(FRONT)
ANNUAL REPORT 1999
The Future of Security. . .
National Resources.
Local Response.
CompuDyne Corporation (Logo)_
(INSIDE FRONT COVER)
Three-Year Summary of Selected Financial Data
Statement of Operations Data
<TABLE>
<S> <C> <C> <C>
(Thousands of Dollars,
except per share data) 1999 1998 1997
Total Revenues $111,446 $31,916 $20,016
Net Income 2,670 847 696
Net Income Per Diluted Share 0.46 0.20 0.16
Return On Average Equity 33.6% 31.6% 34.8%
Weighted Average Diluted Shares 5,868 4,343 4,364
Balance Sheet Data
(Thousands of Dollars) 1999 1998 1997
Working Capital $16,102 $18,858 $1,885
Total Assets 57,447 43,570 7,598
External Debt 19,613 20,535 1,339
Shareholder Equity 10,030 5,890 2,162
</TABLE>
(Page 1)
The Future of Security... National Resources. Local Response.
Dear Shareholder:
We entered 1999 with the significant challenge of integrating and
growing a major acquisition, Norment Industries, a business which was
three times our size. We finish 1999 as a fully integrated and smoothly
functioning organization that has market and technical leadership
positions in most of our targeted business segments. In the process we
have had dramatic increases in revenues and earnings, and our shareholder
value has more than doubled. Our market position and financial strength
provides us with a solid platform, ensuring significant continuing growth
both organically and through acquisitions. This is indeed an enjoyable
report to write.
We have increased our bonding capacity to over $100 million, we are
well positioned to finance a significant acquisition, we have been paying
down debt well ahead of schedule, and we were listed on the NASDAQ
National Market.
(CDCY NASDAQ Listed Logo)
(Photo) Stock ticker tape
In 1999 CompuDyne More Than Doubled Its Market Capitalization and Was
Listed On The NASDAQ National Market
Acquisitions
We continued our strategy of supplementing internal growth with
focused acquisitions in two areas - regional high end security
integration companies and technology based companies that extend our
markets in security, corrections, public safety and services to the
criminal justice market. To that end we reviewed a number of regional
integrators, but were only able to find one company that met our high
standards, Ackley-Dornbach, in Milwaukee, WI, which we acquired in
November. We also made a very significant step into corrections
software and Integrated Justice Systems with the acquisitions of
CorrLogic in May. Both acquisitions provide extensive cross-marketing
opportunities within the CompuDyne family of companies. These
acquisitions are reviewed on pages 5 and 8 respectively. We are
actively pursuing further targeted acquisitions as well as opportunities
to introduce our products and services to overseas markets.
Financial Review
By any measure, 1999 has been an exceptional year:
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
Revenues $111,446 $31,916 +249%
Operating Margin 5.4% 4.6% +17%
Net Income $2,670 $847 +215%
Return On Equity 33.6% 31.6% +6%
Earnings Per Share $0.46 $0.20 +130%
Stock Price at Year End $8.00 $4.25 +88%
</TABLE>
(Page 2)
Integrated Strategy
Our strategy for CompuDyne is straightforward. We will focus on:
_ Security systems for corrections, institutional, military and large
commercial customers.
_ Expanding our network of regional offices.
_ Integrated software based systems for the corrections, justice and
public safety markets.
_ Building our base of recurring service revenue.
_ Optimizing existing relationships through cross-selling.
Our objective is to maintain market and technology leadership in
each of our businesses, to increase operating margins, and to build a
large service revenue base. Specifically, we are committed to the
following long term targets:
_ Consistent Growth in Revenues
- 15% Internally Plus Acquisitions
_ Improved Operating Margins
- Increase From 5.4% to 10%
(Photo)
United States Outline
CompuDyne Locations Listed: Boston, MA, Hudson, NY, Newark, NJ,
Gaithersburg, MD, Hanover, MD, Milwaukee, WI, Raleigh, NC, Columbia, SC,
Montgomery, AL, Boulder, CO, Denver, CO, Phoenix, AZ, Tucson, AZ,
Livermore, CA, Lake Oswego, OR.
The Future of Security... National Resources, Local Response.
CompuDyne has built the model for the future of security. As you
read this report you will see that we have put together the building
blocks for a unique security resource - combining national resources and
strengths with regional presence to provide rapid and unmatched local
response at a national service quality level:
(Photo)
Regional Offices
Integration
Financial Strength
Products
Federal Systems
Control Software
Engineering
Attack Protection
Training
(Page 3)
Positioned for Future Growth
Outlook
Our core businesses continue to have strong fundamentals. Prison
populations continue to grow and remain at 20% over the rated prison
system capacity according to Federal studies. Demographic tends,
regrettably, suggest a resurgence of crime rates intermediate term.
The judicial policies which have resulted in surer and stiffer sentences
have had the salutary impact of keeping criminals in jail longer and have
had the intended effect of moderating crime trends. In addition, our
Corrections products lend themselves particularly well to retrofitting
existing facilities.
We are confident that this will result in a continuing, strong
upgrade and modernization market. Outside of Corrections, the need for
physical security is great in all of our markets and continues to grow
faster than the general economy, providing ample opportunity to grow our
Norshield and Quanta Systems businesses and to further diversify our
customer base at our Norment Security Group. Our backlogs indicate that
2000 should show significant growth in revenues, and our earnings should
at least track revenues barring unforeseen complications.
(Photo) Man Behind Computer Chip
In Today's World of Security, Sophisticated Electronics and Software Are
As Important As Bars And Fences.
(Photo) The United States Embassy in Macedonia under attack in 1998.
Norshield Provides Protection Against Terrorist Threats.
Shareholder Value
Our overriding objective is to increase shareholder value in the
intermediate term. We have made significant progress in 1999 with our
NASDAQ National Market listing in June, and plan further acquisitions to
increase our market capitalization. We are currently reviewing the
possibility of a common stock underwriting. While we have no immediate
need for additional equity, our acquisition activity and our desire
for further improvement in our stock liquidity and institutional
interest, which is partly driven by market capitalization, suggests that
an underwriting would be advisable. We are also undertaking an
externally driven public relations effort to put the CompuDyne story in
front of many prospective customers and investors. All key management
are heavily incentivised with stock and stock options, and I,
personally, have a very substantial holding in CompuDyne stock.
You can be assured that management shares your interest in building
shareholder value.
(Signature)
Martin Roenigk, Chairman & CEO
(Page 4)
Corrections
CompuDyne's largest market is the corrections industry. Our
Norment Security Group is, by a wide margin, the largest, best known and
most respected provider of physical and electronic security systems to
the prison, jail and courthouse markets. Our technical experience,
financial strength, and the quality, maturity and depth of our
management team makes us uniquely capable of handling the very largest
installations. Our unique and growing network of regional offices
permits us to more efficiently service customers nationwide, and to
provide continuing maintenance services with the requisite short
response times in our very security dependent market. During 1999 we
consolidated our Quanta SecurSystems regional office network under our
Norment Security Group to provide seamless customer support throughout
the country. We also installed a state-of-the-art Enterprise Resource
System to replace the accounting function that had been provided by
Norment's former owner. Our product offerings from Trentech, Airteq,
SYSCO and CorrLogic represent the most advanced products and systems
available to the corrections market. The expansion of our manufacturing
operations as well as our acquisition of CorrLogic with its' Inmate
Management Software and our growing maintenance business is consistent
with our objective of raising these businesses to 50% of our overall
corrections business.
During 1999 our Corrections business had dramatically higher
results, driven both by the Norment Industries acquisition and by
internal growth. Revenues in 1999 were $82 million, up 413% from $16
million in 1998. Importantly, revenue growth at Quanta SecurSystems,
which was owned during both years, was up 37%, reflecting the robustness
of our industry as well as a significant gain in market share.
Contribution (earnings before corporate overhead and interest expense)
in 1999 was $4.9 million, up 347% from $1.1 million in 1998.
Combined backlogs at the end of 1999 were $78.4 million, up 9.6%
from $68.8 million at the end of 1998, having benefited by $9.5 million
from the addition of CorrLogic and Ackley-Dornbach.
The Norment Security Group is made up of both services and
products, and on a combined basis is the largest supplier of physical
and electronic security products and services to the corrections
industry. Norment also has a number of government and commercial
clients outside of the corrections industry.
Norment Security Group, during 1999, solidified and expanded its
market leading position as the largest provider of security electronics
and detention hardware to the jail, prison and courthouse markets while
achieving record results.
(Millions)
Corrections Revenues Corrections Contribution
1999 1998 1997 1999 1998 1997
82.5 16.3 6.2 4.9 1.1 .8
(Photo)
Newly Expanded Norment Security Group Headquarters and Manufacturing
Facility in Montgomery Alabama
(Page 5)
Integration & Maintenance
We are reprinting, on page 9, our continuing post-merger national
advertisement which delineates the great advantages that Norment Security
Group is able to offer to its customers around the world. Our unique
capability is a result of having:
_ The largest organization in corrections devoted to electronic
security, over 175 people.
_ Corrections revenue 50-60% greater than our nearest competitor.
_ Market leading technology in security electronics and security
hardware.
_ The newest manufacturing facility in the industry.
