ADT Reports First Quarter 2013 Results

  ADT Reports First Quarter 2013 Results

         Company Announces $600 Million Accelerated Share Repurchase

Business Wire

BOCA RATON, Fla. -- January 30, 2013

The ADT Corporation (NYSE: ADT):

  *Recurring revenue of $744 million, up 5.1%
  *Net income of $105 million, up 12.9%
  *EBITDA before special items of $417 million, up 6.1%
  *GAAP diluted earnings per share of $0.44 and earnings per share before
    special items of $0.44
  *ADT Pulse overall take rate at 18.6% in the quarter, up from 7.2% last
    year

                                                           
($ in millions, except per-share amounts)
                                 Q1 2013          Q1 2012          Change
Recurring revenue                $744             $708             5.1%
Other revenue                    $65              $87              -25.3%
Total revenue                    $809             $795             1.8%
Net income                       $105             $93              12.9%
EBITDA before special            $417             $393             6.1%
items^1
EBITDA margin before             51.5%            49.4%            210 bps
special items^1
Diluted earnings per             $0.44            $0.39            12.8%
share
Diluted earnings per
share before special             $0.44            $0.41            7.3%
items^1
^1Reconciliations from GAAP to non-GAAP financial measures can be found in the
attached tables, as well as on the Investor Relations section of our web site,
www.ADT.com.


The ADT Corporation (NYSE: ADT) today reported diluted earnings per share of
$0.44 for the first quarter of 2013, and diluted earnings per share before
special items of $0.44. Using the company’s cash tax rate, EPS before special
items was $0.70^1.

Naren Gursahaney, ADT’s Chief Executive Officer, said, “We are pleased to
start the new fiscal year with a very solid quarter characterized by continued
strong growth in recurring revenue and EBITDA margin, along with stabilization
in attrition rates. During the quarter we also began to execute on our
previously announced share repurchase program, further supported by the
implementation of an accelerated share repurchase initiative, announced
today.” Gursahaney added, “Looking ahead to the balance of the year we will
continue to focus on our ultimate objective of creating long-term value for
our shareholders by reinvesting in our business to drive profitable growth,
and returning excess cash to our shareholders.”

Recurring revenue, which made up 92% of total revenue in the quarter, was up
5.1%. Recurring revenue growth was driven by a 4.7% increase in ending average
revenue per customer, which rose to $39.27, and 0.5% net growth in ending
customer accounts. Non-recurring revenue declined 25.3% as the company’s mix
of newly installed systems continues to shift toward more ADT-owned systems,
increasing deferred revenue and reducing current period installation revenue.
Total revenue of $809 million increased 1.8%, compared to the first quarter of
2012. Attrition was flat sequentially at 13.8%. ADT added 257,000 new
customers and closed the quarter with 6.4 million customer accounts.

EBITDA before special items was $417 million, 6.1% higher than the first
quarter of the prior year, and EBITDA margin before special items was 51.5%, a
210 basis point improvement. The margin expansion was mainly due to the
favorable impact from the mix shift to more ADT-owned systems and was also
aided by cost control initiatives that helped to offset the expense impact of
dis-synergies caused by the separation from the Tyco commercial business and
Hurricane Sandy.

Operating cash flow for the twelve month period ended December 28, 2012 was
$1.6 billion. Steady-state free cash flow before special items, calculated on
a pre-tax and unlevered basis for the twelve month period ended December 28,
2012 was $982 million, up 0.8% over the prior year’s twelve month trailing
period.

SHARE REPURCHASE PROGRAM

Under its previously announced $2 billion authorization, during the quarter
the company repurchased 567 thousand of its shares for $26 million, and in
January the company repurchased an additional 1.6 million of its shares for
$74 million.

The company announced today that it has entered into an accelerated share
repurchase agreement with Credit Suisse International, under which it will
repurchase approximately $600 million of its common stock. The company will
acquire the shares under its previously authorized share repurchase program
and will fund the repurchase using proceeds from its recently concluded debt
offering. Under the terms of the agreement with Credit Suisse International,
ADT will pay Credit Suisse International $600 million on February 4, 2013 and
on that date will receive initial deliveries of approximately 10 million
shares, representing a substantial majority of the shares expected to be
retired over the course of the agreement. The total number of shares
ultimately repurchased under the agreement will generally be based on the
volume-weighted average share price of the company’s common stock during the
calculation period of the accelerated share repurchase program, less a
discount, and subject to a cap provision that will establish a minimum number
of shares repurchased. The accelerated share repurchase is expected to be
completed by July 26, 2013, although the completion date may be accelerated at
Credit Suisse International’s option after an initial fixed period. The actual
number of shares repurchased will be determined at the completion of the
accelerated share repurchase program.

