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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 FORM 10-Q
(Mark One)
☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2024
OR
☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number: 001-38352
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ADT Inc.
(Exact name of registrant as specified in its charter)
Delaware47-4116383
(State or other jurisdiction
of incorporation or organization)		(I.R.S. Employer
Identification No.)
1501 Yamato Road
Boca Raton, Florida 33431
(561) 988-3600
(Address of principal executive offices, zip code, registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareADTNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x  No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer ☐Smaller reporting company☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of July 24, 2024, there were 857,083,468 shares outstanding of the registrant’s common stock, $0.01 par value per share, and 54,744,525 shares outstanding of the registrant’s Class B common stock, $0.01 par value per share.


TABLE OF CONTENTS
Page


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ADT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)
June 30, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$37,883 $14,621 
Restricted cash and restricted cash equivalents111,034 115,329 
Accounts receivable, net of allowance for credit losses of $57,216 and $46,850, respectively
386,484 370,201 
Inventories, net203,022 201,394 
Prepaid expenses and other current assets240,928 242,192 
Current assets of discontinued operations6,190 60,957 
Total current assets985,541 1,004,694 
Property and equipment, net263,004 253,658 
Subscriber system assets, net3,018,746 3,005,936 
Intangible assets, net4,835,809 4,877,493 
Goodwill4,903,899 4,903,899 
Deferred subscriber acquisition costs, net1,249,237 1,175,904 
Other assets727,023 699,231 
Noncurrent assets of discontinued operations2,563 43,279 
Total assets$15,985,822 $15,964,094 
Liabilities and stockholders' equity
Current liabilities:
Current maturities of long-term debt$192,220 $312,061 
Accounts payable222,113 277,201 
Deferred revenue247,414 255,221 
Accrued expenses and other current liabilities604,897 556,114 
Current liabilities of discontinued operations48,702 79,611 
Total current liabilities1,315,346 1,480,208 
Long-term debt7,532,250 7,513,456 
Deferred subscriber acquisition revenue2,034,660 1,914,954 
Deferred tax liabilities1,080,102 1,027,189 
Other liabilities199,713 219,069 
Noncurrent liabilities of discontinued operations15,541 20,572 
Total liabilities12,177,612 12,175,448 
Commitments and contingencies (See Note 11)
Stockholders' equity:
Preferred stock—authorized 1,000,000 shares of $0.01 par value; zero issued and outstanding as of June 30, 2024 and December 31, 2023
— — 
Common stock—authorized 3,999,000,000 shares of $0.01 par value; issued and outstanding shares of 857,052,617 and 867,432,337 as of June 30, 2024 and December 31, 2023, respectively
8,571 8,674 
Class B common stock—authorized 100,000,000 shares of $0.01 par value; issued and outstanding shares of 54,744,525 as of June 30, 2024 and December 31, 2023
547 547 
Additional paid-in capital7,347,061 7,413,305 
Accumulated deficit(3,535,042)(3,617,718)
Accumulated other comprehensive income (loss)(12,927)(16,162)
Total stockholders' equity3,808,210 3,788,646 
Total liabilities and stockholders' equity$15,985,822 $15,964,094 
See Notes to Condensed Consolidated Financial Statements
1


ADT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue:
Monitoring and related services$1,068,065 $1,043,255 $2,130,717 $2,071,888 
Security installation, product, and other136,494 124,822 263,514 228,665 
Total revenue1,204,559 1,168,077 2,394,231 2,300,553 
Cost of revenue (exclusive of depreciation and amortization shown separately below):
Monitoring and related services151,192 142,488 305,905 304,276 
Security installation, product, and other45,042 45,222 84,634 75,058 
Total cost of revenue196,234 187,710 390,539 379,334 
Selling, general, and administrative expenses388,440 319,218 747,003 654,417 
Depreciation and intangible asset amortization333,859 320,726 666,861 679,120 
Merger, restructuring, integration, and other1,851 8,325 13,504 22,624 
Operating income (loss)284,175 332,098 576,324 565,058 
Interest expense, net(109,700)(83,478)(197,150)(254,411)
Other income (expense)11,550 519 27,172 (671)
Income (loss) from continuing operations before income taxes and equity in net earnings (losses) of equity method investee186,025 249,139 406,346 309,976 
Income tax benefit (expense)(59,840)(66,963)(116,270)(85,560)
Income (loss) from continuing operations before equity in net earnings (losses) of equity method investee126,185 182,176 290,076 224,416 
Equity in net earnings (losses) of equity method investee— (1,738)— (4,415)
Income (loss) from continuing operations126,185 180,438 290,076 220,001 
Income (loss) from discontinued operations, net of tax(33,791)(88,227)(106,131)(246,627)
Net income (loss)$92,394 $92,211 $183,945 $(26,626)
Common Stock:
Income (loss) from continuing operations per share - basic$0.14 $0.20 $0.32 $0.24 
Income (loss) from continuing operations per share - diluted$0.13 $0.19 $0.30 $0.23 
Net income (loss) per share - basic$0.10 $0.10 $0.20 $(0.03)
Net income (loss) per share - diluted$0.10 $0.09 $0.19 $(0.03)
Weighted-average shares outstanding - basic848,273 857,581 852,083 855,949 
Weighted-average shares outstanding - diluted909,128 916,859 913,475 919,220 
Class B Common Stock:
Income (loss) from continuing operations per share - basic$0.14 $0.20 $0.32 $0.24 
Income (loss) from continuing operations per share - diluted$0.13 $0.19 $0.30 $0.23 
Net income (loss) per share - basic$0.10 $0.10 $0.20 $(0.03)
Net income (loss) per share - diluted$0.10 $0.09 $0.19 $(0.03)
Weighted-average shares outstanding - basic54,745 54,745 54,745 54,745 
Weighted-average shares outstanding - diluted54,745 54,745 54,745 54,745 
See Notes to Condensed Consolidated Financial Statements
2