_ Financial and bonding capacity to handle the very largest
installations.
(Photo)
Manatee County Stockade, Florida Prison
Quanta SecurSystems' offices have now joined with EMSS, Norment's
California regional office which had record volume in 1999, to create
our Norment Security Group Regional Office structure. In a first show
of cooperation, EMSS worked with SecurSystems' Arizona office to manage
the record $18 million Arizona installation. With the full integration
of our Quanta SecurSystems regional offices into the Norment Security
Group, we have positioned Norment as the only company that can offer
customers a broad and rapidly growing regional support base. This
network of offices is equipped to handle most installation jobs, with
plans to add hardline capabilities in 2000. More importantly, it is
positioned geographically to provide security system maintenance on a
rapid response contract basis with our Security Assurance program. The
regional offices allow Norment's Montgomery, Alabama headquarters to
focus on major and mega installations. Simultaneously, the regional
offices provide quick, cost effective capabilities for small to medium
projects as well as a comprehensive range of maintenance services for
even the largest facilities, including state wide security outsourcing
arrangements such as with the State of Arizona.
Our acquisition of Ackley-Dornbach, located outside of Milwaukee,
WI, is illustrative of the type of regional security integrator we are
looking to acquire to expand our regional network. Ackley-Dornbach has
a long history and strong reputation in hardline contracting for prisons
and jails. We will be able to supply in-house manufactured product for
their customers. We will also be able to add electronic security
capabilities to the Ackley-Dornbach office. In addition, our financial
and bonding capability will permit Ackley-Dornbach to expand more rapidly
than they otherwise might. Ackley-Dornbach also brings to the Norment
organization a special capability in security walls and ceilings that
will help us company-wide.
(Photo)
Leon County Jail, Tallahassee, Florida
(PAGE 6)
Major Projects
Norment Security Group had a very successful year in 1999, major projects
included:
ASPC Lewis and SW Juvenile Complex in Arizona: 4,150 beds at three
sites encompassed a variety of our detention products and services:
Pneumatic locks and sliding devices, mechanical hardware, security
glazing, detention furnishings and integrated electronic control systems
including touchscreen control consoles. Approximate $18 million contract
for Norment.
Snake River Correctional Institution Phase II, Ontario, OR: The largest
touchscreen installation in the country also incorporates Airteq
pneumatic locks and sliding devices. $8.6 million.
Miami Correctional Center, Phase I, Peru, Indiana: This was the first
prison that Indiana approved the use of pneumatic locking products.
Phase I consisted of 1,300 beds and our contract value was $6 million.
Phase II is currently under construction.
2000 begins with strong backlogs and some important projects underway:
Thomson Maximum Segregation Adult Unit, Thomson, Illinois: The design
is unique in that it clusters two cells together opening to an ante-room
for extra security. Illinois' first state prison to utilize a pneumatic
locking system. $7.2 million.
Fayette County Detention Center, Lexington, KY: With 1280 beds, this
project incorporates both Airteq pneumatic locks and sliding devices and
TrenTech touchscreen controls. The largest county jail in Kentucky, it
is designed to fit in with the picturesque countryside. $10.5 million.
Clayton County Justice Complex, Jonesboro, GA: Design/build fast-track
project for a 1544 bed jail and four-story courthouse with 18 courtrooms.
$10.6 million.
2000 will be particularly interesting for Norment Security Group
because we expect three projects to come to market averaging $25 million
each in Norment's sector. We are very well positioned to be competitive
on these projects. We have also made significant inroads with two of the
four largest operators of private prisons - Norment is uniquely
positioned to offer nationwide service to these rapidly growing
participants in the corrections marketplace.
(Photo)
ASPC Lewis and SW Juvenile Complex in Arizona
(PAGE 7)
Corrections/Security Products
(Trentech Logo)
Trentech, an integral part of the Norment Security Group, designs
manufacturers and integrates electronic security products for Norment
and for external customers.
This group of 60 highly skilled electrical, electronics and software
personnel can handle the largest and most complex installations.
Trentech has long been a technology leader in the corrections industry.
Two important and illustrative market leading developments include:
Intelligent Distributed Environment Automation System ("IDEAS"). This
is a "smart" and cost-effective security automation control system, which
is unique in the detention industry. IDEAS distributes intelligence and
control directly to the location of an electrical or electronic device,
resulting in the reduction of conduit and cable usage and assuring that
any single device failure does not affect the balance of the system's
integrity. IDEAS is especially ideal for retrofit and upgrade
situations.
(Photo)
Demonstration Room at Norment/Norshield headquarters, contains examples
of our products, plus those of our competitors for comparison by
prospective customers.
Visitor Identification & Control System ("VICS").
This PC based video imaging system prints badges and credentials
directly. First developed for the U.S. Air Force, VICS is the only
imaging system that has undergone formal evaluation and procurement
approval by DoD's Security Police Equipment Management Authority, and is
the only product that meets all the Air Force Security Forces
regulations. VICS is a MS-Windows NT based system which provides
substantial cost savings combined with expanded functionality including
full integration with investigative databases.
(AirTeq Logo)
AirTeq, supplemented by Norshield manufacturing resources, offers a
complete line of locks and locking devices to the corrections industry.
Long an industry leader and innovator in pneumatic locking technology,
AirTeq, in January 2000, introduced an innovative new electromechanical
sliding device which completes our product line. The new
electromechanical sliding device illustrates AirTeq's technology
leadership, bringing to the corrections industry a device which
represents a significant advance over the competition:
(Photo)
New electromechanical sliding devise for opening and closing cell
doors, a significantly improved design
_ It is engineered to be a simpler, more reliable design
_ It has been designed to reduce the complexity and cost of field
installation.
_ It uses components that permit reduced replacement and maintenance
costs.
With recently strengthened marketing capabilities, expanded regional
marketing opportunities, and the newly expanded product line, we have
committed to relocate and expand AirTeq's manufacturing capability by
70% in 2000.
(Page 8)
Control Software Solutions
(CorrLogic Logo)
In May of 1999 CompuDyne acquired the Correctional Information
Systems division of BI, Inc. Now renamed CorrLogic, this 75-employee
company has the most robust and extensive software in the industry for
the management of inmates and other personnel and processes within the
courthouse, jail and prison environment. When acquired, the software
product was incomplete and the nine major projects underway were in
various stages of delay and contention. By year end CorrLogic had
completed the core software product, installed seven of the nine
installations, and was on schedule to complete the remaining acquired
contracts. All operations during 1999, because they were 100% devoted
to "catching up" with the pre-existing problems, have been charged
against reserves that were set up at the time of the CorrLogic
acquisition.
(Photo)
CorrLogic Headquarters in Boulder, Colorado
CorrLogic software is designed to handle the country's largest
jails. Some of our larger installations include Wayne County (Detroit),
Michigan, Shelby County (Memphis), Tennessee, Hennepin County
(Minneapolis) MN, and we have begun executing a contract for Jefferson
County (Louisville), Kentucky. To give a sense of the complexity of the
product, the average installation has about 1 million lines of software
code, and our San Diego installation, currently underway, will have
1.4 million lines of code. We can also handle multiple facilities, and
are currently proposing to install a state-wide prison management system
for a Southern state. CorrLogic represents the cornerstone of a strategy
to offer software based technology solutions, on an integrated basis, to
Justice and Public Safety organizations. We expect to make other
acquisitions in this area of Integrated Justice Systems, which has been
growing very rapidly as the benefits of integrated multi-jurisdictional
systems have become recognized.
(Sun Microsystems Logo)
(Oracle Logo)
During 2000 we expect to make significant progress in the
development of systems to meet the needs of the high volume, smaller
jail market. Our Net Jail internet based service bureau product and the
Personal Premier IMS packaged solution product will offer smaller jail
owners attractive automated system options at a low initial investment
level.
(Sysco Logo)
SYSCO, while not specifically oriented to the corrections
marketplace, represents the balance of CompuDyne's security related
product offerings.
SYSCO has two key products:
_ ADACS. Developed and supported by a 20-person software team
in England, ADACS (Alarm and Distributed Access Control System) is a PC
and NT based, Internet accessible software system that is so robust and
comprehensive that it was selected to secure all 6500 UK-wide facilities
of British Telecom. Currently installed in several U.S. Air Force bases
as well as commercial, correctional and government facilities, the
system is gaining increasing acceptance where clients desire to tie
together multiple remote locations with consequent cost savings on
monitoring. The ADACS software has recently been configured to be
Internet enabled. CompuDyne has exclusive rights to this product for
North America.
_ SecuLan. Local Area Networks (LAN) have a security weakness
that many IT officers are not aware of - cabling and conduits that carry
the information between workstations can easily be compromised, without
detection by their users. SecurLan is a proprietary product which
protects these systems utilizing fiber optic based technology. This
product has gained rapid acceptance in the U.S. Military where
information security is critical.
(PAGE 9)
This statement of CompuDyne's Unique Strength is Being Presented in a
National Advertising Campaign.
(AD "A Global Vision")
Currently, the CompuDyne Corporation has created the largest force in
corrections and judicial security industry Providing the deepest
experience and broadest geographical coverage. CompuDyne's family of
companies can accommodate all your security needs.
