ADT 2011 Annual Report Download - page 236

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Commitments and Contingencies (Continued)
Court for the Southern District of New York denied Tyco’s affirmative claims for recovery of damages
against Mr. Walsh. Tyco is pursuing an appeal. This affirmative matter, and the affirmative matters
against Messrs. Kozlowski and Swartz, are not subject to the liability sharing provisions of the
Separation and Distribution Agreement. Separately, Mr. Walsh is pursuing a New York state court
claim against the Company asserting his entitlement to indemnification. This action is subject to the
liability sharing provisions of the Separation and Distribution Agreement.
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 30, 2011, Tyco concluded that it was
probable that it would incur remedial costs in the range of approximately $38 million to $86 million. As
of September 30, 2011, Tyco concluded that the best estimate within this range is approximately
$60 million, of which $18 million is included in accrued and other current liabilities and $42 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
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. As part of the
Company’s strategy, it has also entered into a cost-sharing agreement with an entity from which it
acquired a business several decades ago. Under the agreement, insurance proceeds from policies that
were purchased by the seller prior to its acquisition by the Company have been made available to the
Company. To the extent there is insufficient insurance for claims subject to the agreement, the parties
are required to share costs, although responsibility for such excess costs gradually transitions to the
Company over the next nine to ten years. In 2022, the Company will ultimately be responsible for all
excess costs if available insurance policies do not fully respond. While the Company expects that the
insurance policies it has gained access to under the agreement will be sufficient to cover any increased
liability resulting from this arrangement, it cannot predict whether this will be the case.
As of September 30, 2011, there were approximately 4,500 lawsuits pending against the Company,
its subsidiaries or entities for which the Company has assumed responsibility. Each lawsuit typically
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