ADT 2002 Annual Report Download - page 17

America and South Africa. The Fire and Security Services segment occupies approximately 27.5 million
square feet, of which 5.7 million square feet are owned and 21.8 million square feet are leased.
The Electronics segment has manufacturing facilities in North America, Central and South
America, Europe, Asia and Australia. The group occupies approximately 34.6 million square feet, of
which 22.5 million square feet are owned and 12.1 million square feet are leased.
The Healthcare segment has manufacturing facilities in North America, Europe and Asia. The
group occupies approximately 23.1 million square feet, of which 14.3 million square feet are owned and
8.8 million square feet are leased.
The Engineered Products and Services segment has manufacturing, warehouses and distribution
centers throughout North America, Europe, the Asia-Pacific region and Central and South America.
The group occupies approximately 28.8 million square feet, of which 18.8 million square feet are owned
and 10.0 million square feet are leased.
The Plastics and Adhesives segment has manufacturing facilties in North America, Europe & Asia.
The group occupies approximately 12.2 million square feet, of which 8.2 million square feet are owned
and 4.0 square feet are leased.
In the opinion of management, our properties and equipment are in good operating condition and
are adequate for our present needs. We do not anticipate difficulty in renewing existing leases as they
expire or in finding alternative facilities. See Note 20 to Consolidated Financial Statements for a
description of our rental obligations.
Research and Development
The amounts expended for Tyco-sponsored research and development during fiscal 2002, fiscal
2001 and fiscal 2000 were $633.4 million, $572.0 million and $527.5 million, respectively. Customer-
funded research and development expenditures were $20.4 million, $40.4 million and $18.6 million,
respectively.
Approximately 5,842 full-time scientists, engineers and other technical personnel were engaged in
our product research and development activities as of September 30, 2002.
Research activity at Tyco Electronics focuses specifically on new product development and a
continuous expansion of technical capabilities. Tyco Healthcare focuses on technologies to complement
existing product lines and applying expertise to refine and successfully commercialize such products and
technologies and on acquiring rights to new products. Research activity in Fire and Security Services
relates mostly to the design of fire and intrusion alarm products and emergency alarm systems, as well
as products related to electronic article surveillance. The Engineered Products and Services segment
focuses on improvements in hydraulic design which controls the motion of fluids, resulting in new fire
protection devices and flow control products. Tyco Plastics and Adhesives research activities consist
primarily of new and improved product development.
Raw and Other Purchased Materials
We are a large buyer of steel and plastic resin in the United States. We are also a large buyer of
copper, brass, gold, electronic components, chemicals and additives, thin and flexible copper clad
materials, zinc, paper, ink, foil, adhesives, cloth, wax, pulp and cotton. Certain of the components used
in the Fire Protection business, principally certain valves and fittings, are purchased for installation in
fire protection systems or for distribution. Our electronic security systems are purchased from suppliers
and are manufactured to our specification. Materials are purchased from a large number of
independent sources around the world. There have been no shortages in materials which have had a
material adverse effect on our businesses. We actively manage our exposure to prices in base and
precious metals by the usage of forward contracts with banks that have at least an A+/A1 credit rating
by S & P and Moody’s. In addition, long-term supply contracts, using fixed or variable pricing are
entered into in order to manage our exposure to potential supply disruptions.
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