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☒
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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47-4116383
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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¨
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Accelerated filer
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☐
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Non-accelerated filer
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x (Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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||
Emerging growth company
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☐
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Page
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June 30, 2019
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December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
43,052
|
|
|
$
|
363,177
|
|
Accounts receivable trade, less allowance for doubtful accounts of $43,892 and $39,765, respectively
|
275,545
|
|
|
245,714
|
|
||
Inventories, net
|
108,251
|
|
|
89,178
|
|
||
Work-in-progress
|
27,997
|
|
|
26,137
|
|
||
Prepaid expenses and other current assets
|
127,630
|
|
|
129,811
|
|
||
Total current assets
|
582,475
|
|
|
854,017
|
|
||
Property and equipment, net
|
356,911
|
|
|
326,565
|
|
||
Subscriber system assets, net
|
2,929,512
|
|
|
2,907,701
|
|
||
Intangible assets, net
|
7,225,974
|
|
|
7,488,194
|
|
||
Goodwill
|
5,145,477
|
|
|
5,081,887
|
|
||
Deferred subscriber acquisition costs, net
|
487,781
|
|
|
429,965
|
|
||
Other assets
|
249,039
|
|
|
120,279
|
|
||
Total assets
|
$
|
16,977,169
|
|
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$
|
17,208,608
|
|
|
|
|
|
||||
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
329,884
|
|
|
$
|
58,184
|
|
Accounts payable
|
275,081
|
|
|
221,341
|
|
||
Deferred revenue
|
340,100
|
|
|
334,886
|
|
||
Accrued expenses and other current liabilities
|
445,913
|
|
|
398,079
|
|
||
Total current liabilities
|
1,390,978
|
|
|
1,012,490
|
|
||
Long-term debt
|
9,481,059
|
|
|
9,944,112
|
|
||
Deferred subscriber acquisition revenue
|
629,810
|
|
|
544,429
|
|
||
Deferred tax liabilities
|
1,287,589
|
|
|
1,342,168
|
|
||
Other liabilities
|
297,874
|
|
|
140,604
|
|
||
Total liabilities
|
13,087,310
|
|
|
12,983,803
|
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||
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|
|
|
||||
Commitments and contingencies (See Note 7)
|
|
|
|
||||
|
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|
||||
Stockholders' equity:
|
|
|
|
||||
Common stock—authorized 3,999,000,000 shares of $0.01 par value; issued and outstanding shares of 746,360,289 and 766,881,453 as of June 30, 2019 and December 31, 2018, respectively
|
7,464
|
|
|
7,669
|
|
||
Additional paid-in capital
|
5,888,576
|
|
|
5,969,347
|
|
||
Accumulated deficit
|
(1,904,242
|
)
|
|
(1,680,432
|
)
|
||
Accumulated other comprehensive loss
|
(101,939
|
)
|
|
(71,779
|
)
|
||
Total stockholders' equity
|
3,889,859
|
|
|
4,224,805
|
|
||
Total liabilities and stockholders' equity
|
$
|
16,977,169
|
|
|
$
|
17,208,608
|
|
|
For the Quarters Ended
|
|
For the Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||
Monitoring and related services
|
$
|
1,085,422
|
|
|
$
|
1,023,126
|
|
|
$
|
2,155,837
|
|
|
$
|
2,040,418
|
|
Installation and other
|
198,322
|
|
|
108,333
|
|
|
370,967
|
|
|
207,489
|
|
||||
Total revenue
|
1,283,744
|
|
|
1,131,459
|
|
|
2,526,804
|
|
|
2,247,907
|
|
||||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
338,089
|
|
|
246,225
|
|
|
664,047
|
|
|
494,619
|
|
||||
Selling, general and administrative expenses
|
344,664
|
|
|
322,538
|
|
|
669,173
|
|
|
627,508
|
|
||||
Depreciation and intangible asset amortization
|
500,864
|
|
|
488,320
|
|
|
996,742
|
|
|
971,996
|
|
||||
Merger, restructuring, integration, and other
|
6,990
|
|
|
455
|
|
|
13,269
|
|
|
8,478
|
|
||||
Operating income
|
93,137
|
|
|
73,921
|
|
|
183,573
|
|
|
145,306
|
|
||||
Interest expense, net
|
(154,641
|
)
|
|
(174,479
|
)
|
|
(313,546
|
)
|
|
(348,812
|
)
|
||||
Loss on extinguishment of debt
|
(66,911
|
)
|
|
—
|
|
|
(88,472
|
)
|
|
(61,597
|
)
|
||||
Other income
|
1,510
|
|
|
29,282
|
|
|
2,709
|
|
|
28,822
|
|
||||
Loss before income taxes
|
(126,905
|
)
|
|
(71,276
|
)
|
|
(215,736
|
)
|
|
(236,281
|
)
|
||||
