ADT 2008 Annual Report Download - page 249

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Commitments and Contingencies (Continued)
follow-up investigations, including, as appropriate, briefings concerning additional instances of potential
improper payments identified by us in the course of our ongoing compliance activities. Covidien and
Tyco Electronics agreed, in connection with the Separation, to cooperate with the Company in its
response to these allegations. To date, the baseline review has revealed that some business practices
may not comply with Tyco and FCPA requirements. At this time, we cannot predict the outcome of
these matters and other allegations reported to regulatory and law enforcement authorities and
therefore cannot estimate the range of potential loss or extent of risk, if any, that may result from an
adverse resolution of these matters. However, it is possible that we may be required to pay material
fines, consent to injunctions on future conduct, or suffer other penalties or adverse impacts, each of
which could have a material adverse effect on our financial position, results of operations or cash flows.
Any judgment required to be paid or settlement or other cost incurred by Tyco in connection with
the FCPA investigations matters would be subject to the liability sharing provisions of the Separation
and Distribution Agreement, which assigned liabilities primarily related to the former Healthcare and
Electronics businesses of Tyco to Covidien or Tyco Electronics, respectively, and provides that Tyco will
retain liabilities primarily related to its continuing operations. Any liabilities not primarily related to a
particular segment will be shared equally among Tyco, Covidien and Tyco Electronics.
The German Federal Cartel Office (‘‘FCO’’) charged in early 2007 that certain German subsidiaries
in Tyco’s Flow Control business have engaged in anti-competitive practices, in particular with regard to
its hydrant, valve, street box and fittings business. Tyco investigated this matter and determined that the
conduct may have violated German anti-trust-law. Tyco is cooperating with the FCO in its investigation
of this violation. Tyco cannot estimate the range of potential loss that may result from this violation. It
is possible that the Company may be subject to civil or criminal proceedings and may be required to
pay judgments, suffer penalties or incur settlements in amounts that may have a material adverse effect
on its financial position, results of operations or cash flows.
Other Matters
Fitzpatrick Contractors Limited v. Tyco Fire and Integrated Solutions (UK) Ltd. On July 18, 2007,
Fitzpatrick Contractors Limited (‘‘FCL’’) commenced an action against Tyco Fire and Integrated
Solutions (UK) Ltd. in the High Court of Justice, Queen Bench Division, Technology and Construction
Court, United Kingdom, alleging that Tyco entered into a binding contract in 2002 for the design,
manufacture and installation of mechanical and electrical works for the refurbishment of a portion of
London Transport’s Blackwell Tunnel. FCL seeks damages for breach of contract in the amount of
approximately $38 million and we have reserved our best estimate of probable loss related to this
matter. Tyco intends to defend this action vigorously. While it is not possible at this time to predict the
final outcome of this dispute, Tyco does not believe this action will have a material adverse effect on its
financial position, results of operations or cash flows beyond what has been accrued for. Trial is
expected to begin in April 2009.
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.
146 2008 Financials