ADT 2014 Annual Report Download - page 67

FORM 10-K
PART I
Item 1. Business.
Overview
The ADT Corporation (hereinafter referred to as “we”, the “Company” or “ADT”) is a leading provider of
monitored security, interactive home and business automation and related monitoring services in the United
States and Canada. ADT has one of the most trusted and well-known brands in the monitored security industry
today. We currently serve approximately 6.7 million residential and small business customers, making us the
largest company of our kind in both the United States and Canada. We deliver an integrated customer experience
by maintaining the industry’s largest sales, installation and service field force as well as a robust monitoring
network, all backed by the support of approximately 17,500 employees. Our broad and pioneering set of products
and services, including interactive home and business solutions and home health services, meet a range of
customer needs for today’s active and increasingly mobile lifestyles. We believe we are well positioned to
continue to lead the large and growing residential and expanded business security market, and that our
demonstrated expertise and established footprint will help us to become a leader in the evolving market for home
automation, home health monitoring, lifestyle and business productivity solutions.
We originated in 1874 as the American District Telegraph Company, a consortium of 57 telegraph
operators. During the early part of the 20th century, we began offering fire and burglar alarm solutions. Over the
years, we engaged in a variety of communications related activities and by 1987 had become one of the leading
electronic security services providers. In 1997, we were acquired by Tyco International Ltd. (“Tyco” or
“Parent”). In 2010, we acquired our largest competitor, Broadview Security. The Company was incorporated in
Delaware in 2012 as a wholly-owned subsidiary of Tyco.
On September 19, 2011, Tyco announced that its board of directors had approved a plan to separate Tyco
into three separate, publicly traded companies, identifying the ADT North American Residential Security
Business of Tyco as one of those three companies. In conjunction with this plan, 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.
We conduct business through our operating entities and report financial and operating information in one
operating segment. For the year ended September 26, 2014, our revenue was $3.4 billion and our operating
income was $659 million, and as of September 26, 2014, our total assets were $10.5 billion. Information about
revenues and long-lived assets by geographic area is presented in Note 12 to the Consolidated and Combined
Financial Statements. Unless otherwise indicated, references in this Annual Report on Form 10-K to 2014, 2013
and 2012 are to our fiscal years ended September 26, 2014, September 27, 2013 and September 28, 2012,
respectively.
In order to optimize the financial performance of our business, we focus on several key business drivers,
including customer additions, costs to add a new customer, average revenue per customer, costs incurred to
provide services to customers and customer tenure. We believe we have a proven track record of successfully
balancing these key business drivers to optimize our returns. We use a structured customer acquisition process
designed to generate new customers with attractive characteristics including, high adoption of automatic payment
methods and strong credit scores, and interactive service contracts, which we believe results in long average
customer tenure. We have made customer retention a top priority, and have partnered with J.D. Power and
Associates, a global market research company, to collect and analyze feedback from new and existing customers,
enabling us to focus our efforts on the aspects of customer experience that most strongly correlate to customer
satisfaction and tenure.
1