Income tax benefit
|
22,848
|
|
|
4,571
|
|
|
45,209
|
|
|
12,139
|
|
||||
Net loss
|
$
|
(104,057
|
)
|
|
$
|
(66,705
|
)
|
|
$
|
(170,527
|
)
|
|
$
|
(224,142
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
749,575
|
|
|
750,009
|
|
|
752,895
|
|
|
739,354
|
|
|
For the Quarters Ended
|
|
For the Six Months Ended
|
||||||||||||
|
June 30,
2019 |
|
June 30,
2018 |
|
June 30,
2019 |
|
June 30,
2018 |
||||||||
Net loss
|
$
|
(104,057
|
)
|
|
$
|
(66,705
|
)
|
|
$
|
(170,527
|
)
|
|
$
|
(224,142
|
)
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges
|
(32,934
|
)
|
|
(2,289
|
)
|
|
(50,199
|
)
|
|
(2,289
|
)
|
||||
Foreign currency translation
|
10,646
|
|
|
(10,925
|
)
|
|
20,051
|
|
|
(26,652
|
)
|
||||
Defined benefit pension plans
|
(6
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||
Total other comprehensive loss, net of tax
|
(22,294
|
)
|
|
(13,214
|
)
|
|
(30,160
|
)
|
|
(28,941
|
)
|
||||
Comprehensive loss
|
$
|
(126,351
|
)
|
|
$
|
(79,919
|
)
|
|
$
|
(200,687
|
)
|
|
$
|
(253,083
|
)
|
|
For the Quarter Ended June 30, 2019
|
|
For the Quarter Ended June 30, 2018
|
||||||||||||||||||||||||||||||||||||||||||
|
Number of Common Shares
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders' Equity |
|
Number of Common Shares
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders' Equity |
||||||||||||||||||||||
Balances at beginning of period
|
767,005
|
|
|
$
|
7,670
|
|
|
$
|
5,993,668
|
|
|
$
|
(1,773,662
|
)
|
|
$
|
(79,645
|
)
|
|
$
|
4,148,031
|
|
|
766,844
|
|
|
$
|
1,052
|
|
|
$
|
5,890,377
|
|
|
$
|
(1,148,059
|
)
|
|
$
|
(19,734
|
)
|
|
$
|
4,723,636
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,057
|
)
|
|
—
|
|
|
(104,057
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,705
|
)
|
|
—
|
|
|
(66,705
|
)
|
||||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,294
|
)
|
|
(22,294
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,214
|
)
|
|
(13,214
|
)
|
||||||||||
Common stock issued for initial public offering proceeds, net of related fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155
|
|
|
—
|
|
|
—
|
|
|
155
|
|
||||||||||
Repurchases of common stock
|
(20,610
|
)
|
|
(206
|
)
|
|
(127,808
|
)
|
|
—
|
|
|
—
|
|
|
(128,014
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Dividends, including dividends reinvested in common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,368
|
)
|
|
—
|
|
|
(26,368
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,875
|
)
|
|
—
|
|
|
(26,875
|
)
|
||||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
22,540
|
|
|
—
|
|
|
—
|
|
|
22,540
|
|
|
(49
|
)
|
|
—
|
|
|
45,814
|
|
|
—
|
|
|
—
|
|
|
45,814
|
|
||||||||||
Other
|
(35
|
)
|
|
—
|
|
|
176
|
|
|
(155
|
)
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
(969
|
)
|
|
—
|
|
|
—
|
|
|
(969
|
)
|
||||||||||
Balances at end of period
|
746,360
|
|
|
$
|
7,464
|
|
|
$
|
5,888,576
|
|
|
$
|
(1,904,242
|
)
|
|
$
|
(101,939
|
)
|
|
$
|
3,889,859
|
|
|
766,795
|
|
|
$
|
1,052
|
|
|
$
|
5,935,377
|
|
|
$
|
(1,241,639
|
)
|
|
$
|
(32,948
|
)
|
|
$
|
4,661,842
|
|
|
For the Six Months Ended June 30, 2019
|
|
For the Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||||||||||||||||
|
Number of Common Shares
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders' Equity |
|
Number of Common Shares
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders' Equity |
||||||||||||||||||||||
Balances at beginning of period
|
766,881
|
|
|
$
|
7,669
|
|
|
$
|
5,969,347
|
|
|
$
|
(1,680,432
|
)
|
|
$
|
(71,779
|
)
|
|
$
|
4,224,805
|
|
|
641,119
|
|
|
$
|
2
|
|
|
$
|
4,435,329
|
|
|
$
|
(998,212
|
)
|
|
$
|
(4,007
|
)
|
|
$
|
3,433,112
|
|
Adoption of accounting standard, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,430
|
|
|
—
|
|
|
34,430
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(170,527
|
)
|
|
—
|
|
|
(170,527
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(224,142
|
)
|
|
—
|
|
|
(224,142
|
)
|
||||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,160
|
)
|
|
(30,160
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,941
|
)
|
|
(28,941
|
)
|
||||||||||
Common stock issued for initial public offering proceeds, net of related fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105,000
|
|
|
1,050
|
|
|
1,404,969
|
|
|
—
|
|
|
—
|
|
|
1,406,019
|
|
||||||||||
Repurchases of common stock
|
(23,883
|
)
|
|
(239
|
)
|
|
(149,629
|
)
|
|
—
|
|
|
—
|
|
|
(149,868
