<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 5, 1996
Date of Report (Date of earliest event reported)
Commission file number 0-16979
- -------------------------------------------------------------------------------
ADT LIMITED
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
Cedar House
BERMUDA 41 Cedar Avenue Not Applicable
(Jurisdiction of Hamilton HM12, Bermuda (I.R.S. Employer Identification No.)
Incorporation or (Address of Principal Not Applicable
Organization) Executive Offices)* (Zip Code)
</TABLE>
Registrant's telephone number, including area code 441-295-2244*
- -------------------------------------------------------------------------------
* The executive offices of the subsidiary of registrant which supervises
registrant's North American activities are at One Boca Place, 2255 Glades
Road, Boca Raton, Florida 33431-0835. The telephone number there is
(561) 997-8406.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
It was announced on June 19, 1996 that terms had been agreed for the
acquisition by ADT Limited ("ADT") of the whole of the issued capital of
Automated Security (Holdings) PLC ("ASH") to be effected by means of a Scheme
of Arrangement under Section 425 of the Companies Act 1985 of the United
Kingdom (the "Scheme").
On September 5, 1996 the Scheme became effective in accordance with its terms.
The total consideration in respect of the whole of the issued capital of ASH
consisted of the issue of 7,034,940 ADT common shares with a market value of
approximately $137 million, based on the closing price of an ADT common share
on the New York Stock Exchange on September 5, 1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of businesses acquired
<TABLE>
<S> <C>
Financial Statements of ASH
Page
Report of Independent Chartered Accountants F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Income F-4
Consolidated Statements of Shareholders' Equity F-5
Consolidated Statements of Cash Flows F-8
Consolidated Statement of Recognised Gains and Losses F-9
Company Balance Sheets F-10
Notes to Consolidated Financial Statements F-12
</TABLE>
(b) Pro Forma Financial Information
It is intended that the acquisition of ASH by ADT be accounted for
by means of a pooling of interests.
It is impracticable to provide Pro Forma Financial Information at
this time. ADT will provide such Pro Forma Financial Information
by amendment to this Current Report on Form 8-K by the due date.
(c) Exhibits
<TABLE>
<S> <C>
Exhibit 2.1 Order dated 4 September 1996 of the High Court of Justice
in the Matter of Automated Security (Holdings) PLC
sanctioning the Scheme of Arrangement(1)
Exhibit 23.1 Consent of Independent Chartered Accountants
</TABLE>
(1) Previously filed as an Exhibit to the Registrant's Current
Report dated September 5, 1996 on Form 8-K filed
September 19, 1996.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ADT LIMITED
By: /s/ Stephen J. Ruzika
-----------------------------------
Stephen J. Ruzika
Chief Financial Officer, Executive Vice
President and Director
October 21, 1996
3
<PAGE> 4
AUTOMATED SECURITY (HOLDINGS) PLC
FINANCIAL STATEMENTS
<PAGE> 5
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
To the Board of Directors and Shareholders of
Automated Security (Holdings) PLC and subsidiaries
We have audited the accompanying consolidated balance sheets of Automated
Security (Holdings) PLC as of November 30, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended November 30, 1995; which, as described
in Note 1 have been prepared on the basis of accounting principles generally
accepted in the United Kingdom. These financial statements are the
responsibility of the management of Automated Security (Holdings) PLC. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States 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 consolidated financial statements set out on pages F-2 to
F-50, present fairly, in all material respects, the financial position of
Automated Security (Holdings) PLC at November 30, 1995 and 1994 and the results
of its operations and its cash flows for each of the three years in the period
ended November 30, 1995, in conformity with accounting principles generally
accepted in the United Kingdom which differ in certain significant respects
from those generally accepted in the United States.
By: /s/ Binder Hamlyn
---------------------
Binder Hamlyn
Chartered Accountants
London, England Registered Auditors
May 17, 1996
F-1
<PAGE> 6
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------------
1994 1995 1995
--------- --------- -------
NOTES B.P. '000 B.P. '000 $'000
-----
<S> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash ................................................... 3,934 5,936 9,082
Accounts and notes receivable, less allowances for
possible losses of B.P.2,637,000 and B.P.2,230,000 .... 4(a) 25,818 21,830 33,400
Inventories ............................................ 5 8,095 4,600 7,038
Prepayments and accrued income ......................... 4(b) 3,286 3,195 4,888
--------- --------- -------
TOTAL CURRENT ASSETS ................................... 41,133 35,561 54,408
--------- --------- -------
Long-term accounts and notes receivable, less allowances
for possible losses of B.P.Nil and B.P.718,000 ........ 4(a) 4,122 5,651 8,646
Investment in related companies ........................ 6 3,035 (453) (693)
Other investments ...................................... 7(a) 646 654 1,001
Investment--own shares ................................. 7(b) 3,680 614 939
Property and equipment--net ............................ 8 223,255 227,386 347,901
--------- --------- -------
TOTAL OTHER ASSETS ..................................... 234,738 233,852 357,794
--------- --------- -------
TOTAL ASSETS ........................................... 275,871 269,413 412,202
========= ========= =======
</TABLE>
The figures relating to the year ended November 30, 1995 have been
expressed in US dollars ($), solely for the purpose of convenience using the
Noon Buying Rate in New York City for cable transfers in foreign currencies as
announced for customs purposes by the Federal Reserve Bank of New York in
effect on November 30, 1995. This was $1.53 = B.P.1.00.
See accompanying notes to consolidated financial statements
F-2
<PAGE> 7
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--(CONTINUED)
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------------
1994 1995 1995
--------- --------- ---------
NOTES B.P. '000 B.P. '000 $'000
-----
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt .......................... 9 82,568 83,104 127,149
Accounts payable--trade .................. 14,307 13,094 20,034
Other current liabilities ................ 11 32,518 26,618 40,726
Rentals received in advance .............. 28,575 27,763 42,477
--------- --------- ---------
TOTAL CURRENT LIABILITIES ................ 157,968 150,579 230,386
OTHER LIABILITIES:
Long-term debt ........................... 12 78,712 80,965 123,876
Non-current liabilities .................. 13 3,908 5,385 8,239
--------- --------- ---------
TOTAL LIABILITIES ........................ 240,588 236,929 362,501
--------- --------- ---------
COMMITMENTS AND CONTINGENCIES............. 8,12, 21 & 24
SHAREHOLDERS' EQUITY:
Ordinary Shares .......................... 21 11,957 11,957 18,294
Redeemable Preference Shares ............. 21 48,631 48,629 74,403
Additional paid-in capital ............... 20 5,729 5,610 8,583
Non-distributable reserves ............... 20 (90,681) (82,432) (126,121)
Retained earnings ........................ 20 59,647 48,720 74,542
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY ............... 35,283 32,484 49,701
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 275,871 269,413 412,202
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE> 8
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------------
1993 1994
NOTES (AS RESTATED) (AS RESTATED) 1995 1995
----- ------------- ------------- -------- --------
B.P.'000 B.P.'000 B.P.'000 $'000
<S> <C> <C> <C> <C> <C>
NET SALES
Continuing operations................. 143,136 154,303 153,733 235,211
Discontinued operations............... 17,639 11,768 9,616 14,712
------------- ------------- -------- --------
17 160,775 166,071 163,349 249,923
Cost of sales......................... 15 105,768 108,235 105,511 161,431
------------- ------------- -------- --------
Gross profit on sales................. 55,007 57,836 57,838 88,492
General and administrative expenses... 15 35,776 34,660 36,169 55,339
------------- ------------- -------- --------
OPERATING INCOME/(LOSS)
Continuing operations................. 17 23,416 24,399 20,826 31,863
Discontinued operations............... 17 (4,185) (1,223) 843 1,290
------------- ------------- -------- --------
19,231 23,176 21,669 33,153
------------- ------------- -------- --------
Share of related companies' results... 15 412 761 10 15
Interest income....................... 1,269 181 173 265
Interest expense...................... 17 (12,023) (12,695) (15,035) (23,003)
Exceptional items..................... 16 (1,578) (23,177) (14,225) (21,764)
------------- ------------- -------- --------
INCOME/(LOSS) BEFORE TAXES ON INCOME.. 17 7,311 (11,754) (7,408) (11,334)
TAXES ON INCOME....................... 18 1,800 1,000 800 1,224
------------- ------------- -------- --------
NET INCOME/(LOSS)..................... 5,511 (12,754) (8,208) (12,558)
============= ============= ======== ========
EARNINGS/(LOSS) PER ORDINARY SHARE
Basic................................. 1 2.3p (13.0)p (9.2)p (14.1)ct.
============= ============= ======== ========
Fully diluted......................... 1 2.3p (13.0)p (9.2)p (14.1)ct.
ADJUSTED EARNINGS PER ORDINARY SHARE.. 1 2.5p 4.2 p (1.9)p (2.9)ct.
============= ============= ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic................................. 116.5m 119.5 m 119.6 m 119.6 m
Fully diluted......................... 116.5m 119.5 m 119.6 m 119.6 m
============= ============= ======== ========
</TABLE>
F-4
<PAGE> 9
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
6% CONVERTIBLE
CUMULATIVE
5% CONVERTIBLE CUMULATIVE REDEEMABLE
REDEEMABLE PREFERENCE SHARES PREFERENCE SHARES
ORDINARY SHARES 10P PAR VALUE B.P.1 PAR VALUE B.P.1 PAR VALUE
----------------------------- ------------------------------ ------------------
AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED
'000 '000 B.P. '000 '000 '000 B.P. '000 '000 '000
---------- ------- --------- ---------- ------ --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1992......... 200,000 113,487 11,349 15,000 8,558 8,558 42,000 40,769
Net income for the year............
Shares (converted) issued*......... 3,590 359 (603) (603) (2)
Shares issue expenses..............
Revaluations and realization
adjustments.......................
Goodwill written off...............
Goodwill transferred to Profit and
Loss account on disposals.........
Dividends:
on Ordinary Shares................
Less: Paid by bonus issue.........
on 5% Preference Shares (5p)......
on 6% Preference Shares (6p)......
Currency translation adjustments...
Amortization of CCB costs
transferred to additional paid in
capital..........................
--------- ------- --------- ---------- ------- --------- ---------- ------
BALANCE, NOVEMBER 30, 1993......... 200,000 117,077 11,708 15,000 7,955 7,955 42,000 40,767
========= ======= ========= ========== ======= ========= ========== ======
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL NON-
PAID-IN DISTRIBUTABLE RETAINED
CAPITAL RESERVES EARNINGS TOTAL
PAR VALUE --------- ------------- --------- ---------
B.P. '000 B.P. '000 B.P. '000 B.P. '000 B.P. '000
--------- --------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1992........ 40,769 5,818 (82,269) 72,894 57,119
Net income for the year........... 5,511 5,511
Shares (converted) issued*........ (2) 600 (321) 33
Shares issue expenses............. (279) (279)
Revaluations and realization
adjustments...................... (38) 38 --
Goodwill written off.............. (4,951) (4,951)
Goodwill transferred to Profit and
Loss account on disposals........ 314 314
Dividends:
on Ordinary Shares............... (3,473) (3,473)
Less: Paid by bonus issue........ 3,038 3,038
on 5% Preference Shares (5p)..... (398) (398)
on 6% Preference Shares (6p)..... (2,446) (2,446)
Currency translation adjustments.. (458) (458)
Amortization of CCB costs
transferred to additional paid
in capital...................... (119) 119 --
------ ----- ------- ------ ------
BALANCE, NOVEMBER 30, 1993........ 40,767 6,020 (87,402) 74,962 54,010
====== ===== ======= ====== ======
</TABLE>
* Shares converted at prices ranging between 130p and 267p.
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 10
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
5% CONVERTIBLE CUMULATIVE 6% CONVERTIBLE CUMULATIVE
REDEEMABLE PREFERENCE SHARES REDEEMABLE PREFERENCE SHARES
ORDINARY SHARES 10P PAR VALUE B.P.1 PAR VALUE B.P.1 PAR VALUE
------------------------------ ----------------------------- -----------------------------
AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE
---------- ------ ---------- ---------- ------ --------- ---------- ------ ---------
'000 '000 B.P.'000 '000 '000 B.P.'000 '000 '000 B.P.'000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1993....... 200,000 117,077 11,708 15,000 7,955 7,955 42,000 40,767 40,767
Net Loss for the year............
Shares (converted) issued*....... 2,494 249 (87) (87) (4) (4)
Shares issue expenses............
Goodwill written off.............
Goodwill transferred to Profit
and Loss account on Arius Inc..
Dividends:
on 5% Preference Shares (5p)...
on 6% Preference Shares (6p)...
Currency translation
adjustments....................
Transfer from revaluation reserve
to retained earnings...........
Amortization of CCB costs
transferred to additional paid
in capital.....................
---------- ------- ---------- ---------- ------ --------- ---------- ------ ---------
BALANCE, NOVEMBER 30, 1994....... 200,000 119,571 11,957 15,000 7,868 7,868 42,000 40,763 40,763
========== ======= ========== ========== ====== ========= ========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL NON-
PAID-IN DISTRIBUTABLE RETAINED
CAPITAL RESERVES EARNINGS TOTAL
---------- ------------- -------- --------
B.P.'000 B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1993.................................................... 6,020 (87,402) 74,962 54,010
Net Loss for the year......................................................... (12,754) (12,754)
Shares (converted) issued*.................................................... (157) 1
Shares issue expenses......................................................... (14) (14)
Goodwill written off.......................................................... (20,193) (20,193)
Goodwill transferred to Profit
and Loss account on Arius Inc............................................... 17,365 17,365
Dividends:
on 5% Preference Shares (5p)................................................ (393) (393)
on 6% Preference Shares (6p)................................................ (2,446) (2,446)
Currency translation
adjustments................................................................. (293) (293)
Transfer from revaluation reserve
to retained earnings........................................................ (158) 158 --
Amortization of CCB costs
transferred to additional paid
in capital.................................................................. (120) 120 --
--------- -------- ------- -------
BALANCE, NOVEMBER 30, 1994.................................................... 5,729 (90,681) 59,647 35,283
========= ======== ======= =======
</TABLE>
* Shares converted at prices ranging between 165p and 267p.