ADT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Net income (loss)$92,394 $92,211 $183,945 $(26,626)
Other comprehensive income (loss), net of tax:
Cash flow hedges1,504 3,586 3,121 7,721 
Other23 2 114 (26)
Total other comprehensive income (loss), net of tax 1,527 3,588 3,235 7,695 
Comprehensive income (loss)$93,921 $95,799 $187,180 $(18,931)
See Notes to Condensed Consolidated Financial Statements
3


ADT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands)

Three Months Ended June 30, 2024
Number of Common SharesNumber of Class B Common SharesCommon StockClass B Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Beginning balance855,629 54,745 $8,556 $547 $7,317,895 $(3,576,763)$(14,454)$3,735,781 
Net income (loss)— — — — — 92,394 — 92,394 
Other comprehensive income (loss), net of tax— — — — — — 1,527 1,527 
Dividends— — — — — (50,148)— (50,148)
Share-based compensation expense— — — — 21,416 — — 21,416 
Transactions related to employee share-based compensation plans and other1,424 — 15 — 7,750 (525)— 7,240 
Ending balance857,053 54,745 $8,571 $547 $7,347,061 $(3,535,042)$(12,927)$3,808,210 

Three Months Ended June 30, 2023
Number of Common SharesNumber of Class B Common SharesCommon StockClass B Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Beginning balance866,917 54,745 $8,668 $547 $7,380,867 $(4,101,557)$(43,093)$3,245,432 
Net income (loss)— — — — — 92,211 — 92,211 
Other comprehensive income (loss), net of tax— — — — — — 3,588 3,588 
Dividends— — — — — (32,172)— (32,172)
Share-based compensation expense— — — — 11,506 — — 11,506 
Transactions related to employee share-based compensation plans and other(508)— (4)— (2,104)(445)— (2,553)
Ending balance866,409 54,745 $8,664 $547 $7,390,269 $(4,041,963)$(39,505)$3,318,012 
See Notes to Condensed Consolidated Financial Statements
4


ADT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands)

Six Months Ended June 30, 2024
Number of Common SharesNumber of Class B Common SharesCommon StockClass B Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Beginning balance867,432 54,745 $8,674 $547 $7,413,305 $(3,617,718)$(16,162)$3,788,646 
Net income (loss)— — — — — 183,945 — 183,945 
Other comprehensive income (loss), net of tax— — — — — — 3,235 3,235 
Dividends— — — — — (100,218)— (100,218)
Share-based compensation expense— — — — 29,387 — — 29,387 
Repurchases of common stock (including excise tax)(15,000)— (150)— (93,969)— — (94,119)
Transactions related to employee share-based
compensation plans and other
4,621 — 47 — (1,662)(1,051)— (2,666)
Ending balance857,053 54,745 $8,571 $547 $7,347,061 $(3,535,042)$(12,927)$3,808,210 

Six Months Ended June 30, 2023
Number of Common SharesNumber of Class B Common SharesCommon StockClass B Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Beginning balance862,098 54,745 $8,621 $547 $7,380,759 $(3,949,579)$(47,200)$3,393,148 
Net income (loss)— — — — — (26,626)— (26,626)
Other comprehensive income (loss), net of tax— — — — — — 7,695 7,695 
Dividends— — — — — (64,430)— (64,430)
Share-based compensation expense— — — — 27,488 — — 27,488 
Transactions related to employee share-based
compensation plans and other
4,311 — 43 — (17,978)(1,328)— (19,263)
Ending balance866,409 54,745 $8,664 $547 $7,390,269 $(4,041,963)$(39,505)$3,318,012 
See Notes to Condensed Consolidated Financial Statements
5


ADT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended June 30,
20242023
Cash flows from operating activities:
Net income (loss)$183,945 $(26,626)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and intangible asset amortization668,678 728,893 
Amortization of deferred subscriber acquisition costs109,335 95,163 
Amortization of deferred subscriber acquisition revenue(169,558)(147,932)
Share-based compensation expense29,387 27,488 
Deferred income taxes48,985 (131,226)
Provision for losses on receivables and inventory106,870 67,093 
Goodwill, intangible, and other asset impairments21,296 427,832 
Unrealized (gain) loss on interest rate swap contracts(1,744)(22,097)
Other non-cash items, net42,544 52,652 
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Deferred subscriber acquisition costs(182,834)(185,128)
Deferred subscriber acquisition revenue134,830 148,473 
Other, net(64,729)(235,150)
Net cash provided by (used in) operating activities927,005 799,435 
Cash flows from investing activities:
Dealer generated customer accounts and bulk account purchases(260,056)(252,151)
Subscriber system asset expenditures(284,012)(320,328)
Purchases of property and equipment(87,391)(89,347)
Proceeds (payments) from interest rate swaps
(4,229)— 
Other investing, net2,995 7,126 
Net cash provided by (used in) investing activities(632,693)(654,700)
Cash flows from financing activities:
Proceeds from long-term borrowings905,521 650,000 
Proceeds from receivables facility 145,565 140,194 
Proceeds (payments) from interest rate swaps48,005 36,280 
Repurchases of common stock(93,356)— 
Repayment of long-term borrowings, including call premiums(1,017,686)(873,301)
Repayment of receivables facility(157,713)(92,382)
Dividends on common stock(82,172)(64,229)
Payments on finance leases(15,485)(21,271)
Other financing, net(8,024)(32,806)
Net cash provided by (used in) financing activities(275,345)(257,515)
Cash and cash equivalents and restricted cash and restricted cash equivalents:
Net increase (decrease)18,967 (112,780)
Beginning balance129,950 373,580 
Ending balance$148,917 $260,800 
See Notes to Condensed Consolidated Financial Statements


