UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to __________________
Commission File Number 1-8138
- --------------------------------------------------------------------------------
A. Full title of the plan:
SECURITY SYSTEMS HOLDINGS, INC.
401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Alarmguard Holdings, Inc.
125 Frontage Road
Orange, CT 06477
<PAGE>
Audited Financial Statements
and Supplemental Schedules
Security Systems Holdings, Inc.
401(k) Plan
YEARS ENDED DECEMBER 31, 1997 AND 1996
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
Security Systems Holdings, Inc. 401(k) Plan
Audited Financial Statements
and Supplemental Schedules
Years ended December 31, 1997 and 1996
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors..................................................................1
Audited Financial Statements
Statement of Assets Available for Benefits, With Fund Information - December 31, 1997...........2
Statement of Assets Available for Benefits, With Fund Information - December 31, 1996...........4
Statement of Changes in Assets Available for Benefits, With Fund Information -
Year Ended December 31, 1997...............................................................5
Statement of Changes in Assets Available for Benefits, With Fund Information -
Year Ended December 31, 1996...............................................................7
Notes to the Financial Statements...............................................................8
Supplemental Schedules
Schedule of Assets Held for Investment Purposes................................................12
Schedule of Reportable Transactions............................................................13
</TABLE>
<PAGE>
Report of Independent Auditors
Plan Administrator
Security Systems Holdings, Inc. 401(k) Plan
We have audited the accompanying statements of assets available for benefits of
Security Systems Holdings, Inc. 401(k) Plan (the "Plan") as of December 31, 1997
and 1996, and the related statements of changes in assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Plan at December
31, 1997 and 1996, and the changes in its assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The Fund information in
the statements of assets available for benefits and the statements of changes in
assets available for benefits is presented for purposes of additional analysis
rather than to present the assets available for benefits and changes in assets
available for benefits of each fund. The supplemental schedules and Fund
information have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
The information presented in the "Schedule of Assets Held for Investment
Purposes" and the "Schedule of Reportable Transactions," other than for the
Alarmguard Common Stock Fund, does not disclose the historical cost of
investments. Disclosure of this information is required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
/s/ Ernst & Young LLP
Stamford, Connecticut
June 22, 1998
- 1 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Statement of Assets Available for Benefits, With Fund Information
December 31, 1997
FUND INFORMATION
-----------------------------------------------------------------------------------------------------------
SMALL GOVERN- SHORT-
CAPITALI- DIVER- MENT CASH INTER-
TOTAL ZATION A SIFIED MONEY BLUE RESERVES MEDIATE HIGH TOTAL GROWTH
RETURN A GROWTH A EQUITY INCOME A MARKET CHIP A A GOVERNMENT RETURN RETURN B B
FUND FUND FUND FUND FUND FUND FUND A FUND A FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
At fair value:
Stocks $266,193 $185,696 $2,560 $4,844 $150,026
Bonds $85,027 $33,601
Fixed income $3,465 $58,703
Balanced $146,830 $111,285
Participants notes
receivable
-----------------------------------------------------------------------------------------------------------
Total investments 146,830 266,193 185,696 85,027 3,465 2,560 58,703 33,601 4,844 111,285 150,026
-----------------------------------------------------------------------------------------------------------
Receivables:
Participants' 5,175 9,549 8,868 2,774 4,697 633 2,349 1,329 2,729
contributions
Employer's matching 1,138 2,028 1,668 591 936 142 559 323 450
-----------------------------------------------------------------------------------------------------------
Total receivables 6,313 11,577 10,536 3,365 5,633 775 2,908 1,652 3,179 - -
===========================================================================================================
Assets available for $153,143 $277,770 $196,232 $88,392 $9,098 $3,335 $61,611 $35,253 $8,023 $111,285 $150,026
benefits ===========================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Statement of Assets Available for Benefits, With Fund Information (continued)
December 31, 1997
FUND INFORMATION
---------------------------------------------------------------------------------------------
SMALL SHORT-
CAPITALI- DIVER- INTER-
ZATION B SIFIED BLUE US CASH MEDIATE HIGH ALARMGUARD
EQUITY INCOME B CHIP B MORTGAGE RESERVES GOVERNMENT RETURN COMMON LOAN
FUND FUND FUND B FUND B FUND B FUND B FUND STOCK FUND FUND TOTAL
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
At fair value:
Stocks $92,059 $13,029 $23,599 $445,620 $1,183,626
