ADT 2009 Annual Report Download - page 154

In the normal course of business, we are liable for contract completion and product performance.
In the opinion of management, such obligations will not significantly affect our financial position,
results of operations or cash flows.
As of September 25, 2009, we had total outstanding letters of credit and bank guarantees of
$659 million.
We record estimated product warranty costs at the time of sale. For further information on
estimated product warranty, see Notes 1 and 13 to the Consolidated Financial Statements.
In 2001, a division of Safety Products initiated a Voluntary Replacement Program (‘‘VRP’’)
associated with the acquisition of Central Sprinkler. The VRP relates to the replacement of certain
O-ring seal sprinkler heads which were originally manufactured by Central Sprinkler prior to Tyco’s
acquisition. Under this program, the sprinkler heads are being replaced free of charge to property
owners. On May 1, 2007, we, along with the Consumer Products Safety Commission announced an
August 31, 2007 deadline for filing claims to participate in the VRP. We will fulfill all valid claims for
replacement of qualifying sprinklers received up to August 31, 2007. Settlements during 2009, 2008 and
2007 include cash expenditures of $33 million, $49 million and $38 million, respectively, related to the
VRP. The Company believes the remaining liability represents our best estimate of the cost required to
complete the VRP as of September 25, 2009, which is not material.
62 2009 Financials