ADT 2012 Annual Report Download - page 175

7. Commitments and Contingencies
Lease Obligations
The Company has facility, vehicle and equipment leases that expire at various dates through 2023. Rental
expense under these leases was $44 million, $38 million and $33 million for 2012, 2011 and 2010, respectively.
Additionally, the Company has commitments under capital leases for certain facilities. See Note 5 for further
information on capital lease obligations.
Following is a schedule of minimum lease payments for non-cancelable operating leases as of
September 28, 2012 ($ in millions):
Fiscal 2013 .......................................... $ 44
Fiscal 2014 .......................................... 33
Fiscal 2015 .......................................... 26
Fiscal 2016 .......................................... 12
Fiscal 2017 .......................................... 6
Thereafter ........................................... 24
145
Less sublease income .................................. 11
Total ............................................... $134
Purchase Obligations
The Company has obligations related to commitments to purchase certain goods and services. As of
September 28, 2012, such obligations were as follows: $37 million in fiscal 2013, $8 million in fiscal 2014 and
$5 million in fiscal 2015.
Legal Proceedings
The Company is subject to various claims and lawsuits in the ordinary course of business, including from
time to time, contractual disputes, product and general liability claims, claims that the Company has infringed the
intellectual property rights of others, and claims related to alleged security system failures. The Company has
recorded accruals for losses that it believes are probable to occur and are reasonably estimable. While the
ultimate outcome of these matters cannot be predicted with certainty, the Company believes that the resolution of
any such proceedings (other than matters specifically identified below), will not have a material effect on its
financial condition, results of operations or cash flows.
Broadview Security Contingency
On May 14, 2010, the Company acquired Broadview Security, a business formerly owned by The Brink’s
Company. Under the Coal Industry Retiree Health Benefit Act of 1992, as amended (the “Coal Act”), The
Brink’s Company and its majority-owned subsidiaries at July 20, 1992 (including certain legal entities acquired
in the Broadview Security acquisition) are jointly and severally liable with certain of The Brink’s Company’s
other current and former subsidiaries for health care coverage obligations provided for by the Coal Act. A
Voluntary Employees’ Beneficiary Associate (“VEBA”) trust has been established by The Brink’s Company to
pay for these liabilities, although the trust may have insufficient funds to satisfy all future obligations. At the
time of its spin-off from The Brink’s Company, Broadview Security entered into an agreement in which The
Brink’s Company agreed to indemnify it for any and all liabilities and expenses related to The Brink’s
Company’s former coal operations, including any health care coverage obligations. The Brink’s Company has
agreed that this indemnification survives the Company’s acquisition of Broadview Security. The Company has
evaluated its potential liability under the Coal Act as a contingency in light of all known facts, including the
funding of the VEBA, and indemnification provided by The Brink’s Company. The Company has concluded that
no accrual is necessary due to the existence of the indemnification and its belief that The Brink’s Company and
VEBA will be able to satisfy all future obligations under the Coal Act.
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