Single Source RESPONSIBILITY
(Photo) Manatee County Detention Center, Palmetto, Florida
Reliable INSTALLATION Dependable PRODUCTS Regional SERVICE
Management SYSTEMS
(Photo) Housing unit control room (photo) Airteq locks
(Photo) Technician working on prison control system (photo) Prison
interview room
(Norment Logo)
Norment Security Group Provides single source responsibility for
furnishing and installing state-of-the-art physical and electronic
security systems in jails, prisons, court facilities and other
installations.
(Norment Logo)
Norment Security Assurance providing low cost service & maintenance
contracting direct with the facility from the Norment Security Group's
network of regional offices located across the country.
(AIRTEQ Logo)
AIRTEQ The premier manufacturer of pneumatic, electromechanical and
mechanical locks and sliding devices that comply with the ASTM Standards
and most are certified UL fire rated.
(CorrLogic Logo)
CorrLogic Provides the premier Institution Management System (Premier
IMS TM) with user-configuration Microsoft Windows interface that
automates the operation, management and information in today's
correctional facilities.
CompuDyne Corporation Logo) (Norment Security Group Logo)
3224 Mobile Highway
Montgomery, Alabama 36108
Phone: 334-281-8440
Fax: 334-288-5485
(PAGE 10)
Attack Protection
(Norshield Security Products Logo)
Norshield is America's largest producer of bullet, blast and attack
resistant windows and doors. These products are provided to U.S.
Embassies and other highly security sensitive government facilities such
as GSA properties, federal buildings and courthouses, as well as Federal
Reserve Banks and other commercial customers who desire the very best in
protection from criminal or terrorist attack. Bullet, blast and attack
protection comes in many forms, each being tested, specified and rated
in a variety of standards. Norshield meets these extensive and rigorous
standards set by Underwriters Laboratories, H.P. White, and the
Department of Defense (to mention a few), which are backed by regular
product testing. Norshield produces an integrated, structurally secure
product where the rated protection comes from the proper proprietary
assembly of materials rather than just the rating of individual
components. Norshield also manufactures sliding devices for AirTeq.
During 1999 Norshield revenues were $15.1 million, up 1061% from
$1.3 million in 1998. Contribution margins trailed revenue growth due
to start up costs with the newly expanded manufacturing facility and
conversion to a new production management software system. Contribution
of $1.5 million compared to $34 thousand in 1998. Backlogs were up
dramatically from $6.9 million at the end of 1998 to $15.4 million at
the end of 1999.
(Photo) Model of the Federal Reserve Bank of Atlanta's new building.
This project represents the twelfth Federal Reserve project since 1991
utilizing Norshield's bullet, blast and attack resistant doors, windows,
operating devices and accessories.
(PHOTO) Holocaust Memorial Museum in Washington, D.C.
Norshield built the bullet, blast and attack resistant reception booth
which combines beauty, architectural innovation and state of the art
protection. Quanta Systems installed the access control, intrusion
detection and CCTV for this high profile museum. Quanta also performed
a Security Audit for the museum, which should lead to further work.
(Millions)
Attack Protection Revenues Attack Protection Contributions
1999 1998 1997 1999 1998 1997
15.1 1.3 0 1.5 .34 0
(Page 11)
Worldwide Terrorist Threats
(Photo)
Oklahoma City Bombing of U.S. Federal Building in April, 1995
In An Increasingly Hostile Environment For The World's Last Superpower,
The U.S. Government Relies On Bullet, Blast And Attack Resistant Products
From Norment.
Norshield is experiencing record backlogs, up over 200% in 1999. This
is the result of an increasing awareness on the part of the U.S.
Government of the need for greater security for its facilities both here
and abroad. The United States, as the last remaining Superpower, has
become the prime target for desperate terrorist groups throughout the
world. As we have seen, this threat now even extends to public
facilities here in the United States. As by far the leading supplier of
embassy grade bullet, blast and attack resistant products, Norshield is
participating fully in this massive security upgrade.
Commercial Products
Norshield also manufacturers bullet, blast and attack resistant
products, on an OEM basis for a selected group of corporate clients.
Examples of Norshield commercial products include security doors and
windows, transaction accessories, cash drawers, guard and toll booths
and drive-up windows. Commercial products represent a rapidly growing
portion of Norshield's business. Norshield is also proud to have
produced the immense and architecturally innovative reception booth for
the Holocaust Museum in Washington in 1999.
Manufacturing Capacity Expansion
In order to meet the unprecedented demand for its security
products, Norshield began a 50% expansion of its physical manufacturing
capacity in May of 1999. This expansion is now complete and operating
at capacity. At the same time Norshield upgraded its engineering and
production management and its production information systems. While
this expansion and upgrade was not without "growing pains" in 1999,
Norshield is now very well positioned to meet market demands efficiently
and effectively. 2000 is expected to be an outstanding year.
(Photo) Norshield Manufacturing Plant
Norshield Manufacturing Capacity was Expanded By 50% in 1999 To Meet
Rapidly Expanding Demand For Bullet, Blast and Attack Resistant Products.
Cross-selling Opportunities
Norshield is well known and highly regarded among its government
customers. With the integration with other CompuDyne operations we are
looking at many new opportunities:
_ Selling Norshield product through established channels such as
Quanta Systems.
_ Selling electronic security integration services to Norshield
installations.
_ Selling SecurLan, ADACS, and VICS products to Norshield customers.
(PAGE 12)
Federal Systems
(Quanta Systems Corporation 50 years Logo)
Quanta Systems celebrates 50 years of service to the federal
government's intelligence community since opening its doors as
Washington Technological Associates in 1950. For most of these years
Quanta focused on confidential work for the U.S. Navy. In recent years
Quanta has significantly expanded its customer base, and has developed a
special competence in physical and electronic security which has become
its primary focus. Today Quanta serves a broad array of military and
agency clients and also has achieved significant success with a major
customer at the state level.
During 1999 our Federal Systems business had slightly higher
revenues at $13.2 million versus $12.5 in 1998. Contribution margin
improved from 7.3% in 1998 to 7.7%, as a result 1999 Contribution at
$1.0 million was 10% higher than 1998's $920 thousand million. Quanta
enters 2000 with backlogs of $6.5 million, up 2.5 million from $4.0
million at the end of 1998.
(Millions)
Federal Systems Revenues Federal Systems Contributions
1999 1998 1997 1999 1998 1997
13.2 12.5 12.0 1.0 .9 .8
Quanta goes into 2000 very well positioned for accelerated growth.
building on its traditional customer base and competencies, Quanta has
expanded and strengthened its senior management team in both business
development and execution. The addition of several key industry personnel
has already resulted in greatly expanded new business activity. The
market potential for security products and services for the U.S.
Government and its various Agencies has been estimated conservatively at
$1.7 billion. Quanta intends, to gain an increasing share of this market,
along with selected State and commercial customers who are looking for
the high level of expertise that Quanta has supplied for many years to
its most sensitive and particular customers.
(Quanta Systems Corporation Logo)
Several projects over the past eighteen months are illustrative of
the breadth and depth of Quanta's capabilities in physical and electronic
security:
San Diego Regionalization: QSC completed the first Navy Security
Regionalization consolidating the security functions for eight Navy
Commands in the San Diego, CA area incorporating intrusion detection,
fire alarm and RF communications over a secure state-of-the-art "Derived
Channel" network to central monitoring centers.
State of New Jersey: Quanta installed a Compass access control system
for the Division of Property Management which represents the largest
statewide "Smart Card" access control system in the U.S. covering over
40 buildings with a card holder base of 35,000 employees. Smart Card
access control is a leading edge technology.
(DCS Logo)
Quanta Systems, along with its Data Control Systems division,
also provides electronic black box manufacturing, tactical systems
integrations, and design and production of proprietary communications
products. DCS's engineering staff working in Quanta's new R&D lab,
continues to refine and market its three core products:
1) A configurable communications modem for use with geostationary
satellites; 2) a high data-rate modem for demodulating signals at very
high speeds from Low Earth Orbiting ("LEO") satellites; and
3) a highly complex signal analysis modem which was significantly
upgraded in 1999.
The Future of Security
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders of CompuDyne Corporation:
We have audited the accompanying consolidated balance sheets of
CompuDyne Corporation and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for each of the three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of CompuDyne Corporation
and subsidiaries at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with generally accepted accounting
principles in the United States of America.
