ADT 2002 Annual Report Download - page 8

• designing, manufacturing, installing and servicing a broad line of fire detection, suppression
systems, and manufacturing and servicing of fire extinguishers and related products; and
• providing fully integrated solutions that integrate both electronic security, fire protection and fire
detection systems.
Electronic Security Services
We are the world’s leading provider of electronic security products and services and event
monitoring, which includes the monitoring of burglar alarms, fire alarms, heating systems, medical alert
systems, such as our Personal Emergency Response Systems, and other activities where
around-the-clock monitoring and response is required. We offer regular inspection and maintenance
services to ensure that systems will function properly and can be upgraded as technology or risk profiles
change. We are also a leading supplier of electronic security solutions to the retail, commercial and
industrial market places, through electronic article surveillance, video surveillance, access control,
electronic asset protection and security management systems, products and services. These and other
security services are provided principally under the ADT trade name.
Electronically monitored security systems are tailored to our customers’ specific needs and involve
the installation and use on a customer’s premises of devices designed for intrusion detection and access
control, as well as reaction to various occurrences or conditions, such as movement, fire, smoke,
flooding, environmental conditions, industrial processes and other hazards. These detection devices are
connected to microprocessor-based control panels which communicate to a monitoring center, located
remotely from the customer’s premises, where alarm and supervisory signals are received and recorded.
In most systems, control panels can identify the nature of the alarm and the areas within a building
where the sensor was activated. Depending upon the type of service for which the subscriber has
contracted, monitoring center personnel respond to alarms by relaying appropriate information to the
local fire or police departments, notifying the customer or taking other appropriate action, such as
dispatching employees to the customer’s premises. In some instances, the customer may monitor the
system at its own premises or the system may be connected to local fire or police departments.
Whether systems are monitored by the customer at its premises or connected to one of our
monitoring centers, we usually provide support and maintenance through service contracts. Systems
installed at commercial customers’ premises may be owned by us or by our customer. We usually retain
ownership of standard residential systems, but more sophisticated residential systems are normally
purchased by our customers.
We market our electronic security services to commercial and residential customers through both a
direct sales force and an authorized dealer network. During fiscal 2002, we refocussed our ADT dealer
program, encouraging growth in some geographic areas while curtailing activities in others, as part of
an enhanced focus on return on investment. A separate national accounts sales force services most
commercial customers. We also utilize advertising, telemarketing and direct mail to market our services.
Our commercial customers include financial institutions, industrial and commercial businesses,
federal, state and local governments, defense installations, and health care and educational facilities.
We provide residential electronic security services primarily in North America and Europe, with a
growing presence in the Asia-Pacific region. Our customers are often prompted to purchase security
systems by their insurance carriers, which may offer lower insurance premium rates if a security system
is installed or require that a system be installed as a condition to coverage. It has been our experience
that commercial and residential contracts are generally renewed after their initial terms. Contract
discontinuances occur principally as a result of customer relocation or closure.
We out-source most of the electronic components we install. We manufacture certain alarm,
detection and activation devices and central monitoring station equipment both for installation by us
and for sale to other installers.
6