Bonds $36,899 $124 $39,462 195,113
Fixed income $16,419 78,587
Balanced 258,115
Participants
notes
receivable $42,521 42,521
--------------------------------------------------------------------------------------------------------------
Total investments 92,059 36,899 13,029 124 16,419 39,462 23,599 445,620 42,521 1,757,962
--------------------------------------------------------------------------------------------------------------
Receivables:
Participants'
contributions 38,103
Employer's
matching 7,835
---------------------------------------------------------------------------------------------------------------
Total receivables - - - - - - - - - 45,938
===============================================================================================================
Assets available
for benefits $92,059 $36,899 $13,029 $124 $16,419 $39,462 $23,599 $445,620 $42,521 $1,803,900
===============================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Statement of Assets Available for Benefits, With Fund Information
December 31, 1996
FUND INFORMATION
----------------------------------------------------------------------------------------------------
SMALL SHORT-
CAPITALI- DIVER- INTER-
TOTAL ZATION B HIGH SIFIED U.S. CASH MEDIATE
RETURN GROWTH EQUITY YIELD INCOME MORTGAGE RESERVES GOVERNMENT
B FUND B FUND FUND B FUND B FUND B FUND B FUND B FUND LOAN FUND TOTAL
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
At fair value:
Stocks $257,891 $89,682 $347,573
Bonds $1,191 $41,030 $114 $43,467 85,802
Fixed income $23,524 23,524
Balanced $183,803 183,803
Participants
notes
receivable $5,938 5,938
----------------------------------------------------------------------------------------------------------------
Total investments 183,803 257,891 89,682 1,191 41,030 114 23,524 43,467 5,938 646,640
----------------------------------------------------------------------------------------------------------------
Receivables:
Participants'
contributions 5,808 7,427 4,890 75 2,172 992 1,550 22,914
Employer's
matching 1,300 1,799 977 19 494 246 356 5,191
----------------------------------------------------------------------------------------------------------------
Total receivables 7,108 9,226 5,867 94 2,666 - 1,238 1,906 - 28,105
================================================================================================================
Assets available
for benefits $190,911 $267,117 $95,549 $1,285 $43,696 $114 $24,762 $45,373 $5,938 $674,745
================================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Statement of Changes in Assets Available for Benefits, With Fund Information
Year ended December 31, 1997
FUND INFORMATION
----------------------------------------------------------------------------------
TOTAL SMALL HIGH DIVERSIFIED GOVERNMENT BLUE
RETURN A GROWTH A CAPITALIZATION YIELD A INCOME A MONEY CHIP A
FUND FUND A EQUITY FUND FUND FUND MARKET FUND FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS
ATTRIBUTED TO:
Net appreciation/
(depreciation) in
fair value of
investments $(18,699) $(37,354) $(14,201) $ (3) $ 227 $ (272)
Interest and dividends 21,528 36,225 19,847 7 2,615 $ 28 304
----------------------------------------------------------------------------------
2,829 (1,129) 5,646 4 2,842 28 32
Contributions:
Participants 71,157 124,694 88,691 126 35,622 14,076 1,499
Employer 14,948 26,571 17,156 62 7,156 2,904 330
Rollovers 85,032 159,973 99,288 234 44,627
----------------------------------------------------------------------------------
171,137 311,238 205,135 422 87,405 16,980 1,829
----------------------------------------------------------------------------------
Total additions 173,966 310,109 210,781 426 90,247 17,008 1,861
----------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS
ATTRIBUTED TO:
Benefits paid to
participants (4,630) (9,478) (8,425) (1,553)
Administrative
expenses
----------------------------------------------------------------------------------
Total deductions (4,630) (9,478) (8,425) - (1,553) - -
----------------------------------------------------------------------------------
Net increase (decrease)
prior to interfund
transfers 169,336 300,631 202,356 426 88,694 17,008 1,861
Interfund transfers,
net (16,193) (22,861) (6,124) (426) (302) (7,910) 1,474
----------------------------------------------------------------------------------
Net increase (decrease) 153,143 277,770 196,232 - 88,392 9,098 3,335
Assets available for
benefits at beginning
of year
----------------------------------------------------------------------------------
Assets available for
benefits at end of
year $153,143 $277,770 $196,232 $ - $88,392 $ 9,098 $3,335
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------
SHORT-
CASH INTERMEDIATE HIGH TOTAL
RESERVES A GOVERNMENT A RETURN A RETURN B GROWTH B
FUND FUND FUND FUND FUND
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS
ATTRIBUTED TO:
Net appreciation/
(depreciation) in
fair value of
investments $ (96) $ 39 $ 15,138 $ 24,419
Interest and dividends $ 4,201 811 201 18,435 21,802
------------------------------------------------------------
4,201 715 240 33,573 46,221
Contributions:
Participants 13,339 15,740 6,970 13,945 20,441
