ADT 2008 Annual Report Download - page 120

various U.S. federal, state and local laws and regulations, as well as non-U.S. laws and regulations,
including many related to consumer protection. Most states in which we operate have licensing laws
covering the monitored security services industry and the construction industry. Our ADT Worldwide
business relies heavily upon wireline telephone service to communicate signals, and wireline telephone
companies are regulated by both the federal and state governments. Changes in laws or regulations
could require us to change the way we operate, which could increase costs or otherwise disrupt
operations. In addition, failure to comply with any applicable laws or regulations could result in
substantial fines or revocation of our operating permits and licenses. If laws and regulations changed or
we failed to comply, our financial condition, results of operations or cash flows could be materially and
adversely affected.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar
anti-bribery laws outside the United States.
The U.S. Foreign Corrupt Practices Act (the ‘‘FCPA’’) and similar anti-bribery laws in other
jurisdictions generally prohibit companies and their intermediaries from making improper payments to
non-U.S. officials for the purpose of obtaining or retaining business. Our policies mandate compliance
with these anti-bribery laws. We operate in many parts of the world that have experienced
governmental and commercial corruption to some degree and in certain circumstances, strict
compliance with anti-bribery laws may conflict with local customs and practices. We cannot assure you
that our internal control policies and procedures always will protect us from reckless or criminal acts
committed by our employees or agents. Furthermore, we have been subject to investigations by the
DOJ and the SEC related to allegations that improper payments have been made by our subsidiaries in
recent years in violation of the FCPA. We have reported to the DOJ and the SEC the investigative
steps and remedial measures that we have taken in response to the allegations. We have also retained
outside counsel to perform a company-wide baseline review of our policies, controls and practices with
respect to the FCPA, and we periodically provide updates to the SEC and DOJ. We also intend to
present our factual findings upon the conclusion of the review. As a result, it is possible that we will be
required to pay material fines, consent to injunctions on future conduct or suffer other penalties or
adverse impacts, including being subject to securities litigation or a general loss of investor confidence,
any one of which could adversely affect our financial position, results of operations, cash flows, business
prospects or the market value of our stock.
Our failure to satisfy international trade compliance regulations may adversely affect us.
Tyco’s global operations require importing and exporting goods and technology across international
borders on a regular basis. From time to time, Tyco obtains or receives information alleging improper
activity in connection with imports or exports. Tyco’s policy mandates strict compliance with U.S. and
foreign international trade laws. When Tyco receives information alleging improper activity, its policy is
to investigate that information and respond appropriately, including, if warranted, reporting its findings
to relevant governmental authorities. Nonetheless, we cannot provide assurance that our policies and
procedures will always protect us from actions that would violate U.S. and/or foreign laws. Such
improper actions could subject the Company to civil or criminal penalties, including material monetary
fines, or other adverse actions including denial of import or export privileges, and could damage our
reputation and our business prospects.
We continue to be subject to a number of lawsuits stemming from the actions of our prior senior
management. Adverse outcomes of these matters could have a material adverse effect on our financial
condition, results of operations or cash flows.
In 2007, we settled the majority of the legacy securities claims brought against Tyco related to the
actions of former senior management by contributing our share to a $2.975 billion settlement fund.
However, the settlement did not purport to resolve all securities cases, and several cases remain
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