ADT 1999 Annual Report Download - page 24

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on to customers.
Ruffies®brand trash bags enjoyed sizable
market share gains, emerging as the clear leader in
the United States. Retail demand was spurred by
the introduction of our new wing-tie and Ocean
Scent bags, as well as a cross-promotion involving
ADT Security. That promotion, in which a consumer
who purchased specially marked packages of
Ruffies®or Film-Gard®Plastic Sheeting could get
free installation of an ADT system, was successful
for both Tyco Plastics and ADT.
The acquisition of Sunbelt Plastics will take
us into the institutional trash-can liner market and
solidify our leading position in the construction plas-
tic sheeting market. Our purchase of Batts, Incorpo-
rated makes us the global market share leader in
plastic garment hangers, and will help us expand
throughout Europe.
Fire and Security Services
In Tyco's Fire and Security Services segment, earn-
ings increased 44 percent to $907 million, from
$631 million last year. Sales reached $5.5 billion,
compared to last year's $4.4 billion.
ADT Security sales rose rapidly through
internal growth, supplemented by acquisitions. We
increased the number of participants in our suc-
cessful dealer program by 40 percent and are now
rolling out the program globally. It is crucial, of
course, to keep the customers you get. Last year
we reduced customer attrition from 8.7 percent to
just 8 percent—and we want to reduce it further.
We are constantly looking for new and innovative
ways to provide the highest levels of service to all of
our customers.
Security system penetration remains
relatively low worldwide, giving us ample room to
grow. In Germany, small business use of security
systems was virtually nonexistent—until last year,
when growth exploded. Such cultural shifts,
combined with growing affluence, suggest
the industry's double-digit growth rate should
be sustainable.
In fire protection, we widened our global
lead. Growth came from an increase in service con-
tracts, new construction, a rise in retrofitting pro-
jects and added regulation (as municipalities and
governments become more safety-conscious).
Margins in fire protection improved, aided
by strong increases in our high-margin service busi-
ness. Our worldwide fire extinguisher servicing
business grew substantially. We are also generating
significant cross-selling revenue by targeting ADT
commercial customers who do not yet rely on us for
fire protection, and vice versa.
Fire protection sales were robust in South-
east Asia and Europe, a result of strengthening
local economies and the growing desire of large
companies to use vendors who supply global solu-
tions. As customers expand around the world, our
global footprint gives us a competitive advantage.
Flow Control Products
Earnings in Tyco's Flow Control Products segment
rose to $606 million, a 33 percent increase over the
$457 million earned last year. Sales for the year
grew by 20 percent to $3.5 billion from $2.9 billion
in 1998.
Tyco Flow Control Products had a strong
year, led by international expansion and increasing
service revenue. We saw growing demand for
valve reconditioning in the United Kingdom,
the Asia/Pacific region, and in portions of Europe.
We recondition valves for oil companies operating
in the North Sea and for nuclear power plants
in Germany, as well as for many other industrial
customers.
Acquisitions helped drive international
expansion. Our purchase of the metals processing
division of U.K.-based Glynwed International repre-
sents the first step in our plan to expand our steel
pipe and tubular business globally, and gives us the
chance to transfer our competitive advantages in
global product sourcing and operating efficiencies
to Europe.