Employer 7,257 3,811 1,093 3,056 4,877
Rollovers 101,307 16,235
------------------------------------------------------------
121,903 35,786 8,063 17,001 25,318
------------------------------------------------------------
Total additions 126,104 36,501 8,303 50,574 71,539
------------------------------------------------------------
DEDUCTIONS FROM ASSETS
ATTRIBUTED TO:
Benefits paid to
participants (24,451) (486) (1,385) (18,293)
Administrative
expenses (2,694) (3,467)
------------------------------------------------------------
Total deductions (24,451) (486) (4,079) (21,760)
------------------------------------------------------------
Net increase (decrease)
prior to interfund
transfers 101,653 36,015 8,303 46,495 49,779
Interfund transfers,
net (40,042) (762) (280) (126,121) (166,870)
------------------------------------------------------------
Net increase (decrease) 61,611 35,253 8,023 (79,626) (117,091)
Assets available for
benefits at beginning
of year 190,911 267,117
------------------------------------------------------------
Assets available for
benefits at end of
year $ 61,611 $35,253 $8,023 $111,285 $150,026
============================================================
</TABLE>
- 5 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Statement of Changes in Assets Available for Benefits, With Fund Information (continued)
Year ended December 31, 1997
FUND INFORMATION
---------------------------------------------------------------------------------------
SHORT-
SMALL HIGH DIVERSIFIED BLUE US CASH INTERMEDIATE
CAPITALIZATION YIELD B INCOME B CHIP B MORTGAGE B RESERVES B GOVERNMENT B
B EQUITY FUND FUND FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS
ATTRIBUTED TO:
Net appreciation/
(depreciation)
in fair value of
investments $ 9,996 $ 27 $ 28 $(1,151) $ 2 $ (294)
Interest and dividends 10,352 89 3,237 1,552 8 $ 788 2,728
Interest on
participant loans
---------------------------------------------------------------------------------------
20,348 116 3,265 401 10 788 2,434
Contributions:
Participants 19,174 225 7,474 1,947 4,004
Employer 3,210 56 1,607 866 991
Rollovers
---------------------------------------------------------------------------------------
22,384 281 9,081 2,813 4,995
---------------------------------------------------------------------------------------
Total additions 42,732 397 12,346 401 10 3,601 7,429
---------------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS
ATTRIBUTED TO:
Benefits paid to
participants (9,360) (11,147) (5,305) (4,920)
Administrative
expenses (701) (347) (198) (184)
---------------------------------------------------------------------------------------
Total deductions (10,061) (11,494) (5,503) (5,104)
---------------------------------------------------------------------------------------
Net increase (decrease)
prior to interfund
transfers 32,671 397 852 401 10 (1,902) 2,325
Interfund transfers, net (36,161) (1,682) (7,649) 12,628 (6,441) (8,236)
---------------------------------------------------------------------------------------
Net increase (decrease) (3,490) (1,285) (6,797) 13,029 10 (8,343) (5,911)
Assets available for
benefits at beginning
of year 95,549 1,285 43,696 114 24,762 45,373
---------------------------------------------------------------------------------------
Assets available for
benefits at end of
year $92,059 $ - $36,899 $13,029 $124 $16,419 $39,462
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------
HIGH ALARMGUARD
RETURN B COMMON
FUND STOCK FUND LOAN FUND TOTAL
----------------------------------------------------
<S> <C> <C> <C> <C>
ADDITIONS TO ASSETS
ATTRIBUTED TO:
Net appreciation/
(depreciation)
in fair value of
investments $ 50 $ 35,332 $ 13,188
Interest and dividends 1,111 330 146,199
Interest on
participant loans $ 2,100 2,100
----------------------------------------------------
1,161 35,662 2,100 161,487
Contributions:
Participants 439,124
Employer 95,951
Rollovers 36,373 543,069
----------------------------------------------------
36,373 1,078,144
----------------------------------------------------
Total additions 1,161 35,662 38,473 1,239,631
----------------------------------------------------
DEDUCTIONS FROM ASSETS
ATTRIBUTED TO:
Benefits paid to
participants (3,440) (102,873)
Administrative
expenses (12) (7,603)
----------------------------------------------------
Total deductions (3,440) (12) (110,476)
----------------------------------------------------
Net increase (decrease)
prior to interfund
transfers (2,279) 35,650 38,473 1,129,155
Interfund transfers, net 25,878 409,970 (1,890)
----------------------------------------------------
Net increase (decrease) 23,599 445,620 36,583 1,129,155
Assets available for
benefits at beginning
of year 5,938 674,745
----------------------------------------------------
Assets available for
benefits at end of
year $23,599 $445,620 $42,521 $1,803,900
====================================================
</TABLE>
- 6 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Statement of Changes in Assets Available for Benefits, With Fund Information
Year ended December 31, 1996
FUND INFORMATION
-----------------------------------------------------------------------------
TOTAL SMALL HIGH DIVERSIFIED U.S.