AFFIRMING FISCAL YEAR 2013 GUIDANCE

  *Recurring revenue growth of 4.9%-5.2%
  *EBITDA margin before special items of 49.5%-50.5%
  *Free cash flow before special items of $375-$425 million
  *Steady-state free cash flow before special items of $950 million - $1.0
    billion

CONFERENCE CALL AND WEBCAST

Management will discuss the company’s first quarter results for 2013 during a
conference call and webcast today beginning at 8:30 a.m. (ET). During the
conference call and webcast management will refer to a slide presentation
hosted on and accessible at http://investors.adt.com. Today’s conference call
for investors can be accessed in the following ways:

  *At ADT’s website: http://investors.adt.com
  *By telephone: For both “listen-only” participants and those participants
    who wish to take part in the question-and-answer portion of the call, the
    telephone dial-in number in the United States is (888) 680-0878, pass code
    99131258 when prompted. The telephone dial-in number for participants
    outside the United States is (617) 213-4855, pass code 99131258 when
    prompted.
  *An audio replay of the conference call will be available at 11:30 a.m.
    (ET) on January 30, 2013 and ending at 11:59 p.m. (ET) on February 13,
    2013. The dial-in number for participants in the United States is (888)
    286-8010, pass code 82859564 when prompted. For participants outside the
    United States, the replay dial-in number is (617) 801-6888, pass code
    82859564 when prompted.

ABOUT ADT

The ADT Corporation (NYSE: ADT) is a leading provider of electronic security,
interactive home and business automation and monitoring services for
residences and small businesses in the United States and Canada. ADT's broad
and pioneering set of products and services, including ADT Pulse interactive
home and business solutions, and home health services, meet a range of
customer needs for today’s active and increasingly mobile lifestyles.
Headquartered in Boca Raton, Florida, ADT helps provide peace of mind to more
than six million customers, and it employs approximately 16,000 people at 200
locations. More information is available at www.adt.com.

From time to time, ADT may use its website as a channel of distribution of
material company information. Financial and other material information
regarding the company is routinely posted on and accessible at
http://investors.adt.com. In addition, you may automatically receive email
alerts and other information about ADT by enrolling your email by visiting the
“Investor Relations” section at http://investors.adt.com.

NON-GAAP MEASURES

Earnings before interest, taxes, depreciation and amortization (EBITDA),
EBITDA margin, free cash flow (FCF), steady-state free cash flow (SSFCF),
earnings per share (EPS) and EPS at cash tax rates, in each case “before
special items,” are non-GAAP measures and should not be considered
replacements for GAAP results.

EBITDA is a useful measure of the company’s success in acquiring, retaining
and servicing our customer base and ability to generate and grow recurring
revenue while providing a high level of customer service in a cost-effective
manner. The difference between Net Income (the most comparable GAAP measure)
and EBITDA (the non-GAAP measure) is the exclusion of interest expense, the
provision for income taxes, depreciation and amortization expense. Excluding
these items eliminates the impact of expenses associated with our
capitalization and tax structure as well as the impact of non-cash charges
related to capital investments.

In addition, from time to time, the company may present EBITDA before special
items, which is EBITDA, adjusted to exclude the impact of the special items
highlighted below. This number provides information to investors regarding the
impact of certain items management believes are useful to identify, as
described below.

There are material limitations to using EBITDA. EBITDA may not be comparable
to similarly titled measures reported by other companies. Furthermore, EBITDA
does not take into account certain significant items, including depreciation
and amortization, interest expense and tax expense, which directly affect our
net income. These limitations are best addressed by considering the economic
effects of the excluded items independently, and by considering EBITDA in
conjunction with net income as calculated in accordance with GAAP.

