ADT 2007 Annual Report Download - page 98

Our customers often are 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 of coverage.
Customers
ADT Worldwide sells to residential, commercial, industrial and governmental customers. Our
residential customers typically include owners of single-family homes or multi-family apartment
complexes. Our commercial customers include among others retail businesses, financial institutions,
commercial/industrial facilities and health care facilities. Our governmental customers include federal,
state and local governments, defense installations, schools and mass transportation providers. In
addition to advertising, direct mailings and the internet, we market our electronic security systems and
services to these customers through a direct sales force and, with respect to certain residential
customers, through an authorized dealer network. A separate sales force services large commercial and
governmental customers and focuses on key vertical markets such as retailer and banking.
Competition
The electronic security services business is highly competitive and fragmented with a number of
major firms and thousands of smaller regional and local companies. Competition is based primarily on
price in relation to quality of service. Rather than compete purely on price, we emphasize the quality
of our electronic security service, the reputation of our brands and our knowledge of our customers’
security needs.
Fire Protection Services
Our Fire Protection Services segment designs, sells, installs and services fire detection and fire
suppression systems. We believe we are one of the largest providers of these systems and services, with
2007 net revenue of $3.5 billion. Our Fire Protection Services segment comprises 19% of our
consolidated net revenue. In 2006 and 2005, net revenue totaled $3.3 billion and $3.2 billion,
respectively, which represents 19% of our consolidated net revenue in both years.
Strategy
We intend to grow our customer base and deepen our market penetration by focusing our sales
and marketing efforts across global accounts and along key vertical markets, such as healthcare,
governmental, educational, lodging, manufacturing and commercial/industrial. By combining this vertical
market approach with increased focus on the delivery and responsiveness of our service offerings, we
believe we can differentiate our offerings to better serve our customers’ needs. We also plan to
aggressively pursue recurring revenue opportunities with existing customers. We intend to expand our
product offerings in high-growth, emerging markets where we believe we can capitalize on the skills
and technologies that we have developed in our existing markets. By working closely with our Safety
Products segment, we intend to develop offerings that address key technologies driving customer
demand, such as mass notification, as well as new business generated from changes and expansions in
fire and life-safety codes and standards. We will continue to promote operational excellence by
standardizing internal processes across business units and consolidating back office capabilities.
Services and Products
We design, sell, install and service fire alarm and fire detection systems, automatic fire sprinkler
systems and special hazard suppression systems. Fire Protection Services operates under various leading
trade names, including SimplexGrinnell, Wormald, Mather & Platt, Total Walther, Dong Bang, Zettler
and Tyco. A significant portion of the mechanical components used in our fire detection systems are
manufactured by our Safety Products segment.
6 2007 Financials