ADT 2012 Annual Report Download - page 123

For additional information about our past financial performance and the basis of presentation of our
financial statements, see Management’s Discussion and Analysis of Financial Condition and Results of
Operations and our Consolidated and Combined Financial Statements.
As an independent, publicly-traded company, we may not enjoy the same benefits that we did as a
segment of Tyco.
There is a risk that, as a result of our separation from Tyco, we may become more susceptible to market
fluctuations and other adverse events than we would have been if we were still a part of the current Tyco
organizational structure. As part of Tyco, we enjoyed certain benefits from Tyco’s operating diversity,
purchasing power, available capital for investments and opportunities to pursue integrated strategies with Tyco’s
other businesses. As an independent, publicly-traded company, we do not have similar diversity or integration
opportunities and may not have similar purchasing power or access to capital markets.
As an independent, publicly-traded company, our capital structure and sources of liquidity will change
significantly from our capital structure as a segment of Tyco.
As an independent, publicly-traded company, we no longer participate in cash management and funding
arrangements with Tyco. Instead, our ability to fund our capital needs depends on our ongoing ability to generate
cash from operations, and to access our credit facilities and capital markets, which is subject to general
economic, financial, competitive, regulatory and other factors that are beyond our control.
Certain of the contracts transferred or assigned to us in connection with the Distribution contain
provisions requiring the consent of a third party in connection with the transactions contemplated by the
Distribution. If such consent is not given, we may not be entitled to the benefit of such contracts in the
future.
Certain of the contracts transferred or assigned to us in connection with the Distribution contain provisions
which require the consent of a third party to the internal transactions, the Distribution or both. If we are unable to
obtain such consents on commercially reasonable and satisfactory terms, our ability to obtain the benefit of such
contracts in the future may be impaired.
Our suppliers or other companies with whom we conduct business may need assurances that our
financial stability on a standalone basis is sufficient to satisfy their requirements for doing or continuing
to do business with them.
Some of our suppliers or other companies with whom we conduct business may need assurances that our
financial stability on a standalone basis is sufficient to satisfy their requirements for doing or continuing to do
business with them. Any failure of parties to be satisfied with our financial stability could have a material
adverse effect on our business, financial condition, results of operations and cash flows.
The ownership by our executive officers and some of our directors of common shares, options or other
equity awards of Tyco or Pentair may create, or may create the appearance of, conflicts of interest.
Because of their former positions with Tyco, substantially all of our executive officers, including our chief
executive officer and some of our non-employee directors, own common shares of Tyco and Pentair, options to
purchase common shares of Tyco and Pentair or other equity awards in Tyco and Pentair. The individual
holdings of common shares, options to purchase common shares or other equity awards of Tyco and Pentair may
be significant for some of these persons compared to their total assets. These equity interests may create, or
appear to create, conflicts of interest when these directors and officers are faced with decisions that could benefit
or affect the equity holders of Tyco or Pentair in ways that do not benefit or affect us in the same manner.
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