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Item 5. Market for Registrant’s Common Equity

2022-03-01 compared with 2021-02-25 · 19 added, 105 removed, 15 unchanged (89% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information for our Common Stock

Market Information and Stockholders of Record

We have two classes of common stock outstanding, Common Stock and Class B Common Stock.

In January 2018, we completed an IPO of 105,000,000 shares of Common Stock at an initial public offering price of $14.00 per share pursuant to a Registration Statement on Form S-1 (Registration No.

333-222233), which was declared effective by the SEC on January 18, 2018.

Shares of Common Stock are listed on the NYSE under the symbol “ADT.” Prior to that time, there was no public market for shares of Common Stock.

In September 2020, we sold and issued 54,744,525 shares of Class B Common Stock at a price of $8.22 per share to Google in a private transaction pursuant to Section 4(a)(2) of the Securities Act.

There is no established public trading market for shares of Class B Common Stock.

Common Stock - Prior to our IPO in January 2018, there was no public market for shares of Common Stock.

Our Common Stock is listed on the NYSE under the symbol “ADT.”

As of February 22, 2022, the number of stockholders of record of Common Stock was 121, which does not include the number of stockholders who hold our Common Stock through banks, brokers, and other financial institutions.

Class B Common Stock - In September 2020, we sold and issued 54,744,525 shares of Class B Common Stock at a price of $8.22 per share to Google in a private transaction pursuant to Section 4(a)(2) of the Securities Act.

Shares of Class B Common Stock are convertible on a share-for-share basis into shares of Common Stock at the option of the holder, subject to certain conditions.

Stockholders of Record

As of February 16, 2021, the number of stockholders of record of Common Stock and Class B Common Stock was 71 and one, respectively.

This does not include the number of stockholders who hold our Common Stock through banks, brokers, and other financial institutions.

There is no established public trading market for shares of Class B Common Stock, and Google is the only stockholder of record.

Stock Performance Graph

The information contained in this section shall not be deemed “soliciting material” or to be “filed” with the SEC or incorporated by reference in future filings with the SEC, or otherwise subject to the liabilities under Section 18 of the Exchange Act, except to the extent we specifically incorporate it by reference into such filing.

The following graph and table provide a comparison of the cumulative total stockholder return on our Common Stock from January 19, 2018 (first day of trading following the effective date of our IPO) through December 31, 2021, to the returns of the Standard & Poor's (“S&P”) 500 Index and the S&P North America Commercial & Professional Services Index, a peer group.

The graph and table assume that $100 was invested on January 19, 2018 in each of our Common Stock, the S&P 500 Index, and the S&P North America Commercial & Professional Services Index and that any dividends were reinvested.

The graph is not, and is not intended to be, indicative of future performance of our Common Stock.

Comparison of Cumulative Total Return for ADT Inc.,

the S&P 500 Index, and the S&P North America Commercial & Professional Services Index

Comparison of Cumulative Total Return

Date ADT Inc.

S&P 500 Index S&P North America Commercial & Professional Services Index

1/19/2018 $100.00 $100.00 $100.00

6/30/2018 $70.40 $97.58 $100.73

S&P 500 Index $100.00 $97.58 $90.89 $107.74 $119.50 $ 115.81 $141.47

S&P North America Commercial & Professional Services Index $100.00 $100.73 $94.87 $123.49 $131.83 $ 131.84 $162.69

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of December 31, 2020 with respect to shares of Common Stock issuable under our equity compensation plans.

There are no shares of Class B Common Stock issuable under our equity compensation plans.

All numbers in the following table are presented after giving effect to the 1.681-for-1 stock split of Common Stock that was effected on January 4, 2018.

In addition, the exercise prices of outstanding stock options that were granted prior to December 23, 2019 were reduced by $0.70 in accordance with the provisions of both compensation plans as a result of the payment of a special dividend on December 23, 2019.

Equity Compensation Plans

Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights

(a) Weighted-average exercise price of outstanding options, warrants, and rights

(b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by stockholders:

2016 Equity Incentive Plan (1)

12/31/2018 $49.35 $90.89 $94.87

2018 Omnibus Incentive Plan (2)

6/30/2019 $50.82 $107.74 $123.49

Equity compensation plans not approved by stockholders — —

Total 56,179,788 33,852,263

12/31/2019 $72.00 $119.50 $131.83

(1) The 2016 Equity Incentive Plan (the “2016 Plan”) provides for the award of stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and other equity and equity-based awards to our board of directors, officers, and non-officer employees.

