ADT 2010 Annual Report Download - page 215

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Commitments and Contingencies (Continued)
Tyco has reserved its best estimate of probable loss for these matters, and although their ultimate
resolution could differ materially from these estimates, the Company does not believe 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.
Tyco has recorded asset retirement obligations (‘‘AROs’’) for the estimated future costs associated
with legal obligations to retire certain assets. As of September 24, 2010 and September 25, 2009, the
Company’s AROs were $10 million and $11 million, respectively. The Company believes that any
potential payment 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
asbestos-containing components manufactured by third-parties. Each case typically names between
dozens to hundreds of corporate defendants. While the Company has observed an increase in the
number of these lawsuits over the past several years, including lawsuits by plaintiffs with mesothelioma-
related claims, a large percentage of these suits have not presented viable legal claims and, as a result,
have been dismissed by the courts. The Company’s strategy has been, and continues to be, to mount a
vigorous defense aimed at having unsubstantiated suits dismissed, and, where appropriate, settling suits
before trial. Although a large percentage of litigated suits have been dismissed, the Company cannot
predict the extent to which it will be successful in resolving lawsuits in the future. Of the lawsuits that
have proceeded to trial since 2005, the Company has won or settled all but one case, with that one case
returning an adverse jury verdict for approximately $7.7 million, which included both compensatory and
punitive damages. The Company recently settled the matter while its appeal was pending for
significantly less than the amount awarded by the jury. As of September 24, 2010, there were
approximately 3,500 lawsuits pending against the Company and its subsidiaries. Each lawsuit typically
includes several claims, and the Company has determined that there were approximately 4,700 claims
outstanding as of September 24, 2010, which amount reflects the Company’s current estimate of the
number of active claims made against it or its affiliates, and includes adjustments for claims that are
not actively being prosecuted, identify incorrect defendants or are duplicative of other actions.
2010 Financials 127