ADT 2009 Annual Report Download - page 238

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. 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
2010 ........................................ $ 44 $ 47
2011 ........................................ 45 50
2012 ........................................ 46 56
2013 ........................................ 48 61
2014 ........................................ 49 65
2015-2019 .................................... 269 388
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 $1 million, $1 million and
$3 million in 2009, 2008 and 2007, 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 25, 2009 were $81 million and $42 million, respectively. The Company’s accrued benefit
obligations for Messrs. Kozlowski and Swartz as of September 26, 2008 were $76 million and
$39 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 the subject of
litigation brought by the Company against Messrs. Kozlowski and Swartz.
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 $79 million, $84 million and $78 million for 2009,
2008 and 2007, 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 2009 and 2008, respectively, while an expense of $3 million in
2007 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 $5 million and $1 million and an expense of $13 million in 2009, 2008
and 2007, respectively. Total deferred compensation liabilities were $97 million and $91 million as of
September 25, 2009 and September 26, 2008, respectively.
Rabbi Trusts—Historically, the Company held assets within rabbi trusts, the assets of which could
be used to pay non-qualified plan benefits. Trust assets were primarily composed of corporate-owned
146 2009 Financials