ADT 2007 Annual Report Download - page 95

also believe that several of the industrial end markets in which Flow Control operates will
achieve growth rates higher than the U.S. Gross Domestic Product. For example, we believe that
the water market will continue to grow globally due to both the increasing demand for potable
water in emerging markets and the need to upgrade distribution infrastructures in mature
markets. We also believe that the oil and gas and petrochemical industries will experience
increasing investment levels.
•Stable, recurring revenue base. Many of our ADT Worldwide customers have long-term
agreements with us to provide ongoing monitoring, inspection and maintenance services, which
generate predictable annual revenue in excess of $3.5 billion. In addition, we have a substantial
amount of repeatable revenue from ongoing service and maintenance activities in our Fire
Protection Services business.
•Strong cash flow. We historically have generated significant cash flow from our operations. Our
cash flow provides us with the financial flexibility to invest in new products and acquisitions to
enhance our market leading businesses.
•Experienced management team. Our executive officers have the proven track record and
experience necessary to execute our business strategies. Led by our Chairman and Chief
Executive Officer, Ed Breen, our management team has successfully rationalized our operations,
effected the spin-offs of Covidien and Tyco Electronics, reduced our financial leverage,
implemented world-class corporate governance standards and improved our financial
performance. Our executive officers and the managers that support them have extensive
experience in and knowledge of the markets in which we operate and have established
relationships with our customers.
Strategy
Our goal is to build upon our position as a leading provider of electronic security, fire and safety
services and products, valves and controls and other industrial products. We operate in a number of
highly fragmented markets where we believe we have a number one or two market position that
translates into a relatively small market share. We believe we have opportunities to increase our market
share and accelerate revenue growth by expanding our customer base and by generating new business
from our existing customers. In addition, we believe we have opportunities to improve our margins.
Our business strategy includes the following strategic priorities:
•Expand our customer base. We believe that we have significant opportunities to attract customers
and increase our market share by focusing our sales and marketing efforts and our product
development efforts on key vertical markets. These vertical markets include: retailer, banking,
governmental, educational, oil and gas and transportation for ADT Worldwide; healthcare,
governmental, educational, lodging, manufacturing and commercial/industrial for Fire Protection
Services; and oil, gas, power, petrochemicals and water for Flow Control. In addition, we believe
that we have significant opportunities to acquire new residential customers for ADT Worldwide,
primarily by leveraging the strength of our brand and our global presence. We also intend to
aggressively pursue sales opportunities in new and emerging markets, where we believe that we
have promising opportunities to expand our market share and where we can capitalize on the
skills and technologies we developed in our existing markets.
•Generate new business from existing customers. We believe that our customer relationships,
enhanced by targeted sales and marketing efforts that emphasize the breadth of our portfolio
and that focus on product and service opportunities within each customer’s industry, will enable
us to increase our market penetration and generate increased sales and service revenue from
existing customers. We intend to leverage our existing customer relationships to market a
broader range of our services and products to our multinational customers. Similarly, we intend
2007 Financials 3