<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 0-16979
- -------------------------------------------------------------------------------
ADT LIMITED
(Exact Name of Registrant as Specified in its Charter)
BERMUDA Cedar House Not Applicable
(Jurisdiction of 41 Cedar Avenue (I.R.S. Employer
Incorporation or Hamilton HM12, Bermuda Identification No.)
Organization) (Address of Principal
Executive Offices)* Not Applicable
(Zip Code)
Registrant's telephone number, including area code 441-295-2244* *See page i
- -------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
At August 5, 1996, the number of shares outstanding of the registrant's common
shares par value $0.10 per share was 133,736,123 shares. A subsidiary of ADT
Limited owns 3,182,787 common shares which are included in the number
outstanding.
<PAGE> 2
ADT LIMITED
INDEX TO FORM 10-Q
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 . . . . . . . . . . . 1
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 . . . . . . . . . . . 2
CONSOLIDATED BALANCE SHEETS AT JUNE 30, 1996 AND DECEMBER 31, 1995 . . .. . . . . . . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 . . . . . . . . . . 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
The consolidated financial statements were approved by the Board of Directors
on August 5, 1996.
REGISTERED AND PRINCIPAL EXECUTIVE OFFICES
The registered and principal executive offices of ADT Limited are located at
Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda. The executive offices of
the subsidiary which supervises the Company's North American activities are
located in the United States at One Boca Place, 2255 Glades Road, Suite 421A,
Boca Raton, Florida 33431. The telephone number there is 561-997-8406.
i
<PAGE> 3
ADT LIMITED
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<S> <C> <C>
Six months ended June 30 1996 1995
$m $m
NET SALES 715.6 754.6
Cost of sales (368.3) (405.6)
Selling, general and administrative expenses (231.8) (223.3)
Charge for the impairment of long-lived assets (410.1) -
Goodwill amortization (8.6) (13.1)
----------- -----------
OPERATING (LOSS) INCOME (303.2) 112.6
Interest income 12.7 7.5
Interest expense (38.8) (45.8)
Other income less expenses 0.7 1.1
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (328.6) 75.4
Income taxes (17.9) (19.5)
----------- -----------
(LOSS) INCOME BEFORE EXTRAORDINARY ITEMS (346.5) 55.9
Extraordinary items (1.2) -
----------- -----------
NET (LOSS) INCOME (347.7) 55.9
=========== ===========
PRIMARY (LOSS) EARNINGS PER COMMON SHARE $ $
(Loss) income before extraordinary items (2.68) 0.43
Extraordinary items (0.01) -
----------- -----------
NET (LOSS) INCOME PER COMMON SHARE (2.69) 0.43
=========== ===========
</TABLE>
See notes to consolidated financial statements
1
<PAGE> 4
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended June 30 1996 1995
$m $m
<S> <C> <C>
NET SALES 361.3 381.3
Cost of sales (183.9) (205.3)
Selling, general and administrative expenses (119.2) (111.4)
Goodwill amortization (4.4) (6.5)
----------- -----------
OPERATING INCOME 53.8 58.1
Interest income 6.3 3.8
Interest expense (19.1) (22.9)
Other income less expenses 1.2 -
----------- -----------
INCOME BEFORE INCOME TAXES 42.2 39.0
Income taxes (9.6) (10.2)
----------- -----------
INCOME BEFORE EXTRAORDINARY ITEMS 32.6 28.8
Extraordinary items (1.2) -
----------- -----------
NET INCOME 31.4 28.8
=========== ===========
PRIMARY EARNINGS PER COMMON SHARE $ $
Income before extraordinary items 0.24 0.22
Extraordinary items (0.01) -
----------- -----------
NET INCOME PER COMMON SHARE 0.23 0.22
=========== ===========
FULLY DILUTED EARNINGS PER COMMON SHARE $ $
Income before extraordinary items 0.23 0.22
Extraordinary items (0.01) -
----------- -----------
NET INCOME PER COMMON SHARE 0.22 0.22
=========== ===========
</TABLE>
See notes to consolidated financial statements
2
<PAGE> 5
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited Audited
June 30 December 31
1996 1995
$m $m
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 310.4 341.8
Accounts receivable - net 225.9 169.9
Inventories 29.0 31.0
Prepaid expenses and other current assets 30.9 22.7
----------- -----------
Total current assets 596.2 565.4
Property, plant and equipment - net 1,278.1 1,223.5
Goodwill - net 426.1 823.0
Long-term investments 84.4 1.7
Investment in and loans to associate - 88.8
Other long-term assets 64.4 72.6
----------- -----------
TOTAL ASSETS 2,449.2 2,775.0
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt 44.7 38.8
Accounts payable 140.4 92.0
Other current liabilities 177.9 189.1
----------- -----------
Total current liabilities 363.0 319.9
Long-term debt 900.9 927.8
Deferred revenue 104.8 94.9
Deferred income taxes 127.7 116.7
Other long-term liabilities 113.1 126.3
Minority interests - 15.6
----------- -----------
Total liabilities 1,609.5 1,601.2
----------- -----------
Convertible redeemable preference shares 4.9 4.9
Shareholders' equity:
Common shares 13.3 13.2
Additional paid-in capital
Share premium 740.7 724.9
Contributed surplus 1,436.6 1,436.6
Treasury shares (79.7) (79.7)
Accumulated deficit (1,269.9) (922.0)
Cumulative currency translation adjustments (6.2) (4.1)
----------- -----------
Total shareholders' equity 834.8 1,168.9
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,449.2 2,775.0
=========== ===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 6
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income (347.7) 55.9
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Charge for the impairment of long-lived assets 410.1 -
Depreciation 82.2 75.1
Goodwill amortization 8.6 13.1
Interest on ITS Vendor Note (4.3) -
Liquid Yield Option Notes discount amortization 10.0 -
Refinancing costs amortization 1.6 2.8
Deferred income taxes 12.6 14.0
Extraordinary items 1.2 -
Gain arising from the ownership of investments (1.2) (0.1)
Loss (gain) on currency transactions 0.5 (0.7)
Other (0.5) (1.2)
Changes in assets and liabilities (18.1) (22.6)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 155.0 136.3
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment - net (139.7) (120.6)
Acquisition of businesses (24.4) (5.1)
Purchase of customer contracts (10.1) -
Disposal of investment in and loans to associate 15.4 -
Purchase of other investments (3.8) -
Other 1.2 9.3
----------- -----------
NET CASH UTILIZED BY INVESTING ACTIVITIES (161.4) (116.4)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments) receipts of short-term debt (2.6) 25.3
Repayments of long-term debt (15.0) (33.1)
Purchase of senior subordinated notes (24.0) (7.5)
Proceeds from issue of common shares 15.9 4.5
Other 1.2 2.4
----------- -----------
NET CASH UTILIZED BY FINANCING ACTIVITIES (24.5) (8.4)
----------- -----------
EFFECT OF CURRENCY TRANSLATION ON CASH AND CASH EQUIVALENTS (0.5) 0.7
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (31.4) 12.2
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 341.8 215.7
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 310.4 227.9
=========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 7
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(i) BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements
incorporate the financial statements of ADT Limited, a company incorporated in
Bermuda, and its subsidiaries (the "Company") and have been prepared in
accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X
and in accordance with generally accepted accounting principles in the United
States. Accordingly, these unaudited interim consolidated financial statements
do not include all of the disclosures required by generally accepted accounting
principles for annual consolidated financial statements. In the opinion of
management, all adjustments considered necessary for fair presentation have
been included; all such adjustments are of a normal, recurring nature, except
as discussed in note (iii) where, effective January 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 121, and except for the
acquisition of Alert Centre, Inc. ("Alert") as discussed in note (x). The
preparation of consolidated financial statements in accordance with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Certain figures at December 31, 1995 and for the six months and
three months ended June 30, 1995 have been reclassified to conform to the 1996
presentation. In particular, corporate expenses have been reclassified from
other income less expenses to a separate component of operating income. This
reclassification has had no net effect on the reported earnings for income
before income taxes and net income. Results of operations for the six months
and three months ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the full year ending December 31, 1996. For
further information, see the Company's consolidated financial statements,
including the accounting policies and notes thereto, included in the Annual
Report on Form 10-K for the year ended December 31, 1995. ADT Limited is a
holding company with no independent business operations or assets other than
its investment in its subsidiaries, intercompany balances and holdings of cash
and cash equivalents. ADT Limited's businesses are conducted through its
subsidiaries.
