ADT 2014 Annual Report Download - page 73

FORM 10-K
Success in acquiring new customers in the residential and business security and home/business automation
markets is dependent on a variety of factors, including company brand and reputation, market visibility, service
and product capabilities, quality, price and the ability to identify and sell to prospective customers. Competition
is often based primarily on price in relation to value of the solutions and service. Rather than compete purely on
price, we emphasize the quality of our monitored security and home/business automation services, the reputation
of our industry leading brands and our knowledge of customer needs, which together allow us to deliver an
outstanding customer experience. In addition, we are increasingly offering added features and functionality, such
as those in our ADT Pulse®interactive services offering, which provide new services and capabilities that serve
to further differentiate our offering and support a pricing premium.
We believe our robust field sales force, including our nationwide team of in-home sales consultants, our
solid reputation for and expertise in providing reliable security and monitoring services through our in-house
network of fully redundant monitoring centers, our reliable product solutions and our highly skilled installation
and service organization position us well to compete with traditional and new competitors.
Seasonality
Our business experiences a certain level of seasonality. Because more household moves take place during
the second and third calendar quarters of each year, our disconnect rate is typically higher in those quarters than
in the first and fourth calendar quarters. There is also a slight seasonal effect on our new customer installation
volume and related cash expenses incurred in investment in new subscribers; however, other factors, such as the
level of marketing expense and relevant promotional offers, can mitigate any seasonality effects. In addition, due
to weather related incidences, we may see increased servicing costs related to higher alarm signals and customer
service requests as a result of customer power outages and related issues.
Intellectual Property
Patents, trademarks, copyrights and other proprietary rights are important to our business, and we
continuously refine our intellectual property strategy to maintain and improve our competitive position. We
register new intellectual property to protect our ongoing technological innovations and strengthen our brand, and
we take appropriate action against infringements or misappropriations of our intellectual property rights by
others. We review third-party intellectual property rights to help avoid infringement and to identify strategic
opportunities. We typically enter into confidentiality agreements to further protect our intellectual property.
We own a portfolio of patents that relate to a variety of security and home/business automation technologies
utilized in our business, including security panels and sensors and video and information management solutions.
We also own a portfolio of trademarks, including ADT®, ADT Pulse®, ADT Always There®, Companion
Service®and Creating Customers for Life®, and are a licensee of various patents and trademarks, including from
our third-party suppliers and technology partners. Due to the importance that customers place on reputation and
trust when making a decision on a security provider, our brand is critical to our business. Patents for individual
products extend for varying periods according to the date of patent filing or grant and the legal term of patents in
the various countries where patent protection is obtained. Trademark rights may potentially extend for longer
periods of time and are dependent upon national laws and use of the marks.
Government Regulation and Other Regulatory Matters
Our operations are subject to numerous federal, state, provincial and local laws and regulations in the United
States and Canada in areas such as consumer protection, occupational licensing, environmental protection, labor
and employment, tax, licensing and other laws and regulations. Most states and provinces in which we operate
have licensing laws directed specifically toward the monitored security industry. In certain jurisdictions, we must
obtain licenses or permits in order to comply with standards governing employee selection, training and business
conduct.
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