RETURN B GROWTH B CAPITALIZATION YIELD B INCOME B MORTGAGE B
FUND FUND B EQUITY FUND FUND FUND FUND
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS ATTRIBUTED
TO:
Net appreciation
(depreciation) in fair value
of investments $ (4,704) $ (36,949) $ (3,577) $ 20 $ 297 $ (56)
Interest and dividends 26,221 66,094 7,705 53 1,683
Interest on participant loans
-----------------------------------------------------------------------------
21,517 29,145 4,128 73 1,980 (56)
Contributions:
Participants 57,269 78,366 60,681 969 29,872
Employer matching 7,559 10,977 10,813 234 6,009
-----------------------------------------------------------------------------
64,828 89,343 71,494 1,203 35,881
-----------------------------------------------------------------------------
Total additions 86,345 118,488 75,622 1,276 37,861 (56)
DEDUCTIONS FROM ASSETS ATTRIBUTED
TO:
Benefits paid to participants (17,608) (24,714) (2,860) (178) (2,039) (722)
Administrative expenses (390) (382) (53) (8) (62)
-----------------------------------------------------------------------------
Total deductions (17,998) (25,096) (2,913) (186) (2,101) (722)
-----------------------------------------------------------------------------
Net increase (decrease) prior to
interfund transfers 68,347 93,392 72,709 1,090 35,760 (778)
Interfund transfers, net (8,721) (12,361) 4,951 (39) 3,361 (1)
-----------------------------------------------------------------------------
Net increase (decrease) 59,626 81,031 77,660 1,051 39,121 (779)
Assets available for benefits at
beginning of year 131,285 186,086 17,889 234 4,575 893
-----------------------------------------------------------------------------
Assets available for benefits at
end of year $ 190,911 $ 267,117 $ 95,549 $1,285 $43,696 $ 114
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------------
SHORT-
CASH INTERMEDIATE
RESERVES B GOVERNMENT B
FUND FUND LOAN FUND TOTAL
---------------------------------------------------------
<S> <C> <C> <C> <C>
ADDITIONS TO ASSETS ATTRIBUTED
TO:
Net appreciation
(depreciation) in fair value
of investments $ (2) $ (1,198) $ (46,169)
Interest and dividends 866 1,959 104,581
Interest on participant loans $ 429 429
---------------------------------------------------------
864 761 429 58,841
Contributions:
Participants 9,374 16,036 252,567
Employer matching 1,236 2,527 39,355
---------------------------------------------------------
10,610 18,563 291,922
---------------------------------------------------------
Total additions 11,474 19,324 429 350,763
DEDUCTIONS FROM ASSETS ATTRIBUTED
TO:
Benefits paid to participants (20,248) (1,521) (69,890)
Administrative expenses (18) (52) (965)
---------------------------------------------------------
Total deductions (20,266) (1,573) (70,855)
---------------------------------------------------------
Net increase (decrease) prior to
interfund transfers (8,792) 17,751 429 279,908
Interfund transfers, net 13,019 (687) 478 -
---------------------------------------------------------
Net increase (decrease) 4,227 17,064 907 279,908
Assets available for benefits at
beginning of year 20,535 28,309 5,031 394,837
---------------------------------------------------------
Assets available for benefits at
end of year $ 24,762 $ 45,373 $ 5,938 $ 674,745
=========================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- 7 -
<PAGE>
Security Systems Holdings, Inc. 401(k) Plan
Notes to Financial Statements
Years ended December 31, 1997 and 1996
1. DESCRIPTION OF PLAN
The following description of the Security Systems Holdings, Inc. 401(k) Plan
(the "Plan") of Alarmguard Holdings, Inc. ("Alarmguard" or the "Company")
provides only general information. Participants should refer to the Summary Plan
Description for a more complete discussion of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering all employees completing at
least 1,000 hours of service in a twelve consecutive month period and who are
age twenty-one or older. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
The Plan permits each participant to elect to have his or her eligible
compensation reduced by up to 15% and to have that amount contributed through
periodic payroll withholdings to the Plan in accordance with Section 401(k) of
the Internal Revenue Code. The Company's matching contributions are
discretionary by plan year and since the Plan's inception have been based on 25%
of each participant's contributions up to an amount not to exceed 6% of the
participant's annual compensation.
