ADT 2009 Annual Report Download - page 152

Income Taxes
Tyco and its subsidiaries’ income tax returns periodically are examined by various tax authorities.
In connection with these examinations, tax authorities, including the IRS, have raised issues and
proposed tax adjustments. The Company is reviewing and contesting certain of the proposed tax
adjustments. Amounts related to these tax adjustments and other tax contingencies and related interest
have been assessed as uncertain income tax positions and recorded as appropriate. For a detailed
discussion of contingencies related to Tyco’s income taxes, see Note 6 to the Consolidated Financial
Statements.
Compliance Matters
Tyco has received and responded to various allegations and other information that improper
activities were conducted by Tyco employees in recent years, in particular with respect to DOJ and SEC
investigations that have resulted in our performing a Company-wide baseline review of our policies,
controls and practices as they relate to the Foreign Corrupt Practices Act. For a detailed discussion of
these contingencies and others related to Tyco’s compliance efforts, see Item 3. Legal Proceedings—
Compliance Matters.
Other Matters
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.
Backlog
As of September 25, 2009, we had a backlog of unfilled orders of $9.0 billion, compared to a
backlog of $9.6 billion as of September 26, 2008. We expect that approximately 86% of our backlog as
of September 25, 2009 will be filled during 2010. Backlog by segment as of September 25, 2009 and
September 26, 2008 is as follows ($ in millions):
2009 2008
ADT Worldwide ..................................... $5,908 $5,917
Flow Control ........................................ 1,698 2,083
Fire Protection Services ................................ 1,169 1,314
Electrical and Metal Products ............................ 72 117
Safety Products ...................................... 114 154
$8,961 $9,585
Backlog decreased by $624 million, or 6.5%, from $9.6 billion as of September 26, 2008 to
$9.0 billion as of September 25, 2009. Unfavorable changes in foreign currency exchange rates resulted
in a decrease of $87 million. ADT Worldwide’s backlog decreased by $9 million, or 0.2%, as of
September 25, 2009. The decrease was primarily due to unfavorable exchange rates of $83 million
partially offset by an increase in net bookings of $74 million. ADT Worldwide’s total account base grew
2.9% during 2009 to 7.4 million accounts. The amount of recurring revenue-in-force as of
September 25, 2009 and September 26, 2008 was $4.0 billion and $3.9 billion, respectively. The increase
in recurring revenue-in-force was primarily the result of the increase in the account base discussed
above partially offset by unfavorable changes in foreign currency exchange rates. Recurring
revenue-in-force represents 12 months’ fees for monitoring and maintenance services under contract in
the security business. Flow Control’s backlog decreased by $385 million primarily due to decreased
bookings of $398 million offset by favorable exchange rates of $13 million. Fire Protection Services
60 2009 Financials