Amount shown in the column denoted by (a) includes 1,613,608 of shares of Common Stock that may be issued upon the exercise of service-based stock options and 1,685,428 of shares of Common Stock that may be issued upon the exercise of performance-based stock options.

We do not expect to issue additional share-based compensation awards under the 2016 Plan.

(2) The 2018 Omnibus Incentive Plan (the “2018 Plan”) provides for the award of stock options, RSUs, RSAs, and other equity and equity-based awards to our board of directors, officers, and non-officer employees.

Amount shown in the column denoted by (a) includes 26,969,889 of shares of Common Stock that may be issued upon the exercise of service-based stock options, 9,119,573 of shares of Common Stock that may be issued upon the exercise of performance-based stock options, 15,872,971 of shares of Common Stock that may be issued upon the vesting of service-based RSUs, 890,303 of shares of Common Stock that may be issued upon the vesting of performance-based RSUs, and 28,016 of shares of Common Stock that may become freely transferable upon the vesting of service-based RSAs.

The weighted-average exercise price in column (b) is inclusive of the outstanding RSUs and RSAs, both of which can result in the issuance of shares for no consideration.

Excluding the RSUs and RSAs, the weighted-average exercise price is equal to $8.81.

Recent Sales of Unregistered Equity Securities

As part of the consideration associated with the acquisition of Cell Bounce on November 24, 2020, we issued warrants to purchase up to an aggregate of 2 million shares of Common Stock with an exercise price of $7.77 per share and subject to vesting over a three year period upon the achievement of certain mutually agreed milestones.

The warrants were issued in a private transaction to individuals and entities previously holding an ownership interest in an entity that we acquired in a private

transaction in reliance on the exemption provided by Section 4(a)(2) of the Securities Act.

If the warrants are fully exercised, we will receive aggregate proceeds of approximately $16 million.

There were no other sales of unregistered equity securities during the three months ended December 31, 2020.

Use of Proceeds from Registered Equity Securities

We did not receive any proceeds from sales of registered equity securities during the three months ended December 31, 2020.

Issuer Purchases of Equity Securities

On February 27, 2019, we approved a share repurchase program (the “Share Repurchase Program”), which authorized us to repurchase up to $150 million of our shares of Common Stock through February 27, 2021.

We announced the Share Repurchase Program on March 11, 2019.

On March 23, 2020, we approved an increase to $75 million, inclusive of the amount then remaining under the Share Repurchase Program, in the authorized repurchase amount and an extension of the Share Repurchase Program through March 23, 2021.

We may effect these repurchases pursuant to one or more trading plans to be adopted in accordance with Rule 10b5-1 (each, a “10b5-1 plan”) under the Exchange Act, in privately negotiated transactions, in open market transactions, or pursuant to an

accelerated share repurchase program.

We intend to conduct the Share Repurchase Program in accordance with Rule 10b-18 under the Exchange Act.

We are not obligated to repurchase any of our shares of Common Stock and the timing and amount of any repurchases will depend on legal requirements, market conditions, stock price, alternative uses of capital, and other factors.

During the three months ended December 31, 2020, there were no repurchases of any shares of our Common Stock under the Share Repurchase Program.

As of December 31, 2020, we had approximately $75 million remaining under the Share Repurchase Program.

SELECTED FINANCIAL DATA.

The selected financial data presented in the table below should be read in conjunction with “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the accompanying consolidated financial statements and the related notes included elsewhere in this Annual Report.

The selected Consolidated Balance Sheet data as of December 31, 2020 and 2019, and the related selected Consolidated Statement of Operations data for the years ended December 31, 2020, 2019, and 2018, have been derived from our audited consolidated financial statements included elsewhere in this Annual Report.

The selected Consolidated Balance Sheet data as of December 31, 2018, 2017, and 2016, and the related selected Consolidated Statement of Operations data for the years ended December 31, 2017 and 2016 have been derived from our audited consolidated financial statements not included in this Annual Report.