In compliance with federal tax law, for 1997 and 1996, the maximum annual
contribution for a participant was limited to the lesser of $30,000 or 25% of
compensation. In addition, the maximum annual before-tax contribution was
limited to $9,500 in 1997 and 1996.
During 1997, $543,069 was transferred from other qualifying plans as a result of
an acquisition made by the Company. This amount is included in rollovers in the
1997 statement of changes in assets available for benefits.
PARTICIPANT ACCOUNTS
Forfeited balances of terminated participants nonvested accounts are used to
reduce future Company contributions. The balance of forfeited nonvested accounts
was not material as of December 31, 1997 or 1996. Employee contributions plus
actual earnings thereon are always 100% vested, while vesting of Company
matching contributions plus actual earnings thereon occurs over a period of 5
years, at a rate of 20% for each year of service, commencing with the completion
of one year of service. Participants become 100% vested upon death or attainment
of age 65.
Under the provisions of the Plan, a participant may, at the discretion of the
Company, be permitted to (i) contribute to the Plan certain distributions
received from another qualified employee benefit plan, or (ii) direct the
trustee of such other plan to make a trust-to-trust transfer to the Plan of the
participant's account in such other plan.
In accordance with the Plan, participants can direct the investment of their
contributions among 9 investment options of Kemper Service Company and
Alarmguard stock. During 1997, the Company eliminated the High Yield Fund and
U.S. Mortgage Fund investment options and replaced B Fund with A Fund investment
options.
Participants may change their investment options daily.
- 8 -
<PAGE>
Security Systems Holdings, Inc. 401(k) Plan
Notes to Financial Statements (continued)
Years ended December 31, 1997 and 1996
1. DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT NOTES RECEIVABLE
The Plan includes a loan feature for participants who are employed by the
Company enabling them to borrow from their vested account balance. The maximum
amount the participant can borrow is the lesser of 50% of their vested interest
in the Plan or $50,000 less the highest outstanding loan balance over the
previous twelve months. The minimum loan amount is $1,000. The term of the loan
can range from one to five years, or up to 15 years if for the purchase of a
primary residence. Loan repayments are made in equal installments of principal
and interest through automatic payroll deductions starting two months after the
effective date of the loan. The loans are secured by the balance in the
participant's account and bear interest at a rate commensurate with local
prevailing rates as determined by the Plan Administrator. Interest rates on
loans outstanding at December 31, 1997 and 1996 range from 8.0% to 10.5%.
CONDITIONS OF WITHDRAWAL
Upon termination of the participant's employment as a result of retirement,
death, disability, dismissal, or resignation, as defined in the Plan, the
participant's account shall be paid to the participant, or designated
beneficiary, in a lump-sum amount (if account balance is less than $3,500) or
monthly installments based on the value of the participant's account.
EXPENSES
In 1997 and 1996, the Company paid substantially all administrative expenses of
the Plan.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles and, as such, include amounts based on
judgments and estimates made by management, which may differ from actual
results.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. The shares of registered
investment companies are valued at quoted market prices. The participant notes
receivable are stated at cost which approximates fair value. Purchases and sales
of securities are recorded on a trade-date basis. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date.
Alarmguard common stock is purchased on a monthly basis by an independent third
party. At December 31, 1997, the per share price of the common stock was $10.50.