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Dividends, including dividends reinvested in common stock
|
3,407
|
|
|
34
|
|
|
22,407
|
|
|
(53,093
|
)
|
|
—
|
|
|
(30,652
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,715
|
)
|
|
—
|
|
|
(53,715
|
)
|
||||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
46,250
|
|
|
—
|
|
|
—
|
|
|
46,250
|
|
|
20,676
|
|
|
—
|
|
|
95,102
|
|
|
—
|
|
|
—
|
|
|
95,102
|
|
||||||||||
Other
|
(45
|
)
|
|
—
|
|
|
201
|
|
|
(190
|
)
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
||||||||||
Balances at end of period
|
746,360
|
|
|
$
|
7,464
|
|
|
$
|
5,888,576
|
|
|
$
|
(1,904,242
|
)
|
|
$
|
(101,939
|
)
|
|
$
|
3,889,859
|
|
|
766,795
|
|
|
$
|
1,052
|
|
|
$
|
5,935,377
|
|
|
$
|
(1,241,639
|
)
|
|
$
|
(32,948
|
)
|
|
$
|
4,661,842
|
|
|
For the Six Months Ended
|
||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(170,527
|
)
|
|
$
|
(224,142
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and intangible asset amortization
|
996,742
|
|
|
971,996
|
|
||
Amortization of deferred subscriber acquisition costs
|
37,760
|
|
|
27,152
|
|
||
Amortization of deferred subscriber acquisition revenue
|
(50,472
|
)
|
|
(35,555
|
)
|
||
Share-based compensation expense
|
46,250
|
|
|
95,102
|
|
||
Deferred income taxes
|
(47,885
|
)
|
|
(9,778
|
)
|
||
Provision for losses on accounts receivable and inventory
|
27,641
|
|
|
27,531
|
|
||
Loss on extinguishment of debt
|
88,472
|
|
|
61,597
|
|
||
Other non-cash items, net
|
67,957
|
|
|
2,427
|
|
||
Changes in operating assets and liabilities, net of the effects of acquisitions:
|
|
|
|
||||
Deferred subscriber acquisition costs
|
(97,650
|
)
|
|
(88,810
|
)
|
||
Deferred subscriber acquisition revenue
|
134,877
|
|
|
127,973
|
|
||
Other, net
|
(53,993
|
)
|
|
7,269
|
|
||
Net cash provided by operating activities
|
979,172
|
|
|
962,762
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Dealer generated customer accounts and bulk account purchases
|
(333,846
|
)
|
|
(327,553
|
)
|
||
Subscriber system assets
|
(293,973
|
)
|
|
(280,720
|
)
|
||
Capital expenditures
|
(84,461
|
)
|
|
(65,212
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(76,511
|
)
|
|
(36,214
|
)
|
||
Other investing, net
|
1,152
|
|
|
13,552
|
|
||
Net cash used in investing activities
|
(787,639
|
)
|
|
(696,147
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from initial public offering, net of related fees
|
—
|
|
|
1,406,019
|
|
||
Proceeds from long-term borrowings
|
1,956,393
|
|
|
—
|
|
||
Repayment of long-term borrowings, including call premiums
|
(2,249,641
|
)
|
|
(673,928
|
)
|
||
Dividends on common stock
|
(30,407
|
)
|
|
(26,265
|
)
|
||
Repurchases of common stock
|
(149,868
|
)
|
|
—
|
|
||
Deferred financing costs
|
(43,716
|
)
|
|
(337
|
)
|
||
Other financing, net
|
1,804
|
|
|
(79
|
)
|
||
Net cash (used in) provided by financing activities
|
(515,435
|
)
|
|
705,410
|
|
||
|
|
|
|
||||
Effect of currency translation on cash
|
792
|
|
|
(636
|
)
|
||
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents
|
(323,110
|
)
|
|
971,389
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period
|
367,162
|
|
|
126,782
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents at end of period
|
$
|
44,052
|
|
|
$
|
1,098,171
|
|
|
|
|
|
||||
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
||||
Issuance of shares in lieu of cash dividend
|
$
|
22,441
|
|
|
$
|
—
|
|
(in thousands)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Cash and cash equivalents
|
$
|
43,052
|
|
|
$
|
363,177
|
|
Restricted cash and cash equivalents in prepaid expenses and other current assets
|
1,000
|
|
|
3,985
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents at end of period
|
$
|
44,052
|
|
|
$
|
367,162
|
|
(in thousands)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Gross carrying amount
|
$
|
4,599,997
|
|
|
$
|
4,304,279
|
|
Accumulated depreciation
|
(1,670,485
|
)
|
|
(1,396,578
|
)
|
||
Subscriber system assets, net
|
$
|
2,929,512
|
|
|
$
|
2,907,701
|
|
(in thousands)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Accrued interest
|
$
|
89,651
|
|
|
$
|
85,046
|
|
Payroll-related accruals
|
92,679
|
|
|
105,089
|
|
||
Other accrued liabilities
|
263,583
|
|
|
207,944
|
|
||
Accrued expenses and other current liabilities
|
$
|
445,913
|
|
|
$
|
398,079
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
(in thousands)
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Debt instruments, excluding capital lease obligations
