ADT 2015 Annual Report Download - page 101

FORM 10-K
and its majority-owned subsidiaries as of 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 the
Broadview Spin-Off, Broadview Security entered into an agreement pursuant to 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 our acquisition of Broadview Security. We have evaluated our 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. We have concluded that no accrual is necessary due to the existence of the
indemnification and our belief that The Brink’s Company and VEBA will be able to satisfy all future obligations
under the Coal Act. However, if The Brink’s Company and the VEBA are unable to satisfy all such obligations,
we could be held liable, which could have a material adverse effect on our financial condition, results of
operations or cash flows.
Risks Relating to Our Liquidity
Volatility and disruptions in the financial markets or changes in our credit ratings could adversely affect
us by reducing availability of credit or access to financing on favorable terms or at all and could
adversely affect our suppliers by increasing funding costs or reducing availability of credit.
In the normal course of our business, we may access the capital markets for general corporate purposes,
which may include repayment of indebtedness, acquisitions, additions to working capital, repurchase of our
common stock, capital expenditures and investments in our business. We rely on the capital markets, particularly
for offerings of debt securities to meet our financial commitments and liquidity needs. Although we expect to
have sufficient liquidity to meet our foreseeable needs, our access to capital markets and the cost of capital could
be negatively impacted by volatility and/or disruptions in the financial markets or changes in our credit ratings.
In recent years, the credit markets experienced significant dislocations and liquidity disruptions, and similar
disruptions in the credit markets in the future could make financing terms for borrowers unattractive or
unavailable. These factors may make it more difficult or expensive for us to access the capital markets if the need
arises. In addition, these factors may make it more difficult for our suppliers to meet demand for their products or
for potential strategic partners to commence new projects, as they may experience increased costs of debt
financing or difficulties in obtaining debt financing. Volatility and/or disruptions in the financial markets have
had adverse effects on other areas of the economy and have led to a slowdown in general economic activity that
may continue to adversely affect our businesses. These disruptions may have other unknown adverse effects. One
or more of these factors could adversely affect our business, financial condition, results of operations or cash
flows.
Standard and Poor’s Rating Services, Moody’s Investors Service, Inc. and Fitch Ratings have rated the
Company BB-, Ba2 and BBB-, respectively. Our credit ratings are based upon information furnished by us or
obtained by a rating agency from its own sources and are subject to revision, suspension or withdrawal by one or
more rating agencies at any time. Rating agencies may review the ratings assigned to us due to developments that
are beyond our control, including as a result of new standards requiring the agencies to reassess rating practices
and methodologies. Non-investment grade markets have higher volatility than investment grade markets.
Volatility in capital markets and/or a downgrade in our ratings could also cause our future borrowing costs to
increase and reduce our access to capital.
Covenants in our debt instruments may adversely affect us.
Our revolving credit facility contains customary covenants, including a limit on the ratio of debt to earnings
before interest, taxes, depreciation, and amortization (“EBITDA”), a minimum required ratio of EBITDA to
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