5
<PAGE> 8
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(ii) BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
NET SALES
Electronic security services 565.7 531.6
Vehicle auction services 149.9 223.0
----------- -----------
715.6 754.6
=========== ===========
OPERATING (LOSS) INCOME
Electronic security services (305.2) 80.8
Vehicle auction services 10.7 43.0
Corporate (8.7) (11.2)
----------- -----------
(303.2) 112.6
=========== ===========
Three months ended June 30 1996 1995
$m $m
NET SALES
Electronic security services 286.0 270.6
Vehicle auction services 75.3 110.7
----------- -----------
361.3 381.3
=========== ===========
OPERATING INCOME
Electronic security services 45.9 43.1
Vehicle auction services 12.9 20.3
Corporate (5.0) (5.3)
----------- -----------
53.8 58.1
=========== ===========
</TABLE>
Net sales and operating (loss) income of the electronic security services and
vehicle auction services divisions are discussed in Item 2.
6
<PAGE> 9
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(iii) CHARGE FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
Effective January 1, 1996, the Company was required to adopt Statement of
Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
As a result of the adoption of SFAS 121, in the first quarter of 1996 the
Company recorded a non-cash charge for the impairment of long-lived assets of
$410.1 million, as a separate line item in the consolidated statement of
income, with no consequential tax effect. The $410.1 million impairment charge
comprised $397.1 million relating to the electronic security services division
and $13.0 million relating to the vehicle auction services division. Further
details are set out in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996.
(iv) INTEREST INCOME AND INTEREST EXPENSE
Interest income and interest expense are discussed in Item 2.
(v) OTHER INCOME LESS EXPENSES
Other income less expenses for the six months ended June 30, 1996 comprised
non-recurring net gains arising from the ownership of investments of $1.2
million (note (ix)), losses on currency transactions of $0.5 million (1995 -
$0.7 million gain), and in respect of 1995 other net gains of $0.4 million.
Other income less expenses for the three months ended June 30, 1996 comprised
gains on currency transactions of $1.2 million.
(vi) EXTRAORDINARY ITEMS
During the second quarter of 1996 the Company reacquired in the market certain
of its senior subordinated notes, which was financed from cash on hand.
Extraordinary items comprised the loss arising on reacquisition of $0.8 million
and the write off of net unamortized deferred refinancing costs of $0.6 million
relating to the early extinguishment of certain amounts outstanding under the
senior subordinated notes, and were stated net of applicable income taxes of
$0.2 million.
(vii) EARNINGS PER COMMON SHARE
The calculation of primary (loss) earnings per common share in the six months
ended June 30, 1996 was based on the weighted average of 129,416,324 (1995 -
130,240,278) common shares in issue during the period, which in 1996 did not
allow for the allotment of common shares under executive share option schemes,
which are considered common stock equivalents, because their effect was
anti-dilutive as a consequence of the net loss for the period. Common stock
equivalents included in the weighted average number of common shares in issue
during the six months ended June 30, 1995 was 2,150,190. Primary (loss)
earnings per common share was based on adjusted net loss of $347.9 million
(1995 - $55.7 million income).
7
<PAGE> 10
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(vii) EARNINGS PER COMMON SHARE (continued)
The calculation of primary earnings per common share in the three months ended
June 30, 1996 was based on the weighted average of 135,196,318 (1995 -
130,721,589) common shares in issue during the period after allowing for the
allotment of common shares under executive share option schemes and the full
conversion rights attaching to non-voting exchangeable shares which are
considered common stock equivalents. Primary earnings per common share was
based on adjusted net income available to common shareholders of $31.3 million
(1995 - $28.7 million).
The calculation of fully diluted earnings per common share in the three months
ended June 30, 1996 was based on the weighted average of 157,660,408 (1995 -
130,880,890) common shares in issue during the period after allowing for the
allotment of common shares under executive share option schemes, the full
conversion rights attaching to non-voting exchangeable shares and the assumed
exchange of Liquid Yield Option Notes. Fully diluted earnings per common share
was based on adjusted net income available to common shareholders of $34.6
million (1995 - $28.7 million).
(viii) INVENTORIES
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
$m $m
<S> <C> <C>
Raw materials and consumables 9.0 8.8
Work in process 11.7 12.5
Finished goods 8.3 9.7
----------- -----------
29.0 31.0
=========== ===========
</TABLE>
(ix) INVESTMENT IN AND LOANS TO ASSOCIATE
In February 1996, the Company disposed of its entire interest in Shareholder
Loan Notes with an issue price of $13.9 million and valued by the Company at
$13.3 million and 33.1 per cent of the ordinary share capital of ITS valued by
the Company at $0.9 million, for an aggregate cash consideration of $15.4
million. The net gain arising on the transaction amounted to $1.2 million
which was included in other income less expenses (note (v)).
As a result of the above transaction, the Company now holds a 10.0 per cent
interest in the ordinary share capital of ITS, valued by the Company at a
nominal amount, together with the Vendor Note, which at June 30, 1996 is
disclosed as a long-term investment amounting to $78.8 million.
8
<PAGE> 11
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(x) MINORITY INTERESTS
In February 1996, following approval by Alert's shareholders, Alert was merged
into the Company and, as a result, those shares then held by the minority
shareholders and not owned by the Company were converted into the right to
receive in cash the price paid per share by the Company in the initial tender
offer. Accordingly, the minority interest outstanding at December 31, 1995 has
been eliminated.
(xi) COMMON SHARES
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
<S> <C> <C>
Number of common shares of $0.10 each:
Authorized 220,000,000 220,000,000
Issued and outstanding 133,492,146 131,850,465
</TABLE>
On July 1, 1996, as part of an agreement to combine with Republic Industries,
Inc., ADT Limited issued to Republic a warrant to acquire 15 million common
shares of ADT Limited at an exercise price of $20 per common share. The
warrant is exercisable if the agreement is terminated for any reason.
9
<PAGE> 12
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC.
