ADT 2005 Annual Report Download - page 131

and a remaining $12 million is available for issuance. There were no amounts borrowed under any of
these facilities.
In the normal course of business, the Company is liable for contract completion and product
performance. In the opinion of management, such obligations will not significantly affect the
Company’s financial position, results of operations or cash flows.
Legal Matters
Class Actions
For a detailed discussion of contingencies related to Tyco’s securities class actions, shareholder
derivative litigation, ERISA litigation and investigation, and litigation against our former senior
management, see Item 3. Legal Proceedings. We are generally obligated to indemnify our directors and
officers and our former directors and officers who are named as defendants in some or all of these
matters to the extent required by Bermuda law. In addition, our insurance carriers may decline
coverage, or our coverage may be insufficient to cover our expenses and liability, in some or all of
these matters. We are unable at this time to estimate what our ultimate liability in these matters may
be, and it is possible that we will be required to pay judgments or settlements and incur expenses, in
excess of any insurance coverage, in aggregate amounts that would have a material adverse effect on
our financial position, results of operations or cash flows. At this time, it is not possible to estimate the
amount of loss or probable losses, if any, that might result from an adverse resolution of these matters.
Investigation
For a detailed discussion of contingencies related to governmental investigations related to Tyco
see Item 3. Legal Proceedings—Subpoenas and Document Requests From Governmental Entities. We
cannot predict when these investigations will be completed, nor can we predict what the results of these
investigations may be. It is possible that we will be required to pay material fines, consent to
injunctions on future conduct, lose the ability to conduct business with government instrumentalities
(which in turn could negatively impact our business with non-governmental customers) or suffer other
penalties, each of which could have a material adverse effect on our business. It is not possible to
estimate the amount of loss, or range of possible loss, if any, that might result from an adverse
resolution of these matters.
In 2005, the Company recorded a charge of $50 million, which represents the Company’s best
estimate of the amount in fines and penalties management believes the Company will likely pay to
resolve the matters raised in the SEC’s investigation. The Company is engaged in discussions with the
SEC’s Division of Enforcement to resolve the matters raised in the SEC’s investigation. Final
resolution of these matters is subject to a number of uncertainties, including finalizing the terms of a
settlement that the Enforcement Staff will agree to recommend to the Commission, the Company’s
submission of an offer of settlement approved by the Tyco Board of Directors, and the Commission’s
approval of the settlement offer. Until such events have occurred, the charge is subject to change.
Intellectual Property Litigation
For a detailed discussion of contingencies related to Tyco’s intellectual property litigation, see
Item 3. Legal Proceedings—Intellectual Property Litigation.
Environmental Matters
For a detailed discussion of contingencies related to Tyco’s environmental matters, see Item 1.
Business—Environmental Matters.
2005 Financials 55