts will be reversed as a credit
to the selling, general and administrative expenses line in the
Consolidated Statement of Operations and will be described as
a credit in Tyco’s Consolidated Financial Statements. At
September 30, 2003, $106.7 million of the remaining balance is
included in accrued expenses and other current liabilities and the
remaining $121.6 million is included in other long-term liabilities
on the Consolidated Balance Sheet. These amounts are primarily
for payments on non-cancellable lease obligations.
The Healthcare segment recorded a net restructuring and
other charge of $44.8 million, of which $0.5 million is included
in cost of sales. Additionally, the net charge includes charges of
$48.2 million associated with the consolidation of operations
and the exiting of certain business lines, partially offset by a
credit of $3.9 million representing a revision in estimates of
current and prior years’ restructuring charges.
TYCO INTERNATIONAL LTD.
Notes to Consolidated Financial Statements
The following table provides information about the restructuring and other charges (excluding impairments of long-lived assets
which are discussed in Note 6) related to the Healthcare segment recorded in fiscal 2002 ($ in millions):
SEVERANCE FACILITIES-RELATED
NUMBER OF NUMBER OF
EMPLOYEES AMOUNT FACILITIES AMOUNT OTHER TOTAL
Fiscal 2002 charges 380 $«24.0 4 $14.1 $10.1 $«48.2
Fiscal 2002 reversals (6) (0.8) — — (2.4) (3.2)
Fiscal 2002 utilization (100) (9.4) — (2.1) (7.7) (19.2)
Ending balance at September 30, 2002 274 13.8 4 12.0 — 25.8
Fiscal 2003 reversals (42) (1.9) — (4.9) — (6.8)
Fiscal 2003 utilization (231) (11.6) (4) (6.4) — (18.0)
Foreign currency translation adjustments —0.2 —0.1 —0.3
Ending balance at September 30, 2003 1 $«««0.5 — $««0.8 $«««— $«««1.3
Workforce reductions primarily relate to the elimination of
manufacturing and sales personnel associated with the shutdown
of 4 manufacturing and administrative facilities in the United
States. The other charges of $10.1 million consist primarily of
legal fees and other deal costs associated with acquisitions that
were not completed. The total remaining balance at September
30, 2003 is primarily for payments on non-cancellable lease
obligations and severance and is included in accrued expenses
and other current liabilities.
The Engineered Products and Services segment recorded
restructuring and other charges of $50.8 million, of which
$6.2 million are included in cost of sales. Additionally, the
charge includes charges of $44.6 million related primarily to
streamlining the business.