ADT 2010 Annual Report Download - page 146

Guarantees
Certain of our business segments have guaranteed the performance of third-parties and provided
financial guarantees for uncompleted work and financial commitments. The terms of these guarantees
vary with end dates ranging from the current fiscal year through the completion of such transactions.
The guarantees would typically be triggered in the event of nonperformance and performance under
the guarantees, if required, would not have a material effect on our financial position, results of
operations or cash flows.
There are certain guarantees or indemnifications extended among Tyco, Covidien and Tyco
Electronics in accordance with the terms of the Separation and Distribution Agreement and the Tax
Sharing Agreement. The guarantees primarily relate to certain contingent tax liabilities included in the
Tax Sharing Agreement. At the time of the Separation, we recorded a liability necessary to recognize
the fair value of such guarantees and indemnifications. See Note 6 to the Consolidated Financial
Statements for further discussion of the Tax Sharing Agreement. In addition, prior to the Separation we
provided support in the form of financial and/or performance guarantees to various Covidien and Tyco
Electronics operating entities. To the extent these guarantees were not assigned in connection with the
Separation, we assumed primary liability on any remaining such support. These obligations were not
material to us as of September 24, 2010.
In disposing of assets or businesses, we often provide representations, warranties and/or
indemnities to cover various risks including, for example, unknown damage to the assets, environmental
risks involved in the sale of real estate, liability to investigate and remediate environmental
contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and
legal fees related to periods prior to disposition. We have no reason to believe that these uncertainties
would have a material adverse effect on our financial position, results of operations or cash flows. We
have recorded liabilities for known indemnifications included as part of environmental liabilities. See
Note 14 to the Consolidated Financial Statements for a discussion of these liabilities.
In the normal course of business, we are liable for contract completion and product performance.
We record estimated product warranty costs at the time of sale. In the opinion of management, such
obligations will not significantly affect our financial position, results of operations or cash flows.
As of September 24, 2010, we had total outstanding letters of credit and bank guarantees of
approximately $740 million.
For a detailed discussion of guarantees and indemnifications, see Note 12 to the Consolidated
Financial Statements.
Accounting Pronouncements
See Note 1 to the Consolidated Financial Statements for Recently Adopted Accounting
Pronouncements and Recently Issued Accounting Pronouncements.
Forward-Looking Information
Certain statements in this report are ‘‘forward-looking statements’’ within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and
uncertainties. All statements contained herein that are not clearly historical in nature are forward-
looking, and the words ‘‘anticipate,’’ ‘‘believe,’’ ‘‘expect,’’ ‘‘estimate,’’ ‘‘project’’ and similar expressions
are generally intended to identify forward-looking statements. Any forward-looking statement contained
herein, in press releases, written statements or other documents filed with the Securities and Exchange
Commission (‘‘SEC’’), or in Tyco’s communications and discussions with investors and analysts in the
normal course of business through meetings, webcasts, phone calls and conference calls, regarding
expectations with respect to sales, earnings, cash flows, operating and tax efficiencies, product
58 2010 Financials