ADT Operations, Inc., a company incorporated in the State of Delaware, United
States, is an indirect wholly owned subsidiary of ADT Limited. ADT Operations,
Inc. is a holding company that, through its subsidiaries, conducts the
Company's electronic security services and vehicle auction services businesses
in the United States. ADT Operations, Inc. has no independent business
operations or assets other than its investment in its subsidiaries,
intercompany balances and holdings of cash and cash equivalents.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
NET SALES 593.1 537.9
Cost of sales (291.6) (264.3)
Selling, general and administrative expenses (197.0) (169.7)
Charge for the impairment of long-lived assets (316.4) -
Goodwill amortization (5.6) (9.1)
----------- -----------
OPERATING (LOSS) INCOME (217.5) 94.8
Interest income - non-affiliates 1.5 0.8
Interest expense - affiliates (15.5) (10.6)
Interest expense - non-affiliates (37.4) (39.9)
Gain on disposal of assets to affiliates 26.8 -
Other expenses less income (3.1) (3.3)
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (245.2) 41.8
Income taxes (14.1) (14.3)
----------- -----------
(LOSS) INCOME BEFORE EXTRAORDINARY ITEMS (259.3) 27.5
Extraordinary items (0.4) -
----------- -----------
NET (LOSS) INCOME (259.7) 27.5
=========== ===========
</TABLE>
10
<PAGE> 13
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC. (continued)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended June 30 1996 1995
$m $m
<S> <C> <C>
NET SALES 297.7 271.6
Cost of sales (145.4) (132.0)
Selling, general and administrative expenses (100.7) (85.1)
Goodwill amortization (2.8) (4.6)
----------- -----------
OPERATING INCOME 48.8 49.9
Interest income - non-affiliates 0.9 0.3
Interest expense - affiliates (8.0) (5.3)
Interest expense - non-affiliates (18.5) (19.9)
Other expenses less income (2.0) (2.3)
----------- -----------
INCOME BEFORE INCOME TAXES 21.2 22.7
Income taxes (7.5) (7.1)
----------- -----------
INCOME BEFORE EXTRAORDINARY ITEMS 13.7 15.6
Extraordinary items (0.4) -
----------- -----------
NET INCOME 13.3 15.6
=========== ===========
</TABLE>
11
<PAGE> 14
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC. (continued)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited Audited
June 30 December 31
1996 1995
$m $m
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 122.5 54.0
Accounts receivable - net - affiliates 31.0 28.9
Accounts receivable - net - non-affiliates 188.6 132.8
Inventories 17.9 17.2
Prepaid expenses and other current assets 9.1 6.9
----------- -----------
Total current assets 369.1 239.8
Property, plant and equipment - net 1,104.9 1,049.1
Goodwill - net 343.3 698.4
Other long-term assets 27.3 28.9
----------- -----------
TOTAL ASSETS 1,844.6 2,016.2
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt - non-affiliates 41.6 36.3
Accounts payable - affiliates 24.1 9.6
Accounts payable - non-affiliates 128.0 75.2
Other current liabilities - non-affiliates 127.2 127.5
----------- -----------
Total current liabilities 320.9 248.6
Long-term debt - affiliates 184.8 130.2
Long-term debt - non-affiliates 867.2 895.4
Deferred revenue 69.7 67.3
Deferred income taxes 105.1 92.9
Other long-term liabilities - affiliates 123.6 129.8
Other long-term liabilities - non-affiliates 92.9 96.3
Minority interests - 15.6
----------- -----------
Total liabilities 1,764.2 1,676.1
----------- -----------
Shareholders' equity:
Common shares - -
Contributed surplus 858.5 858.5
Accumulated deficit (778.1) (518.4)
----------- -----------
Total shareholders' equity 80.4 340.1
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,844.6 2,016.2
=========== ===========
</TABLE>
12
<PAGE> 15
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC. (continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income (259.7) 27.5
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Charge for the impairment of long-lived assets 316.4 -
Depreciation 69.0 58.1
Goodwill amortization 5.6 9.1
Liquid Yield Option Notes discount amortization 10.0 -
Refinancing costs amortization 1.6 2.8
Deferred income taxes 12.4 12.5
Extraordinary items 0.4 -
Gain on disposal of assets to affiliates (26.8) -
Other (0.4) (0.4)
Changes in assets and liabilities 7.3 (14.1)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 135.8 95.5
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment - net (125.5) (101.8)
Acquisition of businesses from non-affiliates (24.4) (0.9)
Purchase of customer contracts from non-affiliates (4.0) -
Disposal of assets to affiliates 73.5 -
Other (0.8) (0.3)
----------- -----------
NET CASH UTILIZED BY INVESTING ACTIVITIES (81.2) (103.0)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments) receipts of short-term debt - non-affiliates (2.6) 27.0
Proceeds from long-term debt - affiliates 31.5 5.0
Repayments of long-term debt - non-affiliates (15.0) (32.8)
Other - (2.2)
----------- -----------
NET CASH PROVIDED (UTILIZED) BY FINANCING ACTIVITIES 13.9 (3.0)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 68.5 (10.5)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 54.0 78.3
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 122.5 67.8
=========== ===========
</TABLE>
13
<PAGE> 16
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC. (continued)
<TABLE>
<CAPTION>
BUSINESS SEGMENTS
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
NET SALES
Electronic security services 443.2 399.0
Vehicle auction services 149.9 138.9
----------- -----------
593.1 537.9
=========== ===========
OPERATING (LOSS) INCOME
Electronic security services (227.2) 74.0
Vehicle auction services 10.7 21.2
Corporate (1.0) (0.4)
----------- -----------
(217.5) 94.8
=========== ===========
Three months ended June 30 1996 1995
$m $m
NET SALES
Electronic security services 222.4 202.3
Vehicle auction services 75.3 69.3
----------- -----------
297.7 271.6
=========== ===========
OPERATING INCOME
Electronic security services 36.8 39.6
Vehicle auction services 12.9 10.3
Corporate (0.9) -
----------- -----------
48.8 49.9
=========== ===========
</TABLE>
14
<PAGE> 17
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC. (continued)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
$m $m
<S> <C> <C>
INVENTORIES
Raw materials and consumables 6.4 6.5
Work in process 7.6 7.4
Finished goods 3.9 3.3
----------- -----------
17.9 17.2
=========== ===========
</TABLE>
LONG-TERM DEBT - NON-AFFILIATES
Under the terms of the indenture governing the ADT Operations, Inc. senior
subordinated notes a payment blockage prevents ADT Operations, Inc. and its
guarantor subsidiaries and ADT Limited from making any payment of principal,
interest or premium on the senior subordinated notes and from purchasing,
redeeming or otherwise acquiring any senior subordinated notes during the
continuance of any payment blockage period. No payment blockage is currently
in effect.
At June 30, 1996, ADT Operations, Inc. had $331.1 million of Senior
Indebtedness comprised of $81.1 million of Senior Indebtedness related to
letters of credit issued under the terms of the revolving bank credit agreement
and $250.0 million of Senior Indebtedness related to the Senior Notes, (in each
case as defined in the Senior Subordinated Note Indenture).
At June 30, 1996, ADT Limited had no Guarantor Senior Indebtedness (as defined
in the Senior Note Indenture, but excluding Indebtedness in respect of
guarantees issued by ADT Limited of debt of ADT Operations, Inc. or its
subsidiaries). At June 30, 1996, the subsidiary guarantors had $48.0 million
of Guarantor Senior Indebtedness (as defined in the Senior Note Indenture), in
each case ranking pari passu in right of payment with the Senior Note
Guarantees.
All of the subsidiary guarantors under the senior notes and the revolving bank
credit agreement are direct or indirect, wholly owned subsidiaries of ADT
Operations, Inc. Separate financial statements and other disclosures for the
subsidiary guarantors are not included herein because the subsidiary guarantors
have guaranteed the senior notes on a joint and several basis, the aggregate
assets, liabilities, earnings and equity of the subsidiary guarantors are
substantially equivalent to the assets, liabilities, earnings and equity of ADT
Operations, Inc. on a consolidated basis and such separate financial statements
and other disclosures are not considered material to investors.
15
<PAGE> 18
ADT LIMITED
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
(xii) ADT OPERATIONS, INC. (continued)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
<S> <C> <C>
COMMON SHARES
Number of common shares of $0.10 each:
Authorized 10,000 10,000
Issued and outstanding 1,820 1,820
</TABLE>
16
<PAGE> 19
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion of results of operations addresses net sales,
operating income and certain other line items in the consolidated financial
statements. The discussion is based on the segmental information set out
below.
NET SALES
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
Electronic security services 565.7 531.6
Vehicle auction services 149.9 223.0
----------- -----------
Net sales 715.6 754.6
=========== ===========
OPERATING (LOSS) INCOME AND (LOSS) INCOME BEFORE INCOME TAXES
Six months ended June 30 1996 1995
$m $m
Electronic security services (305.2) 80.8
Vehicle auction services 10.7 43.0
Corporate expenses (8.7) (11.2)
----------- -----------
Operating (loss) income (303.2) 112.6
----------- -----------
Interest income 12.7 7.5
Interest expense (38.8) (45.8)
Other income less expenses 0.7 1.1
----------- -----------
(Loss) income before income taxes (328.6) 75.4
=========== ===========
Charge for the impairment of long-lived assets 410.1 -
Depreciation 82.2 75.1
Goodwill amortization 8.6 13.1
Capital expenditures 141.8 124.7
</TABLE>
The charge for the impairment of long-lived assets and other income less
expenses are discussed in Item 1.
