ADT 2010 Annual Report Download - page 112

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 14 to Consolidated Financial Statements for a
description of our lease obligations.
Item 3. Legal Proceedings
As previously disclosed, the Company and certain of its officers and directors were subject to a
number of lawsuits alleging violations of federal and state securities laws and related claims. Since
June 2007, the Company has resolved substantially all of these claims, although a number of matters
have not reached final resolution. The most significant of these is the previously disclosed settlement
for $79 million of the Stumpf v. Tyco International Ltd. matter, a class action lawsuit arising from Tyco’s
July 2000 initial public offering of common stock of TyCom Ltd. The settlement received final court
approval on August 25, 2010 from the United States District Court for the District of New Jersey,
although certain contingencies for the matter will remain outstanding until the end of calendar year
2010. The settlement is subject to the liability sharing provisions of the Separation and Distribution
Agreement with Covidien and Tyco Electronics. The Company believes its remaining reserve related to
legacy securities matters is sufficient to satisfy the final resolution of this matter.
Tyco is also a party to several lawsuits involving disputes with former management, among which
are affirmative cases brought by Tyco against Mr. Dennis L. Kozlowski, Tyco’s former chief executive
officer, Mr. Mark Swartz, its former chief financial officer, and Mr. Frank Walsh Jr., a former director.
In connection with these affirmative actions, Messrs. Kozlowski and Swartz are seeking an aggregate of
approximately $128 million allegedly due in connection with their compensation and retention
arrangements and under ERISA, and Mr. Walsh has made claims alleging that Tyco is required to
indemnify him for his defense costs and settlement amounts paid by him in connection with securities
lawsuits and arising from his role as a Tyco director. Tyco intends to vigorously defend each of these
actions. In October 2010, the U.S. District Court for the Southern District of New York denied Tyco’s
affirmative claims against Mr. Walsh. Tyco intends to appeal this decision. Mr. Walsh’s claims for
indemnification against Tyco remain outstanding.
Tyco has reserved its best estimate of probable loss for these matters, and although their ultimate
resolution could differ materially from these estimates, it does not believe any such resolution would
have a material adverse effect on its financial position, results of operations or cash flows.
Environmental Matters
Tyco is involved in various stages of investigation and cleanup related to environmental
remediation matters at a number of sites. The ultimate cost of site cleanup is difficult to predict given
the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and
regulations and alternative cleanup methods. As of September 24, 2010, Tyco concluded that it was
probable that it would incur remedial costs in the range of approximately $27 million to $85 million. As
of September 24, 2010, Tyco concluded that the best estimate within this range is approximately
$34 million, of which $18 million is included in accrued and other current liabilities and $16 million is
included in other liabilities in the Company’s Consolidated Balance Sheet. In view of the Company’s
financial position and reserves for environmental matters, the Company believes that any potential
payments of such estimated amounts will not have a material adverse effect on its financial position,
results of operations or cash flows.
Asbestos Matters
The Company and certain of its subsidiaries along with numerous other companies are named as
defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials.
These cases typically involve product liability claims based primarily on allegations of manufacture, sale
or distribution of industrial products that either contained asbestos or were attached to or used with
24 2010 Financials