ADT 2012 Annual Report Download - page 121

We may be unable to achieve some or all of the benefits that we expect to achieve from our separation
from Tyco.
As an independent, publicly-traded company, we believe that our business will benefit from, among other
things, allowing us to better focus our financial and operational resources on our specific business, allowing our
management to design and implement corporate strategies and policies that are based primarily on the business
characteristics and strategic decisions of our business, allowing us to more effectively respond to industry
dynamics and allowing the creation of effective incentives for our management and employees that are more
closely tied to our business performance. However, we may not be able to achieve some or all of the benefits that
we expect to achieve as an independent company in the time we expect, if at all. For example, it is possible that
investors and securities analysts will not place a greater value on our business as an independent company than
on our business as a part of Tyco.
We may increase our debt or raise additional capital in the future, which could affect our financial
health and may decrease our profitability.
We may increase our debt or raise additional capital in the future, subject to restrictions in our revolving
credit facility and indenture and possibly future debt agreements. If our cash flow from operations is less than we
anticipate, or if our cash requirements are more than we expect, we may require more financing. However, debt
or equity financing may not be available to us on terms acceptable to us, if at all. If we incur additional debt or
raise equity through the issuance of additional capital stock, the terms of the debt or our capital stock issued may
give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in
the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our
operations than we currently have. If we raise funds through the issuance of additional equity, your percentage
ownership in us would decline. If we are unable to raise additional capital when needed, it could affect our
financial health. Also, regardless of the terms of our debt or equity financing, the amount of our stock that we can
issue may be limited because the issuance of our stock may cause the Distribution to be a taxable event for Tyco
under Section 355(e) of the Code, and under the 2012 Tax Sharing Agreement, we could be required to
indemnify Tyco for that tax. See “Risk Factors—Risks Relating our Separation from Tyco—We might not be
able to engage in desirable strategic transactions and equity issuances because of restrictions relating to U.S.
federal income tax requirements for tax-free distributions.”
Our accounting and other management systems and resources may not be adequately prepared to meet
the financial reporting and other requirements to which we are subject as an independent, publicly-
traded company.
Our financial results previously were included within the consolidated results of Tyco, and we believe that
our financial reporting and internal controls were appropriate for those of subsidiaries of a public company.
However, we were not directly subject to the reporting and other requirements of the Exchange Act. As an
independent, publicly-traded company, we are subject to reporting and other obligations under the Exchange Act.
Beginning with our Annual Report on Form 10-K for fiscal year 2013, we will be required to comply with
Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which will require annual
management assessments of the effectiveness of our internal control over financial reporting. The Sarbanes-
Oxley Act also requires that we obtain a report by our independent registered public accounting firm expressing
an opinion on the effectiveness of our internal control over financial reporting. These reporting and other
obligations may place significant demands on our management, administrative and operational resources,
including accounting systems and resources.
The Exchange Act requires that we file annual, quarterly and current reports with respect to our business
and financial condition. Under the Sarbanes-Oxley Act, we are required to maintain effective disclosure controls
and procedures and internal controls over financial reporting. We expect to incur additional annual expenses for
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