ADT 2009 Annual Report Download - page 111

If the lenders or trustees accelerate the repayment of borrowings, we cannot provide assurance that we
will have sufficient assets to repay our credit facilities and our other indebtedness. Furthermore,
acceleration of any obligation under any of our material debt instruments will permit the holders of our
other material debt to accelerate their obligations, which could have a material adverse affect on our
financial condition. See Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Material adverse legal judgments, fines, penalties or settlements could adversely affect our financial health
and prevent us from fulfilling our obligations under our outstanding indebtedness.
We estimate that our available cash, our cash flow from operations and amounts available to us
under our revolving lines of credit will be adequate to fund our operations and service our debt for the
foreseeable future. However, material adverse legal judgments, fines, penalties or settlements arising
from our pending investigations and litigation could require additional funding. If such developments
require us to obtain additional funding, we cannot provide assurance that we will be able to obtain the
additional funding that we need on commercially reasonable terms or at all, which could have a
material adverse effect on our financial condition, results of operations or cash flows.
Such an outcome could have important consequences to you. For example, it could:
• require us to dedicate a substantial portion of our cash flow from operations to payments on our
indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general corporate purposes, including
debt reduction or dividend payments;
• increase our vulnerability to adverse economic and industry conditions;
• limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in
which we operate;
• restrict our ability to introduce new technologies or exploit business opportunities;
• make it more difficult for us to satisfy our payment obligations with respect to our outstanding
indebtedness; and
• increase the difficulty and/or cost to us of refinancing our indebtedness.
Risks Relating to Tax Matters
Examinations and audits by tax authorities, including the Internal Revenue Service, could result in
additional tax payments for prior periods.
The Company and its subsidiaries’ income tax returns periodically are examined by various tax
authorities. In connection with these examinations, tax authorities, including the Internal Revenue
Service (‘‘IRS’’), have raised issues and proposed tax adjustments. We are reviewing and contesting
certain of the proposed tax adjustments. Amounts related to these tax adjustments and other tax
contingencies and related interest that management has assessed for uncertain income tax positions
have been recorded through the income tax provision, equity or goodwill, as appropriate. The
calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax
regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities
and record tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions
based on our estimate of whether, and the extent to which, additional income taxes will be due. These
tax liabilities are reflected net of related tax loss carryforwards. We adjust these liabilities in light of
changing facts and circumstances.
In 2004, in connection with the IRS audit of the 1997 through 2000 years, the Company submitted
to the IRS proposed adjustments to certain prior period U.S. federal income tax returns resulting in a
reduction in the taxable income previously filed. During 2006, the IRS accepted substantially all of the
2009 Financials 19