ADT 2009 Annual Report Download - page 108

operations. In addition, failure to comply with any applicable laws or regulations could result in
substantial fines or revocation of our operating permits and licenses. If laws and regulations changed or
we failed to comply, our financial condition, results of operations or cash flows could be materially and
adversely affected.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar
anti-bribery laws outside the United States.
The U.S. Foreign Corrupt Practices Act (the ‘‘FCPA’’) and similar anti-bribery laws in other
jurisdictions generally prohibit companies and their intermediaries from making improper payments to
government officials for the purpose of obtaining or retaining business. Recent years have seen a
substantial increase in FCPA enforcement activity, with more frequent and aggressive investigations and
enforcement proceedings by both the Department of Justice (‘‘DOJ’’) and the Securities and Exchange
Commission (‘‘SEC’’), increased enforcement activity by non-U.S. regulators, and increases in criminal
and civil proceedings brought against companies and individuals. Our policies mandate compliance with
these anti-bribery laws. We operate in many parts of the world that have experienced governmental and
commercial corruption to some degree and in certain circumstances, strict compliance with anti-bribery
laws may conflict with local customs and practices. We cannot assure you that our internal control
policies and procedures always will protect us from reckless or criminal acts committed by our
employees or agents. Furthermore, we have been subject to investigations by the DOJ and the SEC
related to allegations that improper payments have been made by our subsidiaries and agents in recent
years in violation of the FCPA. We have reported to the DOJ and the SEC the remedial measures that
we have taken in response to the allegations and our own internal investigations. We also retained
outside counsel to perform a Company-wide baseline review of our policies, controls and practices with
respect to the FCPA, and we periodically provide updates to the SEC and DOJ regarding our FCPA
investigations and compliance activities. As a result, it is possible that we will be required to pay
material fines, consent to injunctions on future conduct or suffer other civil or criminal penalties or
adverse impacts, including being subject to securities litigation or a general loss of investor confidence,
any one of which could adversely affect our financial position, results of operations, cash flows, business
prospects or the market value of our stock.
Our failure to satisfy international trade compliance regulations may adversely affect us.
Our global operations require importing and exporting goods and technology across international
borders on a regular basis. From time to time, we obtain or receive information alleging improper
activity in connection with imports or exports. Our policy mandates strict compliance with U.S. and
international trade laws. When we receive information alleging improper activity, our policy is to
investigate that information and respond appropriately, including, if warranted, reporting our findings
to relevant governmental authorities. Nonetheless, we cannot provide assurance that our policies and
procedures will always protect us from actions that would violate U.S. and/or foreign laws. Such
improper actions could subject the Company to civil or criminal penalties, including material monetary
fines, or other adverse actions including denial of import or export privileges, and could damage our
reputation and our business prospects.
We continue to be responsible for a portion of our contingent and other corporate liabilities following the
Separation, primarily those relating to shareholder litigation and pre-Separation income tax liabilities.
Under the Separation and Distribution Agreement and other agreements, subject to certain
exceptions contained in the Tax Sharing Agreement, we, Covidien and Tyco Electronics have agreed to
assume and be responsible for 27%, 42% and 31%, respectively, of certain of our contingent and other
corporate liabilities. All costs and expenses associated with the management of these contingent and
other corporate liabilities will be shared equally among the parties. These contingent and other
corporate liabilities primarily relate to legacy securities litigation and any actions with respect to the
separation plan or the Separation brought by any third party, as well as pre-Separation income tax
liabilities. Liabilities that are specifically related to one of the three separated companies are not
allocated.
16 2009 Financials