<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Fiscal Year ended December 31, 1996
TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________ to _________
Commission File Number 33-26970
ADT SECURITY SERVICES, INC. PROFIT SHARING
AND SAVINGS PLAN
(Full Title of the Plan)
1750 Clint Moore Road
Boca Raton, FL 33431
(Address of Plan)
ADT LIMITED
(Name of Issuer of the Securities Held Pursuant to the Plan)
Cedar House
41 Cedar Avenue
Hamilton HM 12, Bermuda
(Address of Principal Executive Office)
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
ADT Security Services, Inc.
Profit Sharing and Savings Plan
(Name of Plan)
Date: June 30, 1997 By:/S/ Steve Levine
---------------------
Steve Levine
Member Profit Sharing and
Savings Plan Committee
<PAGE> 3
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
---------
INDEX
Pages
Financial Statements and Exhibits -----
- ---------------------------------
Report of Independent Accountants 1-2
Financial Statements:
Statements of Net Assets Available for Benefits
with Fund Information as of December 31, 1996 and 1995 3-4
Statements of Changes in Net Assets
Available for Benefits with Fund Information for
the Years Ended December 31, 1996 and 1995 5-7
Notes to Financial Statements 8-15
Supplemental Schedules:
Item 27A - Schedule of Assets Held
for Investment Purposes as of
December 31, 1996 and 1995 16
Item 27D - Schedule of Reportable
Transactions for the year ended
December 31, 1996 17
Exhibit I - Consent of Independent Accountants 18
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN:
We have audited the accompanying statements of net assets available for benefits
with fund information of the ADT Security Services, Inc. Profit Sharing and
Savings Plan (the "Plan") as of December 31, 1996 and 1995 and the related
statements of changes in net assets available for benefits with fund information
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1996 and 1995, and the changes in net assets available for benefits
for the years then ended, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of 1) assets held for investment purposes as of December 31, 1996 and 1995; and
2) reportable transactions for the year ended December 31, 1996 are presented
for the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for benefits as of December 31, 1996 and 1995
-1-
<PAGE> 5
and the statements of changes in net assets available for benefits for the years
then ended is presented for purposes of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
June 30, 1997
-2-
<PAGE> 6
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1996
<TABLE>
<CAPTION>
Participant-Directed
-----------------------------------------------------------------------
Fund A New Fund B New Fund C New Fund D New Fund E
----------- ------------ ----------- ----------- ----------
ADT Intermediate Disciplined Cash
ASSETS: Limited Bond Equity Management Balanced
- ------- Share Fund Fund Fund Fund Fund
----------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
ADT Limited Share Fund
(cost $42,088,788) $58,210,703*
Participation in Fidelity
Intermediate Bond Fund
(cost $7,999,429) $7,898,693*
Participation in Fidelity
Disciplined Equity Fund
(cost $16,336,798) $16,051,140*
Participation in Dreyfus
Cash Management Fund
(cost $21,432,467) $20,681,767*
Participation in Fidelity
Puritan Fund (cost $2,343,150) $2,367,484
Participation in Fidelity
ContraFund (cost $5,766,012)
Participation in Fidelity
Worldwide Fund (cost $1,318,387)
Participant Loans
Due from Broker for Securities Sold 1,049 69,820 7,076
----------- ---------- ----------- ----------- ----------
Total assets $58,210,703 $7,899,742 $16,051,140 $20,751,587 $2,374,560
LIABILITIES:
- ------------
Due to Broker for Securities Purchased $ 33,208 $ 1,845
Administration fees payable 94,171 $ 14,591 27,586 $ 34,269 $ 4,837
----------- ---------- ----------- ----------- ----------
Total liabilities 127,379 14,591 29,431 $ 34,269 4,837
----------- ---------- ----------- ----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $58,083,324 $7,885,151 $16,021,709 $20,717,318 $2,369,723
=========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nonparticipant
Participant- Directed Directed
----------- ------------ ----------- --------------
New Fund F New Fund G Fund A
----------- ------------ --------------
Aggressive Global Participant ADT Limited
Equity Fund Equity Fund Loans Share Fund Total
ASSETS: ----------- ------------ ----------- -------------- ------------
- -------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
ADT Limited Share Fund
(cost $42,088,788) $22,664,797* $ 80,875,500
Participation in Fidelity
Intermediate Bond Fund
(cost $7,999,429) 7,898,693
Participation in Fidelity
Disciplined Equity Fund
(cost $16,336,798) 16,051,140
Participation in Dreyfus
Cash Management Fund
(cost $21,432,467) 750,700* 21,432,467
Participation in Fidelity
Puritan Fund (cost $2,343,150) 2,367,484
Participation in Fidelity
ContraFund (cost $5,766,012) $6,086,289 6,086,289
Participation in Fidelity
Worldwide Fund (cost $1,318,387) $1,388,754 1,388,754
Participant Loans $4,955,194 4,955,194
Due from Broker for Securities Sold 77,945
---------- ---------- ---------- ----------- ------------
Total assets $6,086,289 $1,388,754 $4,955,194 $23,415,497 $141,133,466
LIABILITIES:
- ------------
Due to Broker for Securities Purchased $ 8,810 $ 5,265 $ 14,232 $ 63,360
Administration fees payable 9,534 2,666 42,742 230,396
---------- ---------- ---------- ----------- ------------
Total liabilities 18,344 7,931 -- $ 56,974 293,756
---------- ---------- ---------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $6,067,945 $1,380,823 $4,955,194 $23,358,523 $140,839,710
========== ========== ========== =========== ============
</TABLE>
* Investment value represents 5% or more of the total plan net assets available
for benefits.