/s/Deloitte & Touche LLP
McLean, Virginia
February 29, 2000
The Future of Security
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
December 31,
1999 1998
(in thousands)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 701 $ 1,528
Accounts receivable 33,833 27,451
Costs in excess of billings 5,284 2,610
Inventories
Finished goods - 112
Work in progress 705 499
Raw materials and supplies 3,933 3,611
Total Inventories 4,638 4,222
Prepaid expenses and other current assets 506 199
Total Current Assets 44,962 36,010
Property, plant and equipment, at cost
Land and improvements 250 276
Buildings and leasehold improvements 3,037 1,188
Machinery and equipment 3,914 2,334
Furniture and fixtures 928 182
Automobiles 377 299
Construction in progress 88 939
8,594 5,218
Less accumulated depreciation and amortization 1,416 295
Net property, plant and equipment 7,178 4,923
Capitalized software, net 1,408 -
Deferred tax asset 568 88
Goodwill, net of accumulated amortization 852 62
Other intangible assets, net of
accumulated amortization 2,385 2,474
Other assets 94 13
Total other assets 5,307 2,637
Total Assets $57,447 $ 43,570
See notes to consolidated financial statements
</TABLE>
The Future of Security
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
December 31,
1999 1998
(in thousands)
<S> <C> <C>
Current Liabilities
Accounts payable $11,827 $ 5,707
Accrued payroll expenses 3,040 1,240
Other accrued expenses 1,319 2,222
Billings in excess of contract costs incurred 9,498 6,492
Accrued income taxes - 346
Accrued interest 74 -
Deferred losses/revenues on acquired contracts 859 -
Current portion of term loan 2,243 1,125
Current portion of notes payable-related parties - 20
Total Current Liabilities 28,860 17,152
Term loan 5,500 10,375
Subordinated notes 9,910 9,000
Industrial revenue bond 1,960 -
Notes payable-related parties - 15
Warranty reserves 532 463
Long term pension liability 489 484
Other liabilities 166 191
Total Liabilities 47,417 37,680
Shareholders' Equity
Common stock, par value $.75 per share:
10,000,000 shares authorized; 5,412,866
and 5,200,049 shares issued at
December 31, 1999 and 1998, respectively 4,060 3,900
Other capital 11,734 10,397
Treasury shares, at cost; 88,655 shares
at December 31, 1999 and 78,636 shares
at December 31, 1998 (207) (120)
Receivable from management (30) (90)
Accumulated deficit (5,527) (8,197)
Total Shareholders' Equity 10,030 5,890
Total Liabilities and Shareholders' Equity $57,447 $ 43,570
See notes to consolidated financial statements
</TABLE>
The Future of Security
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
<TABLE>
Years Ended December 31,
1999 1998 1997
(in thousands except per share data)
<S> <C> <C> <C>
Net sales $111,446 $ 31,916 $ 20,016
Cost of goods sold 90,091 25,864 16,737
Gross margin 21,355 6,052 3,279
Sonoma settlement costs - - 270
Selling, general and administrative expenses 15,231 4,415 2,257
Research and development 80 169 172
Operating income 6,044 1,468 580
Other (income) expense
Interest expense 2,203 295 62
Interest income (146) - -
Other income (272) (37) (20)
Total other (income) expense 1,785 258 42
Income before income taxes 4,259 1,210 538
Income tax provision (benefit) 1,589 363 (158)
Net income $ 2,670 $ 847 $ 696
Earnings per share:
Basic earnings per common share $ .51 $ .20 $ .23
Weighted average number of common
shares outstanding 5,237 4,166 3,005
Diluted earnings per common share $ .46 $ .20 $ .16
Weighted average number of common
shares and equivalents 5,868 4,343 4,364
See notes to consolidated financial statements
</TABLE>
The Future of Security
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
<TABLE>
Years Ended December 31,
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,670 $ 847 $ 696
Adjustments to reconcile net income to
net cash provided by (used) operations:
Depreciation and amortization 1,514 250 114
Deferred income tax (benefit) 700 - (189)
Gain on sale of MicroAssembly (180) - -
Loss from disposition of equipment 25 - -
Other, net 26 - -
Changes in assets and liabilities:
Accounts receivable (4,37) (3,004) 516
Costs in excess of billings (191) 608 -
Inventories (897) 11 (285)
Prepaid expenses (108) (14) (38)
Other assets (582) 54 (28)
Accounts payable 5,073 634 (913)
Accrued expenses 603 1,701 (104)
Accrued income taxes (346) 311 (35)
Billings in excess of costs incurred 2,553 414 (562)
Other liabilities (1,916) 2,001 (10)
Net cash flows provided by
(used in) operations 4,513 3,813 (838)
Cash flows from investing activities:
Additions to intangibles (60) - -
Net payments for acquisitions (1,128) (23,880) -
Proceeds from sale of business 1,354 - -
Additions to property, plant and equipment(3,573) (432) (195)
Net cash flows used in investing activities (3,407) (24,312) (195)
Cash flows from financing activities:
Conversion of series D preference stock - - (310)
Issuance of common stock 127- 3,001 -
Proceeds from bond issue 2,100 - -
(Decrease)increase in short term debt - (1,339) 1,177
(Repayment of)borrowings from
long term debt (4,125) 20,500 -
Purchase of treasury stock - (120) -
Repayment of current debt
- related parties (35) (15) (20)
Net cash flows (used in)provided by
financing activities (1,933) 22,027 847
Net (decrease) increase in cash
and cash equivalents (827) 1,528 (186)
Cash and cash equivalents
at the beginning of the year 1,528 - 186
Cash and cash equivalents
at the end of the year $ 701 $ 1,528 $ -
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 2,143 $ 308 $ 62
Income taxes, net of refunds $ 1,172 $ 25 $ 70
See notes to consolidated financial statements.
</TABLE>
The Future of Security
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Receivable
(In Thousands) Preferred Common Other From Accumulated Treasury
Stock Stock Capital Management Deficit Shares Total
Balance at
January 1,1997 $ 945 $ 2,148 $ 8,203 $ 90 $(9,430) $ - $ 1,776
Net Income - - - - 696 - 696
Preferred shares
converted to
Common shares (945) 945 - - (310) - (310)
Balance at December
31,1997 $ - $ 3,093 $ 8,203 $ (90) $(9,044) $ - $ 2,162
Net Income - - - - 847 - 847
Shares issued-
Common shares - 807 2,194 - - - 3,001
Purchase of
treasury stock - - - - - (120) (120)
Balance at December
31,1998 $ - $ 3,900 $10,397 $ (90) $(8,197) $(120)$ 5,890
Net Income - - - - - - 2,670
Payoff of mgmt
receivable - - - 60 2,670 - 60
Shares issued-
Common shares - 160 1,337 - - - 1,497
Treasury stock
acquired - - - - - (87) (87)
Balance at December
31,1999 $ - $ 4,060 $11,734 $ 30 $(5,527) $(207) $10,030
See notes to consolidated financial statements
</TABLE>
The Future of Security
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Description of Business
CompuDyne operates in three general sectors of the security industry
Corrections, Attack Protection and Federal Systems:
Corrections - CompuDyne's Norment Security Group ("NSG"), headquartered
in Montgomery, AL, provides physical and electronic security products
and services primarily to the corrections industry (jails and prisons)
and secondarily to the courthouse, municipal and commercial markets.
NSG operates through the following subsidiaries and divisions:
Norment is a detention contractor, responsible for most installation
work on larger projects. Installation will involve hardline (steel
security doors, frames, locking devices, etc) and sophisticated
electronic security systems including software, electronics,
touchscreens, CCTV, perimeter alarm devices, etc.
TrenTech is an electronic security systems designer, manufacturer
and integrator. TrenTech integrates generally available products
and software as well as designing proprietary systems such as IDEAS
and a video badging system. TrenTech provides systems to Norment
for installation.
Airteq , supplemented by Norshield manufacturing capacity, offers a
complete line of locks and locking devices to the corrections
industry. Long an industry leader and innovator in pneumatic locking
technology, AirTeq in January 2000 introduced an innovative new
electromechanical sliding device, which completes its product line.
NSG Regional Offices provide field level design, installation and
maintenance of both hardline (physical) and electronic security
products. Primary offices are in Hanover, MD, Raleigh, NC, Columbia,
SC, Phoenix, AZ, Tucson, AZ, Milwaukee, WI, and Livermore, CA.
Smaller offices are located in Massachusetts, New Jersey and New
York.
Combined, the NSG is the country's largest supplier of physical and
electronic security products, integration services and maintenance
for jails, prisons and courthouses. Projects range from very small
to as large as $20-25 million. Security maintenance outsourcing
contracts range from very small to over $1 million per year and
provide for the routine maintenance and emergency repair of
sophisticated security control systems and related equipment.
NSG also includes software based control products. CorrLogic
develops, installs and maintains the most robust and extensive
software in the industry for the management of inmates and other
personnel and processes within the courthouse, jail and prison
environment. CorrLogic software is designed to handle the country's
largest jails, with recent installations including Wayne County
(Detroit), MI, Shelby County (Memphis), TN, and Hennepin County
(Minneapolis), MN. SYSCO has exclusive North American rights to the
PC-ADACS (Alarm and Distributed Access Control System) software
based system developed by Shorrock Electronics in England. SYSCO
also has a proprietary product, SecurLan, which is designed to
provide physical protection for Local Area Network conduits and
cables for computer networks.
The Future of Security
Attack Protection - Norshield Security Products ("Norshield") is the
country's largest manufacturer of bullet, blast and attack resistant
windows and doors designed for high security applications such as
embassies, courthouses, Federal Reserve buildings, and banks.
Norshield's largest customer is the U.S. Department of State, and
Norshield is a major supplier of bullet, blast and attack resistant
product to U.S. Embassies around the world. Norshield produces an
integrated structurally secure product where the rated protection comes
not from just the glass but from the frame and encasement as well.
