ADT 2011 Annual Report Download - page 3

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TO OUR STAKEHOLDERS:
I am pleased to report that
Tyco International delivered strong
performance in fiscal 2011.
We achieved solid growth in our
revenue, operating margin and
earnings while further strengthening
our core security, fire protection
and flow control businesses.
diluted share, from $1.1 billion, or $2.31 per diluted share. Excluding
special items, income from continuing operations totaled $3.24
per diluted share for 2011 compared to $2.68 for 2010—a 21% gain.
We continued to generate strong cash flow, finishing the year
with $1.4 billion in cash.
Operational and Strategic Accomplishments
We continued to invest in growth opportunities last year by
increasing our capital spending 12%. We also increased our
research and development spending by 12% to support the work
of our R&D teams around the world in developing new technology
and innovative solutions for our customers. Additionally, we
increased our sales and marketing spending by 5%, focusing on
strengthening our presence in key vertical and emerging markets
and building awareness around product oerings.
One such oering is ADT Pulse, our interactive security platform
that we introduced in the North American residential market
in fiscal 2010. We are now introducing ADT Pulse to our small
business customers to strengthen our position in this important
segment of the security industry. ADT Pulse makes it possible
for anyone with a web-enabled device to remotely access and
control not only a security system, but also lights, thermostats,
video cameras and other appliances in their home or small
business. In our fire protection business, we launched the Simplex
4100ES (eServices) fire alarm system, a product featuring
Internet-based technology that’s designed to simplify installation,
improve serviceability and reduce life-cycle costs for engineers
and end-user customers. Groundbreaking features include
remote service diagnostics, remote program downloads over
the customer’s IT network, and mass storage of vital system data
within the system’s panel. The Simplex 4100ES represents one
of our most important fire alarm system launches in recent years
and has been well received by our customers.
Our progress in 2011 and over the four previous years positioned
us to take an important step to promote future growth and value
creation. In September 2011, we announced plans to separate
Tyco International into three independent, publicly-traded
companies. Following a thorough assessment by our Board of
Directors and senior leadership, we concluded that creating three
companies from our current portfolio of businesses was the best
way to unlock the full potential of Tyco International.
Before discussing these exciting plans in further detail,
let me highlight some of our company’s many accomplishments
during 2011.
Business Performance
Fiscal 2011 revenue of $17.4 billion grew 9%, excluding the results
of our electrical and metal products business. Our organic
revenue (which excludes the impact of acquisitions, divestitures
and foreign currency) grew 4%, reflecting improving conditions
in a number of our end markets. Operating margins expanded
160 basis points to 11.9%. This strong revenue and margin
expansion helped drive earnings sharply higher. Income from
continuing operations grew 39% to $1.6 billion, or $3.27 per
Edward D. Breen
Chairman and Chief Executive Ocer
Tyco International Ltd.
CHAIRMAN’S LETTER