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 11
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
5% CONVERTIBLE CUMULATIVE 6% CONVERTIBLE CUMULATIVE
REDEEMABLE PREFERENCE SHARES REDEEMABLE PREFERENCE SHARES
ORDINARY SHARES 10p PAR VALUE B.P.1 PAR VALUE B.P.1 PAR VALUE
------------------------------ ----------------------------- -----------------------------
AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE AUTHORIZED ISSUED PAR VALUE
'000 '000 B.P. '000 '000 '000 B.P. '000 '000 '000 B.P. '000
---------- ------ --------- ---------- ------ --------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1994...... 200,000 119,571 11,957 15,000 7,868 7,868 42,000 40,763 40,763
Net Loss for the year...........
Shares (converted) issued* ..... 1 (1) (1) (1) (1)
Shares issue expenses ..........
Goodwill written off ...........
Goodwill transferred to
Profit and Loss account........
Dividends:
on 5% Preference Shares (5p) ..
on 6% Preference Shares (6p) ..
Currency translation
adjustments ...................
Amortization of CCB costs
transferred to additional
paid in capital ...............
---------- ------- --------- ---------- ------ --------- ---------- ------ ---------
BALANCE, NOVEMBER 30, 1995...... 200,000 119,572 11,957 15,000 7,867 7,867 42,000 40,762 40,762
========== ======= ========= ========== ====== ========= ========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL NON-
PAID-IN DISTRIBUTABLE RETAINED
CAPITAL RESERVES EARNINGS TOTAL
---------- ------------- --------- ---------
B.P. '000 B.P. '000 B.P. '000 B.P. '000
---------- ------------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1994......... 5,729 (90,681) 59,647 35,283
Net Loss for the year ............. (8,208) (8,208)
Shares (converted) issued* ........ 2 --
Shares issue expenses.............. (1) (1)
Goodwill written off .............. (232) (232)
Goodwill transferred to
Profit and Loss account .......... 8,843 8,843
Dividends:
on 5% Preference Shares (5p) ..... (393) (393)
on 6% Preference Shares (6p) ..... (2,446) (2,446)
Currency translation
adjustments ...................... (362) (362)
Amortization of CCB costs
transferred to additional
paid in capital .................. (120) 120 --
---------- ------------- --------- --------
BALANCE, NOVEMBER 30, 1995......... 5,610 (82,432) 48,720 32,484
========== ============= ========= ========
</TABLE>
* Shares converted at prices ranging between 162p and 267p.
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 12
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------
1993 1994 1995 1995
-------- -------- -------- -------
B.P.'000 B.P.'000 B.P.'000 $'000
<S> <C> <C> <C> <C>
Continuing operations ....................... 67,475 63,400 50,012 76,519
Reorganization .............................. (1,793) -- -- --
Discontinued activities and disposal costs .. (10,484) 1,869 1,027 1,571
-------- -------- -------- -------
NET CASH INFLOW FROM OPERATING ACTIVITIES 55,198 65,269 51,039 78,090
-------- -------- -------- -------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received ............................... 767 164 161 246
Interest paid (including Stapled Unit charges) .. (11,616) (10,662) (14,973) (22,908)
Dividends paid .................................. (9,293) (2,159) (2,839) (4,344)
Dividends from associated undertaking ........... -- 106 -- --
Payments on currency hedging instruments ........ -- (5,349) -- --
-------- -------- -------- --------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE ........................ (20,142) (17,900) (17,651) (27,006)
-------- -------- -------- --------
Taxation
UK (including Advance Corporation Tax) .......... (2,769) (1,071) (505) (773)
Overseas ........................................ -- (88) 6 9
-------- -------- -------- --------
TAXATION PAID ................................... (2,769) (1,159) (499) (764)
-------- -------- -------- --------
INVESTING ACTIVITIES
Purchase of tangible fixed assets ............... (59,020) (43,603) (38,502) (58,908)
Purchase of subsidiary undertakings (net of cash
and cash equivalents acquired) ................. (4,709) (1,480) -- --
Purchase of associated undertakings ............. (10) (2,946) (232) (355)
Loans to associated undertakings ................ -- (983) --
Payment on guarantee to associate undertaking ... -- -- (1,921) (2,939)
Purchase of investments ......................... (226) (101) -- --
Sale of tangible fixed assets ................... 1,822 1,964 1,108 1,695
Sale of subsidiary and associated undertakings .. 6,962 -- 8,677 13,276
-------- -------- -------- --------
NET CASH (OUTFLOW)/INFLOW FROM INVESTING
ACTIVITIES ..................................... (55,181) (47,149) (30,870) (47,231)
-------- -------- -------- --------
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING ...... (22,894) (939) 2,019 3,089
-------- -------- -------- --------
FINANCING
Issue of Ordinary Shares ........................ 33 -- -- --
Share issue expenses ............................ (279) (14) (1) (2)
Repayment of Stapled Units ...................... (3,940) -- -- --
(Decrease)/increase in borrowings ............... 26,134 5,870 (614) (939)
-------- -------- -------- --------
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ........ 21,948 5,856 (615) (941)
-------- -------- -------- --------
INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS (Note 1) ...................... (946) 4,917 1,404 2,148
-------- -------- -------- --------
Note 1:
INCREASE/(DECREASE) IN CASH EQUIVALENTS ......... (1,063) 1,677 (574) (878)
INCREASE/(DECREASE) IN CASH ..................... 117 3,240 1,978 3,026
-------- -------- -------- --------
INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS ................................ (946) 4,917 1,404 2,148
-------- -------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements
F-8
<PAGE> 13
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
NET INCOME/(LOSS) FOR THE YEAR ................................ 5,511 (12,754) (8,208)
Currency translation differences on foreign currency
net investments excluding goodwill ........................... 911 (2,429) 1,415
Currency translation differences on foreign currency hedging .. (1,369) 2,136 (1,777)
-------- -------- ---------
TOTAL RECOGNIZED GAINS AND LOSSES FOR THE YEAR ................ 5,053 (13,047) (8,570)
======== ======== =========
</TABLE>
A note of historical cost profits and losses has not been presented since the
amounts involved are not materially different from those shown on F-4.
F-9
<PAGE> 14
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
COMPANY BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
NOTES 1994 1995
----- --------- ---------
B.P. '000 B.P. '000
<S> <C> <C> <C>
ASSETS
CURRENT:
Cash ............................................ 2,404 3,194
Amounts owed by subsidiary companies ............ 153,879 176,180
Other accounts receivable ....................... 500 484
Prepayments and accrued income .................. 194 218
--------- ---------
TOTAL CURRENT ASSETS ............................ 156,977 180,076
--------- ---------
Investment in subsidiary and related companies .. 22 188,263 182,847
Other investments ............................... 7(a) 646 654
Investment--own shares .......................... 7(b) 3,680 614
--------- ---------
TOTAL OTHER ASSETS .............................. 192,589 184,115
--------- ---------
TOTAL ASSETS .................................... 349,566 364,191
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-10
<PAGE> 15
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
COMPANY BALANCE SHEETS -- (CONTINUED)
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
NOTES 1994 1995
----- --------- ---------
B.P. '000 B.P. '000
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ............................. 22 84,735 100,822
Other current liabilities ................... 22 10,698 7,371
-------- --------
TOTAL CURRENT LIABILITIES ................... 95,433 108,193
OTHER LIABILITIES:
Long-term debt .............................. 22 35,019 36,707
Non-current liabilities ..................... 22 45,476 45,319
-------- --------
TOTAL LIABILITIES ........................... 175,928 190,219
-------- --------
COMMITMENTS AND CONTINGENCIES ............... 8, 12, 21 & 24
SHAREHOLDERS' EQUITY:
Ordinary Shares ............................. 21 11,957 11,957
Redeemable Preference Shares ................ 21 48,631 48,629
Additional paid-in capital .................. 20 5,729 5,610
Non-distributable reserves .................. 20 105,312 105,312
Retained earnings ........................... 20 2,009 2,464
-------- --------
TOTAL SHAREHOLDERS' EQUITY .................. 173,638 173,972
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .. 349,566 364,191
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-11
<PAGE> 16
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NATURE OF OPERATIONS
Automated Security (Holdings) PLC is the holding company of a group
operating in the electronic security sector which designs, markets, installs,
maintains and monitors electronic security systems to safeguard life and
property from a wide range of hazards. The Group's principal markets are the
United Kingdom with some 73% of sales and the United States with 27% of sales.
Substantially all of the customers in the US and some 75% of customers in the
UK are in the commercial, industrial and public sectors. The balance of
services are provided in the private, residential sector.
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of financial statements
As in previous accounting periods, the financial statements have been
prepared under United Kingdom generally accepted accounting principles using
the historical cost convention, with the exception that certain property has
been revalued.
Consolidation
The consolidated financial statements incorporate Automated Security
(Holdings) PLC ("Automated Security (Holdings)") and its subsidiaries (the
"Group") for the year ended November 30. When subsidiaries are acquired or
disposed of during an accounting period, unless they are accounted for as a
pooling-of-interest, the consolidated statement of income includes the results
only for that part of the period during which they are subsidiaries.
Goodwill
Goodwill, being the excess of the consideration on the acquisition of
businesses over the fair value of the net assets acquired, is written off
direct to non-distributable reserves at the date of acquisition.
Investments
Fixed asset investments, excluding related companies, are included at cost
less amounts provided where, in the opinion of the directors, there is a
permanent diminution in value.
A company is treated as being a related company if, not being a subsidiary
company, the Group is in a position to exercise significant influence over the
company and the investment is considered to be long-term.
The results and net assets of related companies are accounted for using
the equity method. Accordingly, the consolidated statement of income includes
the Group's share of income before taxes and taxes on income for the part of
the accounting period during which the companies are treated as related.
Premiums on the acquisition of related companies are written off to
non-distributable reserves at the date of acquisition.
The amounts at which investments in related companies are included in the
consolidated balance sheet therefore comprise the cost of the investment less
premium on acquisition together with the Group's share of retained profits or
losses since the date of acquisition less any amounts provided where, in the
opinion of the directors, there is a permanent diminution in value.
Development expenditure and distribution rights
Expenditure on development and distribution rights is written off as it is
incurred.
F-12
<PAGE> 17
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Inventories
Inventories are valued at the lower of cost and net realizable value on
the FIFO basis. Cost of products manufactured and distributed by the Group
consists of direct material and labor costs, together with appropriate
overheads.
Property and equipment
The cost of equipment on contract hire installed by Group companies is
capitalized as an operating lease. Costs comprise materials, labor and
attributable overheads relating to identifiable and recoverable equipment. All
other costs are written off as they are incurred.
Depreciation and amortization
Property and equipment is depreciated on a straight line basis at the
following annual rates:
<TABLE>
<S> <C>
Equipment on contract hire:
Burglar alarms ................................. 7%-10%
Communication centre equipment .................. 10%-20%
Freehold buildings .............................. 2.5%
Leasehold premises and improvements ............. over unexpired period of lease
Motor vehicles .................................. 25%
Other assets .................................... 10% to 33.3%
</TABLE>
No depreciation is provided on freehold land.
Equipment leased to customers
Equipment leased to customers under finance leases is deemed to be sold at
normal selling value which is taken to net sales at the inception of the lease.
Debtors under finance leases represent outstanding amounts due under these
agreements less finance charges allocated to future periods. Finance lease
income is recognized over the primary period of the lease so as to produce a
constant rate of return on the net cash investments.
Equipment leased to customers under operating leases is capitalized in
accordance with the accounting policy on property and equipment (see above).
Operating lease income is accounted for on a straight line basis with any
rental increases recognized during the period to which they relate.
Operating Leases
Rentals paid under operating leases are charged against income on a
straight line basis over the period of the lease.
Deferred taxation
Deferred taxation is provided on the liability method in respect of timing
differences between profits as computed for taxation purposes and profits as
stated in the financial statements except to the extent that it is expected
that the liability will not be payable in the foreseeable future. Timing
differences arise mainly from the excess of tax allowances on property and
equipment over the corresponding depreciation charged in the financial
statements.
F-13
<PAGE> 18
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Foreign exchange
Foreign currency assets and liabilities of United Kingdom companies and
the financial statements of overseas subsidiaries and related companies are
translated into sterling at the rates of exchange ruling at the balance sheet
date. The results of overseas subsidiaries and related companies have been
translated at the average exchange rate ruling during the year with the
adjustment between average rates and the rates ruling at the balance sheet date
being taken to reserves. The differences arising from the translation of net
equity interests including goodwill in overseas subsidiaries and related
companies, and of matching foreign currency loans and foreign currency swap
facilities, are dealt with through reserves. All other exchange differences are
dealt with in the profit and loss account.
Pensions
The Group operates a funded defined benefit plan for UK employees, based
on final pensionable salary, with assets held in funds administered by the
Trustees of the plan. The cost of providing pensions is spread on a systematic
and rational basis over the period during which the Group benefits from the
members' services.
The pension costs and any necessary provisions are assessed in accordance
with the advice of an independent qualified actuary. Variations from the
regular cost are spread over the average remaining service lives of current
employees. Outside the UK, the Group in general operates defined contribution
plans for certain executives, the costs of which are recognized on the basis of
contributions payable.
Employees' Share Ownership Plan Trust
The Group operates an Employees' Share Ownership Plan ("ESOP") Trust for
directors and employees. The ESOP Trust holds shares in the Company and is
financed by a loan from the Company. In prior years the net amount due from the
Trust was shown in other debtors but following the publication of UITF Abstract
13 in 1995, this balance is now classified as an investment in "own shares" and
the comparative figures have been restated accordingly.
Provision is made for the diminution in the market value of the shares
held by the ESOP Trust.
Earnings per share
Earnings per ordinary share are calculated on a basic and fully diluted
basis. The basic calculation is based on total net income including
discontinued operations and the weighted average number of ordinary shares in
issue during the year.