|
$
|
9,729,534
|
|
|
$
|
10,055,474
|
|
|
$
|
9,952,385
|
|
|
$
|
9,828,274
|
|
(in thousands)
|
|
December 31, 2018
|
|
Lease Standard Adoption Adjustment
|
|
January 1, 2019
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Prepaid expenses and other current assets
|
|
$
|
129,811
|
|
|
$
|
(885
|
)
|
|
$
|
128,926
|
|
Intangible assets, net
|
|
7,488,194
|
|
|
(658
|
)
|
|
7,487,536
|
|
|||
Other assets
|
|
120,279
|
|
|
125,170
|
|
|
245,449
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
||||||
Accrued expenses and other current liabilities
|
|
398,079
|
|
|
29,460
|
|
|
427,539
|
|
|||
Other liabilities
|
|
140,604
|
|
|
94,167
|
|
|
234,771
|
|
|
|
For the Quarters Ended
|
|
For the Six Months Ended
|
||||||||||||
(in thousands)
|
|
June 30,
2019 |
|
June 30,
2018 |
|
June 30,
2019 |
|
June 30,
2018 |
||||||||
Monitoring and related services
|
|
$
|
1,085,422
|
|
|
$
|
1,023,126
|
|
|
$
|
2,155,837
|
|
|
$
|
2,040,418
|
|
Installation and other
|
|
198,322
|
|
|
108,333
|
|
|
370,967
|
|
|
207,489
|
|
||||
Total revenue
|
|
$
|
1,283,744
|
|
|
$
|
1,131,459
|
|
|
$
|
2,526,804
|
|
|
$
|
2,247,907
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||||||||
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contracts and related customer relationships
|
$
|
7,924,412
|
|
|
$
|
(3,393,202
|
)
|
|
$
|
4,531,210
|
|
|
$
|
7,568,456
|
|
|
$
|
(2,816,079
|
)
|
|
$
|
4,752,377
|
|
Dealer relationships
|
1,602,573
|
|
|
(273,420
|
)
|
|
1,329,153
|
|
|
1,598,916
|
|
|
(230,511
|
)
|
|
1,368,405
|
|
||||||
Other
|
215,663
|
|
|
(183,052
|
)
|
|
32,611
|
|
|
210,802
|
|
|
(176,390
|
)
|
|
34,412
|
|
||||||
Total definite-lived intangible assets
|
9,742,648
|
|
|
(3,849,674
|
)
|
|
5,892,974
|
|
|
9,378,174
|
|
|
(3,222,980
|
)
|
|
6,155,194
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name
|
1,333,000
|
|
|
—
|
|
|
1,333,000
|
|
|
1,333,000
|
|
|
—
|
|
|
1,333,000
|
|
||||||
Intangible assets
|
$
|
11,075,648
|
|
|
$
|
(3,849,674
|
)
|
|
$
|
7,225,974
|
|
|
$
|
10,711,174
|
|
|
$
|
(3,222,980
|
)
|
|
$
|
7,488,194
|
|
|
|
For the Quarters Ended
|
|
For the Six Months Ended
|
||||||||||||
(in thousands)
|
|
June 30,
2019 |
|
June 30,
2018 |
|
June 30,
2019 |
|
June 30,
2018 |
||||||||
Definite-lived intangible asset amortization expense
|
|
$
|
311,221
|
|
|
$
|
308,721
|
|
|
$
|
617,528
|
|
|
$
|
612,698
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
|
||||||
Debt Description
|
|
Issued
|
|
Maturity
|
|
Interest Rate
|
|
Interest Payable
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
First Lien Term B-1 Loan
|
|
5/2/2016
|
|
5/2/2022
|
|
LIBOR +2.75%
|
|
Quarterly
|
|
$
|
3,414,353
|
|
|
$
|
3,924,438
|
|
First Lien Revolving Credit Facility
|
|
3/16/2018
|
|
3/16/2023
|
|
LIBOR +2.75%
|
|
Quarterly
|
|
99,000
|
|
|
—
|
|
||
Prime Notes
|
|
5/2/2016
|
|
5/15/2023
|
|
9.250%
|
|
5/15 and 11/15
|
|
1,246,000
|
|
|
2,546,000
|
|
||
First Lien Notes due 2024
|
|
4/4/2019
|
|
4/15/2024
|
|
5.250%
|
|
2/15 and 8/15
|
|
750,000
|
|
|
—
|
|
||
First Lien Notes due 2026
|
|
4/4/2019
|
|
4/15/2026
|
|
5.750%
|
|
3/15 and 9/15
|
|
750,000
|
|
|
—
|
|
||
ADT Notes due 2020
|
|
12/18/2014
|
|
3/15/2020
|
|
5.250%
|
|
3/15 and 9/15
|
|
300,000
|
|
|
300,000
|
|
||
ADT Notes due 2021
|
|
10/1/2013
|
|
10/15/2021
|
|
6.250%
|
|
4/15 and 10/15
|
|
1,000,000
|
|
|
1,000,000
|
|
||
ADT Notes due 2022
|
|
7/5/2012
|
|
7/15/2022
|
|
3.500%
|
|
1/15 and 7/15
|
|
1,000,000
|
|
|
1,000,000
|
|
||
ADT Notes due 2023
|
|
1/14/2013
|
|
6/15/2023
|
|
4.125%
|
|
6/15 and 12/15
|
|
700,000
|
|
|
700,000
|
|
||
ADT Notes due 2032
|
|
5/2/2016
|
|
7/15/2032
|
|
4.875%
|
|
1/15 and 7/15
|
|
728,016
|
|
|
728,016
|
|
||
ADT Notes due 2042
|
|
7/5/2012
|
|
7/15/2042
|
|
4.875%
|
|
1/15 and 7/15
|
|
21,896
|
|
|
21,896
|
|
||
Capital lease obligations
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
81,409
|
|
|
49,911
|
|
||
Less: Unamortized debt discount
|
|
(14,206
|
)
|
|
(19,642
|
)
|
||||||||||
Less: Unamortized deferred financing costs
|
|
(65,236
|
)
|
|
(42,840
|
)
|
||||||||||
Less: Unamortized purchase accounting fair value adjustment and other
|
|
(200,289
|
)
|
|
(205,483
|
)
|
||||||||||
Total debt
|
|
|
|
|
|
|
|
|
|
9,810,943
|
|
|
10,002,296
|
|
||
Less: Current maturities of long-term debt
|
|
(329,884
|
)
|
|
(58,184
|
)
|
||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
9,481,059
|
|
|
$
|
9,944,112
|
|
Execution