FCF is a useful measure of our cash that is free from significant existing
obligations and available for other uses. The difference between Cash Flows
from Operating Activities (the most comparable GAAP measure) and FCF (the
non-GAAP measure) consists of the impact of capital expenditures, subscriber
system assets, dealer generated customer accounts and bulk account purchases.
Dealer generated accounts are accounts that are generated through our network
of authorized dealers. Bulk account purchases represent accounts that we
acquire from third parties outside of our authorized dealer network, such as
other security service providers, on a selective basis. These items are
subtracted from cash flows from operating activities because they represent
long-term investments that are required for normal business activities.

SSFCF is a useful measure of pre-levered cash that is generated by the
business after the cost of replacing recurring revenue lost to attrition, but
before the cost of new subscribers driving recurring revenue growth. The
difference between Cash Flows from Operating Activities (the most comparable
GAAP measure) and SSFCF (the non-GAAP measure) consists of the impact of
capital expenditures, subscriber system assets, dealer generated customer
accounts required to maintain recurring revenue, and cash paid for interest
and income taxes. Capital expenditures, subscriber system assets, and dealer
generated customer accounts required to maintain recurring revenue are
subtracted from cash flows from operating activities because they represent
long-term investments that are required to replace recurring revenue lost to
attrition. The exclusion of cash paid for interest and income taxes eliminates
the impact of cash flows associated with our capitalization and tax structure.
The amount of dealer generated customer accounts required to maintain
recurring revenue is calculated by reducing net recurring revenue lost to
attrition for the previous twelve months by recurring revenue created through
account generation in our direct channel for the previous twelve months and
multiplying the difference by the annual creation multiple on dealer accounts.
As the components of these inputs are determined using trailing twelve month
information, SSFCF is calculated on a trailing twelve month basis.

In addition, from time to time the company may present FCF and SSFCF before
special items, which are FCF and SSFCF, adjusted to exclude the cash impact of
the special items highlighted below. These numbers provide information to
investors regarding the cash impact of certain items management believes are
useful to identify, as described below.

The limitation associated with using FCF and SSFCF is that they adjust for
cash items that are ultimately within management's and the Board of Directors'
discretion to direct and therefore may imply that there is less or more cash
that is available for the company's programs than the most comparable GAAP
measure. This limitation is best addressed by using FCF and SSFCF in
combination with the GAAP cash flow numbers.

FCF and SSFCF as presented herein may not be comparable to similarly titled
measures reported by other companies. These measures should be used in
conjunction with other GAAP financial measures. Investors are urged to read
the company's financial statements as filed with the Securities and Exchange
Commission, as well as the accompanying tables to this press release that show
all the elements of the GAAP measures of Cash Flows from Operating Activities,
Cash Flows from Investing Activities, Cash Flows from Financing Activities and
a reconciliation of the company's total cash and cash equivalents for the
period. See the accompanying tables to this press release for a cash flow
statement presented in accordance with GAAP and reconciliations presenting the
components of FCF and SSFCF.

EPS at cash tax rates is a useful measure of our earnings per share after
considering the difference between our effective tax rate and our cash tax
rate. The difference between Diluted EPS (the most comparable GAAP measure)
and EPS at cash tax rates (the non-GAAP measure) is the exclusion of the
impact of income tax expense and the inclusion of the impact of income taxes
paid, net of refunds. Adjusting for these items provides information on the
impact of our net operating loss carryforwards on our diluted EPS.

The company has presented its EPS, EPS at cash tax rates, EBITDA, EBITDA
margin, FCF and SSFCF before special items. Special items include charges and
gains related to acquisitions, restructurings, impairments, and other income
or charges that may mask the underlying operating results and/or business
trends of the company. The company utilizes these measures to assess overall
operating performance, as well as to provide insight to management in
evaluating overall operating plan execution and underlying market conditions.
The company also presents its effective tax rate as adjusted for special items
for consistency. One or more of these measures may be used as components in
the company's incentive compensation plans. These measures are useful for
investors because they may permit more meaningful comparisons of the company's
underlying operating results and business trends between periods. The
difference between net income and EPS before special items and net income and
EPS (the most comparable GAAP measures) consists of the impact of the special
items noted above on the applicable GAAP measure. EBITDA and EBITDA margin
before special items do not reflect any additional adjustments that are not
reflected in net income before special items. The limitation of these measures
is that they exclude the impact (which may be material) of items that increase
or decrease the company's reported operating income and operating margin and
net income and EPS. This limitation is best addressed by using the non-GAAP
measures in combination with the most comparable GAAP measures in order to
better understand the amounts, character and impact of any increase or
decrease on reported results.

