XML 35 R13.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Divestitures | 12 Months Ended
--- | ---
Dec. 31, 2023
Discontinued Operations and Disposal Groups [Abstract] |
Divestitures | DIVESTITURES The Company may decide to divest portions of its business for various reasons, including efforts to focus on its remaining businesses. The Company presents discontinued operations for components of the business that are either disposed of through sale (or qualify as held for sale), abandonment, or spin-off if these actions also represent a strategic shift that has or will have a major effect on the Company’s financial results. Commercial Divestiture As discussed in Note 1 “Description of Business and Summary of Significant Accounting Policies,” as a result of the Commercial Divestiture, the disposal group met the established held for sale criteria during the third quarter of 2023. The Commercial Divestiture supports the Company’s strategic journey and strengthens its financial profile. Furthermore, the Commercial Divestiture represents a strategic shift that has and will continue to have a major effect on the Company’s operations and financial statements, and therefore, the results of operations of the Commercial Business are classified as discontinued operations in the Company’s Consolidated Statements of Operations for the periods presented. As the agreed upon sale price was substantially higher than the carrying value of the Commercial Business, the Company did not record any impairments or adjustments when recognizing the disposal group at the lower of its carrying amount or fair value less cost to sell. As discussed in Note 3 “Segment Information,” the Commercial Business was previously reflected in the Commercial reportable segment. On October 2, 2023, the Company completed the Commercial Divestiture, and received net proceeds of approximately $1,585 million, subject to certain customary post-closing adjustments as set forth in the Commercial Purchase Agreement, the majority of which is presented as cash flows from investing activities from discontinued operations. In addition, the Company recognized a pre-tax gain on sale of approximately $630 million, which was recognized in income (loss) from discontinued operations. The Company used the majority of the net proceeds for debt redemption, as discussed in Note 8 “Debt.” Refer to Note 13 “Net Income (Loss) per Share” for basic and diluted earnings per share information for discontinued operations. The following reconciliations represent the major classes of line items of the Commercial Business within the Consolidated Balance Sheets and Consolidated Statements of Operations and certain information within the Consolidated Statements of Cash Flows (excluding proceeds from the sale of business discussed above) for the periods presented. Balance Sheet Information
(in thousands) |  |  |  | December 31, 2022
Assets |  |  |  |
Accounts receivable |  |  |  | $ | 262,757 |
Inventories, net |  |  |  | 104,139 |
Work-in-progress |  |  |  | 68,782 |
Prepaid expenses and other current assets |  |  |  | 34,245 |
Total current assets of discontinued operations held for sale |  |  |  | 469,923 |
Property and equipment, net |  |  |  | 69,777 |
Subscriber system assets, net |  |  |  | 142,763 |
Intangible assets, net |  |  |  | 164,783 |
Goodwill |  |  |  | 336,589 |
Deferred subscriber acquisition costs, net |  |  |  | 88,966 |
Other assets |  |  |  | 82,636 |
Total assets of discontinued operations held for sale |  |  |  | $ | 1,355,437 |
Liabilities |  |  |  |
Current maturities of long-term debt |  |  |  | $ | 14,293 |
Accounts payable |  |  |  | 68,855 |
Deferred revenue |  |  |  | 92,784 |
Accrued expenses and other current liabilities |  |  |  | 123,041 |
Total current liabilities of discontinued operations held for sale |  |  |  | 298,973 |
Long-term debt |  |  |  | 9,952 |
Deferred subscriber acquisition revenue |  |  |  | 64,605 |
Other liabilities |  |  |  | 31,713 |
Total liabilities of discontinued operations held for sale |  |  |  | $ | 405,243 |
Statements of Operations Information
|  | Years Ended December 31,
(in thousands) |  | 2023 |  | 2022 |  | 2021
Revenue |  | $ | 1,035,048 |  |  | $ | 1,226,980 |  |  | $ | 1,104,388 |
Cost of revenue |  | 688,433 |  |  | 839,356 |  |  | 777,388 |