|
|
Maturity
|
|
Designation
|
|
Notional Amount
|
||
April 2017
|
|
April 2020
|
|
Not designated
|
|
$
|
1,000,000
|
|
June 2018
|
|
April 2022
|
|
Cash flow hedge
|
|
1,500,000
|
|
|
August 2018
|
|
April 2022
|
|
Cash flow hedge
|
|
1,000,000
|
|
|
January 2019
|
|
April 2022
|
|
Cash flow hedge
|
|
425,000
|
|
|
February 2019
|
|
April 2022
|
|
Cash flow hedge
|
|
300,000
|
|
|
Total notional amount
|
|
|
|
|
|
$
|
4,225,000
|
|
(in thousands)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Prepaid expenses and other current assets
|
$
|
—
|
|
|
$
|
6,525
|
|
Other assets
|
—
|
|
|
1,236
|
|
||
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Accrued expenses and other current liabilities
|
21,117
|
|
|
1,989
|
|
||
Other liabilities
|
73,823
|
|
|
26,040
|
|
||
Fair value of interest rate swaps
|
$
|
94,940
|
|
|
$
|
20,268
|
|
|
For the Six Months Ended June 30, 2019
|
Risk-free interest rate
|
2.30% - 2.51%
|
Expected exercise term (years)
|
6.0 - 6.5
|
Expected dividend yield
|
2.1% - 2.3%
|
Expected volatility
|
41%
|
Declared Date
|
|
Dividend per Share
|
|
Record Date
|
|
Payment Date
|
March 11, 2019
|
|
$0.035
|
|
April 2, 2019
|
|
April 12, 2019
|
May 7, 2019
|
|
$0.035
|
|
June 11, 2019
|
|
July 2, 2019
|
|
For the Quarters Ended
|
|
For the Six Months Ended
|
||||||||||||
(in thousands, except per share amounts)
|
June 30,
2019 |
|
June 30,
2018 |
|
June 30,
2019 |
|
June 30,
2018 |
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(104,057
|
)
|
|
$
|
(66,705
|
)
|
|
$
|
(170,527
|
)
|
|
$
|
(224,142
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding, basic and diluted
|
749,575
|
|
|
750,009
|
|
|
752,895
|
|
|
739,354
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per share, basic and diluted
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.30
|
)
|
Leases (in thousands)
|
|
Classification
|
|
June 30, 2019
|
|
January 1, 2019
|
||||
Assets
|
|
|
|
|
|
|
||||
Current
|
|
|
|
|
|
|
||||
Operating
|
|
Prepaid expenses and other current assets
|
|
$
|
1,527
|
|
|
$
|
1,642
|
|
Non-current
|
|
|
|
|
|
|
||||
Operating
|
|
Other assets
|
|
133,506
|
|
|
125,936
|
|
||
Finance
|
|
Property and equipment, net(a)
|
|
69,210
|
|
|
38,181
|
|
||
Total right-of-use assets
|
|
|
|
$
|
204,243
|
|
|
$
|
165,759
|
|
Liabilities
|
|
|
|
|
|
|
||||
Current
|
|
|
|
|
|
|
||||
Operating
|
|
Accrued expenses and other current liabilities
|
|
$
|
31,011
|
|
|
$
|
30,357
|
|
Finance
|
|
Current maturities of long-term debt
|
|
27,204
|
|
|
18,343
|
|
||
Non-current
|
|
|
|
|
|
|
||||
Operating
|
|
Other liabilities
|
|
107,563
|
|
|
99,168
|
|
||
Finance
|
|
Long-term debt
|
|
54,205
|
|
|
31,568
|
|
||
Total lease liabilities
|
|
|
|
$
|
219,983
|
|
|
$
|
179,436
|
|
(a)
|
Finance right-of-use assets are recorded net of accumulated amortization of approximately $34 million and $32 million as of June 30, 2019 and January 1, 2019, respectively.
|
Lease Cost (in thousands)
|
|
For the Quarter Ended June 30, 2019
|
|
For the Six Months Ended June 30, 2019
|
||||
Operating lease cost
|
|
$
|
14,986
|
|
|
$
|
30,073
|
|
Finance lease cost
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
6,071
|
|
|
10,518
|
|
||
Interest on lease liabilities
|
|
905
|
|
|
1,657
|
|
||
Variable lease costs
|
|
13,408
|
|
|
24,858
|
|
||
Total lease cost
|
|
$
|
35,370
|
|
|
$
|
67,106
|
|
Other information (in thousands)
|
|
For the Six Months Ended June 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
23,628
|
|
Operating cash flows from finance leases
|
|
1,657
|
|
|
Financing cash flows from finance leases
|
|
9,996
|
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
|
43,004
|
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
|
33,398
|
|
Maturity of Lease Liabilities (in thousands)
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019
|
|
$
|
19,709
|
|
|
$
|
27,501
|
|
2020
|
|
37,436
|
|
|
25,295
|
|
||
2021
|
|
31,800
|
|
|
20,486
|
|
||
2022
|
|
28,390
|
|
|
13,807
|
|
||
2023
|
|
22,257
|
|
|
1,003
|
|
||
Thereafter
|
|
23,232
|
|
|
31
|
|
||
Total lease payments
|
|
$
|
162,824
|
|
|
$
|
88,123
|
|
Less interest
|
|
24,250
|
|
|
6,714
|
|
||
Total
|
|
$
|
138,574
|
|
|
$
|
81,409
|
|
Maturity of Lease Liabilities (in thousands)
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019
|
|
$
|
40,192
|
|
|
$
|
20,604
|
|
2020
|
|
31,885
|
|
|
16,735
|
|
||
2021
|
|
26,336
|
|
|
10,728
|
|
||
2022
|
|
22,751
|
|
|
5,386
|
|
||
2023
|
|
16,731
|