FORWARD-LOOKING STATEMENTS

Our reports, filings, and other public announcements may include
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements relate to
anticipated financial performance, management’s plans and objectives for
future operations, business prospects, outcome of regulatory proceedings,
market conditions and other matters. We make these forward-looking statements
in reliance on the safe harbor protections provided under the Private
Securities Litigation Reform Act of 1995. All statements, other than
statements of historical facts, included in this press release or report that
address activities, events or developments that we expect, believe or
anticipate will exist or may occur in the future, are forward-looking
statements. Forward-looking statements can be identified by various words such
as "expects", "intends", "will", "anticipates", "believes", "confident,"
"continue", "propose," “seeks,” “could,” “may,” “should,” “estimates,”
“forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,”
and similar expressions. These forward-looking statements are based on
management’s current beliefs and assumptions and on information currently
available to management that are subject to risks and uncertainties, many of
which are outside of our control, and could cause future events or results to
be materially different from those stated or implied in this press release or
report. Specific factors that could cause actual results to differ from
results contemplated by forward-looking statements include, among others, the
following:

  *competition in the markets we serve, including new entrants in these
    markets;
  *our ability to develop or acquire new technology;
  *failure to maintain the security of our information and technology
    networks;
  *allegations that we have infringed the intellectual property rights of
    third parties;
  *unauthorized use of our brand name;
  *risks associated with ownership of the ADT® brand name outside of the
    United States and Canada by Tyco International Ltd., our former parent
    company (“Tyco”);
  *failure to enforce our intellectual property rights;
  *our dependence on certain software technology that we license from third
    parties;
  *failure or interruption in products or services of third-party providers;
  *our greater exposure to liability for employee acts or omissions or system
    failures;
  *an increase in the rate of customer attrition;
  *downturns in the housing market and consumer discretionary income;
  *risks associated with our non-compete and non-solicit arrangements with
    Tyco;
  *entry of potential competitors upon the expiration of non-competition
    agreements;
  *shifts in consumers’ choice of, or telecommunication providers’ support
    for, telecommunication services and equipment;
  *interruption to our monitoring facilities;
  *interference with our customers’ access to some of our products and
    services through the Internet by broadband service providers;
  *potential impairment of our deferred tax assets;
  *changes in U.S. and non-U.S. governmental laws and regulations;
  *risks associated with acquiring and integrating customer accounts;
  *potential loss of authorized dealers and affinity marketing relationships;
  *failure to realize expected benefits from acquisitions;
  *risks associated with pursuing business opportunities that diverge from
    our current business model;
  *potential liabilities for obligations of The Brink’s Company under the
    Coal Act;
  *potential liabilities for legacy obligations relating to the separation
    from Tyco;
  *capital market conditions, including availability of funding sources;
  *risks related to our increased indebtedness;
  *changes in our credit ratings;
  *failure to fully realize expected benefits from the separation from Tyco;
    and
  *difficulty in operating as an independent public company separate from
    Tyco.

Given the risk factors and uncertainties that could cause our actual results
to differ materially from those contained in any forward-looking statement, we
caution investors not to unduly rely on our forward-looking statements. These
risk factors should not be construed as exhaustive. We disclaim any
obligations to and do not intend to update the above list or to announce
publicly the result of any revisions to any of the forward-looking statements
to reflect future events or developments. If one or more of these risks or
uncertainties materialize or if our underlying assumptions prove to be
incorrect, actual results may vary materially from what we projected,
including the market prices of our common stock during the term and after the
completion of the accelerated share repurchase, the ability of [name of
broker] to buy or borrow shares of our common stock, the ability to complete
the share repurchases within the proposed timing or at all, the number of
shares that ultimately will be repurchased, and the uncertainty regarding the
amount and timing of future share repurchases by ADT and the origin of funds
used for such repurchases. Consequently, actual events and results may vary
significantly from those included in or contemplated or implied by our
forward-looking statements. More detailed information about these and other
factors is set forth in ADT's Annual Report on Form 10-K for the fiscal year
ended Sept. 28, 2012, our quarterly reports on Form 10-Q and in other
subsequent filings with the U.S. Securities and Exchange Commission.


