ADT 2015 Annual Report Download - page 122
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FORM 10-K
generated through our direct channel resulted from lead generation challenges partially due to the impact of the
competitive environment, the implementation of more stringent credit policies for new subscribers and increased
focus on ADT Pulse®upgrades for existing customers.
Ending number of customers, net of attrition, decreased by approximately 2.0% to 5.9 million for fiscal year
2014 as compared to 6.0 million for fiscal year 2013. This decrease was primarily due to the decline in gross
customers additions as discussed above. Customer unit attrition and customer revenue attrition as of
September 26, 2014 were 13.3% and 13.5%, respectively, compared with 13.3% and 13.8%, respectively, as of
September 27, 2013. Attrition was impacted favorably by several new programs implemented to address
voluntary, non-pay and relocation disconnects, offset by the impact of the competitive environment.
Canada
The increase in Canada revenue was attributable to the following:
(in millions) 2014 2013 $ Change % Change
Recurring customer revenue .......................... $180 $167 $13 7.8%
Other revenue ...................................... 22 19 3 15.8%
Total Canada revenue ........................... $202 $186 $16 8.6%
Revenue in Canada increased largely due to $33 million of revenue associated with the Protectron business,
which we acquired during the fourth quarter of fiscal year 2014. This increase was partially offset by the negative
impact of foreign currency exchange rates on revenue, excluding Protectron, of $11 million.
Operating Expenses
We evaluate operating expenses by categorizing costs into cost to serve expenses, gross subscriber
acquisition cost expenses, depreciation and amortization, separation costs and other. The following tables reflect
the location of these costs in our Consolidated Statements of Operations as well as by segment for fiscal years
2014 and 2013:
Consolidated Segment Information
2014 2014
(in millions)
Cost of
revenue
Selling,
general and
administrative
expenses
Radio
conversion
costs
Separation
costs Total
United
States Canada Total
Cost to serve expenses ............ $ 411 $ 647 $ 44 $— $1,102 $1,033 $ 69 $1,102
Gross subscriber acquisition cost
expenses ..................... 61 381 — — 442 416 26 442
Depreciation and amortization ...... 968 203 — — 1,171 1,104 67 1,171
Separation costs .................. — — — 17 17 17 — 17
Other .......................... 17 — — — 17 16 1 17
Total ...................... $1,457 $1,231 $ 44 $ 17 $2,749 $2,586 $163 $2,749
48