-3-
The accompanying notes are an integral part of the financial statements
<PAGE> 7
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1995
<TABLE>
<CAPTION>
Participant-Directed
-------------------------------------------------------------------------
Fund A New Fund B New Fund C New Fund D New Fund E
----------- ------------ ----------- ----------- ----------
ADT Intermediate Disciplined Cash
Limited Bond Equity Management Balanced
ASSETS: Share Fund Fund Fund Fund Fund
- ------- ----------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
ADT Limited Share Fund
(cost $43,632,962) $39,344,661*
Participation in Fidelity
Intermediate Bond Fund
(cost $10,400,970) $10,573,420*
Participation in Fidelity
Disciplined Equity Fund
(cost $18,033,851) $16,576,656*
Participation in Dreyfus
Cash Management Fund
(cost $24,244,623) $23,243,884*
Participation in Fidelity
Puritan Fund (cost $868,953) $891,707
Participation in Fidelity
ContraFund (cost $2,926,890)
Participation in Fidelity
Worldwide Fund (cost $396,042)
Participant Loans (13,487) (46,292) (33,070) (101)
Due from Broker for Securities Sold 26,757 4,487 9,667 1,509 3,836
Company contribution receivable 151,552
----------- ----------- ----------- ----------- --------
Total assets $39,522,970 $10,564,420 $16,540,031 $23,212,323 $895,442
LIABILITIES:
- ------------
Due to Broker for Securities Purchased $ 150,258 $ 58,890 $ 1,840,387 $ 111,777 $ 23,378
Administration fees payable 11,821 5,413 3,428 22,438 4,870
----------- ----------- ----------- ----------- --------
Total liabilities 162,079 64,303 1,843,815 $ 134,215 $ 28,248
----------- ----------- ----------- ----------- --------
NET ASSETS AVAILABLE FOR BENEFITS $39,360,891 $10,500,117 $14,696,216 $23,078,108 $867,194
=========== =========== =========== =========== ========
</TABLE>
<TABLE>
<CAPTION>
Nonparticipant
Participant- Directed Directed
----------- ----------- ----------- --------------
New Fund F New Fund G Fund A
----------- ----------- -----------
Aggressive Global Participant ADT Limited
ASSETS: Equity Fund Equity Fund Loans Share Fund Total
- ------- ----------- ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
ADT Limited Share Fund
(cost $43,632,962) $15,185,859* $ 54,530,520
Participation in Fidelity
Intermediate Bond Fund
(cost $10,400,970) 10,573,420
Participation in Fidelity
Disciplined Equity Fund
(cost $18,033,851) 16,576,656
Participation in Dreyfus
Cash Management Fund
(cost $24,244,623) 1,000,739* 24,244,623
Participation in Fidelity
Puritan Fund (cost $868,953) 891,707
Participation in Fidelity
ContraFund (cost $2,926,890) $2,854,149 2,854,149
Participation in Fidelity
Worldwide Fund (cost $396,042) $401,439 401,439
Participant Loans (723) (198) $2,430,708 2,336,837
Due from Broker for Securities Sold 46,256
Company contribution receivable 747,266 898,818
---------- -------- ---------- ----------- ------------
Total assets $2,853,426 $401,241 $2,430,708 $16,933,864 $113,354,425
LIABILITIES:
- ------------
Due to Broker for Securities Purchased $ 221,563 $ 4,088 $ 2,410,341
Administration fees payable 7,140 4,175 $ 27,582 86,867
---------- -------- ---------- ----------- ------------
Total liabilities 228,703 8,263 -- 27,582 2,497,208
---------- -------- ---------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $2,624,723 $392,978 $2,430,708 $16,906,282 $110,857,217
========== ======== ========== =========== ============
</TABLE>
*Investment value represents 5% or more of the total plan net assets available
for benefits.
