ADT 2006 Annual Report Download - page 203

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Retirement Plans (Continued)
Benefit payments, including those amounts to be paid out of corporate assets and reflecting future
expected service as appropriate, are expected to be paid as follows ($ in millions):
U.S. Plans Non-U.S. Plans
2007 ...................................................... $138 $ 99
2008 ...................................................... 144 106
2009 ...................................................... 146 115
2010 ...................................................... 162 122
2011 ...................................................... 155 133
2012–2016 ................................................. 857 806
The Company also participates in a number of multi-employer defined benefit plans on behalf of
certain employees. Pension expense related to multi-employer plans was $6 million, $15 million and
$13 million in 2006, 2005 and 2004, respectively.
Executive Retirement Arrangements—Messrs. Kozlowski and Swartz participated in individual
Executive Retirement Arrangements maintained by Tyco (the ‘‘ERA’’). Under the ERA,
Messrs. Kozlowski and Swartz would have fixed lifetime benefits commencing at their normal
retirement age of 65. The Company’s accrued benefit obligations for Messrs. Kozlowski and Swartz as
of September 29, 2006 were $66 million and $34 million, respectively. The Company’s accrued benefit
obligations for Messrs. Kozlowski and Swartz as of September 30, 2005 were $62 million and
$32 million, respectively. Retirement benefits are available at earlier ages and alternative forms of
benefits can be elected. Any such variations would be actuarially equivalent to the fixed lifetime benefit
starting at age 65. Amounts owed to Messrs. Kozlowski and Swartz under the ERA are in dispute by
the Company.
Defined Contribution Retirement Plans—The Company maintains several defined contribution
retirement plans, which include 401(k) matching programs, as well as qualified and nonqualified profit
sharing and share bonus retirement plans. Expense for the defined contribution plans is computed as a
percentage of participants’ compensation and was $204 million, $190 million and $175 million for 2006,
2005 and 2004, respectively. The Company also maintains an unfunded Supplemental Executive
Retirement Plan (‘‘SERP’’). This plan is nonqualified and restores the employer match that certain
employees lose due to IRS limits on eligible compensation under the defined contribution plans.
Expense related to the SERP was $3 million in 2006, $6 million in 2005 and $3 million in 2004.
Deferred Compensation Plans—The Company has nonqualified deferred compensation plans, which
permit eligible employees to defer a portion of their compensation. A record keeping account is set up
for each participant and the participant chooses from a variety of measurement funds for the deemed
investment of their accounts. The measurement funds correspond to a number of funds in the
Company’s 401(k) plans and the account balance fluctuates with the investment returns on those funds.
Deferred compensation expense was $10 million, $14 million and $15 million in 2006, 2005 and 2004,
respectively. Total deferred compensation liabilities were $179 million and $171 million at
September 29, 2006 and September 30, 2005, respectively.
Rabbi Trusts—The Company has rabbi trusts, the assets of which may be used to pay non-qualified
plan benefits. The trusts primarily hold corporate-owned life insurance policies, cash and cash
equivalents, and debt and equity securities. At September 29, 2006 and September 30, 2005, trust assets
2006 Financials 141