ADT 2008 Annual Report Download - page 116

We have significant foreign operations, which are subject to political, economic and other risks inherent
in operating in foreign countries.
We have significant operations outside of the United States. We currently operate in approximately
60 countries. We generated 52% of our net revenue outside of the United States in 2008. We expect
net revenue generated outside of the United States to continue to represent a significant portion of
total net revenue. Business operations outside of the United States are subject to political, economic
and other risks inherent in operating in certain countries, such as:
• the difficulty of enforcing agreements, collecting receivables and protecting assets through foreign
legal systems;
• trade protection measures and import or export licensing requirements;
• difficulty in staffing and managing widespread operations and the application of foreign labor
regulations;
• compliance with a variety of foreign laws and regulations;
• changes in the general political and economic conditions in the countries where we operate,
particularly in emerging markets;
• the threat of nationalization and expropriation;
• increased costs and risks of doing business in a number of foreign jurisdictions;
• changes in enacted tax laws;
• limitations on repatriation of earnings; and
• fluctuations in equity and revenues due to changes in foreign currency exchange rates.
Changes in the political or economic environments in the countries in which we operate could have
a material adverse effect on our financial condition, results of operations or cash flows.
Volatility in currency exchange rates, commodity prices and interest rates may adversely affect our
financial condition, result of operations or cash flows.
We are exposed to a variety of market risks, including the effects of changes in currency exchange
rates, commodity prices and interest rates. See Part II Item 7A. Quantitative and Qualitative
Disclosures About Market Risk.
Our net revenue derived from sales in non-U.S. markets for 2008 was 52% of our total net
revenue, and we expect revenue from non-U.S. markets to continue to represent a significant portion of
our net revenue. Therefore, when the U.S. dollar strengthens in relation to the currencies of the
foreign countries where we sell our products and services, as it has recently done, our U.S. dollar
reported revenue and income will decrease, and vice-versa. Changes in the relative values of currencies
occur regularly and in some instances, may have a significant effect on our results of operations. Our
financial statements reflect recalculations of items denominated in non-U.S. currencies to U.S. dollars,
our functional currency.
In addition, we are a large buyer of metals and other commodities, including fossil fuels for our
manufacturing operations and our vehicle fleet, the prices of which have fluctuated significantly in
recent years. Increases in the prices of some of these commodities could increase the costs of
manufacturing our products and providing our services. We may not be able to pass on these costs to
our customers or otherwise effectively manage price volatility and this could have a material adverse
2008 Financials 13