-4-
The accompanying notes are an integral part of the financial statements
<PAGE> 8
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1996
<TABLE>
<CAPTION>
Participant-Directed
-------------------------------------------------------------------------------
Fund A New Fund B New Fund C New Fund D New Fund E
------------ ------------ ------------ ------------ -----------
ADT Intermediate Disciplined Cash
Limited Bond Equity Management Balanced
Share Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Participants $ 5,818,199 $ 871,228 $ 1,555,467 $ 1,555,324 $ 257,631
Company 499,388
Rollover 37,697 617 25,300 386 17,128
------------ ------------ ------------ ------------ -----------
Total contributions 6,355,284 871,845 1,580,767 1,555,710 274,759
------------ ------------ ------------ ------------ -----------
Income from investments:
Interest 332
Dividends 1,029,928
Net appreciation (depreciation)
in fair value of investments 19,325,240 332,338 4,033,775 102,608 267,040
------------ ------------ ------------ ------------ -----------
Total income (loss) from investments 19,325,240 332,338 4,033,775 1,132,868 267,040
------------ ------------ ------------ ------------ -----------
Total additions (deductions) 25,680,524 1,204,183 5,614,542 2,688,578 541,799
------------ ------------ ------------ ------------ -----------
Deductions:
Distributions and withdrawals (5,290,968) (1,757,139) (1,976,422) (4,651,292) (250,633)
Administration fees (141,131) (21,671) (40,209) (49,602) (6,270)
------------ ------------ ------------ ------------ -----------
Total deductions (5,432,099) (1,778,810) (2,016,631) (4,700,894) (256,903)
Transfers between funds (68,189) (1,882,885) (1,960,105) (25,226) 1,247,009
Participant loans (1,457,813) (157,454) (312,313) (323,248) (29,376)
------------ ------------ ------------ ------------ -----------
INCREASE(DECREASE) IN NET ASSETS 18,722,423 (2,614,966) 1,325,493 (2,360,790) 1,502,529
------------ ------------ ------------ ------------ -----------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1995 39,360,901 10,500,117 14,696,216 23,078,108 867,194
------------ ------------ ------------ ------------ -----------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996 $ 58,083,324 $ 7,885,151 $ 16,021,709 $ 20,717,318 $ 2,369,723
============ ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
Nonparticipant
Participant-Directed Directed
-------------------------------------------- --------------
New Fund F New Fund G Fund A
----------- ----------- -----------
Aggressive Global Participant ADT Limited
Equity Fund Equity Fund Loans Share Fund Total
----------- ----------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Participants $ 597,151 $ 171,219 $ 10,826,219
Company $ 1,372,264 1,871,652
Rollover 103,942 61,374 246,444
----------- ----------- ------------ ------------ -------------
Total contributions 701,093 232,593 $ 1,372,264 12,944,315
----------- ----------- ------------ ------------ -------------
Income from investments:
Interest $ 328,537 328,869
Dividends 1,029,928
Net appreciation (depreciation)
in fair value of investments 1,120,240 144,083 8,609,527 33,934,851
----------- ----------- ------------ ------------ -------------
Total income (loss) from investments 1,120,240 144,083 328,537 8,609,527 35,293,648
----------- ----------- ------------ ------------ -------------
Total additions (deductions) 1,821,333 376,676 328,537 9,981,791 48,237,963
----------- ----------- ------------ ------------ -------------
Deductions:
Distributions and withdrawals (534,217) (176,592) (196,972) (3,084,839) (17,919,074)
Administration fees (13,563) (3,465) (60,485) (336,396)
----------- ----------- ------------ ------------ -------------
Total deductions (547,780) (180,057) (196,972) (3,145,324) (18,255,470)
Transfers between funds 2,255,622 817,990 (384,216) --
Participant loans (85,953) (26,764) 2,392,921 --
----------- ----------- ------------ ------------ -------------
INCREASE(DECREASE) IN NET ASSETS 3,443,222 987,845 2,524,486 6,452,251 29,982,493
----------- ----------- ------------ ------------ -------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1995 2,624,723 392,978 2,430,708 16,906,272 110,857,217
----------- ----------- ------------ ------------ -------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996 $ 6,067,945 $ 1,380,823 $ 4,955,194 $ 23,358,523 $ 140,839,710
