ADT 2004 Annual Report Download - page 18

employees globally and our Six Sigma teams
completed nearly 1,100 projects. These efforts gen-
erated approximately $270 million of net savings.
STRATEGIC SOURCING
Our business segments continue to work together to
develop and implement “One Tyco” sourcing strate-
gies to reduce our spending and to make purchases
more efficiently. At year-end, we had cross-functional
teams addressing more than 100 purchase categories
ranging from telecommunications and personal
computers to commercial printing and office sup-
plies. Despite a difficult year for commodity pricing,
we delivered more than $300 million of net savings.
REAL ESTATE
We accelerated our efforts to optimize our real
estate footprint in 2004. Over the past two years we
have closed more than 600 facilities, reducing our
overall real estate portfolio by more than 12 million
square feet. Beyond the savings, we achieved
increased efficiencies as multiple segments and busi-
ness units began co-locating to share services
and infrastructure.
WORKING CAPITAL
In 2004, we improved our working capital velocity
by eight days. All five of our segments showed progress
in inventory turns as we collectively improved by
10 days across the Company. In addition, better
accounts receivable performance resulted in a five-day
improvement. In total, our working capital pro-
grams freed up more than $900 million of cash.
GROWTH FOCUS
Organically, Tyco’s revenue increased 5 percent,
2
or about $2 billion, in 2004. This performance
reflects the success of our new product and service
offerings, our efforts to expand globally, and the
continued loyalty of our customers.
To maintain and extend our market leader-
ship, we are strategically investing to deliver even
greater value for our customers. For example,
we increased research and development investment
across the company by 18 percent, including a
39 percent increase at Tyco Healthcare. We also
expanded our efforts to hire and train new sales-
people for many of our growing operations,
including ADT and Tyco Healthcare.
We are equally focused on improving processes
to better leverage our existing resources. For instance,
Tyco Electronics’ Global Account Management pro-
gram applies an integrated team approach to better
serve our major customers. This best practice is now
being used by other Tyco businesses.
BALANCE SHEET FOCUS
During 2004, we remained focused on actions to
continuously strengthen our balance sheet. We used
our strong cash flow to pay down $4.2 billion of debt,
including the repurchase of $517 million of convert-
ible debt securities. This action reduced the number
of Tyco’s diluted shares outstanding by nearly 23 mil-
lion. We also voluntarily contributed approximately
$575 million to our pension plans. The major rating
agencies recognized these actions and upgraded Tyco’s
debt rating to full investment-grade status in 2004.
“ABOVE ALL, 2004 WAS A YEAR TO
DEMONSTRATE OUR ABILITY TO MEET
OUR COMMITMENTS TO YOU.”
2 Organic revenue growth is a non-GAAP financial measure.
See GAAP reconciliation on inside back cover.
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