Selling, general, and administrative expenses |  | 213,514 |  |  | 267,195 |  |  | 247,679 |
Depreciation and intangible asset amortization |  | 37,691 |  |  | 77,745 |  |  | 75,121 |
Other income and expense items |  | 19,174 |  |  | 6,016 |  |  | (445) |
Income (loss) from discontinued operations before gain on sale of business and income taxes |  | 76,236 |  |  | 36,668 |  |  | 4,645 |
Gain on sale of business |  | 629,980 |  |  | — |  |  | — |
Income (loss) from discontinued operations before income taxes |  | 706,216 |  |  | 36,668 |  |  | 4,645 |
Income tax benefit (expense) |  | (178,667) |  |  | (10,868) |  |  | (1,288) |
Income (loss) from discontinued operations, net of tax |  | $ | 527,549 |  |  | $ | 25,800 |  |  | $ | 3,357 |
Other Cash Flow Information
|  | Years Ended December 31, |  |  |  |
(in thousands) |  | 2023 |  | 2022 |  | 2021 |  |  |  |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |  |  |
Depreciation and intangible asset amortization |  | $ | 37,691 |  |  | $ | 77,745 |  |  | $ | 75,121 |  |  |  |  |
Share-based compensation expense |  | $ | 11,699 |  |  | $ | 13,069 |  |  | $ | 14,126 |  |  |  |  |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |
Subscriber system asset expenditures |  | $ | (8,902) |  |  | $ | (29,230) |  |  | $ | (42,520) |  |  |  |  |
Purchases of property and equipment |  | $ | (4,399) |  |  | $ | (6,885) |  |  | $ | (5,476) |  |  |  |  |
Transition Services Agreement In connection with the Commercial Divestiture, the Company entered into a Transition Services Agreement (the “Commercial TSA”), pursuant to which the Company and the Commercial Business will provide certain transitional services relating to ongoing support and other administrative functions to each other for a transitional period of up to 24 months after the closing of the Commercial Divestiture. Commercial TSA fees charged to the Commercial Business represent charges for internal labor as well as certain third-party costs identified in connection with providing such services. Income from the Commercial TSA is recognized in other income (expense), and expenses incurred by the Company to support the transition are recorded based on the nature of the expense. Income from the Commercial TSA was not material during 2023. ADT Brand License and Intellectual Property Rights The Company and GTCR entered into an agreement granting GTCR a license to continue to use the ADT brand and other Company trademarks for a period of twelve months to transition from Company branding (the “Brand License”). The Company has also agreed to a covenant not to assert a claim against GTCR for infringement of the Company's patents as of the Commercial Divestiture for products and services that were used in the Commercial Business prior to the Commercial Divestiture, and has provided GTCR with a paid-up, irrevocable, non-assignable (with limited exceptions) license to continue to use certain software and other Company intellectual property in the same manner. Royalty income is included in other income (expense) and was not material during 2023. Other Divestitures Other divestiture activity not reflected as discontinued operations includes: During the three months ended September 30, 2023, the Company entered into an Asset Purchase Agreement to sell substantially all of the assets and certain specified liabilities of its Vintage Security business (the “Vintage Security Divestiture”). As a result, the disposal group was classified as held for sale as of September 30, 2023, and the assets and liabilities of the Vintage Security business were reflected as held for sale. In October 2023, the Company completed the sale of its Vintage Security business (the “Vintage Security Divestiture”) for net proceeds of $36 million, subject to certain customary post-closing adjustments, and recognized a gain on sale of $19 million recognized in SG&A. The results of operations of the Vintage Security business are reflected in the CSB segment through the date of sale. During 2022, proceeds related to disposal activities totaled $27 million, resulting in a gain on sale of $10 million recognized in SG&A.

X
- References No definition available. + Details
Name: | us-gaap_DiscontinuedOperationsAndDisposalGroupsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
Name: | us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration