2 unchanged sentences
The risk factors described in our filings with the SEC and other information may not describe every risk facing the Company.
−Removed: There have been no material changes in our risk factors from those disclosed in our 2023 Annual Report, except as discussed below:
−Removed: While we are no longer a “controlled company,” we may continue to rely on exemptions from certain NYSE corporate governance requirements during a one-year transition period.
−Removed: Our Common Stock is listed on the New York Stock Exchange (the “NYSE”).
−Removed: Prior to March 19, 2024, Apollo controlled more than 50% of the combined voting power of the Company with respect to the election of directors, and we were considered a “controlled company” for the purposes of the NYSE rules and corporate governance standards.
−Removed: While we were a “controlled company” under the NYSE rules, we availed ourselves of applicable “controlled company” exemptions, which exempted us from certain requirements, including the requirements that we have a majority of independent directors on our Board of Directors and that the Compensation Committee of our Board of Directors (the “Compensation Committee”) and Nominating and Corporate Governance Committee of our Board of Directors (the “Nominating and Corporate Governance Committee”) be comprised entirely of independent directors.
−Removed: On March 19, 2024, following a registered secondary offering of the Company’s Common Stock by certain Apollo affiliates (and the Company’s concurrent repurchase from the underwriters of 15 million shares of Common Stock that were the subject of the offering), including the exercise of the underwriters’ overallotment option which closed on that date, Apollo’s combined voting power with respect to the election of directors fell to 49.5%, and we ceased to be a controlled company as of that date.
−Removed: Under the NYSE rules, a company that ceases to be a controlled company must comply with the independent board committee requirements as they relate to the nominating and corporate governance and compensation committees on the following phase-in schedule:
−Removed: (i) at least one independent committee member at the time the company ceases to be a controlled company; (ii) at least a majority of independent committee members within 90 days of the date the company ceases to be a controlled company; and (iii) all independent committee members within one year of the date the company ceases to be a controlled company.
−Removed: Additionally, the NYSE rules provide a 12-month phase-in period from the date a company ceases to be a controlled company to comply with the majority independent board requirement.
−Removed: As of the date of this report, we have two independent committee members on each of the Nominating and Corporate Governance and the Compensation Committees of the Board, our Audit Committee is comprised entirely of independent directors and we are in compliance with the phase-in requirements described above.
−Removed: Until we are fully subject to these requirements, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.
−Removed: Apollo continues to exert significant influence over us, and its interests may conflict with our interests and the interests of other stockholders.
−Removed: While we are no longer a “controlled company,” Apollo continues to be able to exert significant influence over us and as of September 30, 2024 had the right to, among other things, nominate 50% of our directors pursuant to the Amended and Restated Stockholders Agreement, dated December 14, 2018, (the “Stockholders Agreement”) between the Company and Ultimate Parent and the Co-Investors (as defined therein).
−Removed: The interests of Apollo and its affiliates, including funds affiliated with Apollo, could conflict with or differ from our interests or the interests of our other stockholders.
−Removed: For example, the concentration of ownership held by funds affiliated with Apollo could (i) delay, defer, or prevent a change in control of our Company, (ii) impede a merger, takeover, or other business combination which may otherwise be favorable for us or that another stockholder may otherwise view favorably or (iii) cause us to enter into transactions or agreements that are not in the best interests of all stockholders.
−Removed: Additionally, Apollo and its affiliates are in the business of making investments in companies and may, from time to time, acquire and hold interests in or provide advice to businesses that compete directly or indirectly with us, or are suppliers or customers of ours.
−Removed: Apollo and its affiliates may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.
−Removed: Any such investment may increase the
−Removed: potential for the conflicts of interest discussed in this risk factor.
−Removed: So long as funds affiliated with Apollo continue to directly or indirectly own a significant amount of our equity, even if such amount is less than 50%, Apollo and its affiliates will continue to be able to substantially influence or effectively control our ability to enter into corporate transactions.
−Removed: In addition, we are party to the Stockholders Agreement with Ultimate Parent and the Co-Investors.
−Removed: The Stockholders Agreement specifies that we will not take certain significant actions without the prior consent of Ultimate Parent, including, among other things, hiring or terminating any Executive Officer of our company, designating any new Executive Officer of our company, entering into certain merger, consolidation or other “change of control” transactions or changing the size of our Board.
−Removed: The Stockholders Agreement also specifies that Ultimate Parent has the right to nominate individuals for election to our Board and that we are, to the fullest extent permitted by applicable law, required to nominate and recommend that each such individual be elected as a director, and the right to designate a member to each committee of our Board.
−Removed: Relatedly, our amended and restated Bylaws (the “Bylaws”) provide that Ultimate Parent and the Co-Investors have the right, subject to certain conditions, to have their representatives appointed to serve on committees of our Board.
−Removed: Cybersecurity attacks or threats or other unauthorized access or attempts to access our systems, or those of third parties, could compromise the security of our systems and otherwise disrupt our normal operations which could have a material adverse effect on our reputation, business, results of operations or financial condition.
−Removed: We collect, process, transmit, and store sensitive and confidential information related to our customers, employees and business partners, as well as proprietary information related to our business, such as business plans and license agreements.
−Removed: This makes us vulnerable to cyber attacks and other attempts to gain unauthorized access to our information and technology networks and systems, including as a result of work from home environments and third-party systems that are interconnected with ours.
−Removed: Cyber attacks may come from phishing, malware, ransomware, or other methods.
−Removed: While we implement security measures within our products, services, operations, and, to a limited extent, within third parties’ systems, cyber attacks continue to evolve in sophistication and increase in volume and frequency and we have not in the past been and may not in the future be able to timely detect or prevent cybersecurity breaches on our systems or within third-party systems that are interconnected with ours, including the unauthorized access, capture, or alteration of information;
−Removed: the exposure or exploitation of potential security vulnerabilities;
−Removed: distributed denial of service attacks;
−Removed: the installation of malware or ransomware;
−Removed: acts of vandalism;
−Removed: computer viruses;
−Removed: or misplaced data or data loss that could materially adversely impact our reputation, business, results of operations or financial condition.
−Removed: Despite our security measures, we and third parties whose systems are interconnected with ours have been the target of and/or subject to a number of these forms of cyber attacks, including the incidents disclosed in the Current Reports on Form 8-K filed with the SEC on August 8, 2024 and October 7, 2024, respectively, the latter of which (referred to herein as the “October Incident”) we are still actively investigating, and we will likely continue to be the target of and/or subject to such attacks in the future.
−Removed: These cyber attacks have in the past resulted and may in the future result in certain impacts on our Company, including disrupted operations, system instability, theft of our confidential or proprietary or other information, increased cybersecurity protection, consulting and legal costs, litigation, and reputational damage.
−Removed: In addition, cyber attacks could result in misstated or misappropriated financial data or impair our ability to effectively manage our financial reporting process.
−Removed: We may be subject to regulatory scrutiny or exposed to additional litigation or other claims by affected persons including our customers, employees, and business partners.
−Removed: We are aware of one putative class action that was filed by a former ADT employee on October 18, 2024, alleging negligence and breach of implied contract arising out of the October Incident.
−Removed: Additionally, while our investigation is continuing, we have notified one state regulator about the October Incident and may additionally need to notify regulatory agencies in other states and individuals.
−Removed: While we maintain insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may not be sufficient to cover all losses or all types of claims that may arise.
−Removed: In addition, following the Commercial Divestiture, certain of our information systems and our information security protocols remain interdependent on those of our divested Commercial Business, including dependence for a transitional period on its information systems for billing and alarm monitoring for a small portion of our clients’ accounts.
−Removed: Moreover, certain employees of our former Commercial Business have had and will continue to have access to our financial and other internal systems for a period of time.