6

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.     DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Organization
ADT Inc., together with its wholly-owned subsidiaries (collectively, “ADT” or the “Company”), provides security, interactive, and smart home solutions to consumer and small business customers in the United States (“U.S.”).
Prior to March 11, 2024, the Company was majority-owned by Prime Security Services TopCo (ML), L.P., which is majority-owned by Prime Security Services TopCo Parent, L.P. (“Ultimate Parent”). Ultimate Parent is majority-owned by Apollo Investment Fund VIII, L.P. and its related funds that are directly or indirectly managed by affiliates of Apollo Global Management, Inc. (together with its subsidiaries and affiliates, “Apollo” or the “Sponsor”). Following a registered secondary offering of the Company’s common stock (“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 March 19, 2024, Apollo beneficially owns less than 50% of the Company’s outstanding common stock, which includes Common Stock and Class B common stock (“Class B Common Stock”) combined, and less than 50% of the Company’s outstanding Common Stock, and the Company ceased to be a “controlled company” under the New York Stock Exchange (the “NYSE”) rules.
Basis of Presentation
The condensed consolidated financial statements included herein:
•have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”);
•comprise the consolidated results of ADT Inc. and its wholly-owned subsidiaries, and all intercompany transactions have been eliminated;
•are unaudited, but in the opinion of management, include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the interim periods presented; and
•should not be taken as indicative of results that may be expected for future interim periods or the full year.
The Condensed Consolidated Balance Sheet as of December 31, 2023 included herein was derived from the audited consolidated financial statements as of that date. Certain information and footnote disclosures required in the annual consolidated financial statements have been omitted as appropriate. For a more comprehensive understanding of the Company and its interim results, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”).
In addition, the results of companies acquired (if applicable) are included from the effective dates of acquisition. Prior to the sale of its shares in SNTNL LLC (“Canopy”) during the fourth quarter of 2023, the Company used the equity method of accounting to account for its investment in Canopy as it had the ability to exercise significant influence but did not control.
Certain prior period amounts have been reclassified to conform with the current period presentation.
Discontinued Operations
In January 2024, the Company’s board of directors (the “Board of Directors” or the “Board”) approved a plan to fully exit the residential solar business (the “Solar Business”) (the “ADT Solar Exit”). The ADT Solar Exit represents a strategic shift that had a major effect on the Company’s financial results. As of June 30, 2024, substantially all operations of the Solar Business have ceased, with the results of operations and financial position of the Solar Business classified as discontinued operations in the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets, respectively, for all periods presented.
In addition, in August 2023, ADT entered into an agreement to divest its commercial business (the “Commercial Business”), which was completed in October 2023 (the “Commercial Divestiture”). As a result, the Commercial Business is presented as a discontinued operation in the Company’s Condensed Consolidated Statements of Operations for all periods presented.
7

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The cash flows and comprehensive income (loss) of discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Comprehensive Income (Loss), respectively, for all periods presented.
Refer to Note 3 “Divestitures” for additional information on discontinued operations.
Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to the Company’s continuing operations.
Use of Estimates
The preparation of these condensed consolidated financial statements in accordance with GAAP requires the Company to select accounting policies and make estimates that affect amounts reported in the condensed consolidated financial statements and the accompanying notes. The Company’s estimates are based on the relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions.
Segment Update
Beginning in the second quarter of 2024, and as a result of the ADT Solar Exit, the Company currently reports its results in a single operating and reportable segment, which reflects the business operations of the Company’s former Consumer and Small Business (“CSB”) segment, based on the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (the “CODM”) evaluates performance and makes decisions about how to allocate resources.
Prior to the third quarter of 2023, the Commercial Business was reflected in the Commercial reportable segment, and prior to the second quarter of 2024, the Solar Business was reflected in the Solar reportable segment.
Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Supplier Finance Program Obligations - ASU 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, requires that a reporting entity who is a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs, including a roll-forward of the obligations.
The Company adopted the roll-forward requirement effective January 1, 2024. The Company does not currently have any material supplier finance programs, and the guidance will be applied prospectively to any future arrangements.
Fair Value of Equity Investments - ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, states that an entity should not consider the impact of contractual sale restrictions when measuring an equity security’s fair value and introduces new disclosure requirements related to such equity securities.
The Company adopted this guidance effective January 1, 2024. This guidance did not impact the Company.
Recently Issued Accounting Pronouncements
Disclosure Improvements - ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, represents changes to clarify or improve disclosure and presentation requirements of a variety of topics.
The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is monitoring the potential impact of this guidance on its financial statements and disclosures.
8

