ADT 2008 Annual Report Download - page 254

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Retirement Plans (Continued)
obligations for Messrs. Kozlowski and Swartz as of September 28, 2007 were $71 million and
$36 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 $84 million, $78 million and $73 million for 2008,
2007 and 2006, 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. Gain
related to the SERP was $1 million in 2008, while an expense of $3 million in 2007 and $2 million in
2006 was incurred.
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 gain was $1 million, and an expense of $13 million and $6 million in 2008, 2007
and 2006, respectively. Total deferred compensation liabilities were $91 million and $100 million at
September 26, 2008 and September 28, 2007, respectively.
Rabbi Trusts During fiscal year 2007, the Company, as permitted under the trust agreement, sold
substantially all of the assets from one of the trusts and received $271 million of proceeds. Trust assets
were primarily composed of corporate-owned life insurance policies. The remaining trust assets totaled
$2 million at September 26, 2008 and September 28, 2007. The trust assets, which are consolidated, are
subject to the claims of the Company’s creditors in the event of the Company’s insolvency. Plan
participants are general creditors of the Company with respect to these benefits.
Postretirement Benefit Plans The Company generally does not provide postretirement benefits
other than pensions for its employees. However, certain acquired operations provide these benefits to
employees who were eligible at the date of acquisition, and a small number of U.S. and Canadian
operations provide ongoing eligibility for such benefits.
Net periodic postretirement benefit cost for 2008, 2007 and 2006 is as follows ($ in millions):
2008 2007 2006
Service cost ............................................ $ 1 $ 1 $ 1
Interest cost ............................................443
Amortization of prior service (credit) ......................... — (1) —
Amortization of net actuarial (gain) .......................... (1) (2) (3)
Net periodic postretirement benefit cost ....................... $ 4 $ 2 $ 1
Weighted-average assumptions used to determine net postretirement benefit
cost during the period:
Discount rate ........................................... 6.1% 5.7% 4.8%
2008 Financials 151