ADT 2011 Annual Report Download - page 113

Risks Relating to Our Businesses
General economic and cyclical industry conditions may adversely affect our financial condition, results of
operations or cash flows.
Our operating results have been and may in the future be adversely affected by general economic
conditions and the cyclical pattern of certain industries in which we operate. For example, demand for
our services and products is significantly affected by the level of commercial construction, the amount
of discretionary consumer and business spending, and the performance of the housing market, each of
which historically has displayed significant cyclicality. Economic weakness in some end markets has
adversely affected certain of our businesses. Events or conditions that adversely impact the health of
the U.S. or global economies, or in the industries in which we operate, could have a material negative
impact on our financial condition, results of operations or cash flows.
We face intense competition in each of our businesses, and competitive challenges from lower cost
manufacturers. If we cannot successfully compete in an increasingly global market-place, our operating results
may be adversely affected.
We operate in competitive domestic and international markets and compete with many highly
competitive manufacturers and service providers, both domestically and on a global basis. Our
manufacturing businesses face competition from lower cost manufacturers in Asia and elsewhere and
our service businesses face competition from alternative service providers around the world. Key
components of our competitive position are our ability to adapt to changing competitive environments
and to manage expenses successfully. This requires continuous management focus on reducing costs,
maintaining our competitive position and improving efficiency through cost controls, productivity
enhancements and regular appraisal of our asset portfolio. If we are unable to achieve appropriate
levels of scalability or cost-effectiveness, or if we are otherwise unable to manage and react to changes
in the global marketplace, our financial condition, results of operations or cash flows may be adversely
affected.
Our future growth is largely dependent upon our ability to successfully compete with new and existing
competitors by developing or acquiring new technologies that achieve market acceptance with acceptable
margins.
Our businesses operate in global markets that are characterized by rapidly changing technologies,
evolving industry standards and potential new entrants in our markets. For example, a number of cable
and other telecommunications companies have introduced security services offerings, including
interactive security services, that are competitive with the products and services offered through our
Tyco Security Solutions business. If these services are aggressively marketed and gain market
acceptance, our ability to grow our Tyco Security Solutions business, in particular our Pulse offering,
could be materially adversely affected. Accordingly, our future success depends upon a number of
factors, including our ability to: identify emerging technological trends in our target end-markets;
develop, acquire and maintain competitive products and services; enhance our products and services by
adding innovative features that differentiate our products and services from those of our competitors;
and develop or acquire, manufacture and bring products and services to market quickly and
cost-effectively. Our ability to develop or acquire new products and services based on technological
innovation can affect our competitive position and requires the investment of significant resources.
These acquisitions and development efforts divert resources from other potential investments in our
businesses, and they may not lead to the development of new technologies, products or services on a
timely basis. Moreover, as we introduce new products such as Pulse, we may be unable to detect and
correct defects in the product or in its installation, which could result in loss of sales or delays in
market acceptance. Even after introduction, new or enhanced products may not satisfy consumer
preferences and product failures may cause consumers to reject our products. As a result, these
10 2011 Financials