−Removed: For more information on the continuing services relationship between ADT and our former Commercial Business, see the risk factor included in our 2023 Annual Report entitled, “ We may not achieve some or all of the strategic and financial benefits that we expect to achieve from the Commercial Divestiture or the Solar Exit which could have a material adverse effect on our financial condition and results of operations .”
−Removed: This interconnection with our former Commercial Business was exploited by an unauthorized actor in the October Incident and exposes us to increased risks related to cyber attacks.
−Removed: Cyber attacks and threats at our former Commercial Business have in the past led and may in the future lead to cyber attacks and threats to our systems and assets.
−Removed: Any measures we have taken or may take in the future to protect against theft and unauthorized system access may prove insufficient and cannot provide absolute protection against employees, including employees of our former Commercial Business, who may wrongfully or negligently use or access such technology, intellectual property, or information, or negligently or wrongfully disclose such technology and intellectual, confidential, proprietary, or any other information to third parties, including our competitors.
−Removed: O ur business also requires us to share confidential information with suppliers and other third parties.
−Removed: Third parties, including our partners and vendors, could also be a source of cybersecurity risk to us, or cause disruptions to our normal operations, in the event of a failure of their own products, components, networks, cybersecurity systems, and infrastructure.
−Removed: For example, in 2021, one of our vendors, the Ultimate Kronos Group (“Kronos”), which is a workforce management and human capital management cloud provider, experienced a ransomware attack that resulted in Kronos temporarily decommissioning the functionality of certain of its cloud software, requiring us to find alternative methods to properly pay our employees and to monitor the status of the work in progress of certain of our projects in a timely manner.
−Removed: In addition, some of the products we sell and provide services for are categorized as Internet of Things and may become targets for cybercriminals and other actors attempting to gain unauthorized access.
−Removed: The significant increase in the number of our employees working from home further exposes us to security risks.
−Removed: Although we take steps to secure confidential, proprietary or other information that is provided to or accessible by third parties working on our behalf, we cannot be certain that advances in criminal capabilities, new discoveries in the field of cryptography, or other developments will not compromise or breach the technology protecting the networks that access our products and services.
−Removed: A significant actual or perceived (whether or not valid) theft, loss, fraudulent use or misuse of customer, employee, or other personally identifiable data, whether by us, our partners and vendors, or other third parties, or as a result of employee error or malfeasance or otherwise, non-compliance with applicable industry standards or our contractual or other legal obligations regarding such data, or a violation of our privacy and information security policies with respect to such data, could result in significant remediation costs, administrative fines, litigation or other claims by third parties, or regulatory actions against us.
−Removed: Such an event could additionally result in unfavorable publicity and therefore materially and adversely affect the market’s perception of the security and reliability of our products and services and our credibility and reputation with our customers, which may lead to customer dissatisfaction and could result in lost sales and increased customer revenue attrition.
−Removed: In addition, we depend on our information technology infrastructure, and that of our third parties, for business-to-business and business-to-consumer electronic commerce.
−Removed: Cyber attacks to, or threats against, this infrastructure could create prolonged system disruptions and shutdowns that could negatively impact our operations.
−Removed: Increasingly, our products and services are accessed through the Internet, and a significant number of service calls happen virtually, and cyber attacks and/or threats in connection with the delivery of our services via the Internet may affect us and could be detrimental to our reputation, business, financial condition, results of operations, and cash flows.
−Removed: There can be no assurance that our continued investments in new and emerging technology and other solutions to protect our network and information systems will prevent any of the risks described herein.
−Removed: In addition, any delay in making such investments due to conflicting budget priorities or otherwise could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: There can be no assurance that our insurance will be sufficient to protect against all our losses from any future disruptions or cyber attacks on our systems or other events as described herein.
+Added: There have been no material changes in our risk factors from those disclosed in our 2024 Annual Report.
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.