Adjusted earnings per ordinary share is calculated by dividing the net
income attributable to ordinary shareholders prior to the charge for the amount
written off fixed asset investments and the loss on sale of subsidiary and
related companies by the weighted average number of ordinary shares in issue
throughout the year. Adjusted earnings have been shown to illustrate the
earnings prior to these exceptional non-recurring charges.
Use of estimates in the preparation of financial statements
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
statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-14
<PAGE> 19
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. RESTATEMENT OF PRIOR YEAR RESULTS
The results of prior years have been restated in two respects to accord
with current accounting procedures. The results of the operations sold during
1995 have been reclassified as discontinued operations. Revenue from continuing
operations has therefore been reduced by B.P.11,768,000 in 1994 and
B.P.10,394,000 in 1993 and operating profit from continuing operations has been
reduced by B.P.2,121,000 in 1994 and B.P.1,332,000 in 1993.
The amounts provided in respect of the ESOP of B.P.450,000 in 1994 and
B.P.200,000 in 1993 have also been reclassified in the comparative figures from
general and administrative expenses to exceptional items.
3. ACQUISITIONS
There were no acquisitions of businesses during the year ended November
30, 1995.
During the year ended November 30, 1994 the Group acquired certain assets
of Sonitrol of Eugene in the United States for an initial cash consideration of
B.P.1,480,000($2,070,000) and a deferred consideration of B.P.289,000
($452,000).
During the year ended November 30, 1993 the Group acquired Telecom
Security in the UK for an initial cash consideration of B.P.6.9 million and an
accrued future consideration of B.P.1.4 million.
These companies are all in the Security Systems business and the
acquisitions were accounted for as purchases. The results of operations have
been included in the financial statements since their respective dates of
acquisition.
4(A) ACCOUNTS AND NOTES RECEIVABLE
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------------------------------------------------
1994 1995
------------------------------ -------------------------------
WITHIN OVER WITHIN OVER
1 YEAR 1 YEAR TOTAL 1 YEAR 1 YEAR TOTAL
------------------------------ -------------------------------
B.P.'000 B.P.'000 B.P.'000 B.P. 000 B.P.'000 B.P.'000
<S> <C> <C> <C> <C> <C> <C>
Trade receivables.... 22,511 -- 22,511 19,225 -- 19,225
Finance lease
receivables......... 3,652 4,122 7,774 2,602 6,136 8,738
-------- -------- --------- --------- -------- ---------
26,163 4,122 30,285 21,827 6,136 27,963
Provision for
doubtful debts..... (2,637) -- (2,637) (2,230) (718) (2,948)
--------- -------- --------- --------- -------- ---------
23,526 4,122 27,648 19,597 5,418 25,015
Other ............ 2,292 -- 2,292 2,233 233 2,466
--------- -------- --------- --------- -------- ---------
25,818 4,122 29,940 21,830 5,651 27,481
========= ======== ========= ========= ======== =========
</TABLE>
F-15
<PAGE> 20
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
4(A) ACCOUNTS AND NOTES RECEIVABLE--(CONTINUED)
Finance lease receivables at November 30, 1995 comprised:
<TABLE>
<CAPTION>
B.P.'000
<S> <C>
Future minimum lease payments .................................... 10,233
Maintenance costs ................................................ (346)
Provision for doubtful debts ..................................... (1,024)
Residual value ................................................... --
Initial direct costs capitalized ................................. --
Unearned income .................................................. (1,149)
-------
Finance lease receivables......................................... 7,714
=======
</TABLE>
Finance lease interest receivable of B.P.489,000 (1994: B.P.448,000; 1993:
B.P.867,000) is included in turnover and profit before interest. Finance lease
rentals receivable in the year were approximately B.P.3.4 million (1994:
B.P.2.9 million; 1993: B.P.3.4 million).
The future minimum lease payments at November 30, 1995 are receivable as
follows:-
<TABLE>
<CAPTION>
B.P.'000
<S> <C>
Within one year .................................................... 3,439
Between 1-2 years .................................................. 2,983
Between 2-3 years .................................................. 2,194
Between 3-4 years .................................................. 1,259
Between 4-5 years .................................................. 358
After more than 5 years ............................................ --
-------
10,233
=======
</TABLE>
4(B) PREPAYMENTS AND ACCRUED INCOME
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
3,286 3,195
======== ========
Included in prepayments is a pension prepayment of B.P.87,000 (1994: B.P.151,000).
</TABLE>
5. INVENTORIES
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Work in progress ........................................ 3,388 1,079
Raw materials and components ............................ 738 13
Finished goods .......................................... 3,969 3,508
--------- ---------
8,095 4,600
========= =========
</TABLE>
F-16
<PAGE> 21
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. INVESTMENT IN RELATED COMPANIES
<TABLE>
<CAPTION>
OTHER SHARE
INVESTMENTS NET ASSETS TOTAL
----------- ---------- ---------
B.P. '000 B.P.'000 B.P. '000
<S> <C> <C> <C>
At December 1, 1994 .............. 327 2,708 3,035
Additions ........................ -- 232 232
Premium on acquisition ........... -- (232) (232)
Exchange adjustments ............. -- (24) (24)
Disposals ........................ -- (3,409) (3,409)
Share net income ................. -- (55) (55)
------- ------- -------
At November 30, 1995 ............. 327 (780) (453)
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE
HELD INVESTMENT
----------- -------------------
ACCOUNTS
SHARE OF NET ASSETS/LIABILITIES PREPARED TO 1994 1995 1994 1995
-------------- ---- ---- ---- ----
% % B.P.'000 B.P.'000
<S> <C> <C> <C> <C> <C>
TVX Inc ........................................... September 30 41 40 (170) (780)
Compagnie Generale de Protection et Securite SA ... -- 40 -- 2,740 --
Microtech Security (UK) Limited ................... -- 25 -- 138 --
Arius Inc ......................................... In Chapter 7 43 43 -- --
-------- --------
2,708 (780)
======== ========
</TABLE>
No share of profits has been incorporated in respect of Arius Inc and full
provision was made in 1994 for all the Group's investment, loans and liabilities
in respect of this company.
Other investments at November 30, 1995 comprise 48.5% of the Redeemable
Preferred Stock par value $0.01, of TVX Inc.
7. OTHER INVESTMENTS
(A) LOANS
<TABLE>
<CAPTION>
B.P.'000
<S> <C>
At December 1, 1994 ................................................. 646
Exchange adjustments ................................................ 8
------
At November 30, 1995 ................................................ 654
======
</TABLE>
Other investments at November 30, 1995 and November 30, 1994 relate to
loans to TVX Inc.
F-17
<PAGE> 22
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. OTHER INVESTMENTS--(CONTINUED)
(B) OWN SHARES
<TABLE>
<CAPTION>
GROUP AND COMPANY B.P.'000
-----------------
<S> <C>
COST
At December 1, 1994 (as previously stated) ...................... --
Transferred from other debtors .................................. 5,930
--------
At December 1, 1994 (as restated) and at November 30, 1995....... 5,930
--------
PROVISIONS
At December 1, 1994 (as previously stated) ...................... --
Transferred from other debtors .................................. (2,250)
--------
At December 1, 1994 (as restated) ............................... (2,250)
Charge for the year ............................................. (3,066)
--------
At November 30, 1995 ............................................ (5,316)
--------
NET BOOK VALUE
At November 30, 1995 ............................................ 614
========
At November 30, 1994 ............................................ 3,680
========
</TABLE>
Own shares held relate to the ESOP Trust. The Company has loans
outstanding from the Trust of B.P.5.9 million and its principal assets are
investments in the Company's shares. At November 30, 1995 the ESOP Trust held
the following shares in the company:-
<TABLE>
<CAPTION>
MARKET VALUE
AT NOVEMBER 30,
1995
---------------------
NO. PER SHARE B.P. '000
---------
<S> <C> <C> <C>
Ordinary Shares of 10p each .................... 2,124,582 24p 510
5% Convertible Cumulative Redeemable Preference
Shares of B.P.1 each ......................... 70,000 38.5p 27
6% Convertible Cumulative Redeemable Preference
Shares of B.P.1 each ......................... 200,000 38.5p 77
--------
614
--------
</TABLE>
The ESOP executive share option scheme (the "Scheme") involves a
participant being granted an option to subscribe for Ordinary Shares of the
Company at a price based on the market price of such Ordinary Shares at the
date of the grant. All directors and employees of the Group may participate in
the Scheme at the discretion of the Board of directors. The maximum number of
shares which may be granted to any recipient is restricted by reference to a
formula based upon the annual remuneration of the individual director or
employee. The options are exercisable during a period between three and ten
years after the date of the grant (and in certain cases between three and seven
years from the date of the grant ) with the last date for such exercise varying
between 1996 and 2000. The prices at which the options are exercisable are in
the range of B.P.2.45 per share to B.P.2.693 per share. At November 30, 1995
there were 722,000 Ordinary Shares subject to option under the Scheme.
The costs of the ESOP have been met by the Trust and the ESOP has not
waived any dividends due on the Company's shares.
F-18
<PAGE> 23
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
EQUIPMENT MOTOR
ON COMMUN- VEHICLES,
LAND AND CONTRACT ICATION FIXTURES
BUILDINGS HIRE CENTRES & PLANT TOTAL
--------- -------- -------- --------- --------
B.P.'000 B.P.'000 B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C> <C> <C>
COST OR VALUATION
Balance, November 30, 1992 .......... 5,126 268,472 -- 15,365 288,963
Transfers ........................... -- (8,616) 6,524 2,092 --
Exchange rate adjustment ............ 14 128 16 14 172
On acquisition ...................... 455 5,145 -- 283 5,883
Additions ........................... 532 51,204 2,692 4,592 59,020
Disposals ........................... (311) (15,954) (1,091) (5,812) (23,168)
-------- -------- -------- --------- --------
Balance, November 30, 1993 .......... 5,816 300,379 8,141 16,534 330,870
Exchange rate adjustment ............ (69) (2,980) (235) (361) (3,645)
Additions ........................... 24 41,090 659 1,830 43,603
Disposals ........................... (627) (15,256) (104) (2,800) (18,787)
Other movements (see note (b)) ...... -- (9,987) -- -- (9,987)
-------- -------- -------- --------- --------
Balance, November 30, 1994 .......... 5,144 313,246 8,461 15,203 342,054
Exchange rate adjustment ............ 50 2,345 3 138 2,536
Reclassification .................... 255 -- (255) -- --
Additions ........................... 8 35,919 288 2,287 38,502
Disposals ........................... (61) (17,913) (3,830) (5,245) (27,049)
-------- -------- -------- --------- --------
Balance, November 30, 1995 .......... 5,396 333,597 4,667 12,383 356,043
======== ======== ======== ========= ========
ACCUMULATED DEPRECIATION
Balance, November 30, 1992 .......... 69 81,502 -- 6,489 88,060
Transfers ........................... -- (2,812) 1,949 863 --
Charged in the year ................. 168 36,804 864 3,099 40,935
Exchange rate adjustment ............ (5) (111) 7 9 (100)
Disposals ........................... (6) (15,954) (770) (3,486) (20,216)
-------- -------- -------- --------- --------
Balance, November 30, 1993 .......... 226 99,429 2,050 6,974 108,679
Charged in the year ................. 315 34,361 1,206 3,069 38,951
Exchange rate adjustment ............ (2) (795) (75) (187) (1,059)
Disposals ........................... (90) (15,256) (103) (2,336) (17,785)
Other movements (see note (b)) ...... -- (9,987) -- -- (9,987)
-------- -------- -------- --------- --------
Balance, November 30, 1994 .......... 449 107,752 3,078 7,520 118,799
Charged in the year (see note (a)) .. 394 28,308 2,514 3,396 34,612
Exchange rate adjustment ............ 5 865 6 76 952
Disposals ........................... (14) (17,252) (3,828) (4,612) (25,706)
-------- -------- -------- --------- --------
Balance, November 30, 1995 .......... 834 119,673 1,770 6,380 128,657
======== ======== ======== ========= ========
NET BOOK VALUE
Balance, November 30, 1993 .......... 5,590 200,950 6,091 9,560 222,191
======== ======== ======== ========= ========
Balance, November 30, 1994 .......... 4,695 205,494 5,383 7,683 223,255
======== ======== ======== ========= ========
Balance, November 30, 1995 .......... 4,562 213,924 2,897 6,003 227,386
======== ======== ======== ========= ========
</TABLE>
F-19
<PAGE> 24
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. PROPERTY AND EQUIPMENT--(CONTINUED)
(A) The depreciation provision for the year includes B.P.1,351,000 in
Communication Centres and B.P.997,000 in Motor Vehicles, Fixtures and Plant in
respect of accelerated depreciation leasehold improvements, computer equipment
and business systems at API.
(B) Other movements in equipment on contract hire relate to the
elimination of balances in respect of systems which have been fully depreciated
and where the related contract has been cancelled in previous years.
(C) The net book value of fixed assets includes B.P.Nil (1994: B.P.
181,000; 1993: B.P.355,000) in respect of assets held under finance leases.
The depreciation charge in respect of these assets was B.P.82,000 (1994:
B.P.99,000; 1993: B.P.174,000).
(D) LAND AND BUILDINGS
<TABLE>
<CAPTION>
1994 1995
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
The net book values of land and buildings comprise:
Freehold buildings ................................ 2,173 2,128
-------- --------
Leaseholds over 50 years .......................... 954 1,136
Other leaseholds .................................. 1,568 1,298
-------- --------
Total leaseholds .................................. 2,522 2,434
-------- --------
Total land and buildings .......................... 4,695 4,562
======== ========
</TABLE>
The amount attributable to freehold land included above is B.P.709,000
(1994: B.P.709,000).
