ADT 2011 Annual Report Download - page 117

products and personnel, the diversion of management’s attention from other business concerns, the
disruption of our business, the potential loss of key employees and the retention of uncertain
environmental or other contingent liabilities related to the divested business. In addition, divestitures
may result in significant asset impairment charges, including those related to goodwill and other
intangible assets, which could have a material adverse effect on our financial condition and results of
operations. We cannot assure you that we will be successful in managing these or any other significant
risks that we encounter in divesting a business or product line.
We may acquire companies and make investments in order to complement existing businesses. These
acquisitions and investments could be unsuccessful or consume significant resources, which could adversely
affect our operating results.
Acquisitions and investments may involve significant cash expenditures, debt incurrence, operating
losses and expenses that could have a material adverse effect on our financial condition, results of
operations and cash flows. Acquisitions involve numerous other risks, including:
• diversion of management time and attention from daily operations;
• difficulties integrating acquired businesses, technologies and personnel into our business;
• inability to obtain required regulatory approvals and/or required financing on favorable terms;
• potential loss of key employees, key contractual relationships, or key customers of acquired
companies or of us; and
• assumption of the liabilities and exposure to unforeseen liabilities of acquired companies.
It may be difficult for us to complete transactions quickly and to integrate acquired operations
efficiently into our current business operations. Any acquisitions or investments may ultimately harm
our business or financial condition, as such acquisitions may not be successful and may ultimately result
in impairment charges.
Risks Related to the 2012 Separation
The proposed spin-offs of our North American residential security business and our flow control business
are contingent upon the satisfaction of a number of conditions, may require significant time and attention of
our management, may not achieve the intended results, and may present difficulties that could have an
adverse effect on us.
The proposed spin-offs of our North American residential security business and our flow control
business are complex in nature, subject to various conditions, and may be affected by unanticipated
developments or changes in market conditions. We expect to file Registration Statements on Form 10
with the SEC that will contain detailed information regarding the businesses proposed to be spun-off.
Completion of these spin-off transactions will be contingent upon a number of factors, including the
approval of our shareholders, favorable rulings from tax authorities, including the Internal Revenue
Service (‘‘IRS’’), the effectiveness of each of the Registration Statements, favorable capital market
conditions and other conditions. For these and other reasons, the spin-off transactions may not be
completed as expected by the end of the third calendar quarter of 2012, if at all. Additionally,
execution of the proposed spinoff transactions will require significant time and attention from
management, which may distract management from the operation of our businesses and the execution
of our other initiatives. Our employees may also be distracted due to uncertainty about their future
roles with each of the separate companies pending the completion of the spin-off transactions. Further,
if the spin-off transactions are completed, each of these transactions may not achieve the intended
results and may result in costs that exceed management’s estimated amount of $700 million. Any such
14 2011 Financials