Norshield also manufactures bullet, blast and attack resistant products
on an Original Equipment Manufacturer, ("OEM") basis for a selected group
of corporate clients. Examples of Norshield commercial products include
security doors and windows, transaction accessories, cash drawers, guard
and tollbooths and drive up windows. Norshield also manufactures cell
door sliding devices for sale under the Airteq brand.
Federal Systems - Quanta Systems, Inc., ("Quanta") has been serving the
federal government's intelligence community since 1950. Serving the
military, government agencies, and state and local customers, Quanta
provides specialty engineering and security services, often of a
classified nature. In recent years Quanta has developed and emphasized a
special competence in physical and electronic security, which has become
its primary focus. Quanta along with its Data Control Systems division,
("DCS"), provides electronic black box manufacturing, tactical systems
integrations, and the design and production of propriety communications
products.
MicroAssembly - Located in Willimantic, Connecticut, MicroAssembly is a
manufacturer of a proprietary automated process called the Stick-Screw
System. All of the assets of MicroAssembly were sold on May 31, 1999 and
the name was changed to 4 Focus, Inc..
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements
include the accounts of CompuDyne Corporation and its subsidiaries, all
of which are wholly-owned. All material inter-company transactions have
been eliminated.
Inventories - Raw material inventories are valued at the lower of cost
or market. Work-in-process represents direct labor, materials and
overhead incurred on products not yet delivered. Finished goods are
valued at the lower of cost or market. Cost is determined by the
first-in, first-out (FIFO) method. Inventories are net of obsolescence
reserves of $166 thousand and $313 thousand as of December 31, 1999 and
1998, respectively
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Certain estimates used by
management are susceptible to significant changes in the economic
environment. These include estimates of percentage-completion on long
term contracts and valuation allowances for contracts accounts
receivable. Actual results could differ from those estimates.
Revenue Recognition - Revenue under cost reimbursement contracts is
recognized to the extent of costs incurred to date plus a proportionate
amount of the fee earned. Revenue under time and materials contracts
are recognized to the extent of billable rates times hours delivered plus
materials expenses incurred. Revenue from fixed price contracts is
recognized under the percentage of completion method. Revenue from the
sale of manufactured products is recognized based on shipment date.
Provisions for estimated losses on uncompleted contracts are recognized
in the period such losses are determined. Costs and estimated earnings
in excess of billings on uncompleted contracts represent the excess of
contract revenues recognized to date over billings to date on certain
contracts. Billings in excess of costs and estimated earnings on
uncompleted contracts represent the excess of billings to date over the
amount of revenue recognized to date on certain contracts.
The Future of Security
Property, Plant and Equipment - Property, plant and equipment are
recorded at cost less accumulated depreciation and amortization.
Depreciation is computed using principally the straight-line method based
on the estimated useful lives of the related assets. The estimated
useful lives are as follows:
Buildings and improvements 7-39 years
Machinery and equipment 3-10 years
Furniture and fixtures 3-10 years
Leasehold improvements are amortized over their estimated useful lives
or the term of the underlying lease, whichever is shorter. Maintenance
and repair costs are charged to operations as incurred; major renewals
and betterments are capitalized.
Capitalized Software The Company has capitalized software that was
acquired when it purchased CorrLogic in 1999. The value allocated
resulting from the purchase was $1.6 million. The software is the base
product used in its sales product and is being amortized over 7 years.
Accumulated amortization was $183 thousand at December 31, 1999.
Goodwill - In conjunction with the purchase of the assets of Ackley
Dornbach in 1999, goodwill has been recorded on the balance sheet and is
being amortized over 25 years. Accumulated amortization was $6 thousand
as of December 31, 1999. Goodwill also includes credit for negative
goodwill recorded due to the acquisition of SecurSystems and is being
amortized on a straight-line basis over 5 years. Accumulated
amortization was $(72) thousand and ($51) thousand respectively at
December 31, 1999 and 1998, respectively.
Other Intangible Assets Other intangible assets consist primarily of
amounts recorded in conjunction with the acquisition of Norment and
Norshield, including trade names, trademarks, Department of State
Certifications, UL listings, patents and ASTM standards. These are
amortized on a straight-line basis over periods ranging from 15 to 25
years. Accumulated amortization was $124 thousand and $14 thousand as
of December 31, 1999 and 1998 respectively.
Cash and Cash Equivalents - For purposes of the statements of cash
flows, the company considers temporary investments with original
maturities of three months or less to be cash equivalents.
Income Taxes - The Company follows Statement of Financial Accounting
Standards, ("SFAS") No. 109, "Accounting for Income Taxes". Under SFAS
109, deferred income taxes are recognized for the future tax consequences
of differences between tax bases of assets and liabilities and financial
reporting amounts, based upon enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to amounts expected to be realized. Income tax
expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
Stock Based Compensation - The Company continues to account for stock
based compensation using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting For Stock Issued
to Employees", ("APB No. 25") for the recognition and measurement of
employees stock-based compensation and has adopted only the disclosure
requirements of SFAS No. 123, "Accounting For Stock Based Compensation",
("SFAS No. 123").
New Accounting Pronouncements - In July 1998, the Financial Accounting
Standard Board, ("FASB") issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", ("SFAS No. 133"), which establishes
the accounting definition of a derivative and specifies measurements,
recognition, and disclosure of changes in the fair value of derivatives
(hedges) held by a company.
The Future of Security
This standard will require derivatives designated as hedges to be
recorded on the balance sheet at fair value with the change in fair
value of the underlying hedged item. Accounted for, depending on the
intended use of the derivative. SFAS No. 133 will be adopted by the
Company in the year 2001 and the Company has not determined what impact,
if any, this standard will have when it is adopted.
Reclassifications - Certain prior period amounts have been reclassified
to conform to the current year presentation.
3. EARNINGS PER SHARE
Earnings per share are presented in accordance with SFAS No. 128,
"Earnings Per Share." This statement requires dual presentation of
basic and diluted earnings per share on the face of the income statement.
Basic earnings per share excludes dilution and is computed by dividing
net income available by the weighted-average number of common shares
outstanding for the year. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Options
to purchase 122,302 shares of common stock at prices ranging from$7.38
to $8.75 per share were outstanding during 1999 but were not included in
the computation of diluted earnings per common share for 1999 because the
options' exercise price was greater than the average market price of the
common shares. Options to purchase 303,000 shares of common stock at
$4.31 and warrants to purchase 297,924 shares of common stock at $3.25
were outstanding during 1998 but were not included in the computation of
diluted earnings per common share because the exercise price was greater
than the average market price of the common shares. Options to purchase
53,050 shares of common stock at $2.81 were outstanding during 1997 but
were not included in the computation of diluted earnings per common share
for 1997 because the options' exercise price was greater than the average
market price of the common shares.
The following is a reconciliation of the amounts used in calculating
basic and diluted earnings per common share:
<TABLE>
<S> <C> <C>
Per Share
Income Shares Amount
($ in thousands)
Basic earnings per common share
for the year ended December 31, 1999:
Net Income $ 2,670 5,237,042 $ .51
Effect of dilutive stock options 630,814
Diluted earnings per common share
for the year ended December 31, 1999 $ 2,670 5,867,856 $ .46
Basic earnings per common share
for the year ended December 31, 1998:
Net Income $ 847 4,166,250 $ .20
Effect of dilutive stock options 177,024
Diluted earnings per common share
for the year ended December 31, 1998 $ 847 4,343,274 $ .20
Basic earnings per common share
for the year ended December 31, 1997:
Net Income $ 696 3,004,974 $ .23
Effect of dilutive preferred stock 1,102,902
Effect of dilutive stock options 256,325
Diluted net income per common share
for the year ended December 31, 1997 $ 696 4,364,201 $ .16
</TABLE>
The Future of Security
4. ACQUISITIONS/DISPOSITIONS OF BUSINESSES
Acquisition of Ackley Dornbach, Inc. - On November 12, 1999, CompuDyne
entered into and consummated an agreement to acquire all of the assets of
Ackley Dornbach, Inc. The consideration paid for the assets was 15,000
shares of unregistered, legended CompuDyne common stock at a value of
$8.00 per share, the fair market value at the time of the acquisition,
and the ability to earn an additional 10,000 shares over the next three
years depending on the profitability of the division. This acquisition
has been accounted or by the purchase method of accounting. The purchase
price was allocated to the net assets acquired based on their estimated
fair market values. The financial statements reflect the preliminary
allocation of the purchase price and further refinement may be made
based on the completion of final studies. The operating results of
Ackley Dornbach have been included in the Company's results of operations
from the date of acquisition.
In conjunction with this acquisition,
the following was recorded: (in thousands)
Fair value of assets acquired $ 904
Goodwill recorded 830
Fair value of stock issued (120)
Liabilities assumed $ 1,614
Disposition of MicroAssembly Systems, Inc. On May 28, 1999 CompuDyne
entered into and consummated an agreement to sell all of the assets of
MicroAssembly to PENN Engineering & Manufacturing Corp. ("PEM"). The
consideration received was $1.4 million in cash and resulted in a gain
of $180 thousand.