The analysis of the gross book value is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Cost .............................................. 3,534 3,786
1992 Valuation .................................... 1,610 1,610
--------- --------
Gross Value ....................................... 5,144 5,396
========= ========
</TABLE>
The net book value of land and buildings, determined by reference to their
historical costs, is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Cost .............................................. 5,144 5,396
Depreciation ...................................... (449) (834)
--------- -------
Net book value at historical cost ................. 4,695 4,562
========== =======
</TABLE>
(E) CAPITAL COMMITMENTS OUTSTANDING ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Contracts placed .................................... 228 475
========= ========
Expenditure authorized but not contracted for ....... 706 1,972
========= ========
</TABLE>
F-20
<PAGE> 25
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
9. SHORT-TERM DEBT
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Bank loans and overdrafts (unsecured) (see note 12) .. 82,278 82,992
Current portion of long-term debt (see note 12) ...... 290 112
--------- ---------
82,568 83,104
========= =========
</TABLE>
10. DIVIDENDS
The Directors have not recommended payment of a dividend in respect of the
Ordinary Shares for 1995 or 1994. All of the preference dividends were paid for
1994 but in 1995 only the interim dividends have been paid on the due date. The
balance of the preference dividends has been accrued but it should be noted
that the Company is unlikely to be in a position to pay Preference or Ordinary
dividends to shareholders for the time being.
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Interim dividends:
Ordinary Shares: Nil (1994: Nil) per Share ........... -- --
Preference Share dividends ........................... 1,420 1,420
--------- ---------
1,420 1,420
--------- ---------
Final Dividends:
Ordinary Shares: Proposed Nil (1994: Nil) per Share .. -- --
Preference Share dividends ........................... 1,419 1,419
--------- ---------
1,419 1,419
--------- ---------
Total dividends 2,839 2,839
========= =========
</TABLE>
11. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Corporation tax payable .............................. 2,690 2,797
Other creditors ...................................... 9,781 3,684
Accruals ............................................. 16,063 16,868
Other taxes and social security ...................... 3,984 3,269
--------- ---------
32,518 26,618
========= =========
</TABLE>
F-21
<PAGE> 26
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12. LONG-TERM DEBT
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
8.28% Senior Notes ....................................... 35,019 36,707
9.5% Convertible Capital Bonds 2006 ...................... 43,693 43,813
Unsecured bank loans ..................................... -- 409
Obligations under finance lease contracts ................ 290 148
--------- ---------
79,002 81,077
Less: current portion (see note 9) ....................... (290) (112)
--------- ---------
78,712 80,965
========= =========
</TABLE>
(A) BANK LOANS
At November 30, 1995 the Group had bank facilities totalling approximately
B.P.89.0 million, of which approximately B.P.83.4 million were committed
including B.P.66.3 million under the Multiple Option Facility which was
previously underwritten by the banks concerned until May 14, 1996. All of the
maturity dates of the committed facilities have been extended to January 2,
1998 by a Credit Agreement dated December 21, 1995 which gives security to the
banks over the majority of the assets of the Group. Of these facilities, the
Group has drawn down amounts in both pounds sterling and US dollars. The
average rates of interest charged in 1995 were 7.7% for sterling borrowings and
7.4% for US dollar borrowings. All other loans are at variable rates of
interest ranging between 7% and 9%. The average rate of interest paid on short
term borrowings during the year was 7.6% (1994: 5.2%; 1993: 5.0%).
(B) SCHEDULED MATURITIES OF LONG TERM DEBT ARE AS FOLLOWS:
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Repayable:
Within one year (see note 9) ........................... 290 112
Between one and two years .............................. -- 36
Between two and three years ............................ -- --
Between three and four years (8.28% Senior
Notes--see note (c)) .................................. -- 36,707
Between four and five years (1994: 8.28% Senior Notes,
see note (c)) ......................................... 35,019 --
After five years (1994: Convertible Capital Bonds,
see note (e)) ......................................... 43,693 44,222
--------- ---------
79,002 81,077
========= =========
</TABLE>
(C) 8.28% SENIOR NOTES
On May 27, 1994 the Company issued $60,721,638, 8.28% Senior Notes of
which $5,643,273 was in respect of yield maintenance. The Notes were due for
repayment on May 27, 1999. The notes were issued to The Prudential Insurance
Company of America to replace the Stapled Units previously issued by API
Security Inc, a subsidiary company. The effective interest rate including yield
maintenance is 10.73% per annum. The maturity date of the Senior Notes has been
amended to January 2, 1998 by agreement dated December 21, 1995 when it was
agreed that the Noteholders would share in the security given to the banks.
F-22
<PAGE> 27
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12. LONG-TERM DEBT--(CONTINUED)
(D) CONVERTIBLE CAPITAL BONDS
On May 31, 1991 ASH Capital Finance (Jersey) Limited, a subsidiary of
Automated Security (Holdings) issued B.P.60 million 9.5 per cent Convertible
Capital Bonds due 2006, which are guaranteed on a subordinated basis by
Automated Security (Holdings). The Bonds are convertible on and after July 10,
1991 into fully paid 2 per cent Exchangeable Redeemable Preference Shares in
ASH Capital Finance (Jersey) Limited ("Preference Shares"), guaranteed on a
subordinated basis by Automated Security (Holdings). The Preference Shares are
redeemable at their paid-up value of 1p each and are exchangeable for fully
paid Ordinary Shares in Automated Security (Holdings) at a price of 250p per
Ordinary Share, subject to adjustment under certain circumstances.
Under the terms of the issue, Automated Security (Holdings) may require
conversion of any outstanding Bond if 85% of issue has been previously
converted or purchased and cancelled, in which case the bondholders may elect
for redemption in lieu of conversion. In addition, Automated Security
(Holdings) also has the right at any date after May 31, 1996 to require the
redemption of all bonds.
The balance at November 30, 1995 is shown net of unamortized issue costs
of B.P.1,126,000 (1994: B.P.1,246,000) in accordance with FRS4.
13. NON-CURRENT LIABILITIES
<TABLE>
<CAPTION>
B.P. '000
<S> <C>
Balance, November 30, 1993 ........................................... 12,769
Exchange adjustments ................................................. (66)
Other creditors ...................................................... 2,551
Utilized/paid during the year:
- --Arising on acquisitions ............................................ (547)
- --Maintenance and warranties ......................................... (1,350)
- --Currency hedging payments .......................................... (5,349)
Transferred to property and equipment ................................ (4,100)
-------
Balance, November 30, 1994 ........................................... 3,908
Exchange adjustments ................................................. 13
Other creditors ...................................................... 1,774
Utilized/paid during the year:
- --Arising on acquisitions ............................................ (33)
- --Maintenance and warranties ......................................... (277)
-------
Balance, November 30, 1995 ........................................... 5,385
=======
</TABLE>
The Group had various hedging arrangements to offset any gains or losses
on the translation of net equity interest in overseas subsidiaries, principally
in the United States. These hedging arrangements previously included currency
loans, forward exchange contracts and currency swaps. Throughout 1995 and at
November 30, 1995 hedging arrangements relate only to US$ loans.
As part of the hedging arrangements in previous years the Company entered
into a callable currency swap with a bank whereby the company had a right at
November 30, 1993 to receive some B.P.18.2 million and an obligation to pay US
$35 million. The swap was cancelled on April 20, 1994. Gains and losses on the
translation of net equity interests in overseas subsidiaries and matching
foreign currency loans, forward contracts and swap facilities are recorded as a
charge or credit directly to shareholders' equity.
F-23
<PAGE> 28
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
13. NON-CURRENT LIABILITIES--(CONTINUED)
Other non-current liabilities may be analyzed as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------
1994 1995
--------- ---------
B.P. '000 B.P. '000
<S> <C> <C>
Acquisition reorganization costs ....................... 503 470
Future maintenance provisions .......................... 854 590
--------- ---------
Total provisions ....................................... 1,357 1,060
Other creditors ........................................ 2,551 4,325
--------- ---------
3,908 5,385
========= =========
</TABLE>
During 1994 the provision for cancelled contracts was transferred to
depreciation on equipment on contract hire in property and equipment. See note
8. The amounts shown above as provisions of B.P.1,060,000 in 1995 and
B.P.1,357,000 in 1994 are described as "provisions for liabilities and charges"
under UK GAAP.
14. DERIVATIVE FINANCIAL INSTRUMENTS
As part of the Group's currency hedging arrangements discussed above the
company previously used a US dollar currency swap facility to manage its
exposure to fluctuations in US dollar exchange rates. This facility was repaid
in April 1994 and the Group no longer uses any derivative instruments for
currency hedging. US dollar assets are now matched using US currency loans and
the Group has no derivative financial instruments.
F-24
<PAGE> 29
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
15. COST OF SALES AND EXPENSE ANALYSIS
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
COST OF SALES
Continuing Operations ..................................... 89,554 98,739 99,310
Discontinued Operations ................................... 16,214 9,496 6,201
-------- -------- --------
105,768 108,235 105,511
======== ======== ========
GENERAL AND ADMINISTRATIVE EXPENSES
Continuing Operations ..................................... 30,166 33,740 39,081
Discontinued Operations ................................... 5,610 3,495 2,572
-------- -------- --------
35,776 37,235 41,653
======== ======== ========
General and administrative expenses comprise:
Continuing operations:
Distribution costs ....................................... 13,959 14,592 12,878
Administrative expenses .................................. 16,207 19,148 26,203
-------- -------- --------
30,166 33,740 39,081
-------- -------- --------
Discontinued operations:
Distribution costs ....................................... 1,250 589 267
Administrative expenses .................................. 4,360 2,906 2,305
-------- -------- --------
5,610 3,495 2,572
-------- -------- --------
Total ..................................................... 35,776 37,235 41,653
======== ======== ========
SHARE OF RELATED COMPANIES
Continuing Operations ..................................... (135) (154) (586)
Discontinued Operations ................................... 547 915 596
-------- -------- --------
412 761 10
======== ======== ========
NET INCOME IS RESTATED AFTER CHARGING/(CREDITING):
Depreciation .............................................. 40,935 34,851 34,612
Capitalized in respect of equipment on contract hire ...... (51,204) (41,090) (35,919)
Hire of plant and machinery ............................... 843 887 842
Other operating lease and hire charges .................... 6,502 9,243 9,402
(Profit)/loss on disposal property and equipment .......... 621 (962) (239)
Auditors' remuneration .................................... 386 410 400
Currency exchange (gains) losses .......................... (127) 10 (26)
Development expenditure ................................... 1,250 430 191
EU grant receivable ....................................... (287) (356) --
</TABLE>
Finance lease interest receivable of B.P.489,000 (1994: B.P.448,000; 1993:
B.P.867,000) is included in sales and profit before interest. Finance lease
rentals receivable in the year were approximately B.P.3.4 million (1994:
B.P.2.9 million; 1993: B.P.3.4 million). Included within cost of sales is the
cost of assets for rental under finance leases of approximately B.P.3.0 million
(1994: B.P.3.5 million; 1993: B.P.2.6 million). The remuneration paid to the
auditors in respect of non-audit services during 1995 amounted to B.P.251,000
(1994: B.P.308,000; 1993: B.P.245,000).
F-25
<PAGE> 30
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
16. EXCEPTIONAL ITEMS
<TABLE>
<CAPTION>
(AS RESTATED) (AS RESTATED)
1993 1994 1995
------------- ------------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Exceptional operating expenses ........................ -- (2,575) (5,484)
Loss on sale of discontinued operations ............... -- -- (5,675)
Restructuring and reorganization costs ................ (1,378) -- --
Amounts written off fixed asset investments ........... (200) (20,602) (3,066)
------------- ------------- --------
(1,578) (23,177) (14,225)
============= ============= ========
Analyzed as follows:
Restructuring and reorganization ...................... (1,378) -- --
Amount paid to former Chairman ........................ -- (993) --
Refinancing costs ..................................... -- (1,582) (3,136)
API Security costs .................................... -- -- (2,348)
Amounts written off ESOP .............................. (200) (450) (3,066)
Amounts written off investments and loans ............. -- (862) --
Other provisions ...................................... -- (1,925) --
Profit on sale of subsidiary and related companies
based on the consolidated carrying value ............. -- -- 3,168
Less: Goodwill on acquisition of subsidiary and
related companies previously written off to reserves . -- (17,365) (8,843)
------------- ------------- --------
(1,578) (23,177) (14,225)
============= ============= ========
</TABLE>
Exceptional operating expenses in 1995 relate to refinancing costs of
B.P.3,136,000 and costs in API Security of B.P.2,348,000. Refinancing costs
relate to fees to professional advisers and other third parties in connection
with the refinancing of the Group. The additional charges at API Security
relate to the write off of existing computer systems and leasehold improvements
of $3.7 million as a result of the Board's decision to move to smaller and less
expensive premises on expiry of the present lease in May 1996 and the
implementation of enhanced computer monitoring and business systems.
The 1995 loss on the sale of discontinued operations relates to the sale
of a subsidiary undertaking, Modern Vitalcall Limited, the business of Modern
Integrated Systems and the Group's investment in two associated undertakings,
Compagnie Generale de Protection et Securite SA and Microtech Security (UK)
Limited. The total consideration receivable amounted to B.P.9.3 million of
which B.P.0.1 million is receivable in 1996 and B.P.0.5 million is in the form
of Loan Notes.
As part of the Company's share option schemes the group established the
Automated Security (Holdings) PLC Employees' Share Ownership Plan ("ESOP"). The
ESOP has a loan of B.P.5.9 million from the Company and its assets consist
principally of investments in the Company's shares.
In accordance with Urgent Issues Task Force Abstract 13, issued on June 8,
1995, the amount receivable from the ESOP is reclassified as a fixed asset
investment (see note 7b) and any permanent diminution in value is charged to
the profit and loss account. The Board believes that a prudent method of
application of this Abstract is to value the shares held by the ESOP at the
market prices as at November 30, 1995. Consequently the shortfall between the
market value of the ESOP's shares and the amount receivable from the ESOP has
been charged to the profit and loss account in the current year. The provisions
made in previous years (1994: B.P.450,000 and 1993: B.P.200,000) have been
reclassified as exceptional items in the above analysis.
