ADT 2010 Annual Report Download - page 144

Commitments and Contingencies
Contractual Obligations
Contractual obligations and commitments for debt, minimum lease payment obligations under non-
cancelable operating leases and other obligations as of September 24, 2010 are as follows
($ in millions):
Fiscal Year
2011 2012 2013 2014 2015 Thereafter Total
Debt principal(1) .................... $ 516 $ — $ — $656 $500 $2,379 $4,051
Interest payments(2) ................. 235 219 219 199 169 632 1,673
Capital leases(3) .................... 215566 35 78
Operating leases ................... 254 194 131 86 56 155 876
Purchase obligations(4) ............... 488 6 3 — — — 497
Total contractual cash obligations(5) ...... $1,514 $424 $358 $947 $731 $3,201 $7,175
(1) Excludes debt discount, swap activity and interest.
(2) Interest payments consist of interest on our fixed interest rate debt and exclude the impact of our interest rate swaps. As of
September 24, 2010, we had swapped an aggregate of approximately $1.5 billion of fixed for floating rate debt.
(3) Excludes interest.
(4) Purchase obligations consist of commitments for purchases of goods and services.
(5) Other long-term liabilities excluded from the above contractual obligation table primarily consist of the following: pension
and postretirement costs, income taxes, warranties and environmental liabilities. We are unable to estimate the timing of
payment for these items due to the inherent uncertainties related to these obligations. However, the minimum required
contributions to our pension plans are expected to be approximately $64 million in 2011 and we expect to pay $6 million in
2011 related to postretirement benefit plans. In addition, we expect to make a payment of $156 million for resolution of
certain of the outstanding IRS audit matters within the next twelve months (see Note 6). As of September 24, 2010, we
recorded gross unrecognized tax benefits of $318 million and gross interest and penalties of $63 million. We are unable to
make a reasonably reliable estimate of the timing for the payments in future years of such unrecognized tax benefits;
therefore, such amounts have been excluded from the above contractual obligation table. However, based on the current
status of our income tax audits, we believe that is reasonably possible that between $18 million and $140 million in
unrecognized tax benefits may be resolved in the next twelve months.
As of September 24, 2010, we had total commitments of $1.69 billion under our revolving credit
facilities, $500 million of which expires on June 24, 2011 and $1.19 billion of which expires on April 25,
2012. As of September 24, 2010, there were no amounts drawn under these revolving credit facilities.
TIFSA’s bank credit agreements contain customary terms and conditions, and financial covenants
that limit the ratio of our debt to earnings before interest, taxes, depreciation, and amortization and
that limit our ability to incur subsidiary debt or grant liens on our property. Our indentures contain
customary covenants including limits on negative pledges, subsidiary debt and sale/leaseback
transactions. None of these covenants are considered restrictive to our business.
In May 2008, TIFSA commenced issuing commercial paper to U.S. institutional accredited
investors and qualified institutional buyers. Borrowings under the commercial paper program are
available for general corporate purposes. As of September 24, 2010, TIFSA had no commercial paper
outstanding.
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.
56 2010 Financials