ADT 2015 Annual Report Download - page 131

FORM 10-K
Commitments and Contractual Obligations
The following table provides a summary of our contractual obligations and commitments for debt, minimum
lease payment obligations under non-cancelable leases and other obligations as of September 25, 2015.
(in millions) 2016 2017 2018 2019 2020 Thereafter Total
Debt principal(1) ............................. $ 1 $1,086 $— $500 $300 $3,450 $5,337
Interest payments(2) ........................... 216 213 199 190 170 1,003 1,991
Operating leases ............................. 58 52 45 35 28 46 264
Capital leases(3) .............................. 7 7766 7 40
Purchase obligations(4) ........................ 273 182 46 1 — — 502
Total contractual cash obligations(5) .............. $555 $1,540 $297 $732 $504 $4,506 $8,134
(1) Debt principal consists of short-term and long-term debt obligations related to our senior unsecured notes,
revolving credit facility and other debt and excludes debt discounts and interest.
(2) Interest payments consist primarily of interest on our fixed-rate debt.
(3) Capital leases reflect the principal amount of capital lease obligations, including related interest.
(4) Purchase obligations consist of commitments related to agreements for purchases of goods and services,
including purchase orders, entered into in the ordinary course of business. The purchase obligations in the
table above primarily relate to an agreement with one of our suppliers for the purchase of certain security
system equipment and components. The agreement, which was amended during the third quarter of fiscal
year 2015, provides that the Company meet minimum purchase requirements, which are subject to
adjustments based on certain performance conditions for each of the calendar years 2015, 2016, and 2017.
The agreement expires on December 31, 2017. See Note 7 to the Consolidated Financial Statements for
further information on our purchase obligations.
(5) Total contractual cash obligations in the table above exclude income taxes as we are unable to make a
reasonably reliable estimate of the timing for the remaining payments in future years. As of September 25,
2015, we had unrecognized tax benefits of $48 million. Accrued interest and penalties related to the
unrecognized tax benefits were not material. See Note 6 to the Consolidated Financial Statements for further
information.
As of September 25, 2015, standby letters of credit related to our insurance programs were immaterial.
Off-Balance Sheet Arrangements
As of September 25, 2015, we had no material off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of the Consolidated Financial Statements in conformity with GAAP requires management
to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. The following
accounting policies are based on, among other things, judgments and assumptions made by management that
include inherent risks and uncertainties. Management’s estimates are based on the relevant information available
at the end of each period.
Revenue Recognition
Substantially all of our revenue is generated by contractual monthly recurring fees received for monitoring
services provided to customers. Revenue from monitoring services is recognized as those services are provided to
customers. Customer billings for services not yet rendered are deferred and recognized as revenue as the services
are rendered. The balance of deferred revenue is included in current liabilities or long-term liabilities, as
appropriate.
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