ADT 2006 Annual Report Download - page 84

In the opinion of management, our properties and equipment are in good operating condition and
are adequate for our present needs. We do not anticipate difficulty in renewing existing leases as they
expire or in finding alternative facilities. See Note 18 to Consolidated Financial Statements for a
description of our lease obligations.
Item 3. Legal Proceedings
Securities Class Actions
As previously reported in our 2005 Form 10-K, Tyco and certain of our former directors and
officers have been named as defendants in over 40 securities class actions. Most of the securities class
actions have now been transferred to the United States District Court for the District of New
Hampshire by the Judicial Panel on Multidistrict Litigation for coordinated or consolidated pretrial
proceedings. On January 28, 2003, a consolidated securities class action complaint was filed in these
proceedings. On January 7, 2005, the Company answered the plaintiffs’ consolidated complaint. On
January 14, 2005, lead plaintiffs made a motion for class certification, which the Company opposed on
July 22, 2005. On July 5, 2005, the Company moved for revision of the Court’s October 14, 2004 order
in light of a change in law, insofar as the order denied the Company’s motion to dismiss the
consolidated complaint for failure to plead loss causation. On December 2, 2005, the Court denied the
Company’s motion. On April 4, 2006 plaintiffs filed a partial motion for summary judgment that was
denied without prejudice to its later renewal. On June 12, 2006, the Court entered an order certifying a
class ‘‘consisting of all persons and entities who purchased or otherwise acquired Tyco securities
between December 13, 1999 and June 7, 2002, and who were damaged thereby, excluding defendants,
all of the officers, directors and partners thereof, members of their immediate families and their legal
representatives, heirs, successors or assigns, and any entity in which any of the foregoing have or had a
controlling interest.’’ On June 26, 2006, Tyco filed a petition for leave to appeal the class certification
order to the United States Court of Appeals for the First Circuit. Separately, on September 22, 2006,
the United States Court of Appeals for the First Circuit denied Tyco’s petition. On July 6, 2006, the
lead plaintiffs filed in the United States District Court for the District of New Hampshire a motion for
a permanent injunction against prosecution of the class action styled Brazen v. Tyco International Ltd.
that was certified by the Circuit Court for Cook County, Illinois. On October 26, 2006, the Court
denied Plaintiffs’ motion for injunction release without prejudice.
As previously reported in our periodic filings, a class action complaint, Ezra Charitable Trust v. Tyco
International Ltd., was filed in the United States District Court for the Southern District of Florida on
May 28, 2003. The Judicial Panel on Multidistrict Litigation transferred the action to the United States
District Court for the District of New Hampshire. Thereafter, the Company moved to dismiss the
complaint. On December 22, 2004, plaintiff moved to amend the complaint. The proposed amendment
asserts causes of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder against Tyco International Ltd. and Edward Breen, our current Chief
Executive Officer, and seeks to add as defendants David FitzPatrick, our former Chief Financial
Officer, and PricewaterhouseCoopers LLP, our former independent auditors. As against defendants
Breen and FitzPatrick, the complaint asserts a cause of action under Section 20(a) of the Securities
Exchange Act of 1934. On March 25, 2005, the United States District Court for the District of New
Hampshire granted plaintiff’s motion to amend. Plaintiff filed an amended complaint that day. On
March 28, 2005, the Court denied defendants’ motion to dismiss the original complaint, without
prejudice to the defendants’ ability to move against the amended complaint. On April 25, 2005,
defendants moved to dismiss the consolidated amended class action complaint. On September 2, 2005,
the United States District Court for the District of New Hampshire entered a Memorandum and Order
dismissing the amended complaint. On October 18, 2005, plaintiff filed a notice to appeal in the United
States District Court for the District of New Hampshire. On September 27, 2006, the United States
22 2006 Financials