ADT 2010 Annual Report Download - page 94

manufacturing, power generation, petrochemical, offshore oil exploration, transportation, data
processing, telecommunications, commercial food preparation, mining and marine applications.
Fire Protection Services installs fire detection and fire suppression systems in both new and
existing buildings. These systems typically are purchased by owners, construction engineers and
electrical contractors as well as mechanical or general contractors. In recent years, retrofitting of
existing buildings has grown as a result of legislation mandating the installation of fire detection and
fire suppression systems, especially in hotels, healthcare facilities and educational establishments. In
September 2008, the International Residential Code Council, a non-profit association that develops
model codes that are the predominant building and fire safety regulations used by states and
jurisdictions in the United States, adopted a proposal advanced by firefighters and other life-safety
advocates to require sprinkler systems in new one and two family dwellings effective in January 2011.
This national code must be adopted by states and jurisdictions in order for it to be applied to new
homes being built in that area. The timing of adoption will vary by state / district. Fire Protection
Services also continues to focus on system maintenance and inspection, which have become increasingly
significant parts of its business.
Customers
Fire Protection Services’ customers include commercial enterprises, governmental entities, airports,
commercial shipping companies, transportation systems, healthcare facility owners, petrochemical
facilities and homeowners. We market our fire detection and fire suppression systems to the majority of
these customers through a direct sales force.
Competition
Competition in the fire detection and fire suppression business varies by region. In North America,
we compete with hundreds of smaller contractors on a regional or local basis for the installation of fire
detection and fire suppression systems. In Europe, we compete with many regional or local contractors
on a country-by-country basis. In Asia, Australia and New Zealand, we compete with a few large fire
detection and fire suppression contractors, as well as with many smaller regional and local companies.
We compete for fire detection and fire suppression systems contracts primarily on the basis of service,
quality and price.
Electrical and Metal Products
During the third quarter of 2010, we announced our intention to pursue a tax-free spin-off of our
Electrical and Metal Products business. On November 9, 2010, we announced an agreement to sell a
51% interest in our Electrical and Metal Products business. In connection with this announcement, we
no longer plan to pursue the tax-free spin-off of our Electrical and Metal Products business as
proposed on April 27, 2010. See Note 25 to the Consolidated Financial Statements.
Our Electrical and Metal Products segment designs, manufactures and sells galvanized steel tubing
and pipe products, pre-wired armored electrical cables, electrical support systems and metal framing
systems for trade contractors in the construction and modernization of non-residential structures such
as commercial office buildings, institutional facilities, manufacturing plants and warehouses, shopping
centers and multi-family dwellings. In North America, our Allied Tube & Conduit business is a leading
manufacturer of electrical steel conduit and our AFC Cable Systems business is a leading manufacturer
of steel and aluminum pre-wired electrical cable. Electrical and Metal Products also manufactures and
sells cable tray systems, steel tubes, tiles, plates and other specialty formed steel products in South
America, Asia Pacific and EMEA. With 2010 net revenue of $1.4 billion, our Electrical and Metal
Products segment comprises 8% of our consolidated net revenue. In 2009 and 2008, net revenue
6 2010 Financials