|
|
696
|
|
||
Thereafter
|
|
17,727
|
|
|
—
|
|
||
Total lease payments
|
|
$
|
155,622
|
|
|
$
|
54,149
|
|
Less interest
|
|
—
|
|
|
4,238
|
|
||
Total
|
|
$
|
155,622
|
|
|
$
|
49,911
|
|
(in thousands, except as otherwise indicated)
|
For the Quarters Ended
|
||||||||||
Results of Operations:
|
June 30, 2019
|
|
June 30, 2018
|
|
$
Change
|
||||||
Monitoring and related services
|
$
|
1,085,422
|
|
|
$
|
1,023,126
|
|
|
$
|
62,296
|
|
Installation and other
|
198,322
|
|
|
108,333
|
|
|
89,989
|
|
|||
Total revenue
|
1,283,744
|
|
|
1,131,459
|
|
|
152,285
|
|
|||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
338,089
|
|
|
246,225
|
|
|
91,864
|
|
|||
Selling, general and administrative expenses
|
344,664
|
|
|
322,538
|
|
|
22,126
|
|
|||
Depreciation and intangible asset amortization
|
500,864
|
|
|
488,320
|
|
|
12,544
|
|
|||
Merger, restructuring, integration, and other
|
6,990
|
|
|
455
|
|
|
6,535
|
|
|||
Operating income
|
93,137
|
|
|
73,921
|
|
|
19,216
|
|
|||
Interest expense, net
|
(154,641
|
)
|
|
(174,479
|
)
|
|
19,838
|
|
|||
Loss on extinguishment of debt
|
(66,911
|
)
|
|
—
|
|
|
(66,911
|
)
|
|||
Other income
|
1,510
|
|
|
29,282
|
|
|
(27,772
|
)
|
|||
Loss before income taxes
|
(126,905
|
)
|
|
(71,276
|
)
|
|
(55,629
|
)
|
|||
Income tax benefit
|
22,848
|
|
|
4,571
|
|
|
18,277
|
|
|||
Net loss
|
$
|
(104,057
|
)
|
|
$
|
(66,705
|
)
|
|
$
|
(37,352
|
)
|
|
|
|
|
|
|
||||||
Key Performance Indicators: (1)
|
|
|
|
|
|
||||||
RMR
|
$
|
351,391
|
|
|
$
|
338,078
|
|
|
$
|
13,313
|
|
Gross customer revenue attrition (percent) (2)
|
13.3
|
%
|
|
13.5
|
%
|
|
(20) bps
|
|
|||
Adjusted EBITDA (3)
|
$
|
630,239
|
|
|
$
|
610,387
|
|
|
$
|
19,852
|
|
(1)
|
Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.
|
(2)
|
Trailing twelve-month gross customer revenue attrition excludes DIY customers for all periods presented in this report. For all reports covering periods prior to January 1, 2019, trailing twelve-month gross customer revenue attrition included DIY customers and as of June 30, 2018, was 3 basis points higher and rounded to 13.6% with DIY customers included. Refer to the “—Key Performance Indicators” section for further details.
|
(3)
|
Adjusted EBITDA is a non-GAAP measure. Refer to the “—Non-GAAP Measures” section for the definition of this term and reconciliation to the most comparable GAAP measure.
|
(in thousands, except as otherwise indicated)
|
For the Six Months Ended
|
||||||||||
Results of Operations:
|
June 30, 2019
|
|
June 30, 2018
|
|
$
Change
|
||||||
Monitoring and related services
|
$
|
2,155,837
|
|
|
$
|
2,040,418
|
|
|
$
|
115,419
|
|
Installation and other
|
370,967
|
|
|
207,489
|
|
|
163,478
|
|
|||
Total revenue
|
2,526,804
|
|
|
2,247,907
|
|
|
278,897
|
|
|||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
664,047
|
|
|
494,619
|
|
|
169,428
|
|
|||
Selling, general and administrative expenses
|
669,173
|
|
|
627,508
|
|
|
41,665
|
|
|||
Depreciation and intangible asset amortization
|
996,742
|
|
|
971,996
|
|
|
24,746
|
|
|||
Merger, restructuring, integration, and other
|
13,269
|
|
|
8,478
|
|
|
4,791
|
|
|||
Operating income
|
183,573
|
|
|
145,306
|
|
|
38,267
|
|
|||
Interest expense, net
|
(313,546
|
)
|
|
(348,812
|
)
|
|
35,266
|
|
|||
Loss on extinguishment of debt
|
(88,472
|
)
|
|
(61,597
|
)
|
|
(26,875
|
)
|
|||
Other income
|
2,709
|
|
|
28,822
|
|
|
(26,113
|
)
|
|||
Loss before income taxes
|
(215,736
|
)
|
|
(236,281
|
)
|
|
20,545
|
|
|||
Income tax benefit
|
45,209
|
|
|
12,139
|
|
|
33,070
|
|
|||
Net loss
|
$
|
(170,527
|
)
|
|
$
|
(224,142
|
)
|
|
$
|
53,615
|
|
|
|
|
|
|
|
||||||
Summary Cash Flow Data:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
979,172
|
|
|
$
|
962,762
|
|
|
$
|
16,410
|
|
Net cash used in investing activities
|
$
|
(787,639
|
)
|
|
$
|
(696,147
|
)
|
|
$
|
(91,492
|
)
|
Net cash (used in) provided by financing activities
|
$
|
(515,435
|
)
|
|
$
|
705,410
|
|
|
$
|
(1,220,845
|
)
|
|
|
|
|
|
|
||||||
Key Performance Indicators: (1)
|
|
|
|
|
|
||||||
RMR
|
$
|
351,391
|
|
|
$
|
338,078
|
|
|
$
|
13,313
|
|
Gross customer revenue attrition (percent) (2)
|
13.3
|
%
|
|
13.5
|
%
|
|
(20) bps
|
|
|||
Adjusted EBITDA (3)
|
$
|
1,251,574
|
|
|
$
|
1,230,154
|
|
|
$
|
21,420
|
|
Free Cash Flow (3)
|
$
|
266,892
|
|
|
$
|
289,277
|
|
|
$
|
(22,385
|
)
|
(1)
|
Refer to the “—Key Performance Indicators” section for the definitions of these key performance indicators.
