ADT 2009 Annual Report Download - page 115

distribution centers are located in North America, Europe and the Asia-Pacific region. The group
occupies approximately 6 million square feet, of which 3 million square feet are owned and 3 million
square feet are leased.
In the opinion of management, our properties and equipment are in good operating condition and
are adequate for our present needs. We do not anticipate difficulty in renewing existing leases as they
expire or in finding alternative facilities. See Note 15 to Consolidated Financial Statements for a
description of our lease obligations.
Item 3. Legal Proceedings
In the normal course of business, we are subject to various legal proceedings and claims, including
product and general liability matters, environmental matters, patent infringement claims, employment
disputes, disputes on agreements and other commercial disputes.
In connection with the Separation, we entered into a liability sharing agreement regarding certain
legal actions that were pending against Tyco prior to the Separation. Under the Separation and
Distribution Agreement, we, Covidien and Tyco Electronics are jointly and severally liable for the full
amount of any judgments resulting from the actions subject to the agreement, which generally relate to
legacy matters that are not specific to the business operations of any of the companies. The Separation
and Distribution Agreement also provides that we will be responsible for 27%, Covidien 42% and Tyco
Electronics 31% of payments to resolve these matters, with costs and expenses associated with the
management of these contingencies being shared equally among the parties. In addition, under the
agreement, we will manage and control all the legal matters related to assumed contingent liabilities as
described in the Separation and Distribution Agreement, including the defense or settlement thereof,
subject to certain limitations. Additionally, at the time of the Separation, the Company, Covidien and
Tyco Electronics agreed to allocate responsibility for certain legacy tax claims pursuant to the same
formula under the Tax Sharing Agreement. See Note 6 to the Consolidated Financial Statements for a
description of our Tax Sharing Agreement.
Class Action Settlement and Legacy Securities Matters
As previously reported, Tyco, and some members of the Company’s former senior corporate
management were named as defendants in a number of lawsuits alleging violations of the disclosure
provisions of the federal securities laws.
In June 2007 the Company settled 32 purported securities class action lawsuits arising from actions
alleged to have been taken by prior management for $2.975 billion. Of this amount, the Company
contributed $803 million, representing its share under the Separation and Distribution Agreement.
The June 2007 class action settlement did not purport to resolve all legacy securities cases, and
several remain outstanding, the most significant of which is Stumpf v. Tyco International Ltd., which is a
class action lawsuit in which the plaintiffs allege that Tyco, among others, violated the disclosure
provisions of the federal securities laws. The matter arises from Tyco’s July 2000 initial public offering
of common stock of TyCom Inc., and alleges that the TyCom registration statement and prospectus
relating to the sale of common stock were inaccurate, misleading and failed to disclose facts necessary
to make the registration statement and prospectus not misleading. The complaint further alleges the
defendants violated securities laws by making materially false and misleading statements and omissions
concerning, among other things, executive compensation, TyCom’s business prospects and Tyco’s and
TyCom’s finances. The matter is currently in the pre-trial stages of litigation.
In the first half of fiscal 2009, the Company settled a number of legal matters stemming from
alleged violations of federal securities laws committed by former senior management, including several
lawsuits from plaintiffs that had opted out of the June 2007 class action settlement, for an aggregate
amount of approximately $90 million. Pursuant to the Separation and Distribution Agreement, the
2009 Financials 23