THE ADT CORPORATION

CONDENSED, CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(Unaudited)
                                     For the Quarters Ended
                                      December 28,   December 30,
                                                                  % Change 
                                      2012           2011
                                                                    
Revenue                               $   809        $   795        1.8      %
Cost of revenue                           336            345        (2.6)    %
Selling, general and administrative       281            274        2.6      %
expenses
Separation costs                         6            —     
Operating income                          186            176        5.7      %
Interest expense                          (24   )        (22   )    9.1      %
Other income                             6            —     
Income before income taxes                168            154        9.1      %
Income tax expense                       (63   )       (61   )    3.3      %
Net income                            $   105       $   93        12.9     %
                                                                    
Earnings per share:
Basic                                 $   0.45       $   0.40       12.5     %
Diluted                               $   0.44       $   0.39       12.8     %
Weighted-average shares
outstanding:
Basic                                     233            232        0.4      %
Diluted                                   236            236        —        %
                                                                    
Effective tax rate                        37.5  %        39.6  %    (210) bps
                                                                    


THE ADT CORPORATION

CONDENSED AND CONSOLIDATED BALANCE SHEETS

(in millions)

(Unaudited)
                                             December 28,   September 28,
                                                         
                                             2012           2012
Assets
Current Assets:
Cash and cash equivalents                    $    382       $    234
Accounts receivable trade, net                    81             78
Inventories                                       44             42
Prepaid expenses and other current assets         77             46
Deferred income taxes                            68            40
Total current assets                              652            440
Property and equipment, net                       215            217
Subscriber system assets, net                     1,793          1,744
Goodwill                                          3,419          3,400
Intangible assets, net                            2,844          2,861
Deferred subscriber acquisition costs, net        476            464
Other assets                                     129           134
Total Assets                                 $    9,528     $    9,260
                                                            
Liabilities and Equity
Current Liabilities:
Current maturities of long-term debt         $    2         $    2
Accounts payable                                  143            144
Accrued and other current liabilities             232            181
Deferred revenue                                 242           245
Total current liabilities                         619            572
Long-term debt                                    2,525          2,525
Deferred subscriber acquisition revenue           696            675
Deferred tax liabilities                          239            157
Other liabilities                                185           174
Total Liabilities                                4,264         4,103
                                                            
Total Equity                                     5,264         5,157
                                                            
Total Liabilities and Equity                 $    9,528     $    9,260
                                                            


THE ADT CORPORATION

CONDENSED, CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)
                                      For the Quarters Ended
                                       December 28,  December 30,  %
                                       2012           2011           Change
Cash Flows from Operating
Activities:
Net income                             $   105        $   93
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and intangible asset          227            212
amortization
Amortization of deferred subscriber        30             27
acquisition costs
Amortization of deferred subscriber        (32   )        (29   )
acquisition revenue
Stock-based compensation expense           4              2
Deferred income taxes                      59             61
Provision for losses on accounts           13             14
receivable and inventory
Other non-cash items                       2              —
Changes in assets and liabilities,
net of the effects of acquisitions:
Accounts receivable, net                   (17   )        (15   )
Inventories                                (3    )        (13   )
Accounts payable                           —              (2    )
Accrued and other liabilities              42             (22   )
Income taxes, net                          1              (3    )
Deferred subscriber acquisition            (42   )        (15   )
costs
Deferred subscriber acquisition            54             32
revenue
Other                                     (34   )       (5    )
Net cash provided by operating            409          337       21.4   %
activities
Cash Flows from Investing
Activities:
Dealer generated customer accounts         (125  )        (164  )
and bulk account purchases
Subscriber system assets                   (122  )        (81   )
Capital expenditures                       (13   )        (5    )
Acquisitions, net of cash acquired        (16   )       —     
Net cash used in investing                (276  )       (250  )    10.4   %
activities
Cash Flows from Financing
Activities:
Proceeds from exercise of stock            27             —
options
Repurchases of common stock under          (8    )        —
approved program
Repurchases of common stock for            (6    )        —
employee related program
Dividends paid                             (29   )        —
Proceeds received from Tyco for
allocation of funds related to the         32             —
Separation
Repayment of long-term debt                (1    )        —
Allocated debt activity                    —              17
Change in parent company investment        —              (109  )
Other                                     —            1     
Net cash provided by (used in)            15           (91   )    (116.5 )%
financing activities
Net increase (decrease) in cash and        148            (4    )
cash equivalents
Cash and cash equivalents at              234          65    
beginning of period
Cash and cash equivalents at end of    $   382       $   61        526.2  %
period
                                                                            

