ADT 2008 Annual Report Download - page 217

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 26, 2008,
September 28, 2007 and September 29, 2006 are as follows ($ in millions):
2008 2007 2006
ADT Worldwide .......................................... $ 97 $ 83 $ 3
Flow Control ............................................ 8 25 2
Fire Protection Services .................................... 22 23 —
Electrical and Metal Products ................................ 43 7 —
Safety Products ........................................... 73 29 7
Corporate and Other ...................................... 4 40 1
247 207 13
Charges in cost of sales and selling, general and administrative ........ (22) (7) —
Restructuring and asset impairment charges, net ................... $225 $200 $13
To further improve operating efficiency, during the first quarter of 2007, we launched a
restructuring program (the ‘‘2007 Program’’) across all of the Company’s segments, including the
corporate organization to streamline some of the businesses and reduce the operational footprint. As of
September 26, 2008, we have substantially completed the program. Upon initiation of the program, we
expected to incur aggregate charges related to the program of approximately $350 million to
$400 million primarily through the end of calendar 2008. Since the inception of this program through
September 26, 2008, the Company has incurred charges of $395 million.
The 2007 Program included numerous actions designed to improve operating efficiency and
strengthen the Company’s competitive position in the future. Many of the actions initiated in 2007 were
related to improving field efficiencies and consolidating certain administrative functions in the
European operations of ADT Worldwide and Fire Protection Services and consolidation of certain
Corporate headquarter functions.
During 2008, the Company continued the execution of various European restructuring activities
within the ADT Worldwide and Fire Protection Services segments. Within the Flow Control, Safety
Products and Electrical and Metal Products segments, the Company recognized employee severance
and benefits charges, facility and other exit costs, and asset impairment charges related primarily to the
closure and relocation of manufacturing facilities.
The Company completed the franchise acquisitions of Winner Security Services LLC and
Sensormatic Security Corp., which resulted in restructuring charges of $51 million for ADT Worldwide
and $7 million for Safety Products. Refer to Note 4. The $58 million of restructuring charges related to
these franchise acquisitions are not reflected in the 2007 Program’s aggregate charges of $395 million
discussed above.
The Company has identified additional opportunities for cost savings for restructuring activities in
fiscal 2009. The Company expects to incur restructuring charges of approximately $50 million in fiscal
2009.
2008 Charges and Credits
Net restructuring and asset impairment charges during the year ended September 26, 2008 were
$247 million, which include $22 million for the non-cash write down in carrying value of inventory and
accelerated depreciation (which was classified in cost of sales and selling, general and administrative
expenses) related to assets expected to become obsolete as a result of the restructuring. The remaining
114 2008 Financials