ADT 2010 Annual Report Download - page 127

partially offset by a decrease in the Latin American region due to the continued slowdown in
commercial and retailer end markets. Net revenue in the Rest of World geographies was also favorably
impacted by changes in foreign currency exchange rates of $110 million, or 10.9%.
Attrition rates decreased during 2010 as compared to 2009 as shown in the following table:
For the Fiscal Year Ended
September 24, September 25, September 26,
2010 2009 2008
Attrition ................................ 12.8% 13.3%(1) 12.9%(1)
(1) Attrition rates for the years ended September 25, 2009 and September 26, 2008 have been recast to reflect the divestiture
of our French security business, which resulted in reductions of 0.1% in the amounts previously reported for September 25,
2009 and September 26, 2008, respectively.
Operating income increased by approximately $1.3 billion during 2010 as compared to 2009.
Operating income for 2009 was negatively affected by goodwill impairment charges of $959 million
recorded at our ADT EMEA and Sensormatic Retail Solutions reporting units and intangible asset
impairment charges of $64 million. Operating income in 2010 was positively impacted by the shift to
higher margin recurring revenue. Additionally, 2010 operating income was favorably impacted by the
net impact of savings realized through previous restructuring actions, savings realized through cost
containment actions, and a curtailment gain of $12 million recognized when certain defined benefit
pension plans were frozen in the United Kingdom. These increases were partially offset by an increase
in the amortization of intangible assets primarily relating to the Broadview Security acquisition. During
2010, $60 million of net restructuring charges were incurred, of which $14 million related to
restructuring actions associated with the acquisition of Broadview Security, as compared to $103 million
of restructuring charges, net during 2009. Fiscal year 2010 also included a $45 million gain on
divestitures, net primarily related to the sale of our French security business, and $32 million of
acquisition and integration costs related to the acquisition of Broadview Security, as compared to a $6
loss and nil of divestiture and acquisition costs, respectively, during 2009. Changes in foreign currency
exchange rates favorably impacted operating income by $30 million.
Net revenue for ADT Worldwide decreased $736 million, or 9.4%, during 2009 as compared to
2008. This decrease was primarily driven by the unfavorable impact of changes in foreign currency
exchange rates of $614 million. Revenue was positively affected by $152 million for the net impact of
acquisitions and divestitures. Revenue from product sales decreased 16.8% and service revenue
decreased 5.5%. Recurring revenue declined 3.5% during 2009 primarily as a result of changes in
foreign currency exchange rates, which unfavorably impacted recurring revenue by 7.5%, but was offset
by growth in North America and Asia. Product sales and installation and other service revenue declined
15.6% partially due to a result of changes in foreign currency exchange rates, which unfavorably
impacted system installation and service revenue by 8.3%, and lower sales volume due to weakness in
the commercial markets, including the retailer end market. Geographically, revenue in North America
decreased $46 million, or 1.1%, resulting from reduced spending primarily in the commercial markets,
including the retailer end market. Revenue in EMEA decreased $528 million, or 22.0%, largely as a
result of foreign currency exchange rates, which had an unfavorable impact of $328 million. The
remaining decrease in EMEA was primarily a result of a decline in product sales, systems installation
and service revenue due to a slowdown in the commercial markets, including the retailer end market.
Revenue declined $162 million, or 13.8%, in the Rest of World geographies, which was primarily due to
the unfavorable impact of changes in foreign currency exchange rates of $223 million partially offset by
growth in Asia and Latin America.
Operating income in 2009 decreased $1.1 billion as compared to 2008. Based on the deterioration
in the commercial markets, including the retailer end market discussed above, the Company recorded a
goodwill impairment charge of $959 million related to its ADT EMEA reporting unit and intangible
2010 Financials 39