ADT 2011 Annual Report Download - page 4

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Our investment in growth opportunities also included several
strategic acquisitions. In our security solutions segment,
we purchased Signature Security to strengthen our sales,
installation and service capabilities in Australia and New Zealand.
Additionally, we acquired Visonic Ltd., a leader in developing
advanced wireless technology for the security industry. Visonic
has a strong presence in Europe, the Middle East and Africa. In our
fire protection segment, we added Chemguard, Inc., broadening
our global fire suppression oerings while augmenting our
presence in the Middle East and Latin America. And in the flow
control segment, we acquired a 75% stake in KEF Holdings,
gaining a local valve manufacturing presence in the Middle East,
while broadening our product and service oerings in that region.
Meanwhile, we took a further step to streamline our portfolio
with the sale of a majority stake in our electrical and metal
products business. Through these portfolio moves, we
strengthened our competitive position in our core platforms while
increasing our recurring and service revenues that are sources
of consistency and stability. These revenues grew to 45% of total
revenues last year.
During the year, we continued to focus on improving productivity
through cost-containment initiatives and restructuring programs.
In recent quarters, productivity gains—in conjunction with the
gradual upturn in the global economy and the resulting increases
in organic growth—have fueled the improvement in our
operating margin.
We also made very good progress last year in the area of capital
allocation. In addition to funding organic growth and acquisitions,
we continued to return excess cash to shareholders. We used
$1.3 billion of cash to repurchase 6% of our outstanding shares
and increased our annual dividend by approximately 20% during
fiscal 2011.
Positioning Tyco for the Future
We are on track with our plan to separate Tyco International into
three independent, publicly-traded companies, consisting of a
standalone ADT North America residential and small business
security company; a standalone flow control company; and a
standalone fire protection and security company. Each will have
highly-skilled employees and talented, experienced leaders. All
three will have industry-leading positions in large and fragmented
industries. Importantly, the new companies will have greater
flexibility to pursue their own strategies to achieve growth—both
organically and through acquisitions—than they would under
Tyco’s current corporate structure. Pages 5 to 7 in this report
provide overviews of the proposed new companies.
Each company will have its own independent board of directors.
We expect that a number of current Tyco board members will
serve on the boards of the three companies. Upon completion of
the transaction, I expect to become non-executive chairman of
the fire protection and security company, a director of the flow
control company and a consultant to the ADT North America
company. In addition, current Tyco directors are expected to
serve as non-executive chairmen of the flow control company
and the ADT North America company.
With all three businesses well positioned to operate as separate
entities, we expect the transition to proceed smoothly and
seamlessly. The separation of Tyco International into three
separate companies requires your approval. We plan to hold
a special general meeting of shareholders in the fourth quarter of
2012; pending your approval, the new companies are expected
to begin operations by October 2012.
In Closing
Tyco’s separation into three standalone companies should truly
unlock the potential of our businesses. I am proud of the progress
we have made on many fronts since I came on board in 2002.
It was dicult then to envision what this company has become
today—a global leader in all of its businesses with a reputation
for transparency, honesty and integrity. That progress would
not have been possible without the passion, hard work and
commitment of our more than 100,000 employees around the
world. To our dedicated employees and all Tyco stakeholders,
I oer my most sincere thanks for your continued and loyal
support of our company.
Edward D. Breen
Chairman and Chief Executive Ocer
“ We strengthened
our competitive position
in our core platforms
while increasing our
recurring and service
revenues.”