ADT 2008 Annual Report Download - page 247

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Commitments and Contingencies (Continued)
ERISA requires that payment of withdrawal liability be made in full or in quarterly installments
commencing upon receipt of a liability assessment from the plan. A plan’s assessment of withdrawal
liability generally may be challenged only in arbitration, and ERISA requires that quarterly payments
must continue to be made during the pendency of the arbitration. If the employer prevails in
arbitration (and any subsequent court appeals), its quarterly withdrawal liability payments are refunded
with interest. The Fund’s total withdrawal liability assessment against SimplexGrinnell is approximately
$25 million. The quarterly withdrawal liability payments are $1.1 million, $6.6 million of which have
been paid to date. While the ultimate outcome is uncertain, SimplexGrinnell believes that it has strong
arguments that no withdrawal liability is owed to the Fund, and it plans to vigorously defend against
the Fund’s withdrawal liability assessment. The matter is currently in arbitration. The Company has
made no provision for this contingency and believes that its quarterly payments are recoverable.
Investigations
The Company and others have received various subpoenas and requests from the Securities and
Exchange Commission (‘‘SEC’s’’) Division of Enforcement, the United States Department of Labor,
state departments of labor, the General Service Administration and others seeking the production of
voluminous documents in connection with various investigations into the Company’s governance,
management, operations, accounting and related controls. The Company cannot predict when these
investigations will be completed, nor can the Company predict what the results of these investigations
may be. It is possible that the Company 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 the Company’s business with non-governmental customers) or
suffer other penalties or adverse impacts, each of which could have a material adverse effect on the
Company’s 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. The ultimate cost of site cleanup is difficult to predict given the
uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and
regulations and alternative cleanup methods. As of September 26, 2008, Tyco concluded that it was
probable that it would incur remedial costs in the range of approximately $37 million to $76 million. As
of September 26, 2008, Tyco concluded that the best estimate within this range is approximately
$43 million, of which $10 million is included in accrued and other current liabilities and $33 million is
included in other liabilities on Tyco’s Consolidated Balance Sheet. In view of the Company’s financial
position and reserves for environmental matters, the Company believes that any potential payment of
such estimated amounts will not have a material adverse effect on its financial position, results of
operations or cash flows.
Tyco has recorded asset retirement obligations (‘‘AROs’’) according to the provisions of SFAS
No. 143, ‘‘Accounting for Asset Retirement Obligations,’’ and FIN No. 47 for the estimated future costs
associated with legal obligations to retire certain assets. As of September 26, 2008 and September 28,
2007, the Company’s AROs were $13 million and $12 million, respectively. The Company believes that
any potential payment of such estimated amounts will not have a material adverse effect on its financial
position, results of operations or cash flows. See further discussions on the implementation of FIN
No. 47 in Note 7.
144 2008 Financials