ADT 2005 Annual Report Download - page 141

Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as defined under Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America. Internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of record
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
Company’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that the Company’s receipts and expenditures are being made only in accordance with
authorizations of the Company’s management and directors and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of
September 30, 2005. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—
Integrated Framework. Management’s assessment included an evaluation of the design of the
Company’s internal control over financial reporting and testing of the operational effectiveness of its
internal control over financial reporting. Management reviewed the results of its assessment with the
Audit Committee of our Board of Directors. Based on our assessment and those criteria, management
believes that the Company maintained effective internal control over financial reporting as of
September 30, 2005.
Our management’s assessment of the effectiveness of our internal control over financial reporting
as of September 30, 2005 has been audited by Deloitte & Touche LLP, the independent registered
public accounting firm that audited and reported on the consolidated financial statements included in
this Form 10-K, as stated in their report which is included herein.
December 9, 2005
Item 9B. Other Information
On December 6, 2005, George W. Buckley, a director of Tyco International Ltd., verbally notified
Tyco of his intention to resign from the Board of Directors effective on December 7, 2005. Mr. Buckley
joined Tyco’s Board in December 2002 and was a member of Compensation and Human Resources
Committee. Mr. Buckley resigned his seat on the Board of Directors in connection with his
appointment as Chairman of the Board, Chief Executive Officer and President of 3M Company.
On December 9, 2005, Tyco and Richard Meelia, the President of Tyco Healthcare, agreed to
amend Mr. Meelia’s retention agreement to extend the expiration date of the voluntary termination
provision set forth therein from December 31, 2005 to June 30, 2007. The revised retention agreement
continues in effect all provisions of his prior agreement through June 30, 2007, with the following
modifications: (i) cash severance benefits payable upon termination of employment will be credited
with interest for the period January 1, 2006 through payment at a rate of 4.32%; (ii) payment or
commencement of certain benefits are delayed for six months following termination of employment;
and (iii) instead of vesting over three years following termination of employment, the unvested portions
of Mr. Meelia’s pre-fiscal year 2005 options will vest immediately upon termination of employment and
the exercise period for specified options has been shortened or otherwise modified in order to comply
with the requirements of Section 409A of the Internal Revenue Code. The amendment is filed as an
exhibit to this Form 10-K.
2005 Financials 65