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Segment Reporting - ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. In addition, the guidance, among other requirements, enhances interim disclosures, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and provides new segment disclosure requirements for entities with a single reportable segment.
The amendments in this guidance are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. This guidance should be applied retrospectively to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its disclosures.
Income Taxes - ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, focuses on improvements to income tax disclosures, primarily related to the rate reconciliation and income tax paid information. In addition, the update includes certain other amendments to improve the effectiveness of income tax disclosures.
The guidance is effective for annual periods beginning after December 15, 2024, and should be applied prospectively, with retrospective application also a permitted option. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its disclosures.
Significant Accounting Policies
Unless otherwise noted, the Company’s accounting policies, including those discussed herein, do not materially differ from those disclosed in the 2023 Annual Report.
Cash and Cash Equivalents and Restricted Cash and Restricted Cash Equivalents
The following table reconciles the amounts below reported in the Condensed Consolidated Balance Sheets to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows:
(in thousands)June 30, 2024December 31, 2023
Cash and cash equivalents$37,883 $14,621 
Restricted cash and restricted cash equivalents(1)
111,034 115,329 
Ending balance$148,917 $129,950 
________________
(1)    Primarily includes funds received from State Farm Fire & Casualty Company (“State Farm”), net of payments and inclusive of interest earned, in connection with the State Farm Development Agreement (as defined and discussed in Note 13 “Related Party Transactions”). The remaining amount of restricted cash relates to the Company’s uncommitted receivables securitization financing agreement (the “2020 Receivables Facility”). Refer to Note 5 “Debt.”
Inventories, net
Inventories, net includes finished goods and work-in-progress. Work-in-progress is not material.
Subscriber System Assets, net and Deferred Subscriber Acquisition Costs, net
Subscriber system assets represent capitalized equipment and installation costs incurred in connection with transactions in which the Company retains ownership of the security system, and which the Company may retrieve upon termination of the contract with the customer. Deferred subscriber acquisition costs represent selling expenses (primarily commissions) that are incremental to acquiring customers.
Subscriber system assets and any related deferred subscriber acquisition costs are accounted for on a pooled basis based on the month and year of customer acquisition. The Company depreciates and amortizes these pooled costs using an accelerated method over the estimated life of the customer relationship, which is 15 years.
(in thousands)June 30, 2024December 31, 2023
Gross carrying amount$6,665,977 $6,404,479 
Accumulated depreciation(3,647,231)(3,398,543)
Subscriber system assets, net$3,018,746 $3,005,936 
9

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Depreciation of subscriber system assets and amortization of deferred subscriber acquisition costs are reflected in depreciation and intangible asset amortization and selling, general, and administrative expenses (“SG&A”), respectively, as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Depreciation of subscriber system assets$139,306 $134,894 $277,609 $272,325 
Amortization of deferred subscriber acquisition costs
$54,730 $45,968 $109,335 $90,200 
Accrued Expenses and Other Current Liabilities
(in thousands)June 30, 2024December 31, 2023
Accrued interest$124,457 $111,197 
Payroll-related accruals82,422 110,941 
Opportunity Fund (see Note 13 “Related Party Transactions”)
89,254 93,950 
Operating lease liabilities (see Note 12 “Leases”)
19,282 13,035 
Accrued dividends50,042 32,207 
Other accrued liabilities239,440 194,784 
Accrued expenses and other current liabilities$604,897 $556,114 
Fair Value of Financial Instruments
The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash and restricted cash equivalents, accounts receivable, retail installment contract receivables, accounts payable, debt, and derivative financial instruments. Due to their short-term and/or liquid nature, the fair values of cash, restricted cash, accounts receivable, and accounts payable approximate their respective carrying amounts.
Cash Equivalents - Included in cash and cash equivalents and restricted cash and restricted cash equivalents, as applicable from time to time, are investments in money market mutual funds. These investments are generally classified as Level 1 fair value measurements, which represent unadjusted quoted prices in active markets for identical assets or liabilities.
As of June 30, 2024 and December 31, 2023, investments in money market mutual funds were $57 million and $55 million, respectively.
Long-Term Debt Instruments - The fair values of the Company’s long-term debt instruments are determined using broker-quoted market prices, which represent quoted prices for similar assets or liabilities as well as other observable market data, and are classified as Level 2 fair value measurements. The carrying amounts of debt outstanding, if any, under the Company’s first lien revolving credit facility (the “First Lien Revolving Credit Facility”) and the 2020 Receivables Facility approximate their fair values as interest rates on these borrowings approximate current market rates.
June 30, 2024December 31, 2023
(in thousands)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Long-term debt instruments subject to fair value disclosures(1)
$7,647,751 $7,576,484 $7,756,049 $7,731,408 
________________
(1)    Excludes finance leases and certain vehicle loans reported as discontinued operations.
Derivative Financial Instruments - Derivative financial instruments are reported at fair value as either assets or liabilities that are primarily calculated using discounted cash flow models utilizing observable inputs, such as quoted forward interest rates, and incorporate credit risk adjustments to reflect the risk of default by the counterparty or the Company. The resulting fair values are classified as Level 2 fair value measurements.
Refer to Note 6 “Derivative Financial Instruments” for the fair values of the Company’s derivative financial instruments.
10

