ADT 2010 Annual Report Download - page 101

Tyco may be required to accelerate the depreciation and amortization of subscriber system assets and
intangible assets, which could cause a material adverse effect on our financial condition or results of
operations.
We have significant operations outside of the United States, which are subject to political, economic and
other risks inherent in operating outside of the United States.
We generated 51% of our net revenue outside of the United States in 2010. 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 non-
U.S. legal systems;
• trade protection measures and import or export licensing requirements;
• difficulty in staffing and managing widespread operations and the application of certain labor
regulations outside of the United States;
• compliance with a wide variety of non-U.S. 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 wide variety of jurisdictions;
• changes in enacted tax laws;
• limitations on repatriation of earnings; and
• fluctuations in revenues, operating margins and other financial measures 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 Item 7A. Quantitative and Qualitative Disclosures
About Market Risk.
Our net revenue derived from sales in non-U.S. markets for 2010 was 51% of our total net
revenue, and we expect revenue from non-U.S. markets to continue to represent a significant portion of
our total net revenue. Therefore, if the U.S. dollar has strengthened in relation to the principle foreign
currencies where we derive revenue as compared to a prior period, 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 translation of items denominated in non-U.S. currencies to U.S. dollars, our
functional currency (using year-end exchange rates for balance sheet data and average exchange rates
for statement of operations data).
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
2010 Financials 13