=========== =========== ============ ============ =============
</TABLE>
-5-
The accompanying notes are an integral part of the financial statements
<PAGE> 9
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1995
<TABLE>
<CAPTION>
Participant-Directed
--------------------------------------------------------------------------------
Fund A Old Fund B Old Fund C Old Fund D New Fund B
------------ ------------ ------------ ------------ ------------
ADT Fixed General Money Intermediate
Limited Income Equity Market Bond
Share Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Participants $ 5,281,336 $ 621,236 $ 1,076,317 $ 1,159,312 $ 418,743
Company 461,049
------------ ------------ ------------ ------------ ------------
Total contributions 5,742,385 621,236 1,076,317 1,159,312 418,743
------------ ------------ ------------ ------------ ------------
Income from investments:
Interest 16,044 12,566 10,889 1,031,400
Dividends
Net appreciation (depreciation)
in fair value of investments 10,353,393 1,088,729 4,128,386 351,380
------------ ------------ ------------ ------------ ------------
Total income (loss) from investments 10,369,437 1,101,295 4,139,275 1,031,400 351,380
------------ ------------ ------------ ------------ ------------
Total additions (deductions) 16,111,822 1,722,531 5,215,592 2,190,712 770,123
------------ ------------ ------------ ------------ ------------
Deductions:
Distributions and withdrawals (3,200,019) (1,075,275) (1,204,393) (2,654,180) (174,622)
Administration fees (165,205) (664) (1,941) (23,274) (71,240)
------------ ------------ ------------ ------------ ------------
Total deductions (3,365,224) (1,075,939) (1,206,334) (2,677,454) (245,862)
Transfers between funds 761,872 (11,136,845) (18,384,064) (24,662,253) 10,224,368
Participant loans (1,141,620) (248,512)
------------ ------------ ------------ ------------ ------------
INCREASE(DECREASE) IN NET ASSETS 12,366,850 (10,490,253) (14,374,806) (25,148,995) 10,500,117
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1994 26,994,041 10,490,253 14,374,806 25,148,995
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1995 $ 39,360,891 $ 0 $ 0 $ 0 $ 10,500,117
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant-Directed
---------------------------------------------------------------------------
New Fund C New Fund D New Fund E New Fund F New Fund G
------------ --------------- ---------- ----------- -------------
Disciplined Cash Management Balanced Aggressive Global Equity
Equity Fund Fund Fund Equity Fund Fund
------------ --------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Participants $ 690,662 $ 759,923 $ 30,817 $ 78,389 $ 14,328
Company
------------ ------------ --------- ----------- ---------
Total contributions 690,662 759,923 30,817 $ 78,389 14,328
------------ ------------ --------- ----------- ---------
Income from investments:
Interest
Dividends 441,486
Net appreciation (depreciation)
in fair value of investments (1,516,543) 13,741 (142,672) (1,987)
------------ ------------ --------- ----------- ---------
Total income (loss) from investments (1,516,543) 441,486 13,741 (142,672) (1,987)
------------ ------------ --------- ----------- ---------
Total additions (deductions) (825,881) 1,201,409 44,558 (64,283) 12,341
------------ ------------ --------- ----------- ---------
Deductions:
Distributions and withdrawals (355,694) (728,732) (1,288) (3,007) (1,201)
Administration fees (101,849) (114,555) (5,065) (7,410) (4,215)
------------ ------------ --------- ----------- ---------
Total deductions (457,543) (843,287) (6,353) (10,417) (5,416)
Transfers between funds 16,345,936 23,312,999 855,998 2,732,647 387,964
Participant loans (366,296) (593,013) (27,009) (33,224) (1,911)
------------ ------------ --------- ----------- ---------
INCREASE(DECREASE) IN NET ASSETS 14,696,216 23,078,108 867,194 2,624,723 392,978
------------ ------------ --------- ----------- ---------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1994
------------ ------------ --------- ----------- ---------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1995 $ 14,696,216 $ 23,078,108 $ 867,194 $ 2,624,723 $ 392,978
============ ============ ========= =========== =========
</TABLE>
-6-
The accompanying notes are an integral part of the financial statements.
