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FOR IMMEDIATE RELEASE
MARCH 3, 1997 [ADT LOGO]
ADT Limited ("ADT")
ADT ANNOUNCES EARNINGS FOR THE FOURTH QUARTER AND FOR THE YEAR TO DECEMBER 31,
1996
__________________________________________________________________
Hamilton, Bermuda, March 3, 1997 -- ADT Limited (NYSE - ADT), through its
subsidiaries, a leading provider of electronic security services and vehicle
auction services, announced today that net income, before non-recurring items,
for the three months and twelve months ended December 31, 1996 was $45.2m and
$140.3m, respectively.
In the third quarter of 1996 ADT acquired Automated Security (Holdings) PLC
("ASH"). The acquisition of ASH has been accounted for using the pooling of
interests method of accounting which assumes that ADT and ASH have been merged
from their inception and requires all consolidated financial statements to be
restated and presented accordingly. In the fourth quarter of 1996, ADT
announced its intention to sell its United States vehicle auction division,
its European vehicle auction division having been sold in 1995, and,
accordingly, the vehicle auction services segment is now treated as a
discontinued operation.
Results for the three months ended and twelve months ended December 31, 1996
are therefore as follows:
1996
Fourth 1996
Quarter Year
$m $m
------- ----
$ $
Continuing operations:
Net sales 367.4 1,406.2
Net income before non-recurring items 44.3 120.9
Non-recurring items - net of tax:
SFAS 121 charge - (720.9)
Restructuring charges (195.0) (195.0)
Sale of investments and other 45.1 43.5
Settlement gain 69.7 69.7
Merger costs - (11.3)
Net loss after non-recurring items (35.9) (693.1)
Extraordinary items (2.6) (8.4)
Net loss from continuing operations (38.5) (701.5)
Discontinued operations:
Net sales 75.0 297.8
Net income after non-recurring items: 0.9 6.4
Per share information (fully diluted):
$ $
Net income before non-recurring items:
Continuing operations 0.28 0.81
Discontinued operations 0.01 0.12
----- -----
0.29 0.93
Non-recurring items (0.54) (5.94)
Extraordinary items (0.02) (0.06)
Net (loss) income per common share (0.27) (5.07)
The fully diluted weighted average number of common shares outstanding during
the fourth quarter of 1996 was 167.4m and for the twelve months to December
31, 1996 was 165.3m.
Non-recurring items, net of tax, in respect of 1996 include: i) a non-cash
charge of $720.9m arising in the first quarter of 1996, relating to the
write-down of specific assets to their estimated fair values in accordance
with the requirements of SFAS 121; ii) a charge of $195.0m principally
relating to costs associated with integrating the businesses of ASH in the
United Kingdom and the United States into ADT, together with the costs of
administrative, accounting, management information and technological
infrastructure enhancements currently being implemented in the United States
electronic security services division; iii) a gain of $53.4m, represented by
cash, arising on the sale of the Company's entire interest in Limelight Group
plc, which was recorded in the balance sheet at a nominal value; and iv) a
gain of $69.7m represented by cash receivable as a result of the settlement of
the Company's litigation against Binder Hamlyn.
Commenting, Mr. Michael A. Ashcroft, Chairman and Chief Executive Officer,
said:
"1996 was a year both of successful growth and of transition for ADT. In
addition to strong internal growth in security system sales, we expanded
through the acquisition of ASH, by growing our dealer network and through
employing new channels of distribution. We also extended our service
offerings to include mobile security and launched an advertising campaign
focussed on the ADT brand."
"I am pleased to report that ADT has taken another significant step in
expanding its channels of distribution and has signed a marketing agreement
with AT&T under which ADT and AT&T will promote each other's services.
This promises to be a highly efficient and cost effective method of adding
new customers."
"Our goal is to ensure the highest level of customer service and to maintain
the momentum we have established in expanding our business in an increasingly
security-conscious marketplace. To help us achieve our goal, we undertook,
and successfully completed, a major internal restructuring in 1996."