F-26
<PAGE> 31
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
16. EXCEPTIONAL ITEMS--(CONTINUED)
Exceptional items in 1994 also include B.P.993,000 paid to the former
Chairman on termination of his employment within the Group and B.P.1,582,000 of
refinancing costs.
Exceptional items in 1993 also relate to the refocusing and fundamental
reorganization carried out within the security systems segment, and the closure
of the Group's manufacturing operations.
17. BUSINESS SEGMENT INFORMATION
Set out below is information with respect to the Group's principal
business segments and geographical regions. The Group's principal business
relates entirely to Security Systems. Security Systems provides intruder
alarms, various central station monitoring services, integrated security
systems and other detection systems to customers in commercial, industrial,
residential and public sectors.
<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Business segments
Net sales ............................. 160,775 166,071 163,349
============= ============= ========
1993 1994
(AS RESTATED) (AS RESTATED) 1995
------------- ------------- --------
B.P.'000 B.P.'000 B.P.'000
Income before taxes:
Security systems ...................... 22,793 25,306 25,506
Corporate ............................. (3,562) (2,130) (3,837)
Share of profits of related companies . 412 761 10
Net interest .......................... (10,754) (12,514) (14,862)
Exceptional items ..................... (1,578) (23,177) (14,225)
------------- ------------- --------
7,311 (11,754) (7,408)
============= ============= ========
Interest payable comprises:
On loans repayable:
--after five years ................... 8,747 6,331 4,389
--wholly within five years ........... 3,276 6,364 10,646
------------- ------------- --------
12,023 12,695 15,035
============= ============= ========
Interest receivable ................... 1,269 181 173
============= ============= ========
Business Segments
Identifiable assets:
Security Systems ...................... 271,694 267,812 268,505
Related companies and investments ..... 18,905 3,681 201
Corporate ............................. 5,410 4,378 707
------------- ------------- --------
296,009 275,871 269,413
============= ============= ========
Depreciation charged in the year ...... 40,935 34,851 34,612
============= ============= ========
Capital expenditure in the year* ...... 59,020 43,603 38,502
============= ============= ========
</TABLE>
- -------------------
*Capital expenditure includes the cost of equipment rented to customers under
operating leases.
F-27
<PAGE> 32
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
17. BUSINESS SEGMENT INFORMATION--(CONTINUED)
<TABLE>
<CAPTION>
1993 1994
(AS RESTATED) (AS RESTATED) 1995
-------------- ------------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Geographical Analysis
Net Sales:
Continuing operations
UK ............................. 95,687 106,771 108,191
USA ............................ 43,515 43,503 41,864
Ireland......................... 3,934 4,029 3,678
----------- ----------- --------
143,136 154,303 153,733
Discontinued operations ......... 17,639 11,768 9,616
----------- ----------- --------
160,775 166,071 163,349
=========== =========== ========
Income Before Taxes:
Continuing operations:
UK ............................. 15,387 18,252 15,398
USA ............................ 7,315 6,628 5,583
Ireland......................... 579 (635) (741)
----------- ----------- --------
23,281 24,245 20,240
Discontinued operations ......... (3,638) (308) 1,439
----------- ----------- --------
19,643 23,937 21,679
Exceptional items ............... (1,578) (23,177) (14,225)
Interest payable (net) .......... (10,754) (12,514) (14,862)
----------- ----------- --------
7,311 (11,754) (7,408)
=========== =========== ========
Identifiable Assets:
UK ............................. 199,616 195,994 191,704
USA ............................ 86,075 68,964 69,980
Ireland......................... 10,318 10,913 7,729
----------- ----------- --------
296,009 275,871 269,413
=========== =========== ========
</TABLE>
18. TAXES ON INCOME
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
The charge of income taxes consists of the following:
Current tax:
UK ............................................... -- -- --
Overseas ......................................... 112 (64) 65
Share of tax charge of related companies ............ 45 78 173
Deferred tax ........................................ -- -- --
Advance Corporation Tax written off as
presently irrecoverable ............................ 2,270 710 705
Prior year adjustments .............................. (627) 276 (143)
-------- -------- --------
1,800 1,000 800
======== ======== ========
</TABLE>
Advance Corporation Tax (ACT) written off in 1995 includes ACT of
B.P.355,000 in respect of accrued Preference Dividends. No tax is payable in
respect of the sale of discontinued operations in 1995.
F-28
<PAGE> 33
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
18. TAXES ON INCOME--(CONTINUED)
A reconciliation of the difference between the statutory UK rate and the
Group's effective tax rate is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
"Expected" income tax at UK statutory rate of 33% .. 2,413 (3,879) (2,445)
Movement in potential liability for deferred tax ... 44 (558) (354)
Tax reallocation on fair value adjustments ......... (314) -- --
Advance Corporation Tax written off ................ 2,270 710 705
Adjustments relating to prior periods .............. (627) 276 (143)
Permanent differences .............................. (1,519) 4,602 2,903
Other differences, individually not significant .... (467) (151) 134
-------- -------- --------
1,800 1,000 800
======== ======== ========
</TABLE>
In accordance with the Group's accounting policy no provision for deferred
taxation was required in 1993, 1994 or 1995. Permanent differences principally
related to the results of overseas operations which did not incur a tax charge
under UK GAAP.
The total potential liability for deferred tax under UK GAAP is as
follows:-
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------
1994 1995
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
Accelerated capital allowances on property and equipment ........ 13,137 12,438
Other timing differences ........................................ (1,725) (1,456)
-------- --------
11,412 10,982
Less: Advance Corporation Tax ................................... (6,439) (6,363)
-------- --------
Potential deferred tax .......................................... 4,973 4,619
======== ========
The total potential liability for deferred tax under US GAAP is as follows:-
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, NOVEMBER 30,
------------------------- -------------------------
1994 1994 1995 1995
----------- ----------- ----------- -----------
B.P.'000 B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C> <C>
Deferred tax assets:
Losses .......................... 21,383 24,484
Valuation allowances ............ (7,116) (6,088)
-------- --------
14,267 18,396
Short term temporary
differences .................... 1,725 1,456
Valuation allowance ............. -- --
-------- --------
1,725 1,456
Advance Corporation Tax ......... 10,500 11,205
Valuation allowance ............. (4,061) (4,842)
-------- --------
6,439 6,363
Deferred tax liabilities ........ (38,367) (43,041)
-------- --------
Net deferred tax liability ...... (15,936) (16,826)
======== ========
</TABLE>
F-29
<PAGE> 34
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
19. PENSIONS
The Group operates a contributory defined benefits plan (the "Plan")
available for all full-time permanent employees in the UK who have attained the
age of 18. The benefits are related to final pensionable salary and pensionable
service. The amount charged for the Plan in the year ended November 30, 1995
was B.P.1,181,000 (1994: B.P.1,160,000, 1993: B.P.1,098,000) net of member
contributions. Including member contributions the charge was B.P.1,772,000 in
1995, B.P.1,705,000 in 1994 and B.P.1,654,000 in 1993.
The latest actuarial valuation of the plan was carried out at April 1,
1994 using the Projected Unit method, to assess the finances of the Plan and to
determine pensions costs. For the valuation, certain long term assumptions were
employed, the most important being:
(i) Investment return: 8.5% per annum compound
(ii) Dividend increases: average of 4.0% per annum
(iii) Pensionable salary growth: 6.5% per annum compound
(iv) Increases to pensions in payment in excess of GMP's: 0.7% per annum
compound
(v) Increases to deferred pensions: 5% per annum compound.
At April 1, 1994, the market value of the assets of the UK Pension Fund
was B.P.30.2 million. The actuarial value of the assets amounted to 119% of the
value of the accrued liabilities of the Fund after allowing for the assumed
increases in pensionable salary. The surplus assets in the Fund are being used
to reduce the Group's long-term contributions to the Fund. The effect upon
Group profit is not significant. Overseas, the Group in general operates
defined contribution plans for certain executives, the costs of which are
recognised on the basis of contributions payable. The contributions in the year
ended November 30, 1995 were B.P.382,000 (1994: B.P.557,000, 1993:
B.P.705,000).
The amount charged to income in respect of all pension plans was
B.P.1,563,000 in 1995, B.P.1,717,000 in 1994 and B.P.1,803,000 in 1993.
Under UK GAAP, the cost of providing pension benefits may be calculated by
the use of any actuarial method which is appropriate and whose assumptions
reflect the long-term nature of the assets and liabilities involved. Under US
GAAP, the cost of providing these benefits are calculated in accordance with
Statement of Financial Accounting Standards No. 87 which requires the use of
the projected unit method and a discount rate (being the rate of interest at
which pension liabilities could effectively be settled) which reflects current
market rates.
Including members' contributions, the pension expense for the UK defined
benefits plan in accordance with US GAAP on this basis is as follows:
<TABLE>
<CAPTION>
November 30,
----------------------------
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Service costs of benefits earned during the year .. 1,696 2,031 2,207
Interest costs on projected benefit obligations ... 1,687 2,246 3,079
Actual return on assets ........................... 1,571 (2,919) (4,570)
Deferred asset gain/(loss) ........................ (3,760) 298 1,428
Net amortization .................................. 460 (146) (86)
-------- -------- --------
1,654 1,510 2,058
======== ======== ========
</TABLE>
F-30
<PAGE> 35
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
19. PENSIONS--(CONTINUED)
The actuarial present value of benefit obligations and the funded status
of the UK plan in accordance with US GAAP are as follows:
<TABLE>
<CAPTION>
November 30,
----------------------------
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Accumulated benefit obligations:
Vested........................................ 20,750 28,400 23,700
Non-vested.................................... -- -- --
-------- -------- --------
Total accumulated benefit obligations.......... 20,750 28,400 23,700
======== ======== ========
Total projected benefit obligations............ 24,157 33,378 27,300
Plan assets at fair value...................... (26,773) (30,848) (36,593)
-------- -------- --------
Excess of obligations over assets.............. (2,616) 2,530 (9,293)
Unrecognised transition asset.................. 1,461 1,217 974
Unrecognised prior service cost................ (779) (681) (1,424)
Unrecognised (loss)/gain....................... 1,634 (3,412) 9,780
-------- -------- --------
Net pension provision/(prepayment)............. (300) (346) 37
======== ======== ========
The main actuarial assumption underlying this valuation is as follows:
</TABLE>
<TABLE>
<CAPTION>
November 30,
--------------------
1993 1994 1995
---- ---- ----
% % %
<S> <C> <C> <C>
Discount rate ........................................... 9.0 9.0 8.0
---- ---- ----
Return on assets ........................................ 10.0 10.0 8.5
Compensation increases .................................. 8.0 8.0 6.5
==== ==== ====
</TABLE>
The effect of applying US GAAP in the calculation of the UK pension
expense compared with the results in accordance with UK GAAP is Nil in 1993, a
reduction in 1994 of B.P.195,000 and a charge of B.P.286,000 in 1995. These
amounts were not considered sufficiently material to record as a significant
difference between UK GAAP and US GAAP in note 28.
F-31
<PAGE> 36
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
20. RESERVES
<TABLE>
<CAPTION>
B.P.'000
<S> <C>
(A) ADDITIONAL PAID-IN CAPITAL
At November 30, 1994............................................................... 5,729
Share premiums received............................................................ 2
Expenses of issue.................................................................. (1)
Amortized Convertible Capital Bond issue costs transferred
from retained earnings............................................................ (120)
-------
At November 30, 1995............................................................... 5,610
=======
</TABLE>
<TABLE>
<CAPTION>
GROUP COMPANY
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
(B) NON-DISTRIBUTABLE RESERVES
At November 30, 1994 ............................................................ (90,681) 105,312
Goodwill in the year written off ................................................ (232) --
Goodwill of subsidiary and associated undertakings transferred to profit and loss
account ........................................................................ 8,843 --
Exchange adjustments on:
Net investments including goodwill ............................................. 3,387 --
Hedging arrangements ........................................................... (1,777) --
Goodwill ....................................................................... (1,972) --
-------- -------
At November 30, 1995 ............................................................ (82,432) 105,312
======== =======
</TABLE>
Non-distributable reserves of the Company at November 30, 1995 and 1994
comprise Special Reserves of B.P.82,118,000, Merger Reserves of B.P.23,114,000
and Other Reserves of B.P.80,000.
<TABLE>
<CAPTION>
GROUP COMPANY
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
(C) RETAINED EARNINGS
At November 30, 1994 ............................................................. 59,647 2,009
Result for year .................................................................. (11,047) 335
Convertible Capital Bonds issue costs transferred to additional paid in capital .. 120 120
------- ------
At November 30, 1995 ............................................................. 48,720 2,464
======= ======
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------
1994 1995
-------- ---------
B.P.'000 B.P.'000
<S> <C> <C>
Amounts transferred to/(from) retained earnings in 1995 originated from:
The Company ............................................................ (13,917) 335
Subsidiary companies ................................................... (2,253) (11,327)
Related companies ...................................................... 577 (55)
-------- --------
At November 30, 1995 ................................................... (15,593) (11,047)
======== ========
</TABLE>
F-32
<PAGE> 37
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
21. SHARE CAPITAL
<TABLE>
<CAPTION>
1994 1995
--------- ---------
B.P.'000 B.P.'000
<S> <C> <C>
AUTHORISED
ORDINARY SHARES:
200,000,000 Ordinary Shares of 10p each .............................................. 20,000 20,000
======== ========
REDEEMABLE PREFERENCE SHARES:
15,000,000 5% Convertible Cumulative Redeemable Preference Shares
of B.P.1 each ....................................................................... 15,000 15,000
42,000,000 6% Convertible Cumulative Redeemable Preference Shares
of B.P.1 each ....................................................................... 42,000 42,000
-------- --------
57,000 57,000
======== ========
ISSUED
ORDINARY SHARES:
119,571,953, Ordinary Shares of 10p each (1994: 119,571,379) ......................... 11,957 11,957
======== ========
REDEEMABLE PREFERENCE SHARES:
7,867,442, 5% Conv. Cum. Redeemable Pref. Shares of B.P.1 each
(1994: 7,867,490) ................................................................... 7,868 7,867
40,761,578, 6% Conv. Cum. Redeemable Pref. Shares of B.P.1 each
(1994: 40,763,032) .................................................................. 40,763 40,762
-------- --------
48,631 48,629
========= =========
</TABLE>
Shares issued during the year:
(i) Holders of 1,454, 6% Preference Shares exercised their conversion
rights on May 31, 1995 and were duly allotted 545 Ordinary Shares of 10p each
(B.P.54.50 nominal value) on the basis of 375p nominal of Ordinary Shares for
every B.P.100 nominal of Preference Shares held.
