ADT 2007 Annual Report Download - page 143

number of strategic alternatives for under-performing or non-strategic businesses including possible
divestiture. In July 2007, the Board of Directors approved for divestiture Infrastructure Services which
was previously reported as part of Corporate and Other. Infrastructure Services had total net revenue
of $1.3 billion and operating income of $53 million in 2007. Infrastructure Services met the held for
sale criteria in the fourth quarter of 2007 and has been included in discontinued operations in all
periods presented.
To further improve operating efficiency, during the first quarter of 2007, we launched a
restructuring program across all segments, including the corporate organization, which will streamline
some of the businesses and reduce the operational footprint. We expect to incur charges related to the
program of approximately $350 million to $400 million through the end of 2008. During 2007, we
incurred charges of $204 million, of which $7 million was recorded in cost of sales, and utilized cash of
$70 million related to this program. We believe this restructuring program will strengthen our
competitive position over the long term.
Class Action Settlement
On May 14, 2007, Tyco entered into a Memorandum of Understanding with plaintiffs’ counsel in
connection with the settlement of 32 purported securities class action lawsuits.
Under the terms of the Memorandum of Understanding, the plaintiffs agreed to release all claims
against Tyco, the other settling defendants and ten other individuals in consideration for the payment of
$2.975 billion from Tyco to the certified class. The parties to the Memorandum of Understanding have
applied to the court for approval of the settlement agreement. On July 13, 2007, the U. S. District
Court in Concord, New Hampshire granted preliminary approval of the settlement. On November 2,
2007, the final fairness hearing for the class settlement was held. The Court indicated it would approve
the settlement and stated a formal ruling would be issued in a few weeks. If the settlement agreement
does not receive final court approval, the Memorandum of Understanding will be null and void. By
December 28, 2007, class participants must file their proofs of claim demonstrating their right to
recovery under the class settlement.
The deadline for deciding not to participate in the class settlement was September 28, 2007. As of
such date, Tyco had received opt-out notices from individuals and entities totaling approximately 4% of
the shares owned by class members. These individuals and entities may pursue their claims separately
against Tyco and any judgments resulting from such claims would not reduce the settlement amount.
One entity, Franklin Mutual Advisers, LLC, has filed a complaint against Tyco on September 24, 2007
in an action styled Franklin Mutual Advisers, LLC v. Tyco International Ltd. in the United States District
Court for the District of New Jersey alleging violations of Section 11 of the Securities Act of 1933,
15 U.S.C. Sec. 77(b), Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. Sec. 78(b),
and Rule 10b-5 promulgated thereunder and Section 18 of the Securities and Exchange Act of 1934,
15 U.S.C. Sec. 78(k) in connection with the plaintiffs’ purchases and sales of Tyco securities between
June 4, 2001 and April 30, 2002. The plaintiffs seek unspecified compensatory damages and reasonable
attorneys’ fees and costs. Tyco has requested that this action be transferred to the United States
District Court for the District of New Hampshire. Tyco intends to vigorously defend the litigation. It is
not possible at this time to predict the final outcome or to estimate the amount of loss or range of
possible loss, if any, that might result from an adverse resolution of the Franklin matter or other
unasserted claims from individuals that have opted-out.
2007 Financials 51