"In 1997, we are taking a further initiative to secure our status as market
leader by investing in a significant technological restructuring. This will
enable us to make wholesale changes to the way in which we arrange our
hardware and support services, eventually reducing the number of US customer
monitoring centers to four, and positioning ADT to become a major gateway in
premises control."
"ADT remains firmly focused on increasing shareholder value and has a sound
strategy to secure long-term business growth in a changing environment. We
remain comfortable with analyst's earnings estimates for the year 1997, which
will see us continuing to invest in the business to ensure that ADT retains
and builds on its leadership position."
Electronic Security Services
Net sales and operating income before non-recurring items from the Electronic
Security Services division for the fourth quarter of 1996 amounted to $367.4m
and $48.6m, respectively.
Net sales and operating income before non-recurring items from the Electronic
Security Services division for the twelve months ended December 31, 1996
amounted to $1,406.2m and $207.7m, respectively.
ADT's annualized service revenues as of December 31, 1996 amounted to $920m,
representing an annualized growth rate of approximately 10 per cent.
Residential
During the fourth quarter, ADT contracted to install and monitor 75,000 new
residential security systems bringing the total for 1996 to more than
280,000, a 30 per cent increase over the 215,000 systems sold in 1995 ADT's
residential customer base is now approximately 1,100,0000 of which
approximately 85 per cent is located in the United States.
Competition in the residential marketplace continues to keep the per system
cost to the consumer down, however, ADT's recurring revenue base is continuing
to benefit from the increases in average monthly monitoring fees which were
introduced for new customers in early 1996.
ADT's strategic relationships with RadioShack, USAA Insurance and HFS
(ERA/Century 21) opened up new channels of distribution in 1996 and are all
producing results. Sales through these channels are expected to benefit from
the ADT branding campaign in 1997.
The ADT authorized dealer program continues to expand. ADT had 124 authorized
dealers throughout the United States at the end of 1996, compared with 58 at
the beginning of the year. During the fourth quarter of 1996 approximately
23 per cent of residential unit sales in the United States were attributable
to the dealer program and the momentum built up in the dealer network in 1996
is expected to continue in 1997 when dealer sales should also benefit from
ADT's investment in branding.
Vehicle Security and Tracking
CarCop, a major advance in personal protection and vehicle security, developed
by Mobile Security Communications ("MSC") and monitored by ADT, is being test
marketed in Atlanta and Miami. CarCop is being distributed primarily through
mobile electronic speciality retail channels and MSC is currently exploring
the distribution of CarCop through chain electronic and cellular retailers.
Direct marketing of CarCop to ADT's commercial customers has begun and
direct mail marketing of CarCop to residential customers will begin in
selected markets during the second quarter of 1997.
National Accounts/Core Commercial
In the commercial market, sales in the small business segment were strong
during the fourth quarter and outright sales to national account customers
also improved. CCTV was the product segment growth leader in 1996, driven in
part by the migration of CCTV sales to small and medium sized businesses.
Sales to the public sector also remained strong during the quarter. New
business included significant orders for CCTV systems from Emerson Electric
and Amoco; a contract renewal with Darden Restaurants for ADT services to Red
Lobster and Olive Garden restaurants; and an integrated alarm and CCTV system
for a video arcade/restaurant concept being developed by Sega Gameworks, a new
customer for ADT.
The market in Canada is showing some signs of improvement. ADT has signed
contracts with several new customers, including Vancouver-based Lowen Group,
an operator of funeral homes throughout North America. An ADT authorized
dealer program, similar to that in the United States, is to be established in
Canada and the Company expects to have approximately 30 authorized dealers
there by the end of 1997.
In the United Kingdom, the CCTV and integrated systems markets continue to
drive growth. ADT was also successful in increasing its market share in the
slower-growing intruder alarm market. New business included additional orders
from Railtrack, including a large contract for CCTV systems on train platforms
and a significant order from SmithKline Beecham covering access control, fire
detection, intruder alarms and CCTV at various sites in southern England. The
integration of ASH's operations in the United Kingdom with ADT is progressing
and the resulting improvements in service levels and operating efficiencies
should be seen as 1997 progresses.