THE ADT CORPORATION

GAAP to Non-GAAP Reconciliations

(Unaudited)

Net Income Before           For the
Special Items                                                    
                            Quarters Ended
                            December 28,         December 30,
($ in millions)                                                      Change
                            2012                 2011
Net Income (GAAP)           $    105             $    93              12.9  %
Restructuring, net^(1)           —                    1
Integration costs^(1)            —                    3
Non-recurring                    4                    —
separation costs^(1)
Separation related              (6      )           —       
other income^(2)
Net Income before           $    103            $    97             6.2   %
special items
^(1) Calculated using a tax rate of 38.9% for the quarter ended December 28,
2012 and a tax rate of 38.3% for the quarter ended December 30, 2011.
^(2) Relates to the 2012 Tax Sharing Agreement between Tyco, ADT and Pentair.

EPS Before Special          For the
Items
                            Quarters Ended
                            December 28,         December 30,
                                                                      Change
                            2012                 2011
Diluted EPS (GAAP)          $    0.44            $    0.39            12.8  %
Restructuring, net^(1)           —                    —
Integration costs^(1)            —                    0.02
Non-recurring                    0.02                 —
separation costs^(1)
Separation related              (0.02   )           —       
other income^(2)
EPS before special          $    0.44           $    0.41           7.3   %
items
^(1) Calculated using a tax rate of 38.9% for the quarter ended December 28,
2012 and a tax rate of 38.3% for the quarter ended December 30, 2011.
^(2) Relates to the 2012 Tax Sharing Agreement between Tyco, ADT and Pentair.

EPS Before Special          For the
Items at Cash Tax
Rates                       Quarters Ended
                            December 28,         December 30,
                                                                      Change
                            2012                 2011
Diluted EPS (GAAP)          $    0.44            $    0.39            12.8  %
Plus: Impact of income
tax expense on diluted           0.27                 0.26
EPS
Less: Impact of income
taxes paid, net of              (0.01   )           (0.01   )
refunds
EPS at cash tax rates       $    0.70            $    0.64            9.4   %
Restructuring, net^(1)           —                    0.01
Integration costs^(1)            —                    0.02
Non-recurring                    0.02                 —
separation costs^(1)
Separation related              (0.02   )           —       
other income^(2)
EPS before special
items at cash tax           $    0.70           $    0.67           4.5   %
rates
^(1) Calculated using a cash tax rate of 1.9% for the quarter ended December
28, 2012 and a cash tax rate of 2.0% for the quarter ended December 30, 2011.
^(2) Relates to the 2012 Tax Sharing Agreement between Tyco, ADT and Pentair.



THE ADT CORPORATION

GAAP to Non-GAAP Reconciliations (continued)

(Unaudited)
                                         For the
EBITDA Before Special Items                                         
                                         Quarters Ended
                                         December 28,   December 30,
($ in millions)                                                       Change
                                         2012           2011
Net Income (GAAP)                        $   105        $   93         12.9  %
Interest expense, net                        24             22
Income tax expense                           63             61
Depreciation and intangible asset            227            212
amortization
Amortization of deferred subscriber          30             27
acquisition costs
Amortization of deferred subscriber         (32   )       (29   )
acquisition revenue
EBITDA                                   $   417        $   386        8.0   %
Restructuring, net                           —              2
Integration costs                            —              5
Non-recurring separation costs               6              —
Separation related other income^(1)         (6    )       —     
EBITDA before special items              $   417       $   393       6.1   %
EBITDA Margin before special items           51.5  %        49.4  %    210 bps
^(1) Relates to the 2012 Tax Sharing Agreement between Tyco, ADT and Pentair.