Years Ended December 31,

(in thousands, except per share data) 2020 (a)(b)(c)

2019 (d)(e)(f)

2018 (g)(h)(i)

Statement of operations data:

Total revenue $ 5,314,787 $ 5,125,657 $ 4,581,673 $ 4,315,502 $ 2,949,766

Operating income (loss) $ 40,640 $ 196,444 $ 277,840 $ 282,439 $ (229,315)

Net (loss) income $ (632,193) $ (424,150) $ (609,155) $ 342,627 $ (536,587)

Net (loss) income per share - basic:

Common stock $ (0.82) $ (0.57) $ (0.81) $ 0.53 $ (0.84)

Class B common stock $ (0.72) $ — $ — $ — $ —

Weighted-average shares outstanding - basic:

Common stock (m)

6/30/2020 $73.42 $115.81 $131.84

Class B common stock 15,855 — — — —

Net (loss) income per share - diluted:

Common stock $ (0.82) $ (0.57) $ (0.81) $ 0.53 $ (0.84)

Class B common stock $ (0.74) $ — $ — $ — $ —

Weighted-average shares outstanding - diluted:

Common stock (m)

12/31/2020 $72.80 $141.47 $162.69

Class B common stock 17,944 — — — —

Dividends declared per share

Common stock $ 0.14 $ 0.84 $ 0.14 $ 1.17 $ —

Class B common stock $ 0.07 $ — $ — $ — $ —

Balance sheet data (at period end):

Cash and cash equivalents $ 204,998 $ 48,736 $ 363,177 $ 122,899 $ 75,891

Total assets $ 16,116,936 $ 16,083,652 $ 17,208,608 $ 17,014,820 $ 17,176,481

Total debt $ 9,492,544 $ 9,692,275 $ 10,002,296 $ 10,169,186 $ 9,509,970

Mandatorily redeemable preferred securities (n)

6/30/2021 $100.79 $163.03 $181.11

Total liabilities $ 13,077,600 $ 12,899,283 $ 12,983,803 $ 13,581,708 $ 13,371,505

Total stockholders' equity $ 3,039,336 $ 3,184,369 $ 4,224,805 $ 3,433,112 $ 3,804,976

12/31/2021 $79.25 $182.04 $212.05

(a) During January 2020, we completed the Defenders Acquisition.

(b) During September 2020, we sold and issued 55 million shares of Class B Common Stock to Google for $450 million.

(c) During 2020, net loss included loss on extinguishment of debt of approximately $120 million due to various financing transactions throughout the year.

(d) During 2019, net loss included loss on extinguishment of debt of approximately $104 million due to various financing transactions throughout the year.

(e) During 2019, operating income and net loss included a loss on sale of business of $62 million and a goodwill impairment loss of $45 million related to the sale of ADT Canada during November 2019.

(f) During 2019, we paid a special dividend of $0.70 per share to common stockholders.

(g) During January 2018, we completed an IPO in which we received net proceeds of $1.4 billion, after deducting underwriting discounts, commissions, and offering expenses.

The proceeds received from the IPO were used to reduce our debt and redeem the mandatorily redeemable preferred securities in full, which resulted in an aggregate loss on extinguishment of debt of $275 million.

In addition, we modified certain share-based compensation awards as well as granted one-time awards in connection with the IPO, which represented approximately $116 million of share-based compensation expense during 2018.

(h) During 2018, operating income and net loss included a goodwill impairment loss of $88 million related to the Canada reporting unit.

(i) During December 2018, we completed the Red Hawk Acquisition.

(j) During 2017, net income included a beneficial impact associated with Tax Reform.

(k) During 2017, we paid a special dividend of $750 million to common stockholders.

(l) During May 2016, we completed the ADT Acquisition.

(m) The weighted-average share numbers are presented after giving effect to the 1.681-for-1 stock split of our common stock that was effected during January 2018, and have been adjusted retroactively for prior periods presented.

(n) During May 2016, we issued mandatorily redeemable preferred securities in connection with the ADT Acquisition.

During July 2018, we redeemed the mandatorily redeemable preferred securities in full using the proceeds from our IPO and cash on hand.

Recent Sales of Unregistered Equity Securities

There were no sales of unregistered equity securities during the three months ended December 31, 2021 other than in connection with the Sunpro Solar Acquisition in December 2021 as previously disclosed in our Current Reports on Form 8-K filed with the SEC on November 9, 2021 and December 9, 2021.

Use of Proceeds from Registered Equity Securities

We did not receive any proceeds from sales of registered equity securities during the three months ended December 31, 2021.

Issuer Purchases of Equity Securities

On February 27, 2019, we approved a share repurchase program (the “Share Repurchase Program”), which authorized us to repurchase shares of our Common Stock (up to a certain amount).

The Share Repurchase Program terminated in accordance with its terms on March 23, 2021.

There were no repurchases of any shares of our Common Stock during the three months ended December 31, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity