ADT 2007 Annual Report Download - page 119

Fire Protection Services operates through a network of offices located in North America, Central
America, South America, Europe, and the Asia-Pacific region. Our Fire Protection Services
manufacturing facilities are located in North America, Europe and the Asia-Pacific region. The group
occupies approximately 6 million square feet, of which 1 million square feet are owned and 5 million
square feet are leased.
Flow Control has manufacturing facilities, warehouses and distribution centers throughout North
America, South America, Europe, and the Asia-Pacific region. The group occupies approximately
12 million square feet, of which 6 million square feet are owned and 6 million square feet are leased.
Safety Products operates through a network of offices located in North America, South America,
Europe, and the Asia-Pacific region. Our Safety Products manufacturing facilities are located in North
America, Europe and the Asia-Pacific region. The group occupies approximately 6 million square feet,
of which 3 million square feet are owned and 3 million square feet are leased.
Electrical and Metal Products has manufacturing facilities, warehouses and distribution centers
throughout North America, South America, Europe, and the Asia-Pacific region. The group occupies
approximately 7 million square feet, of which 5 million square feet are owned and 2 million square feet
are leased.
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 16 to Consolidated Financial Statements for a
description of our lease obligations.
Item 3. Legal Proceedings
In the ordinary course of business, we are subject to various legal proceedings and claims,
including product liability matters, environmental matters, employment disputes, disputes on
agreements and other commercial disputes. In addition, we operate in an industry susceptible to
significant patent legal claims. At any given time in the ordinary course of business, we are involved as
either a plaintiff or defendant in a number of patent infringement actions. If infringement of a third
party’s patent were to be determined against us, we might be required to make significant royalty or
other payments or might be subject to an injunction or other limitation on our ability to manufacture
or sell one or more products. If a patent owned by or licensed to us were determined to be invalid or
unenforceable, we might be required to reduce the value of the patent on our balance sheet and to
record a corresponding charge, which could be significant in amount.
In connection with the Separation, we entered into a liability sharing agreement regarding certain
class actions that were pending against Tyco prior to the Separation. Subject to the terms and
conditions of the Separation and Distribution Agreement, we will manage and control all the legal
matters related to assumed contingent liabilities as described in the Separation and Distribution
Agreement, including the defense or settlement thereof, subject to certain limitations. A description of
the liability sharing provisions of the Separation and Distribution Agreement regarding these class
actions can be found in Tyco’s Current Report on Form 8-K filed with the Securities and Exchange
Commission (‘‘SEC’’) on July 6, 2007.
Securities Class Actions
As previously reported in our periodic filings, Tyco and certain of our former directors and officers
have been named as defendants in over 40 purported securities class action suits. We stipulated,
pursuant to a court order, that each party to the Separation and Distribution Agreement would be
primarily liable for a portion of the obligations arising from such litigation. The stipulation also
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