                                         For the
FCF Before Special Items
                                         Quarters Ended
                                         December 28,   December 30,
($ in millions)                                                        Change
                                         2012           2011
Net cash provided by operating           $   409        $   337        21.4  %
activities
Dealer generated customer accounts and       (125  )        (164  )
bulk account purchases
Subscriber system assets                     (122  )        (81   )
Capital expenditures                        (13   )       (5    )
FCF                                      $   149        $   87         71.3  %
Restructuring, net                           1              1
Integration costs                            —              5
Non-recurring separation costs              10           —     
including capital expenditures
FCF before special items                 $   160       $   93        72.0  %
                                                                             


THE ADT CORPORATION

GAAP to Non-GAAP Reconciliations (continued)

(Unaudited)
                                        For the
SSFCF Before Special Items                                           
                                        Twelve Months Ended
                                        December 28,     December 30,
($ in millions)                                                        Change
                                        2012             2011
Net cash provided by operating          $   1,563        $  1,468       6.5  %
activities
Subscriber system assets                    (418    )       (303   )
Capital expenditures                        (68     )       (35    )
Dealer generated customer accounts
required to maintain recurring              (220    )       (279   )
revenue^(1)
Interest paid                               64              83
Income taxes paid, net of refunds          30            13     
SSFCF                                   $   951          $  947         0.4  %
Restructuring, net                          3               7
Integration costs                           9               20
Non-recurring separation costs             19            —      
including capital expenditures
SSFCF before special items              $   982         $  974        0.8  %

^(1) Dealer generated customer accounts required to maintain recurring revenue
is calculated as follows:


                                                   For the
                                              
                                                   Twelve Months Ended
                                                   December 28,  December 30,
      ($ in millions)                              2012           2011
      Average trailing twelve month annualized
      recurring revenue under contract for the     $  2,963       $  2,816
      period
      Trailing twelve month gross attrition          16.6   %      16.0   %
      Recurring revenue lost to attrition          $  492         $  451
      Price escalations as a % of previous
      periods trailing twelve month annualized       3.1    %      1.9    %
      recurring revenue
      Trailing twelve month recurring revenue      $  92         $  54     
      from price escalation
      Net recurring revenue lost                   $  400         $  397
                                                                  
      Direct gross additions (in thousands)           632            609
      Trailing twelve month Direct New ARPU        $  42.3       $  40.2   
      Recurring revenue created through direct     $  321         $  294
      channel
                                                                  
      Recurring revenue required through dealer    $  79          $  103
      channel
      Gross dealer annual creation multiple          2.79         2.71   
      Dealer generated customer accounts           $  220        $  279    
      required to maintain recurring revenue
                                                                            

                                                             
THE ADT CORPORATION

SELECTED FINANCIAL AND OPERATING DATA

(Unaudited)
                         For the

                         Quarters Ended
                         December 28,        December 30,
                                                                  Change
                         2012                2011
Recurring customer
revenue (in              $     744           $    708             5.1     %
millions)
Other revenue (in             65                87              (25.3   )%
millions)
Total revenue (in        $     809           $    795             1.8     %
millions)
                                                                  
Ending number of
customers (in                  6,428              6,394           0.5     %
thousands)
Gross customer
additions (in                  257                295             (12.9   )%
thousands)
Customer attrition             13.8     %         13.0    %       80 bps
rate ^(1)
Average revenue per
customer (dollars)       $     39.27         $    37.51           4.7     %
^ (2)

(1) The attrition rate is a 52 week trailing ratio, the numerator of which is
the annualized recurring revenue lost during the period due to attrition and
the denominator of which is total annualized recurring revenue based on an
average of recurring revenue under contract at the beginning of each month
during the period.
(2) Average revenue per customer measures the average amount of recurring
revenue per customer per month, and is calculated based on the recurring
revenue under contract at the end of the period, divided by the total number
of customers under contract at the end of the period.


Contact:

The ADT Corporation
Media Relations:
Sarah Cohn, +1 561-322-7029
scohn@adt.com
or
Investor Relations:
Craig Streem, +1 561-226-2983
cstreem@adt.com
 
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