ADT 2010 Annual Report Download - page 126

Revenue from product sales includes sales and installation of electronic security and other life
safety systems as well as products related to retailer anti-theft systems. Service revenue is comprised of
electronic security services and maintenance, including the monitoring of burglar alarms, fire alarms
and other life safety systems as well as other security services.
Net revenue for ADT Worldwide increased $310 million, or 4.4%, during 2010, as compared to
2009. Net revenue was favorably impacted by changes in foreign currency exchange rates of
$218 million, or 3.1%. Net revenue was also favorably impacted by the net impact of acquisitions and
divestitures of $72 million, or 1.0%, which was primarily the result of $193 million in net revenue
estimated to be contributed by the Broadview Security acquisition partially offset by $109 million of
divested revenue relating to our French security business. Approximately 58% and 54% of ADT
Worldwide’s total net revenue during 2010 and 2009, respectively, represents revenue associated with
monitoring and maintenance services under contractual arrangements, which is considered recurring
revenue. Recurring revenue increased by $435 million, or 11.3%, to approximately $4.3 billion as a
result of growth in customer accounts of approximately 1.5 million, or 20.5%, to a total of
approximately 8.9 million accounts as of September 24, 2010. Approximately 1.4 million customer
accounts were acquired on May 14, 2010 in connection with the Broadview Security acquisition and
approximately 501,000 customer accounts were acquired through the ADT dealer program during 2010.
The net impact of acquisitions and divestitures and changes in foreign currency exchange rates
favorably impacted recurring revenue by $148 million in 2010, or 3.8%, and $116 million, or 3.0%,
respectively. Systems installation, product sales and other service revenue declined by $125 million, or
3.9%, to approximately $3.1 billion due to lower sales volume primarily as the result of continued
weakness in the commercial end market, which has declined at a slower rate than the same period in
the prior year. Changes in foreign currency exchange rates favorably impacted systems installation,
product sales and other service revenue by $102 million, or 3.2%, while the net impact of acquisitions
and divestitures resulted in an unfavorable impact of $76 million, or 2.4%.
Net revenue by geographic area for ADT Worldwide for the years ended September 24, 2010,
September 25, 2009 and September 26, 2008 was as follows ($ in millions):
2010 2009 2008
North America ...................................... $4,436 $4,185 $4,231
Europe, Middle East and Africa (‘‘EMEA’’) ................. 1,733 1,870 2,398
Rest of World ....................................... 1,207 1,011 1,173
$7,376 $7,066 $7,802
Geographically, North America net revenue increased $251 million, or 6.0%, during 2010 primarily
as the result of the net impact of acquisitions and divestitures, which favorably impacted net revenue by
an estimated $193 million, or 4.6%, as the result of the acquisition of Broadview Security. Partially
offsetting this increase was a decline in systems installation and product sales as the result of continued
weakness in the commercial market, although the rate of decline was slower than the same period in
the prior year. Changes in foreign currency exchange rates also favorably impacted net revenue by
$48 million, or 1.1%. Net revenue in EMEA decreased $137 million, or 7.3%, as favorable changes in
foreign currency exchange rates of $60 million, or 3.2%, were more than offset by a decline in systems
installation and other service revenue as a result of continued weakness in the commercial end market,
although the rate of decline was slower than the same period in the prior year. Additionally, EMEA
net revenue was unfavorably impacted by $121 million, or 6.5%, due to the impact of divestitures. Net
revenue increased $196 million, or 19.4%, in the Rest of World geographies primarily due to recurring
revenue growth in both Latin American and Asia Pacific regions as ADT Worldwide continues to focus
on building its customer account and recurring revenue base in these markets. The Asia-Pacific region
experienced an increase in system installation, products sales and other service revenue which was
38 2010 Financials