ADT 2013 Annual Report Download - page 76

FORM 10-K
Senior Vice President and Chief Marketing and Customer Officer. Before the separation from Tyco in September
2012, Mr. Wells was Chief Marketing and Customer Officer of Tyco’s ADT North American Residential
business segment. Before joining ADT in May 2012, he served as Executive Vice President and Chief Marketing
Officer for 24 Hour Fitness, overseeing all marketing communications, public relations, 24hourfitness.com,
member services and retail products and services. Prior to joining 24 Hour Fitness in 2007, Mr. Wells held
leadership roles at Visa USA, including Vice President, Client Services and Vice President, Partnership
Marketing. He also served in various sales and marketing positions with Interpublic Group of Companies (IPG),
Clear Channel, The Mills Corporation and Nissan North America. A former Marine infantry officer, Mr. Wells
holds a Bachelor of Science in Physical Science from the United States Naval Academy and a management
certificate from Johns Hopkins University.
Item 1A. Risk Factors.
In addition to risks and uncertainties in the ordinary course of business that are common to all businesses,
important factors that are specific to our industry and our company could have a material and adverse impact on
our business, financial condition, results of operations and cash flows. You should carefully consider the risks
described below and in our subsequent periodic filings with the SEC before investing in our securities. Our
business may also be adversely affected by risks and uncertainties that are not presently known to us or risks that
we currently deem immaterial. The following risk factors should be read in conjunction with “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated and combined
financial statements and related notes in this report.
Risks Relating to Our Business
We sell our products and services in highly competitive markets, which results in pressure on our profit
margins and limits our ability to maintain or increase the market share of our products and services.
The monitored security alarm industry is highly fragmented and subject to significant competition and
pricing pressures. We experience significant competitive pricing pressures on installation, monitoring and service
fees. Several significant competitors offer installation fees that match or are lower than ours. Other competitors
charge significantly more for installation but, in many cases, less for monitoring. In addition, cable and
telecommunications companies are expanding into the monitored security alarm industry and are bundling their
existing offerings with monitored security services. In some instances, it appears that the monitored security
services component of such bundled offerings is significantly underpriced and, in effect, subsidized by the rates
charged for the other services offered by these companies. These pricing alternatives may influence customers’
desire to subscribe to our services at rates and fees we consider appropriate. In many cases we face competition
for direct sales from our authorized dealers, who may offer installation for considerably less than we do in
particular markets. We believe that the monitoring and service fees we offer are generally competitive with rates
offered by other major security companies. We also face potential competition from improvements in self-
monitoring systems, which enable customers to monitor their home environment without third-party involvement
through the Internet, text messages, emails or similar communications, but with the disadvantage that alarm
events may go unnoticed. It is possible that one or more of our competitors could develop a significant technical
advantage over us that allows them to provide additional service or better quality service or to lower their price,
which could put us at a competitive disadvantage. Continued pricing pressure or improvements in technology and
shifts in customer preferences towards self-monitoring could adversely impact our customer base or pricing
structure and have a material adverse effect on our business, financial condition, results of operations and cash
flows.
Expiration of non-competition agreements will allow the entry of potential competitors with deep
knowledge of our business.
We acquired Broadview Security in 2010. In connection with the separation of Broadview Security from
The Brink’s Company in 2008 (the “Broadview Spin-Off”), Broadview Security and The Brink’s Company
entered into a non-competition and non-solicitation agreement pursuant to which The Brink’s Company agreed
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