|
(2)
|
Trailing twelve-month gross customer revenue attrition excludes DIY customers for all periods presented in this report. For all reports covering periods prior to January 1, 2019, trailing twelve-month gross customer revenue attrition included DIY customers and as of June 30, 2018, was 3 basis points higher and rounded to 13.6% with DIY customers included. Refer to the “—Key Performance Indicators” section for further details.
|
(3)
|
Adjusted EBITDA and Free Cash Flow are non-GAAP measures. Refer to the “—Non-GAAP Measures” section for the definitions of these terms and reconciliations to the most comparable GAAP measures.
|
|
For the Quarters Ended
|
|
For the Six Months Ended
|
||||||||||||||||||||
(in thousands)
|
June 30, 2019
|
|
June 30, 2018
|
|
$
Change
|
|
June 30, 2019
|
|
June 30, 2018
|
|
$
Change
|
||||||||||||
Net loss
|
$
|
(104,057
|
)
|
|
$
|
(66,705
|
)
|
|
$
|
(37,352
|
)
|
|
$
|
(170,527
|
)
|
|
$
|
(224,142
|
)
|
|
$
|
53,615
|
|
Interest expense, net
|
154,641
|
|
|
174,479
|
|
|
(19,838
|
)
|
|
313,546
|
|
|
348,812
|
|
|
(35,266
|
)
|
||||||
Income tax benefit
|
(22,848
|
)
|
|
(4,571
|
)
|
|
(18,277
|
)
|
|
(45,209
|
)
|
|
(12,139
|
)
|
|
(33,070
|
)
|
||||||
Depreciation and intangible asset amortization
|
500,864
|
|
|
488,320
|
|
|
12,544
|
|
|
996,742
|
|
|
971,996
|
|
|
24,746
|
|
||||||
Amortization of deferred subscriber acquisition costs
|
19,528
|
|
|
14,305
|
|
|
5,223
|
|
|
37,760
|
|
|
27,152
|
|
|
10,608
|
|
||||||
Amortization of deferred subscriber acquisition revenue
|
(26,133
|
)
|
|
(18,790
|
)
|
|
(7,343
|
)
|
|
(50,472
|
)
|
|
(35,555
|
)
|
|
(14,917
|
)
|
||||||
Share-based compensation expense
|
22,540
|
|
|
45,814
|
|
|
(23,274
|
)
|
|
46,250
|
|
|
95,102
|
|
|
(48,852
|
)
|
||||||
Merger, restructuring, integration, and other
|
6,990
|
|
|
455
|
|
|
6,535
|
|
|
13,269
|
|
|
8,478
|
|
|
4,791
|
|
||||||
Loss on extinguishment of debt
|
66,911
|
|
|
—
|
|
|
66,911
|
|
|
88,472
|
|
|
61,597
|
|
|
26,875
|
|
||||||
Radio conversion costs, net(1)
|
919
|
|
|
1,675
|
|
|
(756
|
)
|
|
919
|
|
|
3,026
|
|
|
(2,107
|
)
|
||||||
Financing and consent fees(2)
|
384
|
|
|
—
|
|
|
384
|
|
|
1,387
|
|
|
—
|
|
|
1,387
|
|
||||||
Foreign currency losses/(gains)(3)
|
93
|
|
|
719
|
|
|
(626
|
)
|
|
(738
|
)
|
|
1,739
|
|
|
(2,477
|
)
|
||||||
Acquisition related adjustments(4)
|
4,943
|
|
|
4,255
|
|
|
688
|
|
|
12,699
|
|
|
7,754
|
|
|
4,945
|
|
||||||
Licensing fees(5)
|
—
|
|
|
(21,533
|
)
|
|
21,533
|
|
|
—
|
|
|
(21,533
|
)
|
|
21,533
|
|
||||||
Other(6)
|
5,464
|
|
|
(8,036
|
)
|
|
13,500
|
|
|
7,476
|
|
|
(2,133
|
)
|
|
9,609
|
|
||||||
Adjusted EBITDA
|
$
|
630,239
|
|
|
$
|
610,387
|
|
|
$
|
19,852
|
|
|
$
|
1,251,574
|
|
|
$
|
1,230,154
|
|
|
$
|
21,420
|
|
(1)
|
Represents costs associated with upgrading cellular technology used in many of our security systems, offset by any incremental revenue earned.
|
(2)
|
Represents fees incurred associated with the issuance, restatement, and amendment of debt.
|
(3)
|
Represents the conversion of intercompany loans that are denominated in Canadian dollars to U.S. dollars.
|
(4)
|
Represents amortization of purchase accounting adjustments and compensation arrangements related to acquisitions.
