ADT 2008 Annual Report Download - page 168

availability of funding has not been adversely affected by illiquid credit markets and we do not expect it
to be materially impacted in the near future.
We continue to have sufficient borrowing capacity for our foreseeable needs based on our current
cash flow forecast. We currently have two syndicated multi-year revolving credit facilities: a $1.25 billion
facility maturing on April 25, 2012 and a $500 million facility maturing on June 24, 2011 with an
aggregate commitment of $1.75 billion.
On September 15, 2008, Lehman Brothers Holdings Inc. (‘‘Lehman’’) filed a petition under
Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of
New York. Lehman is one of the lenders in our $1.25 billion revolving credit facility with a
commitment of $60 million. Our $500 million credit facility did not have a commitment from Lehman.
With the exception of the $60 million in commitments under our $1.25 billion facility, we believe that
the lenders under our revolving credit facilities are capable of meeting any borrowing requests we may
make.
On September 25, 2008, we issued a borrowing request for $300 million under our $1.25 billion
credit facility in accordance with the terms of the agreement. The Lehman portion of the commitment
was not funded, resulting in a total funding of $286 million, which represented the total amount
outstanding under our revolving credit facilities as of September 26, 2008.
Based on our cash flow forecast, we believe we will continue to have sufficient liquidity to meet our
working capital needs, even if Lehman remains unable or unwilling to participate or if another lender
does not assume Lehman’s commitment in the future.
Our ability to access the commercial paper market, and the related cost of these borrowings, is
affected by market conditions and our short-term borrowing rating. As of June 27, 2008, we had
outstanding commercial paper borrowings of $358 million, all of which were scheduled to mature
during the fourth quarter of fiscal 2008. While the Company had the intent to refinance these
outstanding borrowings through the commercial paper market, we have experienced limitations in our
ability to access this market. As of September 26, 2008, we were successful in refinancing $116 million
of the commercial paper outstanding as of June 27, 2008 with new commercial paper issuance. The
remaining balance was refinanced under our $1.25 billion credit facility. Our multi-year revolving credit
facilities serve as a backstop to our commercial paper program. It is our intention to fund future
maturities of commercial paper through new commercial paper issuances or additional borrowing from
our credit facilities.
As of November 12, 2008, $686 million was outstanding under our revolving credit facility.
In addition to our available cash and operating cash flows, additional sources of potential liquidity
include committed credit lines, our commercial paper program, public debt and equity markets as well
as the ability to sell trade accounts receivable. We continue to balance our cash operating, investing
and financing uses of cash through investment in our existing core businesses, strategic acquisitions and
divestitures, dividends and share repurchases. We believe our cash position, amounts available under
our credit facilities and cash provided by operating activities will be adequate to cover our operational
and business needs.
As a result of declines experienced in global financial markets, our pension funds have and may
continue to experience a negative return which will result in an increase in pension costs in 2009. We will
continue to monitor the market conditions and assess the impact, if any, on our financial position, results of
operations and cash flows. Approximately 100% of our U.S. and 97% of our non-U.S. funded pension
plans are invested in readily-liquid investments, including equity and fixed income securities. Although we
do not believe we will be required to make a material cash contribution in the next 12 months, if these
market conditions continue, we may be required to make incremental cash contributions under the Pension
Protection Act in the U.S. or other local statutory law.
2008 Financials 65