ADT 2014 Annual Report Download - page 98

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FORM 10-K
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.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
We currently operate through a network of approximately 200 sales and service offices, ten monitoring
facilities, four customer and field support locations, two national sales call centers and one regional distribution
center, located throughout the United States, Puerto Rico and Canada, the majority of which are leased. Our
corporate headquarters is located in Boca Raton, Florida and we lease this property under a long-term operating
lease with a third party. We believe our properties are adequate and suitable for our business as presently
conducted and are adequately maintained.
Item 3. Legal Proceedings.
On October 25, 2013, we were notified by subpoena that the Office of the Attorney General of California, in
conjunction with the Alameda County District Attorney, is investigating whether certain of our waste disposal
policies, procedures and practices are in violation of the California Business and Professions Code and the
California Health and Safety Code. We are cooperating fully with the respective authorities. We are currently
unable to predict the outcome of this investigation or reasonably estimate a range of possible loss.
On April 28, 2014, we and certain of our current and former officers and directors were named as
defendants in a lawsuit filed in the United States District Court for the Southern District of Florida. The plaintiff
alleges violations of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and seeks monetary damages,
including interest, and class action status on behalf of all plaintiffs who purchased our common stock during the
period between November 27, 2012 and January 29, 2014, inclusive. The claims focus primarily on our
statements concerning our financial condition and future business prospects for fiscal 2013 and the first quarter
of fiscal 2014, our stock repurchase program in 2012 and 2013 and the buyback of stock from Corvex
Management LP (“Corvex”) in November 2013. On June 27, 2014, another plaintiff filed a similar action in the
same court. On July 14, 2014, the Court entered an order consolidating the two actions under the caption
Henningsen v. The ADT Corporation, Case No. 14-80566-CIV-DIMITROULEAS, and appointing IBEW Local
595 Pension and Money Purchase Pension Plans, Macomb County Employees’ Retirement System and KBC
Asset Management NV as Lead Plaintiffs in the consolidated action. In addition to ADT, the defendants named
in the action are Naren Gursahaney, Kathryn A. Mikells, Michael S. Geltzeiler, Keith A. Meister, and Corvex.
We intend to vigorously defend against the allegations in this action and are currently unable to predict the
outcome or if legal damages will be awarded.
In May and June 2014, four derivative actions were filed against a number of our past and present officers
and directors. Like the securities actions described above, the derivative actions focus primarily on our stock
repurchase program in 2012 and 2013, the buyback of stock from Corvex in November 2013 and our statements
concerning our financial condition and future business prospects for fiscal 2013 and the first quarter of fiscal
2014. Three of the derivative actions were filed in the United States District Court for the Southern District of
Florida. On July 16, 2014, the Court consolidated those three actions under the caption In re The ADT
Corporation Derivative Litigation, Lead Case No. 14-80570-CIV-DIMITROULEAS/SNOW. The fourth
derivative action, entitled Seidl v. Colligan, Case No. 2014CA007529, was filed in the Circuit Court of the 15th
32