Vehicle Auction Services
Net sales and operating income from the United States Vehicle Auction division
for the fourth quarter of 1996 amounted to $75.0m and $6.7m, respectively.
Net sales and operating income before non-recurring items from the United
States Vehicle Auction division for the twelve months ended December 31, 1996
amounted to $297.8m and $40.1m, respectively.
1996 was a record year for ADT Automotive. The total number of vehicles sold
at ADT Automotive auctions in the fourth quarter of 1996 increased by
approximately 10 per cent over the fourth quarter of 1995, bringing the total
number of vehicles sold in 1996 to 1,064,000 compared with 994,000 in 1995.
The fleet/lease sector accounted for this growth with an increase of 35 per
cent in vehicles sold, partly offset by lower program car volumes and lower
sales of consignment vehicles.
Background
ADT, through its subsidiaries, is the largest provider of electronic security
services in North America and the United Kingdom, providing continuous
monitoring of commercial and residential security systems to over 1.8 million
customers in North America and Europe.
Forward Looking Information
ADT may occasionally make statements regarding its business and the markets
for its services, including projections of future performance, statements of
management's plans and objectives, forecasts of market trends and other
matters which, to the extent that they are not historical fact, may
constitute "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995.
Certain statements contained herein constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
In particular, statements contained herein regarding the consummation and
benefits of future acquisitions as well as expectations with respect to
future sales, operating efficiencies and product expansion, are subject to
known and unknown risks, uncertainties and contingencies, many of which are
beyond the control of ADT, 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 ADT's services, competitive factors in the industry, regulatory
approvals, and uncertainty about the consummation of future acquisitions.
CERTAIN ADDITIONAL INFORMATION. ADT Limited (the "Company") will be
soliciting proxies against the proposal of Western Resources, Inc.
(together with its subsidiaries, "Western") and revocations of proxies
previously given to Western for such proposals. The following individuals
may be deemed to be participants in the solicitation of proxies and
revocations of proxies by the Company: ADT Limited, Michael A. Ashcroft,
John E. Danneberg, Alan B. Henderson, James S. Pasman, Jr., Stephen J.
Ruzika, W. Peter Slusser, William W. Stinson, Raymond S. Troubh and
Angela E. Entwistle. As of February 28, 1997 Mr. Ashcroft is the
beneficial owner of 11, 075,718 of the Company's common shares, Mr.
Danneberg is the beneficial owner of 102 of the Company's common shares,
Mr. Hendersen is the beneficial owner of 621 of the Company's common
shares, Mr. Pasman is the beneficial owner of 2,000 of the Company's
common shares, Mr. Ruzika is the beneficial owner of 1,157,405 of the
Company's common shares, Mr. Slusser is the beneficial owner of 2,800 of
the Company's common shares, Mr. Stinson is the beneficial owner of 3,010
of the Company's common shares, Mr. Troubh is the beneficial owner of
2,500 the Company's's common shares and Ms. Entwistle is the beneficial
owner of 29,500 of the Company's common shares. The Company has retained
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") to act
as its financial advisor in connection with Western's proposals. Merrill
Lynch is an investment banking firm that provides a full range of financial
services for institutional and individual clients. Merrill Lynch does not
admit that it or any of its directors, officers or employees is a
"participant" as defined in Schedule 14A ("Schedule 14A") promulgated by
the Commission under the Securities Exchange Act of 1934, as amended in the