17
<PAGE> 20
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
NET SALES
<TABLE>
<CAPTION>
Three months ended June 30 1996 1995
$m $m
<S> <C> <C>
Electronic security services 286.0 270.6
Vehicle auction services 75.3 110.7
----------- -----------
Net sales 361.3 381.3
=========== ===========
OPERATING INCOME AND INCOME BEFORE INCOME TAXES
Three months ended June 30 1996 1995
$m $m
Electronic security services 45.9 43.1
Vehicle auction services 12.9 20.3
Corporate expenses (5.0) (5.3)
----------- -----------
Operating income 53.8 58.1
----------- -----------
Interest income 6.3 3.8
Interest expense (19.1) (22.9)
Other income less expenses 1.2 -
----------- -----------
Income before income taxes 42.2 39.0
=========== ===========
Depreciation 42.2 38.3
Goodwill amortization 4.4 6.5
Capital expenditures 74.0 65.6
</TABLE>
18
<PAGE> 21
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
ELECTRONIC SECURITY SERVICES - RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Six months ended June 30 1996 1996 1995 1995
$m % $m %
<S> <C> <C> <C> <C>
Net sales
North America 487.4 86 431.3 81
Europe* 78.3 14 100.3 19
--------- --------- --------- ---------
565.7 100 531.6 100
========= ========= ========= =========
Operating income
North America 90.2 91 83.8 93
Europe* 8.7 9 6.3 7
--------- --------- --------- ---------
Operating income before the charge
for the impairment of long-lived
assets and goodwill amortization 98.9 100 90.1 100
========= =========
Charge for the impairment of long-lived assets (397.1) -
Goodwill amortization (7.0) (9.3)
--------- ---------
Operating (loss) income (305.2) 80.8
========= =========
Depreciation 76.2 66.0
Capital expenditures 131.3 114.0
Three months ended June 30 1996 1996 1995 1995
$m % $m %
Net sales
North America 245.8 86 219.7 81
Europe* 40.2 14 50.9 19
--------- --------- --------- ---------
286.0 100 270.6 100
========= ========= ========= =========
Operating income
North America 45.1 91 44.5 93
Europe* 4.4 9 3.2 7
--------- --------- --------- ---------
Operating income before
goodwill amortization 49.5 100 47.7 100
========= =========
Goodwill amortization (3.6) (4.6)
--------- ---------
Operating income 45.9 43.1
========= =========
Depreciation 39.2 33.8
Capital expenditures 67.4 58.7
</TABLE>
*The Company's European electronic article surveillance operation was disposed
of in November 1995.
19
<PAGE> 22
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
Net sales of the division, which represented approximately 79 per cent of the
Company's consolidated net sales, increased 6.4 per cent in 1996 to $565.7
million from $531.6 million in 1995. This sales increase was attributable to
an increase of $56.1 million in the sales of the North American operations
offset by a $22.0 million decline in the sales of the European operations,
which was due to the exclusion of sales of the European electronic article
surveillance operation which was sold in November 1995. In North America the
increase in sales was due to the first time inclusion of the sales of Alert
which was acquired in December 1995, as well as increased recurring monitoring
and maintenance revenues arising from a larger base of residential security
systems. Approximately 129,000 new residential security systems were sold in
1996 compared with approximately 108,000 systems in 1995. However, due to
price competition in the market place, installation revenues showed a modest
decline in 1996 compared with 1995. The commercial business in the United
States experienced modest growth in new system sales and installation revenues,
and growth in recurring revenues continues to be affected by these market
conditions.
Operating results of the division declined from $80.8 million income in 1995 to
a $305.2 million loss in 1996, due to a charge for the impairment of long-lived
assets of $397.1 million.
Operating income of the division before the charge for the impairment of
long-lived assets and goodwill amortization increased 9.8 per cent in 1996 to
$98.9 million from $90.1 million in 1995. Operating income before the charge
for the impairment of long-lived assets and goodwill amortization as a
percentage of net sales ("Operating margin") increased to 17.5 per cent in 1996
from 16.9 per cent in 1995. The increase in operating income before the charge
for the impairment of long-lived assets and amortization and the increase in
Operating margin reflected the first time inclusion of Alert, the exclusion of
the European electronic article surveillance operation and the continuing
success of the residential security system sales program, which has achieved
further advances in recurring revenues in 1996. However this improvement has
been offset by continued price competition which has caused the contribution
from residential installation revenue and outright sales to show a modest
decline.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995
Net sales of the division, which represented approximately 79 per cent of the
Company's consolidated net sales for the quarter, increased 5.7 per cent in
1996 to $286.0 million from $270.6 million in the second quarter of 1995. This
sales increase was attributable to an increase of $26.1 million in the sales of
the North American operations offset by a $10.7 million decline in the sales of
the European operations, which was due to the exclusion of sales of the
European electronic article surveillance operation which was sold in November
1995. In North America the increase in sales was due to the first time
inclusion of the sales of Alert which was acquired in December 1995, as well as
increased recurring monitoring and maintenance revenues arising from a larger
base of residential security systems. Approximately 69,000 new residential
security systems were sold in the second quarter of 1996 compared with
approximately 53,000 systems in the second quarter of 1995. However, due to
price competition in the market place, residential installation revenues
remained flat in the second quarter of 1996 compared with 1995. The commercial
business in the United States remained flat in new system sales and
installation revenues, and growth in recurring revenues continues to be
affected by these market conditions.
20
<PAGE> 23
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Operating income of the division before goodwill amortization increased 3.8 per
cent in 1996 to $49.5 million from $47.7 million in the second quarter of
1995. Operating margin declined from 17.6 per cent in 1995 to 17.3 per cent in
the second quarter of 1996. The increase in operating income before
amortization reflected the first time inclusion of Alert, the exclusion of the
European electronic article surveillance operation and the continuing success
of the residential security system sales program, which has achieved further
advances in recurring revenues in the second quarter of 1996. However this
improvement has been offset by continued price competition which has caused the
contribution from residential installation revenue and outright sales to remain
flat. The decline in Operating margin is principally due to pressure on
margins in the North American market as a result of increased marketing and
selling costs and the impact of increased competition on installation revenues.
21
<PAGE> 24
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
VEHICLE AUCTION SERVICES - RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Six months ended June 30 1996 1996 1995 1995
$m % $m %
<S> <C> <C> <C> <C>
Net sales
United States 149.9 100 138.9 62
Europe* - - 84.1 38
--------- --------- --------- ---------
149.9 100 223.0 100
========= ========= ========= =========
Operating income
United States 25.3 100 22.9 49
Europe* - - 23.9 51
--------- --------- --------- ---------
Operating income before the charge
for the impairment of long-lived
assets and goodwill amortization 25.3 100 46.8 100
========= =========
Charge for the impairment of long-lived assets (13.0) -
Goodwill amortization (1.6) (3.8)
--------- ---------
Operating income 10.7 43.0
========= =========
Depreciation 5.8 8.9
Capital expenditures 8.6 10.6
Three months ended June 30 1996 1996 1995 1995
$m % $m %
Net sales
United States 75.3 100 69.3 63
Europe* - - 41.4 37
--------- --------- --------- ---------
75.3 100 110.7 100
========= ========= ========= =========
Operating income
United States 13.7 100 11.2 50
Europe* - - 11.0 50
--------- --------- --------- ---------
Operating income before
goodwill amortization 13.7 100 22.2 100
========= =========
Goodwill amortization (0.8) (1.9)
--------- ---------
Operating income 12.9 20.3
========= =========
Depreciation 2.9 4.5
Capital expenditures 5.1 6.9
</TABLE>
*In December 1995 the Company disposed of an interest in its United Kingdom and
Continental European vehicle auction services businesses ("European Auctions").