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Retail Installment Contract Receivables - The fair values of the Company’s retail installment contract receivables are determined using a discounted cash flow model and are classified as Level 3 fair value measurements.
June 30, 2024December 31, 2023
(in thousands)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Retail installment contract receivables, net$675,362 $494,758 $673,635 $487,685 
2.     REVENUE AND RECEIVABLES
Revenue
The Company allocates the transaction price to each performance obligation based on the relative standalone selling price, which is determined using observable internal and external pricing, profitability, and operational metrics.
In addition to the details provided below, the Company’s disaggregated revenue includes monitoring and related services and security installation, product, and other revenue, which are presented on the face of the Condensed Consolidated Statements of Operations.
Company-Owned - In transactions in which the Company provides monitoring and related services but retains ownership of the security system (referred to as Company-owned transactions), the Company’s performance obligations primarily include (i) monitoring and related services, which are recognized when these services are provided to the customer, and (ii) a material right associated with the one-time non-refundable fees in connection with the initiation of a monitoring contract which the customer will not be required to pay again upon a renewal of the contract (referred to as deferred subscriber acquisition revenue). Deferred subscriber acquisition revenue is amortized on a pooled basis over the estimated life of the customer relationship using an accelerated method consistent with the treatment of subscriber system assets and deferred subscriber acquisition costs and is reflected in security installation, product, and other revenue.
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)
2024202320242023
Amortization of deferred subscriber acquisition revenue$86,182 $73,610 $169,558 $143,308 
Customer-Owned - In transactions involving security systems sold outright to the customer (referred to as outright sales), the Company’s performance obligations generally include the sale and installation of the system, which is primarily recognized at a point in time based upon the nature of the transaction and contractual terms, and any monitoring and related services, which are recognized when these services are provided to the customer.
Allowance for Credit Losses
The Company evaluates its allowance for credit losses on accounts receivable in pools based on customer type. For each customer pool, the allowance for credit losses is estimated based on the delinquency status of the underlying receivables and the related historical loss experience, as adjusted for current and expected future conditions, if applicable. The allowance for credit losses is not material for the individual pools of customers.
Six Months Ended June 30,
(in thousands)20242023
Beginning balance$46,850 $27,815 
Provision for credit losses73,707 54,185 
Write-offs, net of recoveries(1)
(63,341)(50,073)
Ending balance$57,216 $31,927 
________________
(1)Recoveries were not material for the periods presented. As such, the Company presented write-offs, net of recoveries.
11

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Retail Installment Contract Receivables, Net
For security system transactions occurring under both Company-owned and customer-owned equipment models, the Company’s retail installment contract option allows qualifying residential customers to pay the fees due at installation over a 24-, 36-, or 60-month interest-free period, and there is no significant financing component.
Upon origination of a retail installment contract, the Company utilizes external credit scores to assess customer credit quality and determine eligibility. Subsequent to origination, the Company monitors the delinquency status of retail installment contract receivables as the key credit quality indicator.
The balance of unbilled retail installment contract receivables comprises:
(in thousands)June 30, 2024December 31, 2023
Retail installment contract receivables, gross$681,852 $674,827 
Allowance for credit losses(6,490)(1,192)
Retail installment contract receivables, net$675,362 $673,635 
Balance Sheet Classification:
Accounts receivable, net$252,365 $238,961 
Other assets422,997 434,674 
Retail installment contract receivables, net$675,362 $673,635 
The allowance for credit losses relates to retail installment contract receivables from outright sales transactions. As of June 30, 2024, the current and delinquent billed retail installment contract receivables were not material.
As of June 30, 2024 and December 31, 2023, retail installment contract receivables, net, used as collateral for borrowings under the 2020 Receivables Facility were $611 million and $610 million, respectively. Refer to Note 5 “Debt” for further discussion regarding the 2020 Receivables Facility.
Contract Assets
Contract assets represent the Company’s right to consideration in exchange for goods or services transferred to the customer. The contract asset is reclassified to accounts receivable when the Company’s right to the consideration becomes unconditional, which generally occurs over the course of a 24-, 36-, or 60-month period as additional services are performed and billed. There is no significant financing component.
During the six months ended June 30, 2024 and 2023, contract assets recognized were not material.
The balance of contract assets for residential transactions comprises:
(in thousands)June 30, 2024December 31, 2023
Contract assets, gross$40,551 $39,627 
Allowance for credit losses(5,121)(9,025)
Contract assets, net$35,430 $30,602 
Balance Sheet Classification:
Prepaid expenses and other current assets$17,527 $15,365 
Other assets17,903 15,237 
Contract assets, net$35,430 $30,602 
3.    DIVESTITURES
The Company may decide to divest or exit a portion of its business for various reasons, including efforts to focus on its other 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.
12

