ADT 2008 Annual Report Download - page 176

Income Taxes
Tyco and its subsidiaries’ income tax returns periodically are examined by various tax authorities. In
connection with these examinations, tax authorities, including the IRS, have raised issues and proposed
tax adjustments. The Company is reviewing and contesting certain of the proposed tax adjustments.
Amounts related to these tax adjustments and other tax contingencies and related interest have been
assessed under FIN 48 and recorded as appropriate. For a detailed discussion of contingencies related
to Tyco’s income taxes, see Item 3. Legal Proceedings—Income Tax Matters.
Compliance Matters
Tyco has received and responded to various allegations and other information that improper
activities were conducted by Tyco employees in recent years, in particular with respect to DOJ and SEC
investigations that have resulted in our performing a company-wide baseline review of our policies,
controls and practices as they relate to the Foreign Corrupt Practices Act. For a detailed discussion of
these contingencies and others related to Tyco’s compliance efforts, see Item 3. Legal Proceedings—
Compliance Matters.
Other Matters
The Company is a defendant in a number of other pending legal proceedings incidental to present
and former operations, acquisitions and dispositions. The Company does not expect the outcome of
these proceedings, either individually or in the aggregate, to have a material adverse effect on its
financial position, results of operations or cash flows.
Backlog
At September 26, 2008, we had a backlog of unfilled orders of $9.7 billion, compared to a backlog
of $9.0 billion at September 28, 2007. We expect that approximately 86% of our backlog at
September 26, 2008 will be filled during 2009. Backlog by segment at September 26, 2008 and
September 28, 2007 is as follows ($ in millions):
2008 2007
ADT Worldwide ..................................... $6,177 $6,137
Flow Control ........................................ 2,083 1,579
Fire Protection Services ................................ 1,139 1,048
Electrical and Metal Products ............................ 117 114
Safety Products ...................................... 154 132
$9,670 $9,010
Within ADT Worldwide, backlog increased primarily as a result of recurring revenue-in-force,
which represents 12 months’ fees for monitoring and maintenance services under contract in the
security business. Our total account base grew 1.6% year over year to 7.2 million accounts. The amount
of recurring revenue-in-force at September 26, 2008 and September 28, 2007 was $3.97 billion and
$3.93 billion, respectively. Flow Control had increased bookings mostly in the Asia-Pacific and
Americas regions. Backlog within Fire Protection Services increased primarily as a result of increased
orders in Asia and North America.
2008 Financials 73