22
<PAGE> 25
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
Net sales of the United States vehicle auction services business, which
represented approximately 21 per cent of the Company's consolidated net sales,
increased 7.9 per cent in 1996 to $149.9 million from $138.9 million in 1995.
The volume of vehicles sold increased by approximately 6 per cent which was
principally due to an increase in the volume of vehicles sold for fleet lease
customers of approximately 36 per cent, while the volume of vehicles sold for
vehicle manufacturers and new and used vehicle dealers declined by
approximately 11 per cent and approximately 1 per cent, respectively.
Operating results of the division declined from $43.0 million in 1995 to $10.7
million in 1996 due to a charge for the impairment of long-lived assets of
$13.0 million and the exclusion of the operating income of European Auctions.
Operating income before the charge for the impairment of long-lived assets and
goodwill amortization of the United States vehicle auction services business
increased to $25.3 million in 1996 from $22.9 million in 1995. Operating
margin increased to 16.9 per cent in 1996 from 16.5 per cent in 1995. The
increases in operating income and Operating margin were due principally to the
increase in volume of vehicles sold and to an increase in the ratio of vehicles
sold to vehicles entered for sale to 58.4 per cent in 1996 from 56.7 per cent
in 1995 which was due to a higher proportion of vehicles entered for sale by
fleet lease customers.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995
Net sales of the United States vehicle auction services business, which
represented approximately 21 per cent of the Company's consolidated net sales
for the quarter, increased 8.7 per cent in 1996 to $75.3 million from $69.3
million in the second quarter of 1995. The volume of vehicles sold increased
by approximately 6 per cent which was principally due to an increase in the
volume of vehicles sold for fleet lease customers of approximately 34 per cent,
while the volume of vehicles sold for vehicle manufacturers declined by
approximately 12 per cent.
Operating income before goodwill amortization of the United States vehicle
auction services business increased to $13.7 million in 1996 from $11.2 million
in the second quarter of 1995. Operating margin increased to 18.2 per cent in
1996 from 16.2 per cent in 1995. The increases in operating income and
Operating margin were due principally to the increase in volume of vehicles
sold and to an increase in the ratio of vehicles sold to vehicles entered for
sale to 56.7 per cent in 1996 from 56.1 per cent in 1995 which was due to a
higher proportion of vehicles entered for sale by fleet lease customers.
23
<PAGE> 26
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
INTEREST INCOME AND INTEREST EXPENSE
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C> <C>
Interest income 12.7 7.5
Interest expense (38.8) (45.8)
Three months ended June 30 1996 1995
$m $m
Interest income 6.3 3.8
Interest expense (19.1) (22.9)
</TABLE>
Interest income increased in 1996 partly due to the increase in the level of
cash deposits held by the Company in 1996, following the disposal of European
Auctions and the European electronic article surveillance business in the
fourth quarter of 1995. During the six months ended June 30, 1996 and the
three months ended June 30, 1996 interest income included $4.3 million and $2.2
million, respectively, relating to the ITS Vendor Note.
Interest expense declined in 1996, principally due to the effects of the
refinancing which took place in the third quarter of 1995. During the six
months ended June 30, 1996 interest expense included $10.0 million relating to
Liquid Yield Option Notes discount amortization and $1.6 million (1995 - $2.8
million) relating to refinancing costs amortization. During the three months
ended June 30, 1996 interest expense included $5.0 million relating to Liquid
Yield Option Notes discount amortization and $0.8 million (1995 - $1.4 million)
relating to refinancing costs amortization.
LIQUIDITY AND CAPITAL RESOURCES
The net decrease in cash and cash equivalents amounted to $31.4 million, after
the negative effect of currency translation on cash and cash equivalents of
$0.5 million. Net cash of $155.0 million provided by operating activities was
offset by net cash utilized by investing activities of $161.4 million and $24.5
million utilized by financing activities.
Net cash provided by operating activities of $155.0 million principally
included cash provided by the Company's electronic security services and
vehicle auction services divisions less other expenses and adjusted for the
net increase in working capital. Within the net increase of $18.1 million in
working capital, net increases in accounts receivable of $56.0 million and
other assets of $4.3 million were offset by a net increase in liabilities of
$42.2 million, principally relating to increases in accounts payable and
deferred revenue and a decrease in other liabilities. The movements in
accounts receivable and accounts payable were principally due to the timing of
cash receipts and payments in the vehicle auction business in respect of
vehicle sales which took place in the latter part of June 1996. The movement
in deferred revenue was principally due to the timing of billings within the
electronic security services division.
24
<PAGE> 27
ADT LIMITED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Net cash utilized by investing activities of $161.4 million was principally due
to capital expenditures of $131.3 million and $8.6 million in the electronic
security services and vehicle auction services divisions, respectively, $24.4
million relating to the acquisition of the minority interest in Alert and $10.1
million relating to the purchase of customer contracts to provide electronic
security monitoring, which was offset by $15.4 million received on the disposal
of certain investments in and loans to associate.
Net cash utilized by financing activities of $24.5 million was principally due
to the purchase of $23.2 million face value of the Company's senior
subordinated notes at a cost of $24.0 million and the repayments of long-term
debt of $15.0 million, which was offset by $15.9 million of proceeds from the
issue of common shares.
A market purchase program in respect of Liquid Yield Option Notes due 2010,
with a market value of up to $100 million, was approved by the board of
directors on August 5, 1996, to be carried out at prevailing market prices from
time to time, depending upon market conditions and other considerations.
The Company believes that the working capital at June 30, 1996, its available
credit facilities and the current cash flows from operations are adequate for
the Company's normal growth and operating needs, the funding of its capital
expenditures budget, the funding of the purchase program referred to above and
the current servicing of its debt requirements.
FORWARD LOOKING INFORMATION
Certain statements in this Form 10-Q constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. In
particular any statements contained herein regarding expectations with respect
to future sales, operating efficiencies, growth and working capital needs, are
subject to known and unknown risks, uncertainties and contingencies, many of
which are beyond the control of the Company, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. Factors that might affect such forward looking
statements include, among others, overall economic and business conditions,
the demand for the Company's services, competitive factors in the industry,
regulatory approvals and uncertainty about the consummation of future
acquisitions.
25
<PAGE> 28
ADT LIMITED
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual General Meeting of common shareholders of ADT Limited was held on
April 11, 1996. All the resolutions put to the meeting were passed and the
following is a brief description of each matter voted upon at the meeting.
PROPOSAL 1. ELECTION OF DIRECTORS
The election of eight directors, constituting the full board of directors of
ADT Limited, to serve until the next Annual General Meeting was approved.
PROPOSAL 2. APPOINTMENT OF AUDITORS
The reappointment of Coopers & Lybrand as the independent auditors of ADT
Limited and the authorization of the board of directors to fix the auditors'
remuneration was approved.
PROPOSAL 3. APPROVAL OF ADT LIMITED'S AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
The audited consolidated financial statements of ADT Limited for the year ended
December 31, 1995 were approved.
PROPOSAL 4. APPROVAL OF AMENDMENTS TO THE ADT 1993 LONG TERM INCENTIVE PLAN
Various amendments to the ADT 1993 Long Term Incentive Plan were approved.
The following is a tabulation of the votes submitted in respect of the
proposals considered at the Annual General Meeting; proxy votes giving
discretion to the chairman of the meeting have been included in the votes for
each proposal.