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Refer to Note 10 “Net Income (Loss) per Share” for basic and diluted earnings per share information for discontinued operations.
ADT Solar Exit
As discussed in Note 1 “Description of Business and Summary of Significant Accounting Policies,” as a result of the ADT Solar Exit, the Solar Business is now presented as a discontinued operation in the Company’s Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets for the periods presented as substantially all operations have ceased.
During the three and six months ended June 30, 2024, the Company incurred aggregate exit charges of $13 million and $89 million, respectively, which have been recognized within income (loss) from discontinued operations, net of tax related to (i) $1 million and $36 million, respectively, associated with the write-down and disposition of inventory and asset impairments, (ii) $10 million and $29 million, respectively, associated with the disposition of the existing installation pipeline, (iii) $1 million and $12 million, respectively, associated with employee separation costs, and (iv) $2 million and $12 million, respectively, associated with contract termination and other charges.
During the six months ended June 30, 2024, the Company paid $18 million associated with the ADT Solar Exit primarily related to employee separation and other restructuring costs.
The following reconciliations represent the major classes of line items of the Solar Business presented within discontinued operations in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and certain information in the Condensed Consolidated Statements of Cash Flows for the periods presented.
Balance Sheet Information
(in thousands)June 30, 2024December 31, 2023
Assets
Accounts receivable, net
$1,089 $20,270 
Inventories, net1,894 28,714 
Prepaid expenses and other current assets
3,207 11,973 
Total current assets of discontinued operations
6,190 60,957 
Property and equipment, net2,451 29,512 
Other assets112 13,767 
Total assets of discontinued operations
$8,753 $104,236 
Liabilities
Current maturities of long-term debt$476 $8,551 
Accounts payable7,199 16,682 
Deferred revenue461 9,177 
Accrued expenses and other current liabilities40,566 45,201 
Total current liabilities of discontinued operations
48,702 79,611 
Long-term debt2,442 9,893 
Other liabilities13,099 10,679 
Total liabilities of discontinued operations
$64,243 $100,183 
13

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Statements of Operations Information
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Revenue$1,656 $77,532 $21,295 $222,367 
Cost of revenue
19,837 64,898 61,359 163,242 
Selling, general, and administrative expenses11,877 50,896 51,768 109,071 
Depreciation and intangible asset amortization466 4,939 1,817 8,896 
Merger, restructuring, integration, and other4,622 2,180 38,150 3,418 
Goodwill impairment
— 181,179 — 422,809 
Other (income) and expense items
(8)415 1,473 784 
Income (loss) from discontinued operations before income taxes(35,138)(226,975)(133,272)(485,853)
Income tax benefit (expense)9,601 44,229 35,376 136,763 
Income (loss) from discontinued operations, net of tax$(25,537)$(182,746)$(97,896)$(349,090)
Cash Flow Information
Six Months Ended June 30,
(in thousands)20242023
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and intangible asset amortization$1,817 $8,896 
Goodwill impairment$— $422,809 
Cash flows from investing activities:
Purchases of property and equipment$(80)$(2,675)
Commercial Divestiture
As discussed in Note 1 “Description of Business and Summary of Significant Accounting Policies,” on October 2, 2023, the Company completed the Commercial Divestiture. The total purchase price was approximately $1,613 million, and the Company received net proceeds of approximately $1,585 million, subject to certain customary post-closing adjustments as set forth in the purchase agreement.
Subsequent Event - In July 2024, the Company paid the purchaser of the Commercial Business $21 million related to the settlement of post-closing adjustments.
In connection with the Commercial Divestiture, the Company entered into a Transition Services Agreement (the “Commercial TSA”). During the three and six months ended June 30, 2024, the Company recognized $11 million and $22 million, respectively, of income from the Commercial TSA, which is reflected in other income (expense).
The following reconciliations represent the major classes of line items of the Commercial Business presented within discontinued operations in the Condensed Consolidated Statements of Operations and certain information in the Condensed Consolidated Statements of Cash Flows for any period presented prior to the Commercial Divestiture.
Statements of Operations Information
During the three and six months ended June 30, 2024, activity, net of tax, relating to the Commercial Divestiture was approximately $8 million.
14

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
Three Months Ended June 30, 2023
Six Months Ended June 30, 2023
Revenue$347,519 $682,562 
Cost of revenue
231,068 455,101 
Selling, general, and administrative expenses71,657 140,512 
Depreciation and intangible asset amortization20,173 40,877 
Other (income) and expense items
7,974 10,408 
Income (loss) from discontinued operations before income taxes16,647 35,664 
Income tax benefit (expense)77,872 66,799 
Income (loss) from discontinued operations, net of tax$94,519 $102,463 
Cash Flow Information
(in thousands)Six Months Ended June 30, 2023
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and intangible asset amortization$40,877 
Share-based compensation expense$6,001 
Cash flows from investing activities:
Subscriber system asset expenditures$(6,212)
Purchases of property and equipment$(5,764)
4.     GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
There were no changes in the carrying amounts of goodwill since December 31, 2023. All accumulated goodwill impairment losses were associated with the Solar reporting unit, which is now presented as a discontinued operation.
Other Intangible Assets
June 30, 2024December 31, 2023
(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$5,831,213 $(3,197,319)$2,633,894 $5,571,456 $(2,937,245)$2,634,211 
Dealer relationships1,518,020 (657,761)860,259 1,518,020 (618,154)899,866 
Other209,773 (201,117)8,656 209,773 (199,357)10,416 
Total definite-lived intangible assets7,559,006 (4,056,197)3,502,809 7,299,249 (3,754,756)3,544,493 
Indefinite-lived intangible assets:
Trade name1,333,000 — 1,333,000 1,333,000 — 1,333,000 
Intangible assets$8,892,006 $(4,056,197)$4,835,809 $8,632,249 $(3,754,756)$4,877,493 
    
15

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The change in the net carrying amount of contracts and related customer relationships during the period was as follows:
(in thousands)
Balance as of December 31, 2023$2,634,211 
Customer contract additions, net of dealer charge-backs(1)
259,858 
Amortization(260,175)
Balance as of June 30, 2024$2,633,894 
________________
(1)     The weighted-average amortization period for customer contract additions was approximately 15 years.
Payments for customer contract additions under the Company’s authorized dealer program and from other third parties are reflected as dealer generated customer accounts and bulk account purchases on the Condensed Consolidated Statements of Cash Flows.
Definite-Lived Intangible Asset Amortization Expense
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Definite-lived intangible asset amortization expense$150,644 $146,163 $301,542 $323,643 
16

