ADT 2008 Annual Report Download - page 175

Tyco has assumed 27%, Covidien has assumed 42% and Tyco Electronics has assumed 31% of
certain Tyco pre-Separation contingent and other corporate liabilities, which include securities class
action litigation, Employee Retirement Income Security Act (‘‘ERISA’’) class action litigation, certain
legacy tax contingencies and any actions with respect to the spin-offs or the distributions made or
brought by any third party. Any amounts relating to these contingent and other corporate liabilities
paid by Tyco after the spin-offs that are subject to the allocation provisions of the Separation and
Distribution Agreement will be shared among Tyco, Covidien and Tyco Electronics pursuant to the
same allocation ratio. As described in the Separation and Distribution Agreement, Tyco, Tyco
Electronics and Covidien are jointly and severally liable for all amounts relating to the previously
disclosed securities class action settlement. All costs and expenses that Tyco incurs in connection with
the defense of such litigation, other than the amount of any judgment or settlement, which will be
allocated in the manner described above, will be borne equally by Covidien, Tyco Electronics and Tyco.
Legal Matters
Class Actions
For a discussion of contingencies related to Tyco’s securities class actions, class action settlement,
ERISA related litigation and Tyco litigation against former senior management, litigation related to our
public debt and various other legal matters, see Item 3, Legal Proceedings. We are generally obligated
to indemnify our directors and officers and our former directors and officers who are named as
defendants in some or all of these matters to the extent required by Bermuda law. While we may from
time to time seek to engage plaintiff’s counsel in settlement discussions, we are unable at this time to
estimate what our ultimate liability in these matters may be, and it is possible that we will be required
to pay judgments or settlements and incur expenses, in excess of any insurance coverage, in aggregate
amounts that could have a material adverse effect on our financial position, results of operations or
cash flows.
Investigations
For a detailed discussion of contingencies related to governmental investigations related to Tyco,
see Item 3. Legal Proceedings—Subpoenas and Document Requests From Governmental Entities. We
cannot predict when these investigations will be completed, nor can we predict what the results of these
investigations may be. It is possible that we will be required to pay material fines, consent to
injunctions on future conduct, lose the ability to conduct business with government entities or
instrumentalities (which in turn could negatively impact our business with non-governmental customers)
or suffer other penalties or adverse impacts, each of which could have a material adverse effect on our
business. It is not possible to estimate the amount of loss, or range of possible loss, if any, that might
result from an adverse resolution of these matters.
Environmental Matters
Tyco is involved in various stages of investigation and cleanup related to environmental remediation
matters at a number of sites. For a detailed discussion of contingencies related to Tyco’s environmental
matters, see Item 1. Business—Environmental Matters and Item 3. Legal Proceedings—Environmental
Matters.
Asbestos Matters
Tyco and some of its subsidiaries are named as defendants in personal injury lawsuits based on
alleged exposure to asbestos-containing materials. For a detailed discussion of Tyco’s contingencies
related to these matters, see Item 3. Legal Proceedings—Asbestos Matters.
72 2008 Financials