Acquisition of Correctional Information Systems - On May 27, 1999,
(effective April 30, 1999) CompuDyne entered into and consummated an
agreement to acquire all of the assets of the Correctional Information
Systems, ("CIS") division of BI Incorporated, ("BI"). CorrLogic, Inc.
was formed as a new company to operate in the state of Colorado with the
old CIS assets. CIS located in Boulder, Colorado developed and installs
an inmate management software product used in correctional facilities.
The consideration paid for the assets was $1.2 million in cash, a five
year note in the amount of $1.1 million, at a fixed interest rate of 7.5%
and 166,667 shares of unregistered, legended CompuDyne common stock at a
value of $7.50 per share, the fair market value at the time of the
acquisition. CompuDyne had accounted for this acquisition using the
purchase method of accounting. The operating results of CIS have been
included in the Company's results of operation from the date of
acquisition. The purchase price was allocated to the net assets acquired
based on their estimated fair market values. Balances for CIS included in
the accompanying balance sheet at December 31,1999 reflect the
preliminary allocation of the purchase price and further refinement may
be made based on the completion of final studies.
In conjunction with this acquisition the following was recorded
(in thousands):
Fair value of assets acquired $ 6,399
Fair value of stock issued (1,250)
Cash (1,170)
Liabilities assumed $ 3,979
Acquisition of Norment Industries, Inc. and Norshield Corporation - On
December 3, 1998, (effective November 28, 1998, CompuDyne entered into
and consummated a Stock Purchase Agreement by and between Apogee
Enterprises, Inc., ("the seller") and CompuDyne, ("the purchaser") to
purchase all of the capital stock of Norment Industries, Inc.,
("Norment") and Norshield Corporation, ("Norshield") from the seller,
effective November 28, 1998. Norment and Norshield, headquartered in
Montgomery, Alabama operate a number of separate businesses which
collectively are engaged in the design, manufacture, installation and
distribution of locks, bullet resistant glass, metal window surrounds,
electronic control systems and similar products that are integrated into
detention security systems under the names Norment Industries, Norshield,
SESCO, EMSS, Airteq and Trentech. The consideration paid to the seller
for the stock of Norment and Norshield was $22.5 million. CompuDyne has
accounted for the acquisition of Norment and Norshield using the purchase
method of accounting. The purchase price was allocated to the net assets
acquired based upon their estimated fair market values. The accompanying
financial statements include the operations of Norment and Norshield for
the period from November 28, 1998, the effective date of acquisition.
In conjunction with the acquisition the following was recorded:
Fair value of assets acquired $ 32,283
Cash paid for capital stock ( 23,880)
Liabilities assumed $ 8,403
Following are the Company's unaudited pro forma results for 1999 and 1998
assuming the acquisitions of Norment, CIS and Ackley Dornbach and the
disposition of MicroAssembly had all occurred on January 1, 1998.
(in thousands except for per share data) 1999 1998
Revenue $ 115,471 $ 112,977
Net income $ 2,440 $ 1,725
Earnings per share
Basic $ .47 $ .33
Diluted .42 .30
These unaudited pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which would have actually resulted had the acquisitions and
disposition been in effect on January 1, 1998, or of future results of
operations.
5. ACCOUNTS RECEIVABLE
<TABLE>
<S> <C> <C>
Accounts Receivable consist
of the following:
(in thousands) December 31, December 31,
1999 1998
U.S. Government Contracts:
Billed $ 1,433 $ 1,622
Unbilled 2,636 818
4,069 2,440
Commercial
Billed 23,598 19,756
Unbilled 6,568 5,695
30,166 25,451
Total Accounts Receivable 34,235 27,891
Less Allowance for Doubtful Accounts (402) (440)
Net Accounts Receivable $ 33,833 $ 27,451
</TABLE>
Unbilled receivables include retainages of approximately $6.6 million
and $5.2 million at December 31, 1999 and 1998, respectively.
The Future of Security
Substantially all of the U.S. Government billed and unbilled receivables
are derived from cost reimbursable or time-and-material contracts. Direct
sales to the U.S. Government for the years ended December 31, 1999, 1998
and 1997 were approximately $10.9 million, $7.8 million and $9.3 million,
respectively, or 10%, 24% and 47% of the Company's total net sales for
the same years. The sales to the U.S. Government were in the following
segments: Corrections and Federal Systems. No other single customer
accounted for greater than 10% of the Company's net sales.
Contract costs for services provided to the U.S. Government, including
indirect expenses, are subject to audit by the Defense Contract Audit
Agency, ("DCAA"). All contract revenues are recorded in amounts expected
to be realized upon final settlement. In the opinion of management,
adequate provisions have been made for adjustments, if any, that may
result from the government audits. Quanta Systems received final
approval on their indirect rates for 1996 from DCAA on July 8, 1999. No
significant payments or billings were made as a result of the approval of
the 1996 rates.
6. CONTRACTS IN PROCESS
Amounts included in the financial statements which relate to recoverable
costs and accrued profits not yet billed on contracts in process are
classified as current assets. Billings on uncompleted contracts in excess
of incurred cost and accrued profits are classified as current
liabilities. Summarized below are the components of the amounts:
<TABLE>
<S> <C> <C>
December 31, (in thousands)
1999 1998
Costs and estimated earnings
on uncompleted contracts $ 302,655 $ 136,447
Less customer progress payments 306,869 140,329
$ (4,214) $ (3,882)
Included in the statements of
financial position:
costs and estimated earnings in excess
of billings on $ 5,284 $ 2,610
uncompleted contracts (9,498) (6,492)
Billings in excess of contract costs
on uncompleted contracts $ (4,214) $ (3,882)
</TABLE>
7. NOTES PAYABLE RELATED PARTIES
CompuDyne entered into a subordinated note agreement on April 29, 1995
with Alan Markowitz, a Director, for $100 thousand. The agreement calls
for CompuDyne to pay $5,000 quarterly plus accrued interest for the
quarter at a rate of Prime plus 1%. Amounts outstanding at December 31,
1999 and December 31, 1998 was $0 and $35 thousand respectively. Interest
expense pertaining to the notes for 1999, 1998 and 1997 was $4, $5 and
$6 thousand respectively. At December 31, 1999 that liability as paid.
8. LONG-TERM DEBT
<TABLE>
<S> <C> <C>
December 31, (in thousands)
1999 1998
Term note, interest at LIBOR
(6.18% at December 31, 1999)
plus a fixed credit spread of
2.0%, collateralized by virtually
all of the Company's assets,
due in quarterly installments which
began on June 30, 1999.
(see the rate swap agreement in Note 9) $ 7,375 $ 11,500
Subordinated fixed term 5 year note
at a rate of 7.5%, payable in annual
installments including principal. $ 1,138 --
Industrial revenue bond, interest
payable quarterly at a variable rate
of 3.2% to 5.7% (5,7% at December 31, 1999)
Principal payable in quarterly installments
of $35,000. The bond is collateralized
by a $2.1 million letter of credit and
a bond guarantee agreement. $ 2,100 --
</TABLE>
The Future of Security
<TABLE>
<S> <C> <C>
Subordinated note, interest at a
fixed rate of 13.15% collateralized
by virtually all of the Company's assets,
subordinated to the term note,
due in quarterly installments
beginning March 31, 2004. 9,000 9,000
Total long-term debt 19,613 20,500
Less amount due within one year 2,243 1,125
17,370 $ 19,375
</TABLE>
<TABLE>
Maturities of long-term debt
<S> <C>
Year Ending December 31, Amount
2000 $ 2,243
2001 2,743
2002 2,867
2003 992
2004 2,368
Thereafter 8,400
$ 19,613
</TABLE>
The term note and subordinated note agreements contain various financial
covenants, including among other things, maintenance of fixed charge
coverage ratios, interest coverage ratios, maximum senior debt to
earnings before interest, taxes, depreciation and amortization ("EBITDA")
ratios, and maximum permitted capital expenditures, and a restriction
against paying dividends.
At December 31, 1999, the Company had a $6.5 million secured working
capital line of credit which allowed borrowings against eligible accounts
receivable. Of this line, $2.1 million was used for a letter of credit
to secure the industrial revenue bond used for the expansion of the
Norment/Norshield operations.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents - The carrying amounts reported in the
balance sheets for cash and cash equivalents approximates fair value.
Long-Term Debt - The carrying amounts reported in the balance sheet
approximate fair value as the amounts are at rates and terms available to
the Company at December 31, 1999 for borrowings for similar transactions.
Rate Swap Agreement - The Company entered into an interest rate swap
agreement on December 15, 1998 to limit the effect of increases in the
interest rates on the floating rate of the term note. The differential
is accrued as interest rates change and is recorded in interest expense.
The effect of this agreement is to limit the interest rate exposure to
7.55% on $6.75 million of the Company's term loan. The fair value as of
December 31, 1998 as estimated by dealers was a favorable $202 thousand
and$3 thousand, respectively.
Foreign Exchange Contract - The Company entered into a foreign exchange
contract in December 1998 and estimates its fair value to approximate its
cost at December 31, 1999 and 1998.
