ADT 2006 Annual Report Download - page 72

Research and Development
Tyco-sponsored research and development expense by segment for the years ended September 29,
2006, September 30, 2005 and September 30, 2004 is as follows ($ in millions):
2006 2005 2004
Electronics ............................................. $504 $454 $441
Healthcare ............................................. 263 232 209
Fire and Security ......................................... 122 119 101
Engineered Products and Services ............................ 25 28 27
$914 $833 $778
Approximately 6,200 full-time scientists, engineers and other technical personnel were engaged in
our product research and development activities as of September 29, 2006.
Research activity at Electronics focuses specifically on new product development and a continuous
expansion of technical capabilities. 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 relates mostly to the
design of fire and intrusion alarm products, video and access control products, as well as products
related to electronic article surveillance. Engineered Products and Services focuses on improvements in
hydraulic design, which controls the motion of fluids, resulting in new fire protection devices and flow
control products.
Raw and Other Purchased Materials
We are a large buyer of steel in the United States. We are also a large buyer of other
commodities, including, resin, copper, brass, gold, paper, 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. 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. However, significant increases in certain raw material costs
may have an adverse impact on costs and operating margins. We enter into long-term supply contracts,
using fixed or variable pricing to manage our exposure to potential supply disruptions.
Patents and Trademarks
We own a portfolio of patents, which principally relate to electrical and electronic products,
healthcare products, fire protection devices, electronic security systems, flow control products, tubing
and building and cable products. We also own a portfolio of trademarks and are a licensee of various
patents and trademarks. Patents for individual products extend for varying periods according to the
date of patent filing or grant and the legal term of patents in the various countries where patent
protection is obtained. Trademark rights may potentially extend for longer periods of time and are
dependent upon national laws and use of the marks. All capitalized product names throughout this
document are trademarks owned by, or licensed to, the Company or its subsidiaries. Although these
have been of value and are expected to continue to be of value in the future, in the opinion of
management the loss of any single patent or trademark would not materially affect the conduct of the
business in any of our segments.
10 2006 Financials