- 9 -
<PAGE>
Security Systems Holdings, Inc. 401(k) Plan
Notes to Financial Statements (continued)
Years ended December 31, 1997 and 1996
3. INVESTMENTS
The Plan's investments are held by a bank administered trust fund. Investments
that represent 5% or more of the Plan's assets available for benefits at
December 31, 1997 and 1996 are as follows:
1997 1996
--------------------------
Total Return Fund - 14,538 shares $146,830 --
Growth A Fund - 20,337 shares 266,193 --
Small Capitalization A Equity Fund - 27,715 shares 185,696 --
Total Return B Fund - 11,029 and 18,234 shares,
respectively 111,285 $183,803
Growth B Fund - 12,085 and 20,451 shares,
respectively 150,026 257,891
Small Capitalization B Equity Fund - 14,496 and
14,799 shares, respectively 92,059 89,682
Alarmguard Holdings, Inc. - 42,440 shares 445,620 --
Diversified Income Fund - 6,850 shares -- 41,030
Short-Intermediate Government Fund - 5,566 shares -- 43,467
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to change or discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants become 100% vested in their accounts.
5. INCOME TAX STATUS
The Internal Revenue Service has ruled (October 27, 1994) that the Plan
qualifies under Section 401(a) of the Internal Revenue Code ("IRC") and the
related trust is, therefore, not subject to tax under Section 501(a) of the
Internal Revenue Code. The Plan is required to operate in conformity with the
IRC to maintain its qualification. The Plan Administrator and management of the
Company are committed to taking all appropriate actions to maintain the Plan's
qualified status.
6. YEAR 2000 ISSUE (UNAUDITED)
The Company has developed a plan to modify its internal information technology
to be ready for the Year 2000 and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become Year 2000 compliant. The
Company currently expects the project to be substantially complete by early
1999. The Company does not expect this project to have a significant effect on
plan operations.
- 10 -
<PAGE>
Security Systems Holdings, Inc. 401(k) Plan
Notes to Financial Statements (continued)
Years ended December 31, 1997 and 1996
7. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of assets available for benefits per the
financial statements to the Form 5500:
DECEMBER 31,
1997 1996
------------------------------
Assets available for benefits per the
financial statements $1,803,900 $674,745
Contribution receivable -- (28,105)
---------- --------
Assets available for benefits per the
Form 5500 $1,803,900 $646,640
========== ========
- 11 -
<PAGE>
Security Systems Holdings, Inc. 401(k) Plan
Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
IDENTITY OF ISSUER,
BORROWER, LESSOR OR
SIMILAR PARTY CURRENT
DESCRIPTION OF INVESTMENT COST* VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kemper Service Company Total Return A Fund-14,538 shares $ 146,830
Growth A Fund-20,337 shares 266,193
Small Capitalization A Equity Fund-27,715 shares 185,696
Diversified Income A Fund-14,148 shares 85,027
Government Money Market Fund - 3,465 shares 3,465
Blue Chip A Fund - 158 shares 2,560
Cash Reserves A Fund - 58,703 shares 58,703
Short-Intermediate Government A Fund - 4,308 shares 33,601
High Return A Fund - 150 shares 4,844
Total Return B Fund - 11,029 111,285
Growth B Fund - 12,085 shares 150,026
Small Capitalization B Equity Fund - 14,496 shares 92,059
Diversified Income B Fund - 6,150 shares 36,899
Blue Chip B Fund - 801 shares 13,029
US Mortgage B Fund - 17 shares 124
Cash reserves B Fund - 16,419 shares 16,419
Short-Intermediate Government B Fund - 5,086 shares 39,462
High Return B Fund - 719 shares 23,599
Alarmguard Holdings, Inc. Alarmguard Common Stock Fund - 42,440 shares $412,811 445,620
Participants notes
receivable Notes mature between June, 1998 and June,
2000 and bear interest at rates which
vary between 8% and 10.5% per annum. 42,521
----------------------
Total $412,811 $1,757,962
======================
</TABLE>
*THE PLAN'S CUSTODIAN WAS UNABLE TO PROVIDE THIS INFORMATION.