The Future of Security
10. INCOME TAXES
The components of the income tax provision (benefit) from continuing
operations for the years ended December 31, 1999, 1998, and 1997 are as
follows:
<TABLE>
<S> <C> <C> <C>
December 31, (in thousands)
1999 1998 1997
Current $ 889 $ 333 $ 31
Deferred 700 30 (189)
$ 1,589 $ 363 $ (158)
</TABLE>
The tax effects of the primary temporary differences giving rise to the
Company's net deferred tax assets and liabilities at December 31, 1999
and 1998 are summarized as follows:
<TABLE>
<S> <C> <C>
December 31, (in thousands)
1999 1998
Assets:
Accrued expenses and
deferred compensation $ 123 $ 116
Tax operating loss carry-forward 10,083 10,151
Tax credit carry-forward 459 459
Book reserves in excess of tax 797 304
Accrued pension liability 312 186
Total deferred assets 11,774 11,216
Valuation allowance (11,063) (11,063)
Net deferred assets $ 711 $ 153
Net deferred liabilities:
Tax depreciation in excess
of book depreciation (143) (65)
$ 568 $ 88
</TABLE>
The Company established a valuation allowance in accordance with FASB
#109. Th Company continually reviews the adequacy of the valuation
allowance and is recognizing these benefits only as reassessment
indicates that if it is more likely than not that the benefits will be
realized.
The difference between the statutory tax rate and CompuDyne's effective
tax rate are summarized as follows:
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
Statutory federal income tax rates 34.0% 34.0% 35.0%
State income taxes, net of
Federal benefit 4.0 7.0 2.9
Change in valuation allowance - (14.5) (51.2)
Tax effect of NOL utilization (3.3) -- (18.6)
Tax effect of non-deductible items 2.6 3.5 2.5
Tax 37.3% 30.0% (29.4)%
</TABLE>
At December 31, 1999, the Company and its subsidiaries have net operating
loss carry-forwards available to offset future taxable income of
approximately $28 million, subject to certain severe limitations. These
carry-forwards expire between 2000 and 2009. The utilization of
substantially all of these tax loss carry-forwards is limited to
approximately $200 thousand each year as a result of the ownership
change, which occurred in 1995. The Company also has carry-forwards
available for alternative minimum tax purposes, which do not differ
significantly from regular net operating loss carry-forwards. The
Company also has research and development tax credits of approximately
$459 thousand expiring between 1999 and 2003.
The Future of Security
11. COMMON STOCK AND COMMON STOCK OPTIONS
The Company has various stock option plans. Under these plans, options
to purchase commons stock may be granted until 2006. Options generally
are granted at fair market value at the date of grant, are exercisable
from 1 to 5 years from the date of grant, and expire 10 years after the
date of grant. The plans permit the issuance of either incentive stock
options or non-qualified stock options. Under all plans, there were
524,898 shares of common stock reserved for future grants as of December
31, 1999. Transactions are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
Year Weighted Year Year
ended Average ended ended
December 31, Exercise December 31, December 31,
1999 Price 1998 1997
Outstanding,
Beginning of Period
Shares 1,085,574 $ 2.93 404,150 375,050+
Prices $1.50-4.31 $1.50-2.81 $1.50-2.00
Granteds 244,302 $6.15 694,42 54,100
Prices $5.19-8.75 $2.63-4.31 $1.69-2.81
Exercised
Shares 31,150 $2.82 - -
Prices $1.63-4.31 - -
Expired
or Canceled 30,700 $5.19 13,000 25,000
Outstanding,
End of Period
Shares 1,268,026 $3.49 1,085,574 404,150
Prices $2.56-8.75 $1.50-4.31 $1.50-2.81
Options
Exercisable 734,774 573,448 253,775
</TABLE>
Exercise prices for options outstanding as of December 31, 1999 ranged
from $1.50 to $8.75. The following table provides certain information
with respect to stock options outstanding as of December 31, 1999:
<TABLE>
<S> <C> <C> <C>
Range of Exercise Number Outstanding Weighted Average Weighted Average
Price at December 31, 1999 Exercise Price Remaining
Contractual Life
$1.50 - $2.00 336,350 $1.56 5.83
$2.00 - $3.00 194,550 $2.59 8.27
$3.25 297,924 $3.25 8.92
$4.31 282,900 $4.31 8.92
$5.19 - $8.75 156,302 $7.77 9.53
1,268,026
</TABLE>
The Future of Security
The following table provides certain information with respect to stock
options exercisable at December 31, 1999:
<TABLE>
<S> <C> <C> <C>
Range of Exercise Number Outstanding Weighted Average Weighted Average
Price at December 31, 1999 Exercise Price Remaining
Contractual Life
$1.50 - $2.00 287,825 $1.55 5.71
$2.00 - $3.00 99,725 $2.58 8.29
$3.25 297,924 $3.25 8.92
$4.31 49,300 $4.31 8.92
734,774
</TABLE>
As permitted under SFAS No. 123, the Company continues to account for its
employee stock-based compensation plans and options granted under APB No.
25. No compensation expense has been recognized in connection with options,
as all significant options have been granted with an exercise price equal
to fair value of the Company's common stock on the date of grant. The
Company has provided below the additional disclosures specified in SFAS No.
123 for 1999 and 1998. For SFAS No. 123 purposes, the fair value of each
option grant has been estimated as of the date of grant using the Black-Scholes
option pricing model with the following weighted average assumptions:
risk-free interest rate of 6.00%, expected life of 7 years, dividend rate
of zero percent and expected volatility of 109%. Using these assumptions,
the fair value of the stock options granted in 1999, 1998 and 1997 is
$1,200,000, $2,700,000, and $0, respectively, which would be amortized as
compensation expense over the vesting period of the options. Had compensation
expense been determined consistent with SFAS No. 123, utilizing the assumptions
detailed above, the Company's net income and earnings per share for the
years ended December 31, 1999, 1998 and 1997 would have been reduced to
the following pro forma amounts:
<TABLE>
<S> <C> <C> <C>
(In thousands except per share data) 1999 1998 1997
Net Income:
As Reported 2,2670 $ 847 $ 696
Pro Forma $ 2,328 $ 778 $ 696
Earnings per share:
As Reported $ 0.51 $ 0.20 $0.23
Pro Forma $ 0.45 $ 0.18 $0.23
</TABLE>
The resulting pro forma compensation cost may not be representative of
that expected in future years.
12. EMPLOYEE BENEFIT PLANS
The Company has established a non-qualified Employee Stock Purchase Plan
in October, 1999, the terms of which allow for qualified employees (as
defined) to participate in the purchase of designated shares of the
Company's common stock with the Company matching at a rate of 15% of the
employee purchase at the market value of the common stock at the monthly
purchase period. The Company bought and distributed 4,466 shares of
common stock during fiscal 1999 pursuant to this plan at an average price
of $8.6317 per share.
The Future of Security
The Company has a 401(k)-retirement savings plan covering all employees.
All employees are eligible to participate in the plan after completing
one year of service. Participants may make before tax contributions
of up to 15% of their annual compensation, subject to Internal Revenue
Service limitations. CompuDyne currently matches 30% of employee
contributions up to a maximum of 6% of annual earnings for all
Norment/Norshield employees enrolled in the plan. CompuDyne currently
matches employee contributions up to the first 2.5% contributed for all
other employees enrolled in the plan. Expense for matching contributions
to the Plan was $245 thousand, $128 thousand and $114 thousand for 1999,
1998, and 1997, respectively.
The Company established a money purchase pension plan covering salaried
Norment/Norshield employees. All salaried Norment/Norshield employees
are eligible to participate in the plan after one year of service. The
Company makes annual contributions of 3% of annual compensation for
employees with less than 10 years of service, 4% for 10 to 20 years of
service and 5% for 20 years or more of service. Expense related to this
plan was $246 thousand in 1999 and $24 thousand in 1998.
13 COMMITMENTS AND CONTINGENT LIABILITIES
The Company and certain of its subsidiaries are obligated as lessees
under various operating leases for office, distribution, manufacturing
and storage facilities.
As of December 31, 1999, future minimum rental payments required under
operating leases that have initial or remaining noncancellable terms in
excess of one year are as follows (in thousands):
<TABLE>
<S> <C>
Year Ending December 31, Total
2000 $ 695
2001 598
2002 516
2003 324
2004 268
$ 2,401
</TABLE>
Rental expense was $1.1 million, $542 thousand and $452 thousand in 1999,
1998, and 1997, respectively.
The Company is party to certain legal actions and inquiries for
environmental and other matters resulting from the normal course of
business. Although the total amount of liability with respect to these
matters cannot be ascertained, management of the Company believes that
any resulting liability will not have a material effect on its financial
position or results of future operations.
The Future of Security
14. KOLUX PENSION PLAN
In March 1987, the Company ceased its Kolux plant operations resulting in
a curtailment of the defined benefit pension plan covering certain plant
employees.
