ADT 2010 Annual Report Download - page 130

realized through cost containment actions, and to a lesser extent, a curtailment gain of approximately
$7 million recognized when certain defined benefit pension plans were frozen in the United Kingdom.
During 2010, $34 million of restructuring and divestiture charges, net were incurred as compared to
$45 million of restructuring charges during 2009. Changes in foreign currency exchange rates favorably
impacted operating income by $11 million. The net increase in operating income was partially offset by
the decreased sales volume discussed above.
Net revenue for Fire Protection Services decreased $403 million, or 10.6%, during 2009 as
compared to 2008. This decrease was primarily due to the impact of unfavorable changes in foreign
currency exchange rates of $293 million, or 7.7%. Additionally, revenue declined due to the weakness
in the commercial market and adverse global economic conditions. Geographically, revenue in our
international fire businesses decreased by $286 million, or 16.8%, largely due to the impact of
unfavorable changes in foreign currency exchange rates discussed above as well as weakness in the
European commercial markets. Additionally, revenue in our North America SimplexGrinnell business
decreased by $117 million, 5.5%, primarily due to a decline in systems installation and upgrade activity
in the sprinkler business.
Operating income decreased $263 million during 2009 as compared to 2008. The decrease was
primarily due to a $180 million goodwill impairment in EMEA recorded during 2009 compared to a
$9 million goodwill impairment in Latin America recorded during 2008. The decrease was further
driven by the decline in sales volume discussed above as well as an increase in bad debt charges, both
as a result of the weakness experienced in the commercial markets and adverse global economic
conditions. There were restructuring, asset impairment and divestiture charges of $45 million in 2009 as
compared to $26 million in 2008. Additionally, operating income decreased due to the unfavorable
impact of changes in foreign currency exchange rates of $10 million. The decline in operating income
was partially offset by savings realized through cost containment and restructuring actions.
Electrical and Metal Products
Net revenue, goodwill impairment, operating income (loss) and operating margin for Electrical and
Metal Products for the years ended September 24, 2010, September 25, 2009 and September 26, 2008
were as follows ($ in millions):
2010 2009 2008
Revenue from product sales .............................. $1,394 $1,389 2,266
Service revenue ....................................... 5 3 6
Net Revenue ......................................... $1,399 $1,392 2,272
Goodwill impairment ................................... $ — $ 935 $ —
Operating income (loss) ................................. 100 (938) 342
Operating margin ..................................... 7.1% —(1) 15.1%
(1) Certain operating margins and percentage changes have not been presented as management believes such calculations are
not meaningful.
Net revenue for Electrical and Metal Products increased $7 million, or 0.5%, during 2010
compared to 2009. The increase in revenue was primarily due to favorable changes in foreign currency
exchange rates of $37 million, or 2.7%, and $24 million, or 1.7%; due to the favorable net impact of
acquisitions and divestitures. These increases were partially offset by a decline in volume of armored
cable products and, to a lesser extent, steel products. Higher selling prices for armored cable products
were almost entirely offset by lower selling prices for steel products.
Operating income increased approximately $1.0 billion during 2010 as compared to 2009.
Operating income for 2009 was negatively affected by goodwill impairment charges of $935 million
42 2010 Financials