ADT 2012 Annual Report Download - page 122

the purpose of addressing these requirements, and those expenses may be significant. If we are unable to upgrade
our financial and management controls, reporting systems, information technology systems and procedures in a
timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that
apply to reporting companies under the Exchange Act could be impaired. Any failure to achieve and maintain
effective internal controls could have a material adverse effect on our business, financial condition, results of
operations or cash flows.
We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an
independent publicly-traded company, and we may experience increased costs after the Separation.
We may be unable to replace in a timely manner or on comparable terms the services or other benefits that
Tyco previously provided to us that are not specified in any transition services agreement. Upon expiration of
any transition services agreement, many of the services that are covered in the agreement will have to be
provided internally or by unaffiliated third parties and we may be unable to replace those services in a timely
manner or on comparable terms. In addition, if Tyco does not continue to perform the transition services and the
other services that are called for under any transition services agreement, we may not be able to operate our
business as effectively and our profitability may decline.
In addition, for a period of time of up to two years after the Separation, we will continue to share monitoring
facilities with Tyco as we work to separate our security monitoring system from that of Tyco. In connection with
the Separation, we have entered into monitoring agreements with Tyco pursuant to which we will provide third-
party monitoring services to certain of their customers and they will provide third-party monitoring services to
certain of our customers for a period of time. We may not be able to affect the separation of our operations and
security monitoring system from Tyco as smoothly as anticipated, which may result in disruption to our ongoing
business, distraction of management and an increase in our cost of operation.
Our historical combined financial information for periods prior to September 28, 2012, is not necessarily
representative of the results we would have achieved as an independent, publicly-traded company and
may not be a reliable indicator of our future results.
The historical combined financial information included in this Annual Report on Form 10-K does not
necessarily reflect what our results of operations, financial condition and cash flows would have been had we
been an independent, publicly-traded company during the periods presented or what our results of operations,
financial condition and cash flows will be in the future. This is primarily because:
• Prior to the Separation, our business was operated by Tyco as part of its broader corporate
organization, rather than as an independent, publicly-traded company. In addition, prior to the
Separation, Tyco, or one of its affiliates, performed significant corporate functions for us, including tax
and treasury administration and certain governance functions, including internal audit and external
reporting. Our historical combined financial statements reflect allocations of corporate expenses from
Tyco for these and similar functions and may not reflect the costs we will incur for similar services in
the future as an independent company.
• Our working capital requirements and capital for our general corporate purposes, including acquisitions
and capital expenditures, historically have been satisfied as part of the company-wide cash
management practices of Tyco. Now that we are an independent company, Tyco will not be providing
us with funds to finance our working capital or other cash requirements. Without the opportunity to
obtain financing from Tyco, we must obtain financing from banks, through public offerings or private
placements of debt or equity securities or other arrangements.
• Other significant changes may occur in our cost structure, management, financing and business
operations as a result of our operating as a company separate from Tyco.
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