<TABLE>
<CAPTION>
Number of
Number of broker non-
Number of votes against votes and
votes for or withheld abstentions
<S> <C> <C> <C>
Proposal 1. M A Ashcroft 84,446,274 2,803,587 30,465,713
J E Danneberg 87,172,459 77,402 30,465,713
A B Henderson 84,464,109 2,785,752 30,465,713
J S Pasman 84,451,880 2,797,981 30,465,713
S J Ruzika 87,208,690 41,171 30,465,713
W P Slusser 84,473,092 2,776,769 30,465,713
W W Stinson 87,198,792 51,069 30,465,713
R S Troubh 84,467,412 2,782,449 30,465,713
Proposal 2. 87,247,937 44,979 30,422,658
Proposal 3. 87,234,752 47,587 30,433,235
Proposal 4. 54,761,543 53,320,598 9,633,433
</TABLE>
26
<PAGE> 29
ADT LIMITED
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<S> <C>
(a) Exhibits
10.1 Waiver and Consent No. 1 dated May 23, 1996 to the ADT Limited Guaranty dated as of August 23,
1995.
10.2 Waiver and Consent No. 2 dated June 7, 1996 to the ADT Limited Guaranty dated as of August 23,
1995.
11.1 Statement regarding the computation of earnings per common share.
27 Financial Data Schedule (for SEC use only).
(b) A Current Report on Form 8-K was filed by ADT Limited on June 27, 1996 announcing the proposed
acquisition of Automated Security (Holdings) PLC.
Current Reports on Form 8-K were filed by ADT Limited on July 10, 1996 and July 16, 1996
comprising certain details of the agreement to combine with Republic Industries, Inc.
</TABLE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ADT LIMITED
/s/ Stephen J. Ruzika
August 5, 1996 ________________________________________
Stephen J. Ruzika
Chief Financial Officer, Executive Vice President and Director
(Principal Financial Officer and Principal Accounting Officer)
27
<PAGE> 30
ADT LIMITED
INDEX TO EXHIBITS TO QUARTERLY REPORT
ON FORM 10-Q
FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1996
EXHIBIT
10.1 Waiver and Consent No. 1 dated May 23, 1996 to the
ADT Limited Guaranty dated as of August 23, 1995.
10.2 Waiver and Consent No. 2 dated June 7, 1996 to the
ADT Limited Guaranty dated as of August 23, 1995.
11.1 Statement regarding the computation of earnings per common
share.
27 Financial Data Schedule (for SEC use only).
<PAGE> 1
EXHIBIT 10.1
[CONFORMED COPY]
ADT LIMITED GUARANTY AMENDMENT, WAIVER AND CONSENT NO. 1
THIS ADT LIMITED GUARANTY AMENDMENT, WAIVER AND CONSENT NO. 1 (this
"Amendment, Waiver and Consent"), dated as of May 23, 1996, between ADT
LIMITED, a company organized under the laws of Bermuda ("ADT Limited"), and the
Documentation Agent (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of August 23, 1995
(as heretofore amended or otherwise modified, the "Credit Agreement"), among
ADT Operations, Inc., a company organized under the laws of Delaware (the
"Borrower"), the financial institutions as are or may become parties thereto
(collectively, the "Lenders"), The Bank of Nova Scotia ("Scotiabank"),
individually and as documentation agent (the "Documentation Agent") for the
Lenders, and Chemical Bank ("Chemical"), individually and as administrative
agent for the Lenders (the "Administrative Agent", and together with the
Documentation Agent, the "Agents"), the Lenders extended Commitments to make
Credit Extensions to the Borrower; and
WHEREAS, in connection with the Credit Agreement, ADT Limited executed
and delivered in favor of the Agents and the Lenders the Guaranty dated as of
August 23, 1995 (the "ADT Limited Guaranty"); and
WHEREAS, the Borrower, directly or through one or more of its
Subsidiaries, desires to purchase shares of the Capital Stock of ADT Limited;
and
WHEREAS, ADT Limited has requested the Agents and the Lenders to grant
a limited waiver and consent with respect to Section 4.2.5 of the ADT Limited
Guaranty in order to permit the Borrower and its Subsidiaries to hold, on the
terms and subject to the conditions hereof, the shares of the Capital Stock of
ADT Limited acquired by them; and
WHEREAS, the Agents and the Lenders desire to clarify the operation of
clause (d) of Section 4.2.10 of the ADT Limited Guaranty;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Unless otherwise defined or the context otherwise requires, terms for
which meanings are provided in the ADT Limited Guaranty (including by reference
to the Credit Agreement) shall have such meanings when used in this Amendment,
Waiver and Consent.
ARTICLE II
AMENDMENT, LIMITED WAIVER AND CONSENT
SECTION 2.1. Amendment. Section 4.2.10 of the ADT Limited Guaranty
is amended by deleting clause (d) thereof and substituting therefor the
following:
"(d) all parties to such Asset Sale are either ADT
Limited or a Subsidiary of ADT Limited (other than the
Borrower, any Subsidiary Guarantor or any Intermediate Parent
Company); or"
SECTION 2.2. Limited Waiver and Consent. On the terms and subject to
the conditions set forth herein and in reliance on the representations and
warranties of ADT Limited herein contained, the Agents and the Required Lenders
consent to the holding by the Borrower and its Subsidiaries of shares of the
Capital Stock of ADT Limited to the extent the acquisition of such shares is
not prohibited by any provision of the ADT Limited Guaranty or any other Loan
Document (excluding Section 4.2.5 of the ADT Limited Guaranty, but including,
without limitation, Section 4.2.6(a) of the ADT Limited Guaranty); provided
that the aggregate amount of Capital Stock of ADT Limited held by Subsidiaries
of ADT Limited (including, without limitation, the Borrower and its
Subsidiaries) does not exceed at any time nine per cent of the Voting Stock of
ADT Limited outstanding at such time. The foregoing consent shall be limited
precisely as written and in no event shall be deemed to constitute a waiver of
compliance by ADT Limited with respect to any other term, provision or
condition of the ADT Limited Guaranty or any other Loan Document or prejudice
any right or remedy that any Agent or any Lender may now have or may have in
the future under or in connection with the ADT Limited Guaranty, any other Loan
Document or any other instrument or agreement referred to therein.
-2-
<PAGE> 3
ARTICLE III
CONDITIONS PRECEDENT
This Amendment, Waiver and Consent shall become effective, as of the
date hereof, upon the receipt by the Documentation Agent of counterparts hereof
executed on behalf of ADT Limited, the Agents and the Required Lenders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Required Lenders to consent to
the terms of this Amendment, Waiver and Consent, ADT Limited hereby reaffirms,
as of the date hereof, the representations and warranties contained in Article
III of the ADT Limited Guaranty and additionally represents and warrants unto
each Lender and each Agent that, as of the date hereof, no Default shall have
occurred and be continuing.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Ratification of and References to ADT Limited Guaranty.
Section 2.1 of this Amendment, Waiver and Consent shall constitute an amendment
to the ADT Limited Guaranty, and the ADT Limited Guaranty, as amended hereby,
is hereby ratified, approved and confirmed in each and every respect. All
references to the ADT Limited Guaranty in any other document, instrument,
agreement or writing shall hereafter be deemed to refer to the ADT Limited
Guaranty as amended hereby.
SECTION 5.2. Headings. The various headings of this Amendment,
Waiver and Consent are inserted for convenience only and shall not affect the
meaning or interpretation of this Amendment, Waiver and Consent or any
provisions hereof.
SECTION 5.3. Execution in Counterparts. This Amendment, Waiver and
Consent may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SECTION 5.4. Governing Law. THIS AMENDMENT, WAIVER AND CONSENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment,
Waiver and Consent to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
ADT LIMITED
By /s/ Stephen J. Ruzika
-----------------------------------
Title: Chief Financial Officer
THE BANK OF NOVA SCOTIA, as
Documentation Agent
By /s/ Frank F. Sandler
-----------------------------------
Title: Relationship Manager
CONSENTED TO BY:
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ Frank F. Sandler
----------------------------------
Title: Relationship Manager
CHEMICAL BANK
By /s/ William J. Caggiano
-----------------------------------
Title: Managing Director
BANK OF AMERICA ILLINOIS
By /s/ Laurens F. Schaad, Jr.