(ii) Holders of 48, 5% Preference Shares exercised their conversion rights
on May 31, 1995 and were duly allotted 29 Ordinary Shares of 10p each (B.P.2.90
nominal value) on the basis of one Ordinary Share for every B.P.1.6196 nominal
of Preference Shares held.
(iii) Details of Rights and Share Options are as follows:
(a) The rights attached to the 5% Convertible Cumulative
Redeemable Preference Shares are summarized as follows:
(i) The right to a cumulative preference dividend of 5% per
annum, payable half-yearly on February 28 and August 31 in
each year in respect of the six month periods ended on
November 30 and May 31 immediately prior to such dates;
(ii) The right during such period as the conversion rights are
exercisable to one vote per Preference Share but thereafter
only in the event that the cumulative dividend is in
arrears or in certain other limited circumstances;
(iii) The right in the month of May in each of the years 1987 to
1999 (or, if later, on the 28th day after the despatch of
the accounts of the Group in respect of the previous year)
to convert into Ordinary Shares of Automated Security
(Holdings) at an effective conversion price of B.P.1.6196
per Ordinary Share;
F-33
<PAGE> 38
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
21. SHARE CAPITAL--(CONTINUED)
(iv) Redemption at the option of Automated Security (Holdings) by
not later than May 31 in the years 2000 to 2005 and redemption
in any event on May 31, 2005;
(v) There is no premium payable on redemption.
(b) The rights attached to the 6% Convertible Cumulative
Redeemable Preference Shares are summarized as follows:
(i) The rights to a cumulative preference dividend of 6% per
annum, payable half-yearly on May 31 and November 30 in
respect of six month periods ending on those dates;
(ii) The right to vote in the event that the cumulative dividend
is in arrears for six months or more or in certain other
limited circumstances;
(iii) The right on May 31 in each of the years 1991 to 2006
inclusive to convert into Ordinary Shares of Automated
Security (Holdings) at an effective conversion price of
B.P.2.67 per share;
(iv) Redemption at the option of Automated Security (Holdings) at
any date after May 31, 2006 and redemption in any event on
May 31, 2009;
(v) There is no premium payable on redemption.
(c) The rights of the holders of the 5% Preference Shares to dividends
and capital are in priority to any payment to the holders of the 6%
Preference Shares. The rights of the shareholders of the 5% and 6%
Preference Shares are in priority to any payment to the holders of
the Ordinary Shares.
(d) At November 30, 1995 Automated Security (Holdings) had outstanding
options in respect of the following Ordinary Shares of 10p each:
<TABLE>
<CAPTION>
DATE OF NUMBER PERIOD OF PRICE AT WHICH
GRANT OF SHARES OPTION EXERCISABLE
------- --------- --------- --------------
<S> <C> <C> <C> <C>
Share option July 10, 1987 159,079 3 to 10 years 256.75p
scheme: March 28, 1988 349,329 3 to 10 years 238.15p
July 27, 1988 211,804 3 to 10 years 242.67p
September 8, 1989 411,476 3 to 10 years 269.30p
April 30, 1990 190,000 3 to 10 years 266.00p
March 7, 1991 136,000 3 to 10 years 232.00p
March 23, 1992 183,000 3 to 10 years 130.00p
March 29, 1993 220,000 3 to 10 years 149.00p
---------
1,860,688
=========
Sharesave August 23, 1993 355,727 5 years 128.00p
scheme: =========
</TABLE>
F-34
<PAGE> 39
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
21. SHARE CAPITAL--(CONTINUED)
Changes in the options outstanding for each of the three years in the
period ended November 30, 1995 are summarized as follows:-
<TABLE>
<CAPTION>
SHARE
OPTION SHARESAVE
SCHEME SCHEME
SHARES SHARES
----------- ---------
<S> <C> <C>
November 30, 1992 .................................... 4,309,514 --
Granted .............................................. 220,000 618,710
Exercised ............................................ (25,000) --
Lapsed ............................................... (928,091) (13,130)
--------- ---------
November 30, 1993 .................................... 3,576,423 605,580
Granted .............................................. -- --
Exercised ............................................ -- --
Lapsed ............................................... (848,341) (73,915)
--------- ---------
November 30, 1994 .................................... 2,728,082 531,665
Granted .............................................. -- --
Exercised ............................................ -- --
Lapsed ............................................... (867,394) (175,938)
--------- ---------
November 30, 1995 .................................... 1,860,688 355,727
--------- ---------
</TABLE>
(e) On September 20, 1990 as part of the Stapled Unit transaction, warrants
were issued in respect of 3,706,680 Ordinary Shares to The Prudential
Insurance Company of America at a price of 300p each exercisable at any
time up to September 20, 2002.
(f) The Convertible Capital Bonds are capable, in certain circumstances, of
being exchanged into 18 million fully paid Ordinary Shares in Automated
Security (Holdings) at a price of 250p per share (see note 12 (d)).
22. ADDITIONAL NOTES TO THE COMPANY BALANCE SHEETS
<TABLE>
<CAPTION>
COMPANY
---------------------------------
SHARES IN SHARES IN
SUBSIDIARY RELATED
COMPANIES COMPANIES TOTAL
----------- ----------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
INVESTMENTS IN SUBSIDIARY AND RELATED COMPANIES
Cost
At November 30, 1994 .......................... 182,847 5,416 188,263
Disposals ..................................... -- (5,416) (5,416)
---------- --------- --------
At November 30, 1995 .......................... 182,847 -- 182,847
========== ========= ========
</TABLE>
<TABLE>
<CAPTION>
COMPANY
---------------------
NOVEMBER 30,
---------------------
1994 1995
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
SHORT TERM DEBT
Bank loans and overdrafts (see note 12) .............. 84,735 100,822
======== ========
</TABLE>
F-35
<PAGE> 40
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
22. ADDITIONAL NOTES TO THE COMPANY BALANCE SHEETS--(CONTINUED)
Certain Group bank borrowings are held under an offset facility,
consequently the short-term debt of the Company may exceed that of the Group.
<TABLE>
<CAPTION>
COMPANY
------------------
NOVEMBER 30,
------------------
1994 1995
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
LONG-TERM DEBT
8.28% Senior Notes (see note 12) ........................... 35,019 36,707
====== ======
</TABLE>
<TABLE>
<CAPTION>
COMPANY
------------------
NOVEMBER 30,
------------------
1994 1995
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
OTHER CURRENT LIABILITIES
Amounts owed to subsidiary companies ..................... 2,243 1,201
Corporation tax payable .................................. 355 355
Other creditors .......................................... 3,869 1,937
Accruals ................................................. 4,231 3,878
-------- --------
10,698 7,371
======== ========
</TABLE>
<TABLE>
<CAPTION>
COMPANY
------------------
NOVEMBER 30,
------------------
1994 1995
-------- --------
B.P.'000 B.P.'000
<S> <C> <C>
NON-CURRENT LIABILITIES
Provisions ............................................... 277 --
Amounts owed to subsidiary company ....................... 45,199 45,319
-------- --------
45,476 45,319
======== ========
</TABLE>
The amount owed to a subsidiary company by the Company, included in
non-current liabilities, relates to a debenture, net of issue costs, owed to
ASH Capital Finance (Jersey) Limited in respect of the Convertible Capital Bond
issue. The Company's obligations under this debenture are subordinated on a
winding up to its liabilities to its other unsecured creditors. The principal
is scheduled to be repaid in 2006.
F-36
<PAGE> 41
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
23. GOODWILL
<TABLE>
<CAPTION>
COST OF
GOODWILL EXCHANGE
ELIMINATED ADJUSTMENTS TOTAL
----------- ----------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Eliminated to November 30, 1993 ................... 196,496 7,482 203,978
Acquisitions in the year
- -- Related companies .............................. 17,466 -- 17,466
- -- Other businesses acquired ...................... 1,769 -- 1,769
Adjustments to previous year's acquisitions ....... 535 -- 535
Share of goodwill movements of related companies .. 423 -- 423
Transferred to profit and loss account ............ (17,365) -- (17,365)
Exchange adjustments .............................. -- (4,516) (4,516)
----------- ----------- --------
Eliminated to November 30, 1994 ................... 199,324 2,966 202,290
Investment in associated undertaking .............. 232 -- 232
Transferred to profit and loss account ............ (8,843) -- (8,843)
Exchange adjustments .............................. -- 1,972 1,972
----------- ----------- --------
Eliminated to November 30, 1995 ................... 190,713 4,938 195,651
=========== =========== ========
</TABLE>
24. COMMITMENTS AND CONTINGENCIES
(a) Automated Security (Holdings) has guaranteed advances by bankers to
subsidiary companies. At November 30, 1995 the net advances subject to these
guarantees totalled B.P.666,000 (1994: B.P.1,525,000). Interlocking guarantees
have been given to the Group's main UK clearing bank by Automated Security
(Holdings) and its UK subsidiary companies.
(b) Automated Security (Holdings) has guaranteed contract bonds and
Letters of Credit on behalf of subsidiary undertakings of B.P.1,492,000 (1994:
B.P.2,693,000).
(c) Automated Security (Holdings) has provided a guarantee in respect of
B.P.44.9 million Convertible Capital Bonds issued by ASH Capital Finance
(Jersey) Limited on May 31, 1991 (see note 12 (d)).
(d) Operating lease commitments at November 30, 1995 are payable as
follows:
<TABLE>
<CAPTION>
LAND
AND
BUILDINGS OTHER TOTAL
--------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
1996 ................................................... 3,051 8,210 11,261
1997 ................................................... 1,937 2,857 4,794
1998 ................................................... 1,220 758 1,978
1999 ................................................... 1,038 539 1,577
2000 ................................................... 941 186 1,127
Thereafter ............................................. 7,936 300 8,236
--------- -------- --------
16,123 12,850 28,973
========= ======== ========
</TABLE>
F-37
<PAGE> 42
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
24. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
(e) Operating lease payments to be made in the year ending November 30, 1996
are in respect of commitments expiring:
<TABLE>
<CAPTION>
LAND
AND
BUILDINGS OTHER TOTAL
--------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Within one year ............................... 706 2,984 3,690
Between one and five years .................... 1,499 5,126 6,625
After more than five years .................... 846 100 946
--------- -------- --------
3,051 8,210 11,261
========= ======== ========
</TABLE>
The operating lease expense for the years ended November 30, 1995, 1994
and 1993 was B.P.9,402,000, B.P.9,243,000 and B.P.6,502,000 respectively.
The aggregate minimum rentals to be received in the future under non
cancellable sub leases for land and buildings as at November 30, 1995 was
B.P.1.1 million (1994: B.P.1.1 million). The Group has also provided for future
rentals in respect of surplus properties, at November 30, 1995 these provisions
amounted to B.P.1.8 million (1994: B.P.1.8 million).
(f) Finance lease commitments at November 30, 1995 are payable as follows:
<TABLE>
<CAPTION>
B.P.'000
<S> <C>
1996 ............................................................ 121
1997 ............................................................ 37
Thereafter ...................................................... --
--------
Total lease payments ............................................ 158
Less: interest portion of payments .............................. (10)
--------
148
========
</TABLE>
25. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 requires disclosure of
the estimated fair values of financial instruments for which it is practicable
to estimate the value.
With regard to cash and cash equivalents, loans, short term debt,
non-trade accounts receivables and payables and long term bank debt, terms of
these financial instruments are similar to those available in the current
market. Accordingly, carrying values approximate fair values.
The fair value of the Group's long term unlisted investments in related
companies and other investments has been reviewed and the Directors consider
that in total these investments are stated at their approximate fair value
based on this review.
The fair value of the Group's 9.5% Convertible Capital Bonds is based on
the quoted market prices for these bonds at November 30. At November 30, 1995,
1994 and 1993 the restated carrying amount of these bonds was B.P.43.8 million,
B.P.43.7 million and B.P.43.6 million and their fair value was B.P.32.1
million, B.P.32.3 million and B.P.43.9 million respectively. As mentioned in
note 14 the Group does not use derivative financial instruments to manage its
foreign currency or interest rate risks.
F-38
<PAGE> 43
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
26. CASH FLOWS
(a) Reconciliation of Operating Profit to Net Inflows from Operating
Activities
<TABLE>
<CAPTION>
1993 1994
(AS RESTATED) (AS RESTATED) 1995
------------- ------------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
Operating profit ........................... 19,643 21,362 16,195
Disposal costs ............................. -- -- (251)
(Profit)/loss on disposal of fixed assets... 673 (962) (239)
Depreciation ............................... 40,935 34,851 34,612
Share of results of associated undertakings. (367) (683) (10)
Reorganization ............................. (1,793) -- --
Decrease/(increase) in stocks .............. 3,674 587 1,888
Decrease/(increase) in debtors ............. (3,569) 7,377 433
Increase/(decrease) in creditors and rentals
in advance ................................ (2,963) 4,651 (1,279)
Decrease in provisions ..................... (1,035) (1,914) (310)
------------- ------------- --------
Net cash inflow from operating activities... 55,198 65,269 51,039
============= ============= ========
</TABLE>
(b) Analysis of changes in cash and cash equivalents during the year
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C>
At December 1 .................................... (353) (1,312) 3,621
Effect of foreign exchange rate changes .......... (13) 16 (11)
Net cash inflow/(outflow) ........................ (946) 4,917 1,404
-------- -------- --------
At November 30 ................................... (1,312) 3,621 5,014
======== ======== ========
</TABLE>
(c) Analysis of balances of cash and cash equivalents as shown in the
balance sheet
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
B.P. '000 B.P. '000 B.P. '000
<S> <C> <C> <C>
Cash at bank and in hand ......................... 716 3,934 5,936
Bank overdrafts and other short term borrowings .. (2,028) (313) (922)
--------- --------- ---------
(1,312) 3,621 5,014
========= ========= =========
</TABLE>
The Group's statement of cash flows is prepared in accordance with UK
Financial Reporting Standard (FRS1), the objectives and principles of which are
substantially consistent with Statement of Financial Accounting Standards No.