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.     DEBT
The Company’s debt is comprised of the following (in thousands):
DescriptionIssuedMaturity
Interest Rate(1)
Interest PayableJune 30, 2024December 31, 2023
First Lien Term Loan B due 2030
10/13/202310/13/2030
Term SOFR +2.25%
Quarterly$1,989,063 $1,375,000 
First Lien Revolving Credit Facility
3/16/20186/23/2026
Term SOFR +2.75%
Quarterly
— — 
Term Loan A Facility3/14/20233/14/2028
Term SOFR +2.25%
Quarterly— 625,625 
First Lien Notes due 20244/4/20194/15/20245.250%2/15 and 8/15— 99,999 
First Lien Notes due 20264/4/20194/15/20265.750%3/15 and 9/151,350,000 1,350,000 
First Lien Notes due 20278/20/20208/31/20273.375%6/15 and 12/151,000,000 1,000,000 
First Lien Notes due 20297/29/20218/1/20294.125%2/1 and 8/11,000,000 1,000,000 
ADT Notes due 20325/2/20167/15/20324.875%1/15 and 7/15728,016 728,016 
ADT Notes due 20427/5/20127/15/20424.875%1/15 and 7/1521,896 21,896 
Second Lien Notes due 20281/28/20201/15/20286.250%1/15 and 7/151,300,000 1,300,000 
2020 Receivables Facility(2)
3/5/20205/20/2029VariousMonthly423,855 436,004 
Total debt principal, excluding finance leases7,812,830 7,936,540 
Plus: Finance lease liabilities(3)
76,719 69,468 
Less: Unamortized debt discount, net(12,436)(15,005)
Less: Unamortized deferred financing costs(32,132)(39,620)
Less: Unamortized purchase accounting fair value adjustment and other(120,511)(125,866)
Total debt7,724,470 7,825,517 
Less: Current maturities of long-term debt, net of unamortized debt discount(192,220)(312,061)
Long-term debt$7,532,250 $7,513,456 
_________________
(1)    Interest rate as of June 30, 2024. Interest on the 2020 Receivables Facility is primarily based on the Secured Overnight Financing Rate (“SOFR”) +0.95% and Cost of Funds (“COF”) +0.85%.
(2)    Maturity date for the 2020 Receivables Facility represents the final maturity date of current loans borrowed under the facility.
(3)    Refer to Note 12 “Leases” for additional information regarding the Company’s finance leases.
As of June 30, 2024, the Company was in compliance with all financial covenant and other maintenance tests for all of its debt obligations.
Significant changes in the Company’s debt during the six months ended June 30, 2024 were as follows:
First Lien Credit Agreement
The Company’s first lien credit agreement, dated as of July 1, 2015 (together with subsequent amendments and restatements, the “First Lien Credit Agreement”), contains a term loan (the “First Lien Term Loan B due 2030”) and the First Lien Revolving Credit Facility.
During the six months ended June 30, 2024, the Company borrowed $260 million and repaid $260 million under the First Lien Revolving Credit Facility; and as of June 30, 2024, the available borrowing capacity was $575 million.
During the six months ended June 30, 2023, there were no borrowings or repayments under the First Lien Revolving Credit Facility.
Significant amendments to the First Lien Credit Agreement since December 31, 2023 are as follows:
•April 2024 - The Company amended and restated the First Lien Credit Agreement, which reduced the interest rate on the First Lien Term Loan B due 2030 from Term SOFR +2.50% to Term SOFR +2.25%.
17

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
•May 2024 - The Company amended and restated the First Lien Credit Agreement, which included the exchange of $143 million principal amount of loans under the Company’s Term Loan A Facility for its First Lien Term Loan B due 2030. In addition, later that month, the Company further amended and restated the First Lien Credit Agreement, pursuant to which the Company incurred an additional $474 million of outstanding principal under the First Lien Term Loan B due 2030 with the proceeds used to pay off the remaining outstanding balance of the Company’s Term Loan A Facility.
Proceeds and repayments of long-term borrowings include the impact of $646 million from the amendments described above. In addition, debt issuance costs, loss on extinguishment of debt, and financing and consent fees were not material as a result of these amendments.
Other than as described above, the loans under the amended and restated First Lien Credit Agreement continue to have the same terms as provided under the existing First Lien Credit Agreement and the parties to the amended and restated First Lien Credit Agreement continue to have the same obligations set forth in the existing First Lien Credit Agreement.
Term Loan A Facility Redemption
Significant activity since December 31, 2023 is as follows:
•May 2024 - The Company exchanged $143 million of loans under its Term Loan A Facility for its First Lien Term Loan B due 2030, as discussed above. In addition, later that month, the Company redeemed the remaining outstanding principal balance of $474 million of its Term Loan A Facility, excluding accrued and unpaid interest, using proceeds under the First Lien Term Loan B due 2030, as discussed above. As a result, the Term Loan A Facility has been terminated.
First Lien Notes due 2024 Redemption
Significant activity since December 31, 2023 is as follows:
•April 2024 - The Company redeemed the remaining outstanding principal balance of $100 million of the First Lien Notes due 2024, excluding accrued and unpaid interest, using proceeds from the Company’s First Lien Revolving Credit Facility.
2020 Receivables Facility
Under the 2020 Receivables Facility, the Company obtains financing by selling or contributing certain retail installment contract receivables to the Company’s wholly-owned consolidated bankruptcy-remote special purpose entity (the “SPE”), which then grants a security interest in those retail installment contract receivables as collateral for cash borrowings.
Significant activity since December 31, 2023 is as follows:
•March 2024 - The Company amended the agreement governing the 2020 Receivables Facility, pursuant to which the uncommitted revolving period was extended from March 2024 to April 2024.
•April 2024 - The Company further amended the agreement governing the 2020 Receivables Facility, pursuant to which, among other things, the borrowing capacity was increased from $500 million to $550 million and the uncommitted revolving period was extended from April 2024 to April 2025. In addition, proceeds and repayments of long-term borrowings include the impact of $32 million from the amendments described above.
As of June 30, 2024, the Company had an uncommitted available borrowing capacity under the 2020 Receivables Facility of approximately $126 million.
Variable Interest Entity
The SPE meets the definition of a variable interest entity for which the Company is the primary beneficiary as it has the power to direct the SPE’s activities and the obligation to absorb losses or the right to receive benefits of the SPE. As such, the Company consolidates the SPE’s assets, liabilities, and financial results of operations.
18

