ADT 2007 Annual Report Download - page 117

Continuing demands on our management team as a result of the Separation could distract management’s
attention from operating the business.
The complexity of the Separation has required and will continue to require a substantial amount of
management and operational resources. Our management team must devote continued time and
attention to fulfilling Tyco’s obligations under the Separation and Distribution Agreement and the Tax
Sharing Agreement, including the defense and settlement of litigation related to shared contingent and
other corporate liabilities of Tyco, Covidien and Tyco Electronics and the administration of the U.S. tax
audit for periods up to June 29, 2007. At the same time, our management team must successfully
implement administrative and operational changes necessary to achieve reductions in corporate expense
following the Separation. These and related demands on our administrative resources may distract
management from the day-to-day operation of Tyco’s business. As a result our financial condition,
results of operations or cash flows may be adversely affected.
We may be unable to achieve some or all of the benefits that we expect will be achieved from the
Separation.
We may not be able to achieve the full strategic and financial benefits we expect will result from
the separation of two of Tyco’s segments into independent companies or such benefits may be delayed
or may not occur at all. For example, there can be no assurance that analysts and investors will regard
Tyco’s post-Separation corporate structure as more clear and simple than its pre-Separation corporate
structure or place a greater value on the businesses remaining with Tyco post-Separation than they
placed on those businesses pre-Separation.
Risks Related to Corporate Governance
We are subject to governmental investigations that might have serious consequences.
We are now, and believe that in light of the current U.S. governmental contracting environment we
will continue to be, the subject of one or more U.S. governmental investigations. If we or one of our
business units were charged with wrongdoing as a result of any U.S. governmental investigations,
including violation of certain environmental or export laws, we could be suspended from bidding on or
receiving awards of new U.S. governmental contracts pending the completion of legal proceedings. If
convicted or found liable, we could be subject to fines, penalties, repayments and treble and other
damages. Any contracts found to be tainted by fraud could be voided by the U.S. government. The
U.S. government also reserves the right to prohibit a contractor from receiving new governmental
contracts for fraudulent, criminal or other seriously improper conduct. Independently, failure to comply
with U.S. laws and regulations related to the export of goods and technology outside the United States
could result in civil or criminal penalties and suspension or termination of our export privileges.
Risks Relating to Our Jurisdiction of Incorporation
Legislation and negative publicity regarding Bermuda companies could affect our financial condition,
results of operations or cash flows.
Legislation Relating to Government Contracts
We continue to assess the potential impact of various U.S. federal and state legislative proposals
that would deny government contracts to U.S. companies that move their corporate location abroad.
The legislative proposals could cover the 1997 acquisition of Tyco International Ltd., a Massachusetts
corporation, by ADT Limited (a public company that had been located in Bermuda since the 1980’s
with origins dating back to the United Kingdom since the early 1900’s), as a result of which ADT
changed its name to Tyco International Ltd. and became the parent to the Tyco group.
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