ADT 2006 Annual Report Download - page 173

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Restructuring and Other Charges (Credits), Net (Continued)
charges during 2006 were $39 million, which includes $27 million of severance and $12 million of
facility exit costs and other charges. These charges related to several restructuring actions and facility
exit plans which were initiated in 2006 for $30 million as well as costs incurred in 2006 related to
actions initiated prior to 2006 for $9 million. During 2006, the Company completed restructuring
activities announced in prior years for amounts less than originally estimated, and accordingly reversed
$15 million of restructuring reserves. The Company also recorded other non-cash credits of $4 million
related to the Electronics segment. Most of the restructuring initiatives undertaken during 2006 as well
as actions taken in prior periods, which impact restructuring charges incurred during 2006, relate to the
Electronics and Fire and Security segments.
During 2006, the Company paid $21 million related to these actions and has $9 million accrued as
of September 29, 2006.
2005 Charges and Credits
During 2005, the Company recorded restructuring charges of $6 million, including $1 million
reflected in cost of sales for the non-cash write down in carrying value of inventory. Restructuring
charges during 2005 were $48 million, which includes $22 million of employee severance and benefits,
$15 million of facility exit costs and $11 million of other costs. These charges related to several
restructuring actions and facility exit plans which were initiated in 2005 as well as incremental costs
incurred in 2005 related to actions initiated during 2004. Of these charges, $22 million related to
actions initiated and completed in 2005 while the remaining $27 million related to actions which
commenced prior to 2005. During 2005, the Company completed restructuring activities announced in
prior years for amounts less than originally estimated, and accordingly reversed $23 million of
restructuring reserves as a restructuring credit. In addition, the Company also sold assets which were
previously written down to their net realizable value in prior years for amounts greater than originally
estimated and recorded related gains as restructuring credits of $20 million. The restructuring credits
were mainly incurred by Electronics.
The $22 million of charges for 2005 restructuring initiatives were largely a result of actions taken
by Electronics and Fire and Security segments which incurred severance of $9 million and $6 million,
respectively. Through 2006, the Company has substantially paid these obligations and the Company has
$1 million accrued as of September 29, 2006. In addition, during 2005, the Company transferred
$4 million of severance liabilities from liabilities held for sale, which resulted from the sale of TGN,
that has also been substantially paid at September 29, 2006.
2006 Financials 111