ADT 2013 Annual Report Download - page 102

FORM 10-K
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
The following discussion should be read in conjunction with our Consolidated and Combined Financial
Statements and the notes thereto. This discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-
looking statements as a result of many factors, including but not limited to those provided in Item 1A. Risk
Factors and under the heading “Cautionary Statement Regarding Forward-Looking Statements” below.
The Consolidated and Combined Financial Statements include our combined operations, assets and
liabilities and have been prepared in accordance with generally accepted accounting principles in the United
States of America (“GAAP”). Unless otherwise indicated, references to 2013, 2012 and 2011 are to our fiscal
years ended September 27, 2013, September 28, 2012 and September 30, 2011, respectively.
As part of a plan to separate into three independent companies, on or 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 stockholders of record as of the close of
business on September 17, 2012 (the “Separation”). On the Distribution Date, each of the stockholders of Tyco
received one share of ADT common stock for every two shares of common stock of Tyco held on September 17,
2012.
Our Consolidated Balance Sheets as of September 27, 2013 and September 28, 2012 reflect the consolidated
financial position of ADT and its subsidiaries as an independent publicly-traded company. Additionally, our
Consolidated and Combined Statements of Operations, Comprehensive Income and Cash Flows for fiscal year
2013 reflect ADT’s operations and cash flows as a standalone company. Prior to the Separation on September 28,
2012, our 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 were derived from Tyco’s
historical accounting records and presented on a carve-out basis. As such, our Consolidated and Combined
Statements of Operations, Comprehensive Income and Cash Flows for fiscal years 2012 and 2011 consist of the
combined results of operations and cash flows of the ADT North American Residential Security Business of
Tyco.
We conduct business through our operating entities and report financial and operating information in one
reportable segment. We have a 52- or 53-week fiscal year that ends on the last Friday in September. Both fiscal
year 2013 and fiscal year 2012 are 52 week years. Fiscal year 2011 was a 53-week year. Our next 53-week year
will occur in fiscal year 2016.
Business Overview
ADT is a leading provider of electronic security, interactive home and business automation and related
monitoring services. We currently serve approximately 6.5 million customers, making us the largest company of
our kind in both the United States and Canada. With a 139-year history, the ADT®brand is one of the most
trusted and well-known brands in the security industry today. Our broad and pioneering set of products and
services, including our ADT Pulse interactive home and business solutions, and our home health services, meet a
range of customer needs for modern lifestyles. Our partner network is the broadest in the industry, and includes
dealers, affinity organizations like USAA and AARP and technology providers. ADT delivers an integrated
customer experience by maintaining the industry’s largest sales, installation and service field force and most
robust monitoring network, all backed by the support of approximately 17,000 employees and approximately 200
sales and service offices.
For fiscal year 2013, our revenue was $3.3 billion and our operating income was $735 million. The majority
of the monitoring services and a large portion of the maintenance services we provide to our customers are
38