|
(5)
|
The quarter and six months ended June 30, 2018 include other income related to approximately $22 million of one-time licensing fees.
|
(6)
|
Represents certain advisory and other costs associated with our transition to a public company as well as other charges and non-cash items. The quarter and six months ended June 30, 2018 include a gain of $7.5 million from the sale of equity in a third party that we received as part of a settlement.
|
|
For the Six Months Ended
|
||||||||||
(in thousands)
|
June 30, 2019
|
|
June 30, 2018
|
|
$
Change
|
||||||
Net cash provided by operating activities
|
$
|
979,172
|
|
|
$
|
962,762
|
|
|
$
|
16,410
|
|
Dealer generated customer accounts and bulk account purchases
|
(333,846
|
)
|
|
(327,553
|
)
|
|
(6,293
|
)
|
|||
Subscriber system assets
|
(293,973
|
)
|
|
(280,720
|
)
|
|
(13,253
|
)
|
|||
Capital expenditures
|
(84,461
|
)
|
|
(65,212
|
)
|
|
(19,249
|
)
|
|||
Free Cash Flow
|
$
|
266,892
|
|
|
$
|
289,277
|
|
|
$
|
(22,385
|
)
|
Declared Date
|
|
Dividend per Share
|
|
Record Date
|
|
Payment Date
|
March 11, 2019
|
|
$0.035
|
|
April 2, 2019
|
|
April 12, 2019
|
May 7, 2019
|
|
$0.035
|
|
June 11, 2019
|
|
July 2, 2019
|
|
For the Six Months Ended
|
||||||||||
(in thousands)
|
June 30, 2019
|
|
June 30, 2018
|
|
$
Change
|
||||||
Net cash provided by operating activities
|
$
|
979,172
|
|
|
$
|
962,762
|
|
|
$
|
16,410
|
|
Net cash used in investing activities
|
$
|
(787,639
|
)
|
|
$
|
(696,147
|
)
|
|
$
|
(91,492
|
)
|
Net cash (used in) provided by financing activities
|
$
|
(515,435
|
)
|
|
$
|
705,410
|
|
|
$
|
(1,220,845
|
)
|
Period
|
|
Total Number of Shares Purchased(a)
|
|
Average Price
Paid Per Share(b) |
|
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs(a) |
|
Maximum Approximate Dollar
Value of Shares that May Yet Be Purchased Under the Plans or Programs(a) (in thousands) |
||||||
April 1, 2019 - April 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
128,146
|
|
May 1, 2019 - May 31, 2019
|
|
9,012,200
|
|
|
$
|
6.22
|
|
|
9,012,200
|
|
|
$
|
72,050
|
|
June 1, 2019 - June 30, 2019
|
|
11,597,900
|
|
|
$
|
6.20
|
|
|
11,597,900
|
|
|
$
|
132
|
|
Total
|
|
20,610,100
|
|
|
$
|
6.21
|
|
|
20,610,100
|
|
|
$
|
132
|
|
(a)
|
On February 27, 2019, we approved a share repurchase program, which permits us to repurchase up to $150 million of our shares of common stock through February 27, 2021. We announced this plan on March 11, 2019.
|
(b)
|
The average price paid per share is calculated by dividing the total cash paid for the shares by the total number of shares repurchased.
|
•
|
Top-Up Options that are or become exercisable will remain outstanding following the holder’s termination of employment until the normal expiration of the Top-Up Option’s term (i.e., January 18, 2028). This amendment applies to both the “Tranche A Option” (i.e., the portion of the Top-Up Option subject to service-based vesting conditions only) and the “Tranche B Option” (i.e., the portion of the Top-Up Option subject to performance-based vesting conditions), except if the option holder’s employment is terminated for cause.
|
•
|
As of each February 21, beginning with February 21, 2020, 20% of the shares of common stock subject to the Tranche B Option will cease to be at risk of forfeiture due to the option holder’s termination of employment (other than a termination for cause) (i.e., they will no longer require continued service in order to vest); provided, that the vesting of the Tranche B Option will in all events remain subject to the return hurdles described in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders (which remain unchanged), and the Tranche B Option will be forfeited if such return hurdles are not achieved. Following an option holder’s termination of employment (other than for cause) on or after February 21, 2020, the portion of the option holder’s Tranche B Option as to which the risk of service-based forfeiture has lapsed will remain outstanding and eligible to vest based on the achievement of the return hurdles.
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101
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XBRL Instant Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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ADT Inc.
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Date:
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August 6, 2019
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By:
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/s/ Jeffrey Likosar
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Name:
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Jeffrey Likosar
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Title:
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Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer) |
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ADT INC.
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By:
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/s/ David Smail
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David Smail
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Executive Vice President, Chief Legal Officer and Secretary
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1.
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Vesting of the Tranche B Option. The following language shall be inserted following the first paragraph of Section 2 (Vesting) of the Top-Up Option Agreement(s):
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2.
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Expiration of the Top-Up Options. The following language shall be inserted as a new subsection (e) to Section 3 (Expiration) of the Top-Up Option Agreement(s):
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1.
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I have reviewed this Quarterly Report on Form 10-Q of ADT Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
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/s/ James D. DeVries
|
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James D. DeVries
|
|
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President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of ADT Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
/s/ Jeffrey Likosar
|
|
|
Jeffrey Likosar
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
/s/ James D. DeVries
|
|
|
James D. DeVries
|
|
|
President and Chief Executive Officer
|
|
|
August 6, 2019
|
|
|
/s/ Jeffrey Likosar
|
|
|
Jeffrey Likosar
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
|
August 6, 2019
|
|
|