ADT 2003 Annual Report Download - page 63

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61
TYCO INTERNATIONAL LTD.
Bermuda law differs from the laws in effect in the United States
and may afford less protection to holders of our securities.
Holders of Tyco securities may have more difficulty protecting
their interests than would holders of securities of a corpora-
tion incorporated in a jurisdiction of the United States. See
“Enforcement of Civil Liabilities.”
As a Bermuda company, Tyco is governed by the Companies
Act 1981 of Bermuda, which differs in some material respects
from laws generally applicable to United States corporations
and shareholders, including, among others, differences relating
to interested director and officer transactions, shareholder law-
suits and indemnification. Under Bermuda law, directors and
officers may have a personal interest in contracts or arrange-
ments with a company or its subsidiaries transactions so long
as such personal interest is first disclosed to the company.
Likewise, the duties of directors and officers of a Bermuda
company are generally owed to the company only. Shareholders
of Bermuda companies do not generally have a personal right
of action against directors or officers of the company and may
only exercise such rights of action on behalf of the company in
limited circumstances. Under Bermuda law, a company may
also agree to indemnify directors and officers for any personal
liability, not involving fraud or dishonesty, incurred in relation
to the company.
Quantitative and Qualitative Disclosures
About Market Risk
We are subject to market risk associated with changes in interest
rates, foreign currency exchange rates and certain commodity
prices. In order to manage the volatility relating to our more
significant market risks, we enter into forward foreign currency
exchange contracts, cross-currency swaps, foreign currency
options, commodity swaps and interest rate swaps. We do not
anticipate any material changes in our primary market risk
exposures in fiscal 2004.
We utilize risk management procedures and controls in
executing derivative financial instrument transactions. We do
not execute transactions or hold derivative financial instruments
for trading purposes. Derivative financial instruments related
to interest rate sensitivity of debt obligations, intercompany
cross-border transactions and anticipated non-functional cur-
rency cash flows, as well as commodity price exposures, are
used with the goal of mitigating a significant portion of these
exposures when it is cost effective to do so. Counter-parties to
derivative financial instruments are limited to financial institu-
tions with at least an A+ long-term debt rating.