ADT 2012 Annual Report Download - page 156

THE ADT CORPORATION
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Nature of Business—The ADT Corporation (“ADT” or the “Company”), a company incorporated in the
state of Delaware, is a leading provider of electronic security, interactive home and business automation and
related monitoring services in the United States and Canada.
Separation from Tyco International Ltd.—On September 19, 2011, Tyco International Ltd. (“Tyco” or
“Parent”) announced that its board of directors had approved a plan to separate Tyco into three separate, publicly
traded companies (the “Separation”), identifying the ADT North American Residential Security Business of
Tyco as one of those three companies. In conjunction with the Separation, prior to September 28, 2012, Tyco
transferred the equity interests of the entities that held all of the assets and liabilities of its residential and small
business security business in the United States and Canada to ADT. Effective on September 28, 2012 (the
“Distribution Date”), Tyco distributed all of its shares of ADT to Tyco’s shareholders of record as of the close of
business on September 17, 2012 (the “Record Date”). On the Distribution Date, each of the shareholders of Tyco
received one share of ADT common stock for every two shares of common stock of Tyco held on the Record
Date. The Separation was completed pursuant to the Separation and Distribution Agreement, dated as of
September 26, 2012, among Tyco and ADT. After the Distribution Date, Tyco did not beneficially own any
shares of ADT common stock.
The Company’s Registration Statement on Form 10 was declared effective by the U.S. Securities and
Exchange Commission (“SEC”) on September 14, 2012. ADT’s common stock began “regular way” trading
under the symbol “ADT” on the New York Stock Exchange (“NYSE”) on October 1, 2012.
Basis of Presentation—The Consolidated and Combined Financial Statements include the combined
operations, assets and liabilities of the Company. The Consolidated and Combined Financial Statements have
been prepared in United States dollars (“USD”) and in accordance with generally accepted accounting principles
in the United States of America (“GAAP”). Unless otherwise indicated, references to 2012, 2011 and 2010 are to
the Company’s fiscal years ended September 28, 2012, September 30, 2011 and September 24, 2010,
respectively.
The Consolidated and Combined Financial Statements reflect the Company’s financial position, results of
operations and cash flows in conformity with GAAP. The Consolidated and Combined Balance Sheet as of
September 28, 2012 reflects the consolidated financial position of The ADT Corporation and its subsidiaries as
an independent publicly-traded company. Prior to the Separation on September 28, 2012, the Company’s
financial position, results of operations and cash flows consisted of Tyco’s residential and small business security
business in the United States, Canada and certain U.S. territories and have been derived from Tyco’s historical
accounting records and presented on a carve-out basis. As such, the Company’s Consolidated and Combined
Statements of Operations and Cash Flows for 2012, 2011 and 2010 consist of the combined results of operations
of the ADT North American Residential Security Business of Tyco.
For periods prior to the Separation, the Company’s Consolidated and Combined Financial Statements
include allocations of certain working capital, property and equipment, and operating expense balances. In
addition, certain general corporate overhead, debt and related interest expense have been allocated by Tyco to the
Company for the financial statements presented on a carve-out basis. The Company used certain underlying
activity drivers as a basis of allocation, including revenue, materials usage, head-count utilization and other
factors. Both ADT and Tyco believe such allocations are reasonable; however, they may not be indicative of the
actual results of the Company had the Company been operating as an independent, publicly traded company for
the periods presented or the amounts that will be incurred by the Company in the future. Note 5 provides further
information regarding debt and related interest expense allocations and Note 9 provides further information
regarding general corporate overhead allocations.
64