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The SPE’s assets and liabilities primarily consist of a portion of the Company’s unbilled retail installment contract receivables, net, as discussed in Note 2 “Revenue and Receivables,” and borrowings under the 2020 Receivables Facility, as presented above.
The 2020 Receivables Facility did not have a material impact to the Condensed Consolidated Statements of Operations during the periods presented.
Solar Receivables Facility
On August 2, 2023, Compass Solar Group, LLC (“Compass”) and ADT Solar Finance LLC (“ADT Solar Finance”), each an indirect wholly-owned subsidiary of ADT Inc. entered into a Receivables Financing Agreement with Mizuho Bank, Ltd. (the “Solar Receivables Financing Agreement”) to finance receivables generated by the installation of residential solar systems. The Solar Receivables Financing Agreement, among other things, provides for an uncommitted revolving loan facility in the aggregate principal amount of up to $300 million which loans are secured by substantially all the assets of ADT Solar Finance (the “Solar Receivables Facility”).
As of June 30, 2024, the Company has not borrowed any amounts under the Solar Receivable Facility, and given the ADT Solar Exit, the Company does not expect to borrow any amounts under the Solar Receivables Facility. The Solar Receivables Facility’s uncommitted revolving period will expire in August 2024.
6.     DERIVATIVE FINANCIAL INSTRUMENTS
The Company's derivative financial instruments primarily consist of interest rate swap contracts, which were entered into with the objective of managing exposure to variability in interest rates on the Company's debt. As of July 2023, SOFR is the applicable benchmark for all of the Company's interest rate swap contracts. All interest rate swap contracts are reported in the Condensed Consolidated Balance Sheets at fair value.
For interest rate swap contracts that are:
•Not designated as cash flow hedges: Unrealized gains and losses are recognized in interest expense, net, and other income (expense) depending on the nature of the underlying that the swaps are economically hedging.
•Designated as cash flow hedges: Unrealized gains and losses are recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and are reclassified into interest expense, net, in the same period in which the related interest on debt affects earnings.
For interest rate swap contracts that have been de-designated as cash flow hedges and for which forecasted cash flows are:
•Probable or reasonably possible of occurring: Unrealized gains and losses previously recognized as a component of AOCI are reclassified into interest expense, net, in the same period in which the related interest on variable-rate debt affects earnings through the original maturity date of the related interest rate swap contracts.
•Probable of not occurring: Unrealized gains and losses previously recognized as a component of AOCI are immediately reclassified into interest expense, net.
The cash flows associated with interest rate swap contracts that included an other-than-insignificant financing element at inception are reflected as cash flows from financing activities.
The cash flows associated with interest rate swap contracts that were entered into with the intention of offsetting the economic overhedged position of a portion of our existing interest rate swaps are reflected as cash flows from investing activities.
19

ADT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Interest Rate Swaps
As of June 30, 2024 and December 31, 2023, the Company’s interest rate swaps consisted of the following (in thousands):
ExecutionMaturityDesignationNotional Amount
October 2019September 2026Not designated$2,800,000 
March 2023
March 2028Not designated100,000 
April 2023
March 2028Not designated200,000 
December 2023(1)
September 2026Not designated700,000 
Total notional amount$3,800,000 
_________________
(1)     Interest rate swaps entered into to offset the excess notional interest rate swaps as a result of the partial redemption of the First Lien Term Loan B due 2026. The changes in fair value associated with these swaps and the over-hedged swaps are reflected in other income (expense).
Classification and Fair Value of Interest Rate Swaps
(in thousands)June 30, 2024December 31, 2023
Prepaid expenses and other current assets$82,164 $74,974 
Other assets$81,312 $76,493 
Accrued expenses and other current liabilities$7,396 $5,312 
Other liabilities$583 $1,325 
Unrealized Gain (Loss) on Interest Rate Swaps
Three Months Ended June 30,Six Months Ended June 30,
Statement of Operations Classification (in thousands)
2024202320242023
Interest expense, net
$(5,125)$54,613 $11,622 $22,097 
Other income (expense)
$(3,277)$— $(9,878)$— 
Cash Flow Hedges Reclassifications out of AOCI
Three Months Ended June 30,Six Months Ended June 30,
(in thousands<