ADT 2007 Annual Report Download - page 205

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Restructuring and Asset Impairment Charges, Net
Restructuring and asset impairment charges, net, during the years ended September 28, 2007,
September 29, 2006 and September 30, 2005 are as follows ($ in millions):
2007 2006 2005
ADT Worldwide .......................................... $ 83 $ 3 $ 2
Fire Protection Services ..................................... 33 — —
Flow Control ............................................. 25 2 4
Safety Products ........................................... 29 7 8
Electrical and Metal Products ................................. 7 — —
Corporate and Other ....................................... 40 1 4
217 13 18
Inventory charges in cost of sales .............................. (7) — (1)
Restructuring and asset impairment charges, net ................... $210 $13 $17
2007 Charges and Credits
During the first quarter of 2007, the Company launched a restructuring program across the
segments including the corporate organization which will streamline some of the businesses and reduce
the operational footprint. The Company expects to incur charges related to the program of
approximately $350 million to $400 million through the end of 2008.
The restructuring program includes numerous actions which are designed to improve operating
efficiency and strengthen the Company’s competitive position in the future. To date, many of the
actions initiated relate to improving field efficiencies and consolidating certain administrative functions
in the European operations of ADT Worldwide and Fire Protection Services. In addition, Corporate
consolidated certain headquarter functions. The restructuring actions were largely reductions in
workforce and are expected to be completed by the end of 2008.
Net restructuring and asset impairment charges during 2007 were $217 million, which include
$7 million reflected in cost of sales for the non-cash write down in carrying value of inventory. The
remaining charge is comprised of restructuring charges of $199 million, which include $183 million of
employee severance and benefits and $16 million of facility exit charges and other cash charges, and
$15 million of asset impairments. During 2007, the Company completed restructuring activities
announced in prior years for amounts less than originally estimated, and accordingly reversed
$4 million of restructuring reserves as a restructuring credit.
During 2007, the Company paid $59 million related to actions initiated in 2007 and has
$127 million accrued related to these actions as of September 28, 2007.
2007 Financials 113