ADT 2008 Annual Report Download - page 218

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Restructuring and Asset Impairment Charges, Net (Continued)
charge is comprised of restructuring charges of $237 million, which include $139 million of employee
severance and benefits; $40 million of facility exit charges and other cash charges; $58 million related
to the reacquisition of certain unfavorable franchise rights; and $20 million of asset impairments, net of
gains from sale of properties. The asset impairments primarily related to the Company’s Electrical and
Metal Products segment. During the period ended September 26, 2008, the Company completed
restructuring activities announced in prior years for amounts less than originally estimated, and
accordingly reversed $32 million of restructuring reserves as restructuring credits.
The Company paid $30 million related to actions initiated in 2008 under the 2007 Program and
paid $58 million related to the franchise acquisitions. As of September 26, 2008, $98 million has been
accrued.
Activity in the Company’s 2008 restructuring reserves related to the 2007 Program is summarized as
follows ($ in millions):
Employee
Severance Facility
and Exit & Other
Benefits Charges Total
Balance at September 28, 2007 ................ $106 $ 9 $115
Charges ................................. 139 39 178
Reversals ................................ (26) (4) (30)
Utilization ............................... (100) (25) (125)
Reclass/transfers ........................... 3 9 12
Currency translation ........................ 3 — 3
Balance at September 26, 2008 ................ $125 $28 $153
2007 Charges and Credits
Net restructuring and asset impairment charges during 2007 were $207 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 $189 million, which include $173 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 2008, the Company paid $95 million related to actions under the 2007 Program and has
$55 million accrued as of September 26, 2008.
2006 Charges and Credits
During 2006, the Company recorded net restructuring and asset impairment charges of $13 million,
which includes $11 million of employee severance and benefits and $2 million of asset impairments.
The restructuring charges related to several restructuring actions and facility exit plans which were
initiated in 2006 for $16 million as well as costs incurred in 2006 related to actions initiated prior to
2006 for $2 million. During 2006, the Company completed restructuring activities announced in prior
years for amounts less than originally estimated, and accordingly reversed $7 million of restructuring
reserves. 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 ADT Worldwide and
Safety Products segments.
2008 Financials 115