-----------------------------------
Title: Vice President
BANK OF MONTREAL
By /s/ Brian L. Banke
-----------------------------------
Title: Director
-4-
<PAGE> 5
CIBC INC.
By /s/ Kim Frederking
-----------------------------------
Title: Director
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Robert Ivosevich
-----------------------------------
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Robert Ivosevich
-----------------------------------
Title: Senior Vice President
CREDIT SUISSE
By /s/ Jan Kopol
-----------------------------------
Title: Member of Senior Management
By /s/ Kristinn R. Kristinsson
-----------------------------------
Title: Associate
MIDLAND BANK PLC, NEW YORK BRANCH
By /s/ Jonathan E. Morris
-----------------------------------
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By /s/ Teiji Teramoto
-----------------------------------
Title: Vice President & Manager
-5-
<PAGE> 6
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Patricia Loret de Mola
-----------------------------------
Title: Senior Vice President
NATIONSBANK, N.A. (SOUTH)
By /s/ Julie Anne Autrey
-----------------------------------
Title: Senior Vice President
FIRST AMERICAN NATIONAL BANK
By /s/ Jane Weaver
-----------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK OF FLORIDA
By /s/ Mary A. Morgan
-----------------------------------
Title: Vice President and Portfolio
Manager
MELLON BANK N.A.
By /s/ Clifford A. Mull
-----------------------------------
Title: Assistant Vice President
NBD BANK
By /s/ Peter F. Ward
-----------------------------------
Title: Vice President
UNITED STATES NATIONAL BANK OF OREGON
By /s/ Stephen Mitchell
-----------------------------------
Title: Vice President
-6-
<PAGE> 7
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK AND CAYMAN ISLANDS
BRANCHES
By /s/ August Kumbier
-----------------------------------
Title: Managing Director
By /s/ Cathy Ruhland
-----------------------------------
Title: Vice President
BANK OF HAWAII
By /s/ Joseph T. Donalson
-----------------------------------
Title: Vice President
-7-
<PAGE> 1
EXHIBIT 10.2
[CONFORMED COPY]
ADT LIMITED GUARANTY WAIVER AND CONSENT NO. 2
THIS ADT LIMITED GUARANTY WAIVER AND CONSENT NO. 2 (this "Waiver and
Consent"), dated as of June 7, 1996, between ADT LIMITED, a company organized
under the laws of Bermuda ("ADT Limited"), and the Documentation Agent (as
defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of August 23, 1995
(as heretofore amended or otherwise modified, the "Credit Agreement"), among
ADT Operations, Inc., a company organized under the laws of Delaware (the
"Borrower"), the financial institutions as are or may become parties thereto
(collectively, the "Lenders"), The Bank of Nova Scotia ("Scotiabank"),
individually and as documentation agent (the "Documentation Agent") for the
Lenders, and Chemical Bank ("Chemical"), individually and as administrative
agent for the Lenders (the "Administrative Agent", and together with the
Documentation Agent, the "Agents"), the Lenders extended Commitments to make
Credit Extensions to the Borrower; and
WHEREAS, in connection with the Credit Agreement, ADT Limited executed
and delivered in favor of the Agents and the Lenders the Guaranty dated as of
August 23, 1995 (as heretofore amended or otherwise modified, the "ADT Limited
Guaranty"); and
WHEREAS, ADT Limited desires to acquire the entire Capital Stock of a
business entity engaged principally in the electronic security services
business ("Target Co.") pursuant to a stock-for-stock exchange in which the
stockholders of Target Co. would receive in the aggregate approximately
8,000,000 shares of the Common Stock, par value $.10 per share, of ADT Limited
(the "Stock Acquisition"); and
WHEREAS, in connection with the Stock Acquisition, certain
Indebtedness of Target Co. and its Subsidiaries in an aggregate principal
amount not exceeding $205,000,000 would be repaid with funds provided by ADT
Limited and its Subsidiaries (the "Debt Repayment"); and
WHEREAS, in connection with the Stock Acquisition, certain
Indebtedness of Target Co. and its Subsidiaries in an aggregate principal
amount not exceeding $70,000,000 would remain outstanding following
consummation of the Stock Acquisition and would be guaranteed by ADT Limited
(such Indebtedness, the "Assumed Indebtedness"); and
<PAGE> 2
WHEREAS, the guarantee of the Assumed Indebtedness, together with the
Stock Acquisition and the Debt Repayment, are collectively referred to herein
as the "Transaction"; and
WHEREAS, the aggregate consideration for the Transaction (including
all accrued and unpaid interest payable in connection with the Debt Repayment)
is not to exceed $425,000,000; and
WHEREAS, ADT Limited has requested the Agents and the Lenders to grant
a limited waiver and consent with respect to Section 4.2.5 of the ADT Limited
Guaranty in order to permit ADT Limited, on the terms and subject to the
conditions hereof, to consummate the Transaction; and
WHEREAS, ADT Limited has further requested the Agents and the Lenders
to grant a limited waiver and consent with respect to Section 4.2.2 of the ADT
Limited Guaranty in order to permit ADT Limited to suffer to exist, on the
terms and subject to the conditions hereof, the Assumed Indebtedness;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined or the context otherwise requires, terms for
which meanings are provided in the ADT Limited Guaranty (including by reference
to the Credit Agreement) shall have such meanings when used in this Waiver and
Consent.
ARTICLE II
LIMITED WAIVER AND CONSENT
On the terms and subject to the conditions set forth herein and in
reliance on the representations and warranties of ADT Limited herein contained,
the Agents and the Required Lenders hereby:
(a) waive the restrictions set forth in Section 4.2.5 of the
ADT Limited Guaranty to the extent necessary to permit ADT Limited to
consummate the Transaction and consent and agree that no portion of
the consideration for the Transaction shall be counted for purposes of
computing the Annual Limit in connection with Permitted Business
Acquisitions or the Equity Proceeds Amount; and
-2-
<PAGE> 3
(b) waive the restrictions set forth in Section 4.2.2 of the
ADT Limited Guaranty to the extent necessary to permit Target Co. and
its Subsidiaries to suffer to exist the Assumed Indebtedness and
consent and agree that no portion of such Indebtedness shall be
counted for purposes of computing the aggregate amount set forth in
clause (q) of Section 4.2.2 of the ADT Limited Guaranty;
provided, however, that the aggregate consideration for the Transaction
(including all accrued and unpaid interest payable in connection with the Debt
Repayment) does not exceed $425,000,000.
The foregoing waivers and consents shall be limited precisely as
written and in no event shall be deemed to constitute a waiver of compliance by
ADT Limited with respect to any other term, provision or condition of the ADT
Limited Guaranty or any other Loan Document (including, without limitation,
delivery of the certificate referred to in the definition of "Permitted
Business Acquisition" in Section 1.1 of the ADT Limited Guaranty and compliance
with the covenants set forth in Section 4.2.4 of the ADT Limited Guaranty) or
prejudice any right or remedy that any Agent or any Lender may now have or may
have in the future under or in connection with the ADT Limited Guaranty, any
other Loan Document or any other instrument or agreement referred to therein.
ARTICLE III
CONDITIONS PRECEDENT
This Waiver and Consent shall become effective, as of the date hereof,
upon the receipt by the Documentation Agent of counterparts hereof executed on
behalf of ADT Limited, the Agents and the Required Lenders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Required Lenders to consent to
the terms of this Waiver and Consent, ADT Limited hereby reaffirms, as of the
date hereof, the representations and warranties contained in Article III of the
ADT Limited Guaranty and additionally represents and warrants unto each Lender
and each Agent that, as of the date hereof, no Default has occurred and is
continuing.