- 12 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Schedule of Reportable Transactions
Year ended December 31, 1997
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET* DATE (LOSS)*
- ---------------------------------------------------------------------------------------------------------------------------
CATEGORY (i) - SINGLE TRANSACTION IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS
<S> <C> <C> <C> <C> <C>
Kemper Service Company Total Return A Fund
7,972 shares $ 92,496 $ 92,496
Growth A Fund
11,462 shares 176,353 176,353
2,524 shares 38,944 38,944
Small Capitalization A Equity Fund
14,994 shares 109,040 109,040
Diversified Income A Fund
8,556 shares 51,100 51,100
Government Money Market Fund
57,218 shares $ 57,218 57,218
Cash Reserves A Fund
509,531 shares 509,531 509,531
509,697 shares 509,697 509,697
104,231 shares 104,231 104,231
Total Return B Fund
10,225 shares 116,876 116,876
Growth B Fund
10,141 shares 146,496 146,496
Alarmguard Holdings, Inc. Alarmguard Stock
9,100 shares 79,625 $79,625 79,625
4,900 shares 44,713 44,713 44,713
8,375 shares 83,750 83,750 83,750
6,030 shares 63,730 63,730 63,730
</TABLE>
THERE WERE NO CATEGORY (ii) OR (iv) REPORTABLE TRANSACTIONS DURING THE YEAR
ENDED DECEMBER 31, 1997.
* THE PLAN'S CUSTODIAN WAS UNABLE TO PROVIDE THIS INFORMATION.
- 13 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Schedule of Reportable Transactions
Year ended December 31, 1997
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET* DATE (LOSS)*
- ---------------------------------------------------------------------------------------------------------------------------
CATEGORY (iii) - SERIES OF TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS
<S> <C> <C> <C> <C>
Kemper Service Company Total Return A Fund
14,516 shares $ 168,058 $168,058
2,132 shares $ 24,112 24,112
Growth A Fund
20,380 shares 310,447 310,447
2,560 shares 37,834 37,834
Small Capitalization A Equity Fund
27,534 shares 201,917 201,917
2,842 shares 21,074 21,074
Diversified Income A Fund
14,396 shares 86,282 86,282
502 shares 3,003 3,003
Government Money Market Fund
11,347 shares 11,347 11,347
57,218 shares 57,218 57,218
Cash Reserves A Fund
630,765 shares 630,765 630,765
535,785 shares 535,785 535,785
Short-Intermediate Government A Fund
4,460 shares 34,884 34,884
161 shares 1,256 1,256
</TABLE>
- 14 -
<PAGE>
<TABLE>
<CAPTION>
Security Systems Holdings, Inc. 401(k) Plan
Schedule of Reportable Transactions
Year ended December 31, 1997
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET* DATE (LOSS)*
- ---------------------------------------------------------------------------------------------------------------------------
CATEGORY (iii) - SERIES OF TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF
PLAN ASSETS (CONTINUED)
<S> <C> <C> <C> <C> <C>
Total Return B Fund
2,372 shares $ 24,392 $ 24,392
10,959 shares $125,298 125,298
Growth B Fund
2,865 shares 35,587 35,587
12,133 shares 174,495 174,495
Small Capitalization B Equity Fund
4,848 shares 28,623 28,623
5,171 shares 36,671 36,671
Alarmguard Holdings, Inc. Alarmguard Stock
42,440 shares 412,811 $412,811 412,811
</TABLE>
THERE WERE NO CATEGORY (ii) OR (iv) REPORTABLE TRANSACTIONS DURING THE YEAR
ENDED DECEMBER 31, 1997.
*THE PLAN'S CUSTODIAN WAS UNABLE TO PROVIDE THIS INFORMATION.
- 15 -
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
23.1 Consent of Independent Auditors
- 16 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Security Systems Holdings, Inc.
401(k) Plan
/s/ David Heidecorn
-----------------------------------
David Heidecorn
Trustee, Security Systems Holdings,
Inc. 401(k) Plan
Dated: June 30, 1998
- 17 -
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Post Effective Amendment No.
1 on Form S-8 to the Registration Statement (Form S-4 No. 333-23307) pertaining
to the 1994, 1995 and 1996 Stock Option Plans and the Registration Statement
(Form S-8 No. 333-30523) pertaining to the 1997 Long-Term Stock Incentive Plan
of Alarmguard Holdings, Inc. of our report dated June 22, 1998, with respect to
the financial statements and schedules of the Security Systems Holdings, Inc.
401(K) Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1997.
/s/ Ernst & Young LLP
Stamford, Connecticut
June 30, 1998
