ADT 2013 Annual Report Download - page 94

FORM 10-K
We may be unable to make, on a timely or cost-effective basis, the continued 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 effect 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 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 combined financial information included in this Annual Report on Form 10-K for periods prior to
September 28, 2012 does not necessarily reflect the results of operations, financial condition and cash flows that
we would have achieved as an independent, publicly-traded company or those that we will achieve 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 combined financial statements for periods prior to September 28, 2012 reflect
allocations of corporate expenses from Tyco for these and similar functions.
• For periods prior to September 28, 2012, our working capital requirements and capital for our general
corporate purposes, including acquisitions and capital expenditures, were satisfied as part of Tyco’s
company-wide cash management practices. As an independent, publicly-traded company, we no longer
obtain funds from Tyco to finance our working capital or other cash requirements. Rather, 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.
For additional information about our past financial performance and the basis of presentation of our
financial statements, see Management’s Discussion and Analysis of Financial Condition and Results of
Operations and our Consolidated and Combined Financial Statements.
As an independent, publicly-traded company, we may not enjoy the same benefits that we did as a
segment of Tyco.
There is a risk that, as a result of our separation from Tyco, we may become more susceptible to market
fluctuations and other adverse events than we would have been if we were still a part of the current Tyco
organizational structure. As part of Tyco, we enjoyed certain benefits from Tyco’s operating diversity,
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