proxy solicitation, or that such Schedule 14A requires the disclosure of
certain financial information concerning Merrill Lynch. In connection with
Merrill Lynch's role as financial advisor to the Company, Merrill Lynch and
the following investment banking employees of Merrill Lynch may communicate
in person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are shareholders of the Company: Richard
Johnson (Managing Director), Huston McCollough (Managing Director), Hugh
O'Hare (Vice President), Robert Simensky (Vice President), Paul Bastone
(Associate) and Eric Evans (Analyst). In the normal course of its
business, Merrill Lynch regularly buys and sells securities issued by the
company and its affiliates ("ADT Securities") for its own account and the
accounts of its customers, which may result from time to time in Merrill
Lynch and its associates having a net "long" or net "short" position in ADT
Securities or option contracts or other derivatives in or relating to ADT
Securities. As of February 28, 1997, Merrill Lynch held positions in ADT
Securities as principal as follows: (i) net "short" 769,995 of the
Company's common shares; (ii) net "long" 51,000 par amount of 9.25%
Guaranteed Senior Subordinated Notes of ADT Operations, Inc. due August 1,
2003; and (iii) net "long" 31,509 Liquid Yield Option [Trademark]Notes of
ADT Operations, Inc. due 2010, exchangeable for 889,499 of the Company's
common shares. As of February 28, 1997, Merrill Lynch held positions in
ADT Securities as agent as follows: (i) net "long" 2,195,181 of the
Company's common shares; (ii) net "long" $4,717,000 par amount of 8.25%
Guaranteed Senior Notes of ADT Operations, Inc. due August 1, 2000; (iii)
net "long" $2,830,000 par amount of 9.25% Guaranteed Senior Subordinated
Notes of ADT Operations, Inc. due August 1, 2003; and (iv) net "long"
31,820 Liquid Yield Option[Trademark] Notes of ADT Operations, Inc. due
2010, exchangeable for 898,278 of the Company's common shares. None of the
investment banking employees of Merrill Lynch who are referred to above or
their associates owned of record or beneficially any ADT Securities as of
February 28, 1997. None of such Merrill Lynch investment banking employees
or their associates purchased or sold for their own account any ADT
Security within the past two years.
Note:
This and other press releases are available through Company News On-Call by
fax; call 800-758-5804, extension 112511, or at http://www.prnewswire.com/
Contact:
ADT
561-988-3600
ADT LIMITED
Summarized Consolidated Statements of Income
1996 1995
Fourth Fourth 1996 1995
Quarter Quarter Year Year
Period ended December 31 $m $m $m $m
- ------------------------ ------- ------- ------- -------
Net sales 367.4 354.6 1,406.2 1,350.9
Cost of sales (203.6) (194.9) (762.8) (750.5)
Selling, general and
administrative expenses (116.9) (112.4) (465.1) (435.6)
Restructuring charges and
other non-recurring items (237.3) (34.2) (237.3) (34.2)
Charge for the impairment
of long-lived assets - - (731.7) -
Operating (loss) income (190.4) 13.1 (790.7) (130.6)
------ ------ ------- -------
Interest expense - net (9.4) (15.0) (58.9) (65.7)
Gain on disposal of
businesses - 34.6 1.7 29.2
Other income less expenses 127.4 (0.1) 128.8 (5.0)
------- ------- ------- -------
(Loss) income before
income taxes (72.4) 32.6 (719.1) 89.1
Income taxes 36.5 1.9 26.0 (20.2)
------- ------ ------- -------
(Loss) income from
continuing operations (35.9) 34.5 (693.1) 68.9
Income (loss) from
discontinued operations 0.9 (64.4) 6.4 (37.9)
------- ------ ------- -------
(Loss) income before
extraordinary items (35.0) (29.9) (686.7) 31.0
Extraordinary items
(net of income taxes) (2.6) (1.8) (8.4) (9.8)
------- ------ ------- -------
Net (loss) income (37.6) (31.7) (695.1) 21.2
Dividends on preference shares (0.1) - (0.3) (0.3)
------- ------ ------- -------
Net (loss) income available to
common shareholders (37.7) (31.7) (695.4) 20.9
