ADT 2002 Annual Report Download - page 18

Patents and Trademarks
We own a portfolio of patents, which principally relate to electrical and electronic products,
healthcare and specialty products, fire protection devices, electronic security systems, flow control
products, pipe and tubing manufacture and cable manufacture. We also own a portfolio of trademarks
and are a licensee under various patents. Although these have been of value and are expected to
continue to be of value in the future, in the opinion of management the loss of any single patent or
group of patents would not materially affect the conduct of the business in any of our segments. In
several cases, one product may be sold under more than one tradename, which also helps minimize
risk. In addition, management believes that the likelihood of losing key patents or trademarks is
remote. The patents and licenses have estimated useful lives ranging from 5 to 40 years. As of
September 30, 2002, we had approximately $140.1 million of trademarks not subject to amortization.
Employees
Tyco employed approximately 267,500 people at September 30, 2002, of which approximately
113,600 are employed in the United States and 153,900 are outside the United States. We have
collective bargaining agreements with labor unions covering approximately 66,900 employees at certain
of our North American, European and Asia-Pacific businesses. We believe that our relations with the
labor unions are generally satisfactory. In April 1994, following lengthy negotiations, contracts between
our Grinnell subsidiary and a local union of the United Association of Plumbers and Pipefitters was
not renewed. Employees in those locations, representing 64% of Grinnell Fire Protection’s North
American union employees at the time, went on strike. The strike ended in January 2001. In January
2002, Grinnell Fire Protection and Simplex Time Recorder Co. began doing business as
SimplexGrinnell LP (an indirect wholly-owned subsidiary of Tyco). SimplexGrinnell has reinstated
relevant terms of the expired collective bargaining agreement and has resumed negotiations with the
local union over a new agreement. SimplexGrinnell is currently participating in a proceeding to
determine what payments are necessary to compensate certain employees (approximately 2% of
SimplexGrinnell’s employee population) for losses they may have experienced as a result of changes in
their wages and benefits that Grinnell implemented in 1994. The action has not had, and is not
expected to have, any material adverse effect on our business or results of operations.
Proposed Legislation
In the normal course of business, we provide services and sell products to various government
agencies. Changes in legislation or governmental policies can have an impact on our worldwide
operations. We are currently assessing the potential impact of various legislative proposals that would
deny U.S. federal government contracts to U.S. companies that move their corporate location abroad.
Tyco became a Bermuda-based company as a result of the 1997 business combination of Tyco
International Ltd., a Massachusetts corporation, and ADT Limited (a public company that had been
located in Bermuda since the 1980’s with origins dating back to the United Kingdom since the early
1900’s). Currently, Tyco’s revenues related to U.S. federal government contracts account for less than
3% of net revenues for the fiscal year ended September 30, 2002. In addition, various state and other
municipalities in the U.S. have proposed similar legislation. There is also other similar proposed tax
legislation which could substantially increase our corporate income taxes and, consequently, decrease
future net income and increase our future cash outlay for taxes. We are unable to predict, with any
level of certainty, the likelihood or final form in which any proposed legislation might become law, or
the nature of regulations that may be promulgated under any such future legislative enactments. As a
result of these uncertainties, we are unable to assess the impact on us of any proposed legislation in
this area.
See Item 3. ‘‘Legal Proceedings’’ included in our Form 10-K filed on December 30, 2002 for a
description of investigations initiated by certain government agencies.
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