ADT 2007 Annual Report Download - page 104

installation in fire protection systems or for distribution. Materials are purchased from a large number
of independent sources around the world. There have been no shortages in materials which have had a
material adverse effect on our businesses. However, significant increases in certain raw material costs
may have an adverse impact on costs and operating margins. We enter into long-term supply contracts,
using fixed or variable pricing to manage our exposure to potential supply disruptions.
Governmental Regulation and Supervision
Our operations are subject to various federal, state and local consumer protection, licensing and
other laws and regulations. Most states in which we operate have licensing laws directed specifically
toward the alarm and fire suppression industries. Our ADT Worldwide business currently relies
primarily upon the use of wireline telephone service to communicate signals. Wireline telephone
companies in the United States are regulated by both the federal and state governments.
We conduct our businesses through subsidiaries worldwide. Changes in legislation or government
policies can affect our worldwide operations. For example, governmental regulation of fire safety codes
can impact our Fire Protection Services business.
Environmental Matters
We are subject to numerous foreign, federal, state and local environmental protection and health
and safety laws governing, among other things, the generation, storage, use and transportation of
hazardous materials; emissions or discharges of substances into the environment; and the health and
safety of our employees. The cost of compliance with environmental laws, however, has not had, and
based on current information and applicable laws, is not expected to have, a material adverse effect
upon our capital expenditures, earnings or competitive position.
Certain environmental laws assess liability on current or previous owners or operators of real
property for the cost of removal or remediation of hazardous substances at their properties or at
properties at which they have disposed of hazardous substances. In addition to cleanup actions brought
by governmental authorities, private parties could bring personal injury or other claims due to the
presence of, or exposure to, hazardous substances. We have received notification from the U.S.
Environmental Protection Agency and from state environmental agencies that conditions at a number
of sites where we and others disposed of hazardous substances require cleanup and other possible
remedial action and may require that we reimburse the government or otherwise pay for the cost of
cleanup of those sites and/or for natural resource damages. We have projects underway at a number of
current and former manufacturing facilities to investigate and remediate environmental contamination
resulting from past operations.
Given uncertainties regarding the extent of the required cleanup, the interpretation of applicable
laws and regulations and alternative cleanup methods, the ultimate cost of cleanup at disposal sites and
manufacturing facilities is difficult to predict. Based upon our experience, current information and
applicable laws, we believe that it is probable that we would incur remedial costs in the range of
approximately $36 million to $63 million. As of September 28, 2007, we believe that the best estimate
within this range is approximately $40 million, of which $11 million is included in accrued expenses and
other current liabilities and $29 million is included in other liabilities on the Consolidated Balance
Sheets. In view of our financial position and reserves for environmental matters, we believe that any
potential payment of such estimated amounts will not have a material adverse effect on our financial
position, results of operations or cash flows.
Employees
As of September 28, 2007, we employed approximately 118,000 people worldwide, of which
approximately 45,000 are employed in the United States and 73,000 are outside the United States. We
have collective bargaining agreements with labor unions covering approximately 17,000 employees and
believe that our relations with the labor unions are generally good.
12 2007 Financials