======= ====== ======= =======
Primary and fully diluted
(loss) earnings per common
share: $ $ $ $
(Loss) income from
continuing operations (0.26) 0.25 (5.06) 0.49
Income (loss) from
discontinued operations 0.01 (0.47) 0.05 (0.27)
Extraordinary items (0.02) (0.01) (0.06) (0.07)
-------- ------- -------- --------
Net (loss) income per
common share (0.27) (0.23) (5.07) 0.15
======== ======= ======== ========
ADT LIMITED
Summarized Consolidated Balance Sheets
1996 1995
At December 31 $m $m
-------------- ------- -------
Assets
Current Assets:
Cash and cash equivalents 165.7 317.9
Accounts receivable - net 132.5 134.0
Inventories 36.7 35.7
Prepaid expenses and other current assets 114.7 32.5
------- -------
Total current assets 449.6 520.1
Property, plant and equipment - net 1,285.7 1,353.3
Goodwill and other intangibles - net 356.9 936.3
Net assets of discontinued operations 349.2 341.7
Long-term investments 100.6 2.0
Investment in and loans to associate - 88.8
Other long-term assets 72.5 81.1
------- -------
Total assets 2,614.5 3,323.3
======= =======
Liabilities and shareholders' equity
Current liabilities:
Short-term debt 175.9 27.2
Accounts payable 77.7 55.5
Other current liabilities 278.6 214.0
------- -------
Total current liabilities 532.2 296.7
Long-term debt 903.7 1,168.4
Deferred revenue 146.1 137.4
Deferred income taxes 96.8 147.1
Other long-term liabilities 175.9 127.9
Minority interests - 15.6
------- -------
Total liabilities 1,854.7 1,893.1
------- -------
Convertible redeemable preference shares - 4.9
Shareholders' equity 759.8 1,425.3
------- -------
Total liabilities and shareholders' equity 2,614.5 3,323.3
======= =======
ADT LIMITED
Summarized Consolidated Statements of Cash Flows
1996 1995
Year ended December 31 $m $m
---------------------- ------ ------
Cash flows from operating activities
Net (loss) income (695.1) 21.2
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Charge for the impairment of long-lived assets 744.7 -
Depreciation and amortization 224.8 247.9
Restructuring and other non-recurring charges 217.4 32.7
Interest on ITS Vendor Note (8.9) -
Liquid Yield Option Notes discount amortization 20.3 9.4
Deferred income taxes (39.5) 18.4
Extraordinary items 8.4 9.8
(Gain) loss on disposal of businesses (1.7) 36.6
(Gain) loss on disposal of investment in associates (1.2) 5.1
Gain arising from ownership of investments (53.2) (0.1)
Settlement gain (69.7) -
Other (4.9) 4.9
Changes in assets and liabilities (32.7) (48.9)
------ ------
Net cash provided by operating activities 308.7 337.0
------ ------
Cash flows from investing activities
Purchase of property, plant and equipment - net (334.4) (317.8)
Acquisition of businesses (25.5) (68.3)
Disposal of businesses 3.0 254.8
Purchase of customer contracts (34.6) (0.5)
Purchase of other investments (6.8) (0.4)
Disposal of other investments 54.1 0.2
Disposal of investment in and loans to associates 15.4 7.8
Other 0.4 5.6
------ ------
Net cash utilized by investing activities (328.4) (118.6)
------ ------
Cash flows from financing activities
Net receipts (repayments) of short-term debt 10.9 (103.9)
Repayments of long-term debt (209.9) (216.9)
Repayment of long-term acquisition debt - (39.6)
Proceeds from long-term debt 86.8 314.0
Debt refinancing costs - (12.0)
Purchase of senior subordinated notes (24.0) (33.7)
Proceeds from issue of common shares 24.7 7.0
Redemption of convertible redeemable preference shares (4.9) -
Other (0.3) (5.1)
------ ------
Net cash utilized by financing activities (116.7) (90.2)
------ ------
Effect of currency translation on cash and cash
equivalents 1.4 0.8
------ ------
Net (decrease) increase in cash and cash
equivalents (135.0) 129.0
Cash and cash equivalents at beginning of
year 350.9 221.9
------ ------
Cash and cash equivalents at end of year:
continuing operations 165.7 317.9
discontinued operations 50.2 33.0
------ ------
215.9 350.9
====== ======
