ADT 2008 Annual Report Download - page 109

We install fire detection and fire suppression systems in both new and existing buildings. These
systems typically are purchased by owners, construction engineers and mechanical or general
contractors. In recent years, retrofitting of existing buildings has grown as a result of legislation
mandating the installation of fire detection and fire suppression systems, especially in hotels, healthcare
facilities and educational establishments. More recently, in September 2008, the International
Residential Code Council, a non-profit association that develops model code documents that are the
predominant building and fire safety regulations adopted by jurisdictions in the United States, adopted
proposals to amend the 2009 International Residential Code to require sprinkler systems in new one
and two family dwellings effective in January 2011. In addition, we continue to focus on system
maintenance and inspection, which have become increasingly significant parts of our business.
Customers
Fire Protection Services’ customers include commercial enterprises, governmental entities, airports,
commercial shipping companies, fire departments, transportation systems, healthcare owners,
petrochemical facilities and homeowners. We market our fire detection and fire suppression systems to
the majority of these customers through a direct sales force.
Competition
Competition in the fire detection and fire suppression business varies by region. In North America,
we compete with hundreds of smaller contractors on a regional or local basis for the installation of fire
detection and fire suppression systems. In Europe, we compete with many regional or local contractors
on a country-by-country basis. In Asia, Australia and New Zealand, we compete with a few large fire
detection and fire suppression contractors, as well as with many smaller regional and local companies.
We compete for fire detection and fire suppression systems contracts primarily on the basis of service,
quality and price.
Electrical and Metal Products
Our Electrical and Metal Products segment designs, manufactures and sells galvanized steel tubing
and pipe products, pre-wired armored electrical cables, electrical support systems and metal framing
systems. In North America, our Allied Tube & Conduit business is a leading manufacturer of electrical
steel conduit and our AFC Cable Systems division is a leading manufacturer of steel and aluminum
pre-wired electrical cable. Electrical and Metal Products also manufactures and sells cable tray systems,
steel tubes, tiles, plates and other specialty formed steel products in South America, Asia Pacific and
EMEA. With 2008 net revenue of $2.3 billion, our Electrical and Metal Products segment comprises
11% of our consolidated net revenue. In 2007 and 2006, net revenue totaled $2.0 billion or 11% of our
consolidated net revenue and $1.9 billion or 11% of our consolidated net revenue, respectively.
The market prices of key raw materials such as steel and copper have a significant impact on the
segment’s operating results. In particular, we monitor the difference between what the company paid
for these raw materials and the selling price charged to customers for the range of value-add products
manufactured from these raw materials. As a result, this segment maintains diligent focus on raw
material purchases, manufacturing processes, pricing and sales strategies.
Strategy
We intend to maintain our market position in key end markets by continuing to take advantage of
our low-cost manufacturing base, technical leadership and brand recognition. We also plan to build our
product portfolio through enhancements to existing lines as well as introductions of new offerings to
the marketplace.
6 2008 Financials