-3-
<PAGE> 4
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Headings. The various headings of this Waiver and
Consent are inserted for convenience only and shall not affect the meaning or
interpretation of this Waiver and Consent or any provisions hereof.
SECTION 5.2. Execution in Counterparts. This Waiver and Consent may
be executed by the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which shall constitute together but one
and the same agreement.
SECTION 5.3. Governing Law. THIS WAIVER AND CONSENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Waiver and
Consent to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
ADT LIMITED
By /s/ Stephen J. Ruzika
-----------------------------------
Title: Chief Financial Officer
THE BANK OF NOVA SCOTIA, as
Documentation Agent
By /s/ Frank F. Sandler
-----------------------------------
Title: Relationship Manager
CONSENTED TO BY:
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ Frank F. Sandler
----------------------------------
Title: Relationship Manager
CHEMICAL BANK
By /s/ William J. Caggiano
-----------------------------------
Title: Managing Director
BANK OF AMERICA ILLINOIS
By /s/ Laurens F. Schaad, Jr.
-----------------------------------
Title: Vice President
BANK OF MONTREAL
By /s/ W.T. Calder
-----------------------------------
Title: Director
-5-
<PAGE> 6
CIBC INC.
By /s/ Kim Frederking
-----------------------------------
Title: Director
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Robert Ivosevich
-----------------------------------
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Robert Ivosevich
-----------------------------------
Title: Senior Vice President
CREDIT SUISSE
By /s/ Jan Kopol
-----------------------------------
Title: Member of Senior Management
By /s/ Kristinn R. Kristinsson
-----------------------------------
Title: Associate
MIDLAND BANK PLC, NEW YORK BRANCH
By /s/ Jonathan E. Morris
-----------------------------------
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By /s/ Gina M. Kearns
-----------------------------------
Title: Vice President & Manager
-6-
<PAGE> 7
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Patricia Loret de Mola
-----------------------------------
Title: Senior Vice President
NATIONSBANK, N.A. (SOUTH)
By /s/ Julie Anne Autrey
-----------------------------------
Title: Senior Vice President
FIRST AMERICAN NATIONAL BANK
By /s/ Jane Weaver
-----------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK OF FLORIDA
By /s/ Mary A. Morgan
-----------------------------------
Title: Vice President and Portfolio
Manager
MELLON BANK N.A.
By /s/ Clifford A. Mull
-----------------------------------
Title: Assistant Vice President
NBD BANK
By /s/ Peter F. Ward
-----------------------------------
Title: Vice President
UNITED STATES NATIONAL BANK OF OREGON
By /s/ Stephen Mitchell
-----------------------------------
Title: Vice President
-7-
<PAGE> 8
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK AND CAYMAN ISLANDS
BRANCHES
By /s/ Ralph White
-----------------------------------
Title: Vice President
By /s/ Ernst J. Auburger
-----------------------------------
Title: Associate
BANK OF HAWAII
By /s/ Joseph T. Donalson
-----------------------------------
Title: Vice President
-8-
<PAGE> 1
ADT LIMITED
Exhibit No. 11.1
Computation of (Loss) Earnings per Common Share
<TABLE>
<CAPTION>
Six months ended June 30 1996 1995
$m $m
<S> <C>
Net (loss) income (347.7) 55.9
Dividends on convertible redeemable preference shares (0.2) (0.2)
----------- -----------
Adjusted net (loss) income available to common shareholders -
primary and fully diluted earnings per common share (347.9) 55.7
=========== ===========
Six months ended June 30 1996 1995
Number Number
Weighted average number of common shares in issue 129,416,324 128,090,088
Weighted average number of common stock
equivalents in issue resulting from:
- Executive share option schemes - 2,147,281
- Non-voting exchangeable shares - 2,909
--------------- ---------------
Weighted average number of common shares in issue as used
in the computation of primary (loss) earnings per common share 129,416,324 130,240,278
Executive share option schemes - 659,977
--------------- ---------------
Weighted average number of common shares in issue as used
in the computation of fully diluted earnings per common share - 130,900,255
=============== ===============
Six months ended June 30 1996 1995
$ $
Primary (loss) earnings per common share (2.69) 0.43
=========== ===========
Fully diluted earnings per common share - 0.43
=========== ===========
</TABLE>
Notes
(i) A certain number of common stock equivalents resulting from
executive share option schemes are anti-dilutive in the calculation
of primary and fully diluted (loss) earnings per common share in
1996 and 1995.
(ii) The effect on fully diluted earnings per common share resulting
from the assumed exchange of Liquid Yield Option Notes, which were
issued in July 1995, is anti-dilutive in 1996. The effect on fully
diluted earnings per common share resulting from the assumed
conversion of convertible redeemable preference shares is
anti-dilutive in 1996 and 1995.
<PAGE> 2
ADT LIMITED
Exhibit No. 11.1
Computation of Earnings per Common Share
<TABLE>
<CAPTION>
Three months ended June 30 1996 1995
$m $m
<S> <C>
Net income 31.4 28.8
Dividends on convertible redeemable preference shares (0.1) (0.1)
----------- -----------
Adjusted net income available to common shareholders -
primary earnings per common share 31.3 28.7
Liquid Yield Option Notes discount amortization (net
of income taxes of $1.7 million) 3.3 -
----------- -----------
Adjusted net income available to common shareholders -
fully diluted earnings per common share 34.6 28.7
=========== ===========
Three months ended June 30 1996 1995
Number Number
Weighted average number of common shares in issue 130,027,007 128,291,740
Weighted average number of common stock
equivalents in issue resulting from:
- Executive share option schemes 5,169,311 2,426,940
- Non-voting exchangeable shares - 2,909
--------------- ---------------
Weighted average number of common shares in issue as used
in the computation of primary earnings per common share 135,196,318 130,721,589
Executive share option schemes 550,552 159,301
Assumed exchange of Liquid Yield Option Notes 21,913,538 -
--------------- ---------------
Weighted average number of common shares in issue as used
in the computation of fully diluted earnings per common share 157,660,408 130,880,890
=============== ===============
Three months ended June 30 1996 1995
$ $
Primary earnings per common share 0.23 0.22
=========== ===========
Fully diluted earnings per common share 0.22 0.22
=========== ===========
</TABLE>
Notes
(i) A certain number of common stock equivalents resulting from
executive share option schemes are anti-dilutive in the calculation
of primary and fully diluted earnings per common share in 1996 and
1995.
(ii) The effect on fully diluted earnings per common share resulting
from the assumed conversion of convertible redeemable preference
shares is anti-dilutive in 1996 and 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1996 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 310,400
<SECURITIES> 0
<RECEIVABLES> 225,900
<ALLOWANCES> 0
<INVENTORY> 29,000
<CURRENT-ASSETS> 596,200
<PP&E> 1,278,100
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,449,200
<CURRENT-LIABILITIES> 363,000
<BONDS> 900,900
4,900
0
<COMMON> 13,300
<OTHER-SE> 821,500
<TOTAL-LIABILITY-AND-EQUITY> 834,800
<SALES> 0
<TOTAL-REVENUES> 715,600
<CGS> 0
<TOTAL-COSTS> 368,300
<OTHER-EXPENSES> 418,700<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,800
<INCOME-PRETAX> (328,600)
<INCOME-TAX> 17,900
<INCOME-CONTINUING> (346,500)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,200)
<CHANGES> 0
<NET-INCOME> (347,700)
<EPS-PRIMARY> (2.69)
<EPS-DILUTED> (2.69)
<FN>
<F1>REPRESENTS A CHARGE OF $410,100 FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AS A
RESULT OF THE ADOPTION OF SFAS 121 AND $8,600 OF GOODWILL AMORTIZATION.
</FN>
</TABLE>
