ADT 2006 Annual Report Download - page 77

acceptance of these adjustments is probable and accordingly has recorded them in the Consolidated
Financial Statements. Such adjustments did not have a material impact on the Company’s financial
condition, results of operations or cash flows.
Material adverse legal judgments, fines, penalties or settlements could adversely affect our financial health
and prevent us from fulfilling our obligations under our outstanding indebtedness.
We estimate that our available cash and our cash flow from operations will be adequate to fund
our operations and service our debt for the foreseeable future. In making this estimate, we have not
assumed the need to make any material payments in connection with our pending litigation or
investigations. Any material adverse legal judgments, fines, penalties or settlements arising from our
pending investigations and litigation could require additional funding. If such developments require us
to obtain additional funding, we cannot provide assurance that we will be able to obtain the additional
funding that we need on commercially reasonable terms or at all, which could have a material adverse
effect on our results of operations and cash flows.
Such an outcome could have important consequences to you. For example, it could:
• require us to dedicate a substantial portion of our cash flow from operations to payments on our
indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general corporate purposes, including
debt reduction or dividend payments;
• increase our vulnerability to general adverse economic and industry conditions;
• limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in
which we operate;
• restrict our ability to introduce new technologies or exploit business opportunities;
• make it more difficult for us to satisfy our payment obligations with respect to our outstanding
indebtedness; and
• increase the difficulty and/or cost to us of refinancing our indebtedness.
Additional negative publicity may adversely affect our business.
As a result of actions taken by our former senior corporate management, Tyco was the subject of
continuing negative publicity focusing on these actions. This negative publicity contributed to significant
declines in the prices of our publicly traded securities in 2002 and brought increased regulatory scrutiny
upon us. Additional negative publicity related to former senior corporate management’s actions could
have a material adverse effect on our results of operations and cash flows and the market price of our
publicly traded securities.
Our senior corporate management team is required to devote significant attention to matters arising from
actions of prior management.
We replaced our senior corporate executives with a new team during 2002 through 2004, and all of
the former members of our Board of Directors determined not to stand for reelection in March 2003.
A new Board of Directors was elected at our annual general meeting of shareholders in March 2003.
We cannot provide assurance that this major restructuring of our Board of Directors and senior
2006 Financials 15