95, "Statement of Cash Flows" ("SFAS95"), under US GAAP, and International
Accounting Standard 7 ("IAS 7"). The principal differences between the
standards relate to classification.
Cash flows from taxation and returns from investments and servicing of
finance under FRS1 would be included as operating activities under SFAS95.
Under FRS1, net cash and cash equivalents comprise cash, investments and
short-term deposits which were within 3 months of maturity when acquired and
short-term borrowings repayable within 3 months from the date of their advance.
Under SFAS95, short-term borrowings repayable and overdraft balances would not
be included in cash and cash equivalents and only investments and short-term
deposits with an original maturity of 3 months or less are included in cash and
cash equivalents.
F-39
<PAGE> 44
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
26. CASH FLOWS -- (CONTINUED)
Under US GAAP definitions cash and cash equivalents would therefore be as
follows:
<TABLE>
<CAPTION>
B.P. '000
<S> <C>
1993 .................................................................... 716
1994 .................................................................... 3,934
1995 .................................................................... 5,936
=========
</TABLE>
(d) Analysis of changes in financing during the year
<TABLE>
<CAPTION>
SHARE
CAPITAL LOANS
INCLUDING CONVERT- AND
ADDITIONAL IBLE OTHER
PAID IN CAPITAL BORROW- STAPLED SENIOR
CAPITAL BONDS INGS UNITS NOTES
--------- --------- --------- --------- ---------
B.P. '000 B.P. '000 B.P. '000 B.P. '000 B.P. '000
<S> <C> <C> <C> <C> <C>
At November 30, 1992 .......... 66,494 43,455 52,016 39,612 --
Exchange adjustments .......... -- -- 815 673 --
Bank overdrafts and other
short term borrowings ........ -- -- 1,076 -- --
Cash inflows from financing ... 33 -- 26,134 (3,940) --
Share issue expenses .......... (279) -- -- -- --
Amortization of issue
expenses ..................... (119) 119 -- 164 --
Other movements ............... 321 -- -- (83) --
--------- --------- --------- --------- ---------
At November 30, 1993 .......... 66,450 43,574 80,041 36,426 --
Exchange adjustments .......... -- -- (1,628) (508) (1,322)
Bank overdrafts and other short
term borrowings .............. -- -- (1,715) -- --
Cash inflows from financing ... -- -- 5,870 -- --
CCB conversion ................ 1 (1) -- -- --
Share issue expenses .......... (14) -- -- -- --
Amortization of issue
expenses ..................... (120) 120 -- 79 66
Transfer to Senior Notes ...... -- -- -- (35,903) 35,903
Yield maintenance accrual ..... -- -- -- -- 372
Other movements ............... -- -- -- (94) --
--------- --------- --------- --------- ---------
At November 30, 1994 .......... 66,317 43,693 82,568 -- 35,019
Exchange adjustments .......... -- -- 986 -- 854
Bank overdrafts and other short
term borrowings .............. -- -- 609 -- --
Cash outflows from financing .. -- -- (614) -- --
Share issue expenses .......... (1) -- -- -- --
Amortization of issue
expenses ..................... (120) 120 -- -- 120
Yield maintenance accrual ..... -- -- -- -- 714
--------- --------- --------- --------- ---------
At November 30, 1995 .......... 66,196 43,813 83,549 -- 36,707
========= ========= ========= ========= =========
</TABLE>
No amount was paid or received in restructuring the Stapled Units into
8.28% Senior Notes in May 1994.
(e) Acquisitions
There were no acquisitions of business in 1995 but the Group invested a
further B.P. 232,000 in TVX Inc., a related company.
F-40
<PAGE> 45
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
26. CASH FLOWS -- (CONTINUED)
On August 31, 1994 the Group acquired certain assets of Sonitrol of Eugene
in Oregon for an initial consideration of $2,070,000 and deferred consideration
of $452,000. In addition the Group paid deferred consideration of B.P.
1,510,000 in respect of the acquisition of Compagnie Generale de Protection et
Securite SA, a related company, and B.P. 1,436,000 in respect of Arius Inc.
In 1993 the Group acquired Telecom Security Limited in the UK for an
initial consideration of B.P.6,980,000 including costs, and additional deferred
consideration of B.P. 1,420,000. The Group also made a further minor
acquisition for a total cost of some B.P. 200,000.
Assets acquired:
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
B.P. '000 B.P. '000 B.P. '000
<S> <C> <C> <C>
At book value
Intangible assets ................................................................ -- 1,769 --
Property and equipment ........................................................... 2,513 -- --
Inventories ...................................................................... 412 -- --
Accounts receivable .............................................................. 574 -- --
Cash at bank ..................................................................... 2,471 -- --
Accounts payable ................................................................. (4,324) -- --
Long term liabilities ............................................................ (406) -- --
--------- --------- ---------
1,240 1,769 --
FAIR VALUE ADJUSTMENTS:
Intangible fixed assets .......................................................... -- (1,769) --
Property and equipment ........................................................... 2,371 -- --
Inventories ...................................................................... -- -- --
Accounts receivable .............................................................. -- -- --
Accounts payable ................................................................. (1,369) -- --
Long term liabilities ............................................................ (64) -- --
--------- --------- ---------
Fair value of net assets acquired ................................................ 2,178 -- --
Consideration
- -cash paid ....................................................................... (7,180) (1,480) --
- -deferred consideration .......................................................... (1,420) (289) --
--------- --------- ---------
Goodwill arising from acquisitions in the current year ........................... (6,422) (1,769) --
Adjustments in respect of prior year's acquisitions .............................. 2,155 (535) --
Accrued consideration in respect of prior year's acquisitions .................... (684) -- --
--------- --------- ---------
(4,951) (2,304) --
========= ========= =========
</TABLE>
Fair value adjustments relate to intangibles eliminated in line with Group
accounting policies, the estimated value of property and equipment, allowances
for obsolete inventories and doubtful accounts receivable, provisions for
maintenance and reorganization costs of businesses acquired. Adjustments in
respect of prior year's acquisitions relate in 1994 to the estimated value of
assets and liabilities in Telecom Security Limited and in 1993 principally to
the estimated value of property and equipment in Sonitrol Management
Corporation in the Untied States. Apart from the consideration shown above,
the acquisitions had no material effect on the Group's cash flows.
F-41
<PAGE> 46
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
26. CASH FLOWS -- (CONTINUED)
(f) Disposals
During 1995 the Group disposed of Modern Vitalcall Limited, a subsidiary
company; the business of Modern Integrated Systems and interests in two
related companies, Compagnie Generale de Protection Securite SA and Microtech
Security (UK) Limited. The total consideration receivable was B.P. 9.3 million
of which B.P. 0.1 million is receivable in 1996 and B.P. 0.5 million is in the
form of Loan Notes.
There were no disposals of business in 1994. During 1993 the Group
disposed of its interests in Hepburn Technology Limited, a related company.
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
B.P. '000 B.P. '000 B.P. '000
<S> <C> <C> <C>
Net assets sold:
Property and equipment ...................... -- -- 474
Investments in related companies ............ 85 -- 3,409
Inventories ................................. -- -- 1,651
Accounts receivable ......................... -- -- 2,981
Accounts payable ............................ -- -- (1,499)
Rentals received in advance ................. -- -- (1,464)
--------- --------- ---------
85 -- 5,552
========= ========= =========
</TABLE>
The businesses sold during 1995 generated B.P. 1,278,000 of the Group's
net operating cash flows, paid B.P. 1,000 in respect of net returns on
investments and servicing of finance, and utilized B.P. 33,000 for investing
activities.
F-42
<PAGE> 47
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
27. EMPLOYEES AND DIRECTORS
EMPLOYEES
<TABLE>
<CAPTION>
1993 1994 1995
NUMBER NUMBER NUMBER
--------- --------- ---------
<S> <C> <C> <C>
Employee numbers
Average number of persons employed:
Engineers and sales staff ................. 2,303 2,202 2,227
Office staff and management ............... 927 807 779
--------- --------- ---------
3,230 3,009 3,006
========= ========= =========
Employee costs
1993 1994 1995
--------- --------- ---------
B.P. '000 B.P. '000 B.P. '000
Wages and salaries .......................... 57,434 59,862 57,117
Social Security ............................. 5,866 4,935 4,875
Pension contributions ....................... 1,803 1,717 1,563
--------- --------- ---------
65,103 66,514 63,555
========= ========= =========
DIRECTORS
1993 1994 1995
--------- --------- ---------
B.P. '000 B.P. '000 B.P. '000
Directors' emoluments:
Salaries and benefits in kind ............... 1,378 1,055 775
Pension contributions ....................... 363 38 28
Compensation for loss of office ............. 222 1,231 --
Pension paid to previous director ........... -- -- 9
--------- --------- ---------
1,963 2,324 812
========= ========= =========
</TABLE>
Lord Lane of Horsell was Chairman during 1995. In 1994 the office of
Chairman was held by two directors and their emoluments (excluding pension
contributions and compensation for loss of office) during the period they
occupied the position of Chairman were as follows:
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
B.P. '000 B.P. '000 B.P. '000
<S> <C> <C> <C>
T V Buffett (until October 18, 1994) .......... 334 279 --
Lord Lane of Horsell (from October 18, 1994) .. -- 4 50
</TABLE>
The highest paid director in 1995 received B.P. 173,000. The former
Chairman was the highest paid director in 1994 and 1993.
F-43
<PAGE> 48
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
27. EMPLOYEES AND DIRECTORS -- (CONTINUED)
The number of directors whose total emoluments, excluding pension
contributions, compensation for loss of office and the emoluments of a director
who discharged his duties outside the United Kingdom are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
NUMBER NUMBER NUMBER
------ ------ ------
<S> <C> <C> <C>
B.P. 5,001-B.P. 10,000 ................ -- 1 --
B.P. 10,001-B.P. 15,000 ................ -- -- 2
B.P. 15,001-B.P. 20,000 ................ 3 3 1
B.P. 20,001-B.P. 25,000 ................ 2 1 1
B.P. 25,001-B.P. 30,000 ................ 2 1 2
B.P. 30,001-B.P. 35,000 ................ -- 1 --
B.P. 50,001-B.P. 55,000 ................ -- -- 1
B.P. 90,001-B.P. 95,000 ................ 1 -- --
B.P. 95,001-B.P. 100,000 ................ -- -- 1
B.P. 100,001-B.P. 105,000 ................ 1 -- --
B.P. 110,001-B.P. 115,000 ................ -- 1 --
B.P. 120,001-B.P. 125,000 ................ -- 1 --
B.P. 160,001-B.P. 165,000 ................ -- -- 1
B.P. 165,000-B.P. 170,000 ................ -- -- 1
B.P. 170,001-B.P. 175,000 ................ -- 1 1
B.P. 215,001-B.P. 220,000 ................ 1 -- --
B.P. 275,001-B.P. 280,000 ................ -- 1 --
B.P. 330,001-B.P. 335,000 ................ 1 -- --
====== ====== ======
</TABLE>
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements of the Group are prepared in
conformity with UK generally accepted accounting principles (UK GAAP) which
differs in certain significant respects from US GAAP. Differences which have a
significant effect on consolidated net income or shareholders' equity are
discussed below. While this is not a comprehensive summary of all differences
between UK GAAP and US GAAP, other differences are not likely to have a
significant effect on the consolidated net income or shareholders' equity of
the Group.
Intangible assets
US GAAP requires that intangible assets are amortized over their estimated
useful life which may not exceed 40 years. Under UK GAAP the cost of goodwill
and other intangible assets, which are considered to be similar in nature to
goodwill, may be written off directly to reserves in the year in which the
assets are acquired. In the tables below the intangible assets which are
substantially comprised of goodwill, subscriber contracts and customer lists,
and franchise contracts are amortized over estimated useful lives which range
from 15 to 40 years. The average useful life of each class of asset is
estimated to be 15 years for subscriber contracts, 30 years for customer lists
and 40 years for franchise contracts.
F-44
<PAGE> 49
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
Deferred income taxes
Under UK GAAP, deferred taxation is provided on the liability method for
all timing differences except where the directors consider that no liability
will arise in the foreseeable future. Following the issuance of Statement of
Financial Accounting Standards No. 109: "Accounting for Income Taxes", US GAAP
provides for the use of the liability method but requires that provisions be
made for all temporary differences. The tables below incorporate adjustments to
shareholders' equity and net income to reflect full provision for deferred
taxation on all temporary differences under the liability method. Temporary
differences arise mainly from the difference between the tax basis of property
and equipment and intangible assets and their corresponding carrying amounts in
the financial statements.
Pensions
Since 1989, as permitted under UK GAAP, the accounting policy of the Group
has been to account for pension costs on a long-term basis spreading the
expected pension costs over the service lives of employees, using assumptions
as advised by an actuary. Under US GAAP, the calculations need to be made using
market rates of interest which were higher than the long-term assumptions made
by the actuary.
A further difference is that under UK GAAP a cost variation is calculated
by spreading the surplus (the difference between the actuarial value of the
assets and the liabilities) over the service lives of the employees, whereas US
GAAP calculates this variation in a particular way--as the expected investment
return on the assets at market value, plus amortization of the surplus (the
difference between the market value of the assets and the actuarial value of
the liabilities), less interest at the market rate on the actuarial value of
the liabilities.
Related companies
In the tables below, estimated adjustments have been made in respect of
related companies accounted for by the Group under the equity method, where
such related companies adopt accounting policies which conform with UK GAAP
which differ significantly from those required under US GAAP. These adjustments
relate primarily to the accounting treatment for goodwill and intangible assets
(see discussion above on intangible assets).