<TABLE>
<S> <C> <C>
December 31,
(in thousands)
1999 1998
Reconciliation of Benefit Obligation
Beginning balance $ 808 $ 801
Interest cost 52 53
Change in assumptions
December 31 (10) 16
Actuarial gain/loss 8 16
Benefits paid (81) (78)
Ending balance $ 777 $ 808
Reconciliation of Fair Value of Plan Assets
Beginning balance $ 328 $ 314
Return on assets (3) 14
Contributions by CompuDyne 79 92
Benefits paid (87) (91)
Ending balance $ 317 $ 329
Funded Status of Plan $ 460 $ 379
Net Periodic Cost Recognized
Service cost $ 6 $ 13
Interest cost 52 53
Expected return on assets 3 (24)
Recognized gains or losses - -
Amortization of unrecognized
net transition (asset) or obligation 14 29
Ending balance $ 75 $ 71
Assumptions on Weighted Average Basis
Assumed discount rate 7.0% - 6.5% 7.0% - 6.5%
Expected long term rate of return on assets 8.0% 8.0%
</TABLE>
In February 2000, the Company purchased an annuity contract to cover the
plan's vested benefits. The purchase of the annuity is irrevocable and
relieves the Company of primary responsibility for pension plan
obligations and eliminates significant risks related to the obligation
and the assets used to effect settlements. The annuity contract cost
$848 thousand and the net pension plan obligation was $808 thousand
at the time the annuity was purchased.
15. OPERATING SEGMENT INFORMATION
Segment information has been prepared in accordance with the Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosure about Segments
of an Enterprise and Related Information", ("SFAS No. 131"). SFAS No.
131 defines "operating segments" to be those components of a business
about which separate financial information is available that is regularly
evaluated by management in deciding how to allocate resources and in
assessing performance. SFAS No. 131 further requires that the segment
information presented be consistent with the basis and manner in which
management internally desegregates financial information for the purpose
of assisting in making internal operating decisions.
The Future of Security
During 1999, the Company changed the structure of its internal
organization in a manner that caused the composition of its reportable
segments to change. Accordingly, the Company has restated the
corresponding items of segment information for earlier periods.
The following segment information includes operating information for
CompuDyne's three operating segments, Corrections, Attack Protection,
Federal Systems and Corporate activities for the three years ended
December 31, 1999, 1998 and 1997. Also included is operating information
from, MicroAssembly's Stick-Screw product sales during the years ended
May 31, 1999 (date of disposal) and years ended December 31, 1998 and
1997, Norment (Corrections segment) and Norshield (Attack Protection
segment), are included since their (date of acquisition), November 28,
1998 and Ackley Dornbach, Inc. (Corrections segment) and since its date
of acquisition, November 12, 1999, and CorrLogic (Corrections segment)
since its date of acquisition, April 30, 1999.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Revenues Gross Profit
(in thousands) 1999 1998 1997 1999 1998 1997
Corrections $ 82,498 $ 16,321 $ 6,217 $ 16,112 $ 3,385 $1,084
Attack Protection 15,124 1,289 - 3,277 313 -
Federal Systems 13,154 12,535 12,031 1,814 1,892 1,637
MicroAssembly 670 1,771 1,768 152 462 558
CompuDyne Corporate - - - - - -
$111,446 $ 31,916 $20,016 $ 21,355 $ 6,052 $3,279
Total Assets, at Year End Operating Income/(Loss)
1999 1998 1997 1999 1998 1997
Corrections $ 38,346 $ 32,415 $ 2,229 $ 4,903 $ 1,097 $ (65)
Attack
Protection 10,914 8,623 - 1,507 34 -
Federal
Systems 4,491 2,197 3,609 1,016 920 782
MicroAssembly - 1,224 1,286 4 50 208
CompuDyne
Corporate 3,696 (889) 474 1,386 - (345)
$ 57,447 $ 43,570 $ 7,598 $ 6,044 $ 1,468 $ 580
Capital Expenditures Depreciation
1999 1998 1997 1999 1998 1997
Corrections $ 1,491 $ 102 $ 55 $ 869 $ 90 $ --
Attack Protection 1,957 65 -- 219 23 11
Federal Systems 84 208 133 90 79 39
MicroAssembly 21 57 7 31 71 80
CompuDyne Corporate 20 -- -- 2 -- --
$ 3,573 $ 432 $ 195 $1,211 $ 263 $ 130
</TABLE>
16. FOREIGN CURRENCY AND EXCHANGE CONTRACT
The Company has a long-term contract in South Africa which requires
payments to the Company in South African rand. The Company has entered
into a foreign exchange contract to hedge its risk in converting rands
into U.S. dollars. The foreign currency exchange contract entered into
expires on April 18, 2000 and requires the Company to convert
approximately 15,600,000 rand to U.S. dollars at rates ranging from 5.9
to 7.0.rand per dollar. As most of this contract was completed during,
1999,no significant exchange risk exists at December 31
(INSIDE BACK COVER)
Corporate Profile
"CompuDyne Corporation, listed on the NASDAQ National Market under the
symbol "CDCY", is a holding company for five businesses with leading
positions in physical and electronic security and technology-based
integrated justice systems solutions. Norment Security Group is the
largest supplier of physical and electronic security products,
integration and maintenance services to the corrections and courthouse
markets. Norshield Security Products is the largest provider of bullet,
blast and attack resistant products to U.S. embassies, banks, courthouses
and other highly secured facilities in the U.S. and around the world.
Quanta Systems is a major supplier of security and specialty engineering
services and telecommunications products to the military, intelligence
and commercial markets. Sysco and CorrLogic sell large scale software
products for access control, alarm monitoring, computer network security,
and integrated justice systems solutions."
(CDCY NASDAQ Listed Logo)
Directors
Martin A. Roenigk Chairman CompuDyne Corporation
Philip M. Blackmon Executive Vice President CompuDyne Corporation
David W. Clark, Jr. Managing Director Pryor & Clark Company
Miles P. Jennings, Jr. Vice President-Investments Advest, Inc.
Alan Markowitz Private Investor
Millard H. Pryor, Jr. Managing Director Pryor & Clark Company
Corporate Directory
Corporate Headquarters
CompuDyne Corporation
7249 National Drive
Hanover, MD 21076
Transfer Agent
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
Bank
LaSalle National Bank
135 South LaSalle Street
Chicago, IL 60603
General Counsel
Tyler Cooper & Alcorn
CityPlace - 35th Floor
185 Asylum Street
Hartford, CT 06103
Auditor
Deloitte & Touche LLP
1750 Tysons Boulevard
McLean, VA 22102-4219
Shareholders may request a free copy of the Company's detailed
annual report filed with the Securities and Exchange Commission on from
10-K by writing to:
William C. Rock, Secretary
CompuDyne Corporation
7249 National Drive
Hanover, Maryland 21076
Any statements in this Annual Report that are not statements of
historical fact are forward looking statements that are subject to a
number of important risks and uncertainties that could cause actual
results to differ materially. Specifically, any forward looking
statements in this Annual Report related to the Company's objectives of
future growth, acquisitions, profitability and financial returns are
subject to a number of risks and uncertainties including, but not limited
to, risks related to a growing market demand for the Company's existing
and new products, continued growth in sales and market share of the
Company's products and services, general economic conditions, competitive
products and services, and product and technology development. There can
be no assurance that such objectives will be achieved.
(BACK)
CompuDyne Corporation Corporate Offices
7249 National Drive
Hanover, Maryland 21076
Phone: 410-712-0275
Fax: 410-712-0677
www.compudyne.com
Norment Security Group
3224 Mobile Highway
Montgomery, AL 36108
Phone: 334-281-8440
Fax: 334-288-5485
Toll Free: 800-633-1968
www.normentsecuritygroup.com
Norshield Security Products
3224 Mobile Highway
Montgomery, AL 36108
Phone: 334-281-8440
Fax: 334-288-5485
Toll Free: 800-633-1968
www.norshieldsecurity.com
Quanta Systems Corporation /
Data Control Systems
213 Perry Parkway
Gaithersburg, MD 20877
Phone: 301-590-3300
Fax: 301-590-3325
Airteq Systems
6285 S.W. Lakeview Blvd.
Lake Oswego, OR 97035
Phone: 503-639-3007
Fax: 503-620-2469
CorrLogic, Inc.
4720 Walnut Street
Boulder, CO 80301
Phone: 720-406-3200
Fax: 720-406-3300
www.corrlogic.com
Sysco Security Systems, Inc.
7255 Standard Drive
Hanover, MD 21076
Phone: 410-712-0333
Fax: 410-712-0329
Norment Security Group
Regional Office Centers
Northeast
7255 Standard Drive
Hanover, Maryland 21076
Phone: 410-712-6020
Fax: 410-712-0329
Toll Free: 800-325-6124
Southeast
214-C Garner Business Court
Garner, NC 27529
Phone: 919-779-0006
Fax: 919-779-0351
Midwest
(Formerly Ackley-Dornbach)
716 North 109th Street
Wauwatosa, WI 53226
Phone: 414-453-8050
Fax: 414-453-2175
Southwest
446 North Austin Dr.
Suite #1
Chandler, AZ 85226-2634
Phone: 480-940-6970
Fax: 480-753-3533
West Cost (EMSS)
6144 B Industrial Way
Livermore, CA 94550
Phone: 925-455-1131
Fax 925-455-1171
(CompuDyne Corporation Logo)
CompuDyne Corporation
Corporate Headquarters
7249 National Drive
Hanover, MD 21076
Phone: 410-712-0275
Fax: 410-712-0677
http//www.CompuDyne.com