Sale of subsidiary and related companies
Under UK GAAP goodwill on acquisition of subsidiaries and related
companies is written off to reserves. On sale of these companies the goodwill
previously written off is recharged in full to the profit and loss account.
Under US GAAP the goodwill on acquisition is carried in the balance sheet and
amortized over its estimated useful life. On sale of these companies the profit
on sale is therefore higher under US GAAP by the amount of the amortization
previously charged to income.
Discontinued activities
The results of discontinued activities are separated on the profit and loss
account under both UK accounting practice and US GAAP. Under UK GAAP a
discontinued operation refers to an operation that was material and whose sale
or termination has a material effect on the nature and focus of the operations
and represents a material reduction in its operating facilities. Under US GAAP,
only the closure, sale or disposal of a separately identifiable segment of a
business qualifies as a discontinued activity.
F-45
<PAGE> 50
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
Redeemable Preference Shares
The 5% and 6% Convertible Cumulative Redeemable Preference Shares (the
"Preference Shares") of Automated Security (Holdings) PLC are convertible into
Ordinary Shares, at the option of the holder, in the month of May in each of
the years 1987 to 1999 (for the 5% Preference Shares) and on May 31 in each of
the years 1991 to 2006 (for the 6% Preference Shares). Automated Security
(Holdings) PLC has the option between May 31, 2000 and May 31, 2005 (for the 5%
Preference Shares) and June 1, 2006 to May 31, 2009 (for the 6% Preference
Shares) to redeem the Preference Shares at par and in any event must redeem on
May 31, 2005 (for the 5% Preference Shares) or May 31, 2009 (for the 6%
Preference Shares). Under UK GAAP the Preference Shares form part of
shareholders' equity whereas under US GAAP they are classified as a separate
non-current liability. Accordingly, for the purposes of the reconciliation the
total amount of the Preference Shares has been excluded from shareholders'
equity and the dividends on the Preference Shares have been deducted to compute
net income attributable to Ordinary Shareholders.
Earnings per share
The earnings per share calculation under UK GAAP is set out in the
accounting policies. Under US GAAP, primary earnings per Ordinary Share is
calculated by dividing the profit attributable to ordinary shareholders by the
weighted average number of shares in issue during the year. The weighted
average number of shares includes common stock equivalents including all
convertible preference shares and convertible unsecured loan stock calculated
under the "If Converted Method" and share options using the "Treasury Stock
Method". The profit attributable to ordinary shareholders comprises the
estimated net income in accordance with US GAAP and the dividends and interest
(net of tax) of preference shares and loan stock which have been included in
calculating the common stock equivalents. Fully diluted earnings per share have
not been presented as they do not vary significantly from primary earnings per
share.
Pre-acquisition tax losses
Under UK GAAP contingent tax assets on acquired businesses are recognized at
the date of acquisition only to the extent that their recoverability can be
foreseen with reasonable certainty. Any subsequent benefits which arise are
recognized as a reduction in the tax charge. Under US GAAP such benefits are
treated as a retrospective reduction of the goodwill arising on the
acquisition.
Employees' share ownership plan
Automated Security (Holdings) PLC has advanced funds to the Automated
Security (Holdings) PLC Employees' Share Ownership Plan Trust ("ESOP"). Under
UK GAAP following the introduction of UITF Abstract 13 the net balance due from
the ESOP has been shown in investments for both 1994 and 1995; previously these
balances were shown in long term accounts and notes receivable. Under US GAAP
these receivables are shown as a deduction from shareholders' equity.
Recently Issued Accounting Pronouncements
(i) In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
("SFAS 121"). SFAS 121 provides guidance on when to assess and how to measure
impairment of long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiables to be disposed of.
F-46
<PAGE> 51
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
This Statement is effective for financial statements for fiscal years
beginning after December 15, 1995. The Company has not yet assessed the future
impact of adopting SFAS 121.
(ii) In October 1995 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 establishes accounting and disclosure
standards for stock-based employee compensation arrangements. The Statement is
effective for fiscal years beginning after December 15, 1995. The Company has
decided that, upon implementation of SFAS 123, it will continue to account for
stock-based compensation arrangements in accordance with the accounting method
prescribed by APB Opinion No. 25, which is an alternative allowed under SFAS
123.
The following is a summary of the adjustments (gross of tax) to net income
and shareholders' equity which would have been required if the Group had
applied US GAAP instead of UK GAAP.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-------------------------------------------
1993 1994 1995 1995
---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
POUNDS STERLING US DOLLARS
<S> <C> <C> <C> <C>
NET INCOME
Net income/(loss) under UK GAAP............. 5,511 (12,754) (8,208) (12,558)
Adjustments:
Amortization of subscriber contracts and
customer lists ........................... (3,588) (3,656) (3,903) (5,972)
Amortization of franchise contracts........ (283) (278) (269) (411)
Amortization of goodwill................... (3,488) (3,445) (3,887) (5,947)
Depreciation and sales of revalued assets.. 44 158 -- --
Deferred income taxes...................... 5 (558) 354 542
Pre-acquisition tax losses................. (314) -- -- --
Related companies.......................... (259) (247) (484) (741)
Effect on profit on disposal and provisions
against subsidiaries and related companies 314 -- 2,470 3,779
Employee Share Ownership Plan provisions... 200 450 3,066 4,691
Deferred tax effect of above adjustments... 1,207 (423) (956) (1,463)
------- ------- ------- -------
Net loss in accordance with US GAAP......... (651) (20,753) (11,817) (18,080)
Preference Share dividends................. (2,844) (2,839) (2,839) (4,344)
------- ------- ------- -------
Net loss in accordance with US GAAP
attributable to Ordinary Shareholders..... (3,495) (23,592) (14,656) (22,424)
======= ======= ======= =======
SHAREHOLDERS' EQUITY
Shareholders' equity under UK GAAP .................. 35,283 32,484 49,700
Adjustments:
Goodwill ........................................... 98,598 93,636 143,263
Deferred income taxes .............................. (4,973) (4,619) (7,067)
Subscriber contracts and customer lists ............ 50,088 46,902 71,760
Franchise contracts ................................ 10,298 10,261 15,699
Related companies .................................. 4,861 -- --
Redeemable Preference Shares ....................... (48,631) (48,629) (74,402)
Employee Share Ownership Plan ...................... (3,680) (614) (939)
Deferred tax effect of above adjustments ........... (10,963) (12,207) (18,677)
------- ------- -------
Shareholders' equity in accordance with US GAAP ..... 130,881 117,214 179,337
======= ======= =======
</TABLE>
F-47
<PAGE> 52
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
The gross amount of subscriber contracts and customer lists subject to
amortization at November 30, 1995 was B.P.63.8 million. The gross amount of
franchise contracts subject to amortization at November 30, 1995 was B.P.11.1
million.
The following is a summary of certain income statement captions reported
in the consolidated statements of income as adjusted by the significant
adjustments which would have been required if the Group had applied US GAAP
instead of UK GAAP.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------
1993 1994 1995 1995
---------- ---------- --------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
POUNDS STERLING US DOLLARS
<S> <C> <C> <C> <C>
CONTINUING OPERATIONS UNDER US GAAP
NET SALES .................................. 160,775 166,071 163,349 249,923
Cost of sales .............................. (105,768) (106,889) (105,511) (161,432)
---------- ---------- ---------- ----------
Gross profit on sales ...................... 55,007 59,182 57,838 88,491
General and administrative expenses ........ (38,340) (43,792) (49,712) (76,059)
Share of results of related companies ...... 153 933 (474) (725)
Loss on closure of subsidiaries and
major operations .......................... (4,816) (2,429) -- --
Profit/(loss) on sale and provisions against
related companies and investments ......... 260 (20,152) (3,205) (4,903)
Exceptional items .......................... (1,378) -- -- --
---------- ---------- ---------- ----------
OPERATING INCOME ........................... 10,886 (6,258) 4,447 6,804
Interest expense, net ...................... (10,635) (12,514) (14,862) (22,739)
---------- ---------- ---------- ----------
INCOME BEFORE TAXES ON INCOME .............. 251 (18,772) (10,415) (15,935)
TAXES ON INCOME ............................ (902) (1,981) (1,402) (2,145)
---------- ---------- ---------- ----------
NET LOSS ................................... (651) (20,753) (11,817) (18,080)
Preference Share dividends ................. (2,844) (2,839) (2,839) (4,344)
---------- ---------- ---------- ----------
NET LOSS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS ..................... (3,495) (23,592) (14,656) (22,424)
========== ========== ========== ==========
Net loss per Ordinary Share in accordance
with US GAAP .............................. (3.0p) (19.7p) (12.3p) (18.8p)
---------- ---------- ---------- ----------
Weighted average shares outstanding
(millions) ................................. 116.5 119.5 119.6 119.6
---------- ---------- ---------- ----------
</TABLE>
F-48
<PAGE> 53
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP--(CONTINUED)
The following is a summary of certain balance sheet captions reported in
the consolidated balance sheets, together with the related amounts as adjusted
by the significant adjustments which would have been required if the Group had
applied US GAAP instead of UK GAAP.
<TABLE>
<CAPTION>
AS REPORTED IN THE AS ADJUSTED
CONSOLIDATED BALANCE TO CONFORM WITH
SHEETS US GAAP
----------------------- ------------------
1994
(AS RESTATED) 1995 1994 1995
------------- -------- -------- --------
B.P.'000 B.P.'000 B.P.'000 B.P.'000
<S> <C> <C> <C> <C>
Current assets .............................. 37,453 35,561 37,453 35,561
Intangible assets ........................... -- -- 158,984 150,799
Property and equipment ...................... 223,255 227,386 223,255 227,386
Other assets ................................ 15,163 6,466 16,344 5,852
------------- -------- -------- --------
Total assets ................................ 275,871 269,413 436,036 419,598
============= ======== ======== ========
Current liabilities and deferred income ..... 157,968 150,579 157,968 68,100
Liabilities due after more than one year .... 3,908 5,830 19,844 105,135
Convertible Capital Bonds ................... 43,693 43,813 43,693 43,813
Senior Notes ................................ 35,019 36,707 35,019 36,707
Redeemable Preference Shares ................ -- -- 48,631 48,629
------------- -------- -------- --------
Total liabilities ........................... 240,588 236,929 305,155 302,384
Ordinary Shares ............................. 11,957 11,957 11,957 11,957
Redeemable Preference Shares ................ 48,631 48,629 -- --
Reserves .................................... (25,305) (28,102) 118,924 105,257
------------- -------- -------- --------
Total shareholders' equity .................. 35,283 32,484 130,881 117,214
------------- -------- -------- --------
Total liabilities and shareholders' equity .. 275,871 269,413 436,036 419,598
============= ======== ======== ========
</TABLE>
The following is an analysis of the change in total shareholders' equity
using US GAAP.
<TABLE>
<CAPTION>
B.P.'000
--------
<S> <C>
Balance at November 30, 1993 ................................................ 158,287
Loss for the year ........................................................... (23,592)
Currency translation adjustments ............................................ (3,962)
Share issue expenses ........................................................ (14)
Shares converted/issued ..................................................... 92
Movement in ESOP receivable ................................................. 70
--------
Balance at November 30, 1994 ................................................ 130,881
Loss for the year ........................................................... (14,656)
Currency translation adjustments ............................................ 988
Share issue expenses ........................................................ (1)
Shares converted/issued ..................................................... 2
--------
Balance at November 30, 1995 ................................................ 117,214
========
</TABLE>
F-49
<PAGE> 54
AUTOMATED SECURITY (HOLDINGS) PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
29. PRINCIPAL SUBSIDIARY AND RELATED COMPANIES
Subsidiary undertakings
<TABLE>
<CAPTION>
COUNTRY OF
REGISTRATION/ NATURE OF
INCORPORATION BUSINESS
----------------- --------------------
<S> <C> <C>
API Security Inc USA Electronic Security
*ASH Capital Finance (Jersey) Limited Jersey Investment
*Automated Security Limited England Holding Company
Modern Security Systems Limited Eire Electronic Security
Modern Security Systems Limited England Electronic Security
Telecom Security Limited England Electronic Security
TVX Limited England Electronic Security
Sonitrol Corporation USA Electronic Security
Sonitrol Management Corporation USA Electronic Security
</TABLE>
The Group owns 100% of the Ordinary Share Capital of the above
subsidiaries which operate in their country of incorporation except for ASH
Capital Finance (Jersey) Limited which operates in England.
All are indirect subsidiaries of Automated Security (Holdings) PLC except
where marked*.
RELATED COMPANY
<TABLE>
<S> <C> <C>
TVX Inc USA Electronic Security
</TABLE>
DETAILS OF THE ISSUED CAPITAL AND DEBT SECURITIES OF RELATED COMPANY
TVX Inc--
2,900,000 Shares of Common Stock, par value US $0.01 (39.9% held by the Group).
1,000,000 Shares of Redeemable Preferred Stock, par value US $0.01 (48.5% held
by the Group).
F-50
<PAGE> 55
SCHEDULE OF EXHIBITS
<TABLE>
<S> <C>
Description
Exhibit 2.1 Order dated 4 September 1996 of the High
Court of Justice in the Matter of Automated
Security (Holdings) PLC sanctioning the
Scheme of Arrangement(1)
Exhibit 23.1 Consent of Independent Chartered Accountants
</TABLE>
(1) Previously filed as an Exhibit to the Registrant's Current Report dated
September 5, 1996 on Form 8-K filed September 19, 1996.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the inclusion in the Current Report on Form 8-K/A-1 of ADT Limited
dated October 21, 1996, of our report dated May 17, 1996, on our audits of the
consolidated financial statements of Automated Security (Holdings) PLC and
subsidiaries as at November 30, 1995 and 1994, and for each of the three years
in the period ended November 30, 1995.
By: /s/ Binder Hamlyn
- ---------------------
Binder Hamlyn
Chartered Accountants and Registered Auditors
London, England
October 21, 1996