<PAGE> 10
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION,
Continued
as of December 31, 1995
<TABLE>
<CAPTION>
Participant- Nonparticipant
Directed Directed
Participant ADT Limited
Loans Share Fund Total
------------ -------------- ------------
<S> <C> <C> <C>
Additions:
Contributions:
Participants $ $ $ 10,131,063
Company 2,368,964 2,830,013
------------ ------------ ------------
Total contributions 2,368,964 12,961,076
------------ ------------ ------------
Income from investments:
Interest 1,070,899
Dividends 441,486
Net appreciation (depreciation)
in fair value of investments 4,437,169 18,711,596
------------ ------------ ------------
Total income (loss) from investments 4,437,169 20,223,981
------------ ------------ ------------
Total additions (deductions) 6,806,133 33,185,057
------------ ------------ ------------
Deductions:
Distributions and withdrawals (1,405,721) (10,804,132)
Administration fees (70,802) (566,220)
------------ ------------ ------------
Total deductions (1,476,523) (11,370,352)
Transfers between funds (438,622) --
Participant loans 2,430,708 (19,123) --
------------ ------------ ------------
INCREASE(DECREASE) IN NET ASSETS 2,430,708 4,871,865 21,814,705
------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1994 12,034,417 89,042,512
------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1995 $ 2,430,708 $ 16,906,282 $110,857,217
============ ============ ============
</TABLE>
-7-
The accompanying notes are an integral part of the financial statements.
<PAGE> 11
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The ADT Security Services, Inc. Profit Sharing and Savings Plan (the
"Plan") is administered through a trustee, (the "Trustee"), currently
Mellon Bank, and by a committee consisting of employees of ADT Security
Services, Inc. (the "Company"). Under the provisions of the Plan, eligible
employees may make participating contributions from 1% to 8% of total
compensation (including commissions, bonuses and overtime pay), which are
eligible for the Company's matching contributions. Such contributions may
be made on an after-tax basis or a before-tax basis pursuant to Section
401(k) of the Internal Revenue Code; before-tax contributions being
limited to 1% to 4% of compensation. Participants may also elect to make
additional after-tax contributions of up to an additional 5% of their
compensation, which are not eligible for the Company's matching
contributions.
The Company makes contributions to the Trustee, of an amount equal to 20%
of the aggregate participating contributions (up to 8% of each
participant's compensation) of participants (the "basic" contribution).
Effective January 1, 1995, the plan was amended to allow the Company, in
its sole discretion, to make a supplemental contribution, in any
percentage, subject to the maximum limit or elect to make no supplemental
contribution. The maximum supplemental contribution is 80% of the
aggregate participating contributions of the employees made during the
year. The Company made no supplemental contributions for the year ended
December 31, 1996 and $947,202 for the year ended December 31, 1995.
In 1995, the investment options of the Plan were changed as a result of a
Plan amendment. Prior to October 1, 1995, participants were able to elect
to have contributions invested in either Fund A - ADT Limited Share Fund
which invests in common shares of ADT Limited; Fund B - Fixed Income Fund
which consists of investments in the Trustee's pooled fixed income fund
which invests in obligations such as U.S. Treasury notes, other federal
agency obligations, corporate obligations and temporary investments, which
have an average maturity of four to five years; Fund C - General Equity
Fund which consists of investments in the Trustee's pooled common stock
fund which invests in such industries as automotive, banking, drugs,
medical and health, insurance, chemicals, food products, oil and gas,
utilities and electronics; and/or, Fund D - Money Market Fund which
consists of investments in the Trustee's pooled short term fund of money
market instruments which invests in obligations such as discounted, demand
8
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS, Continued
------------------
1. PLAN DESCRIPTION, Continued
and interest bearings notes, U.S. Treasury bills and notes, corporate
temporary investments, time deposits, and certificates of deposit.
The investment options in effect prior to October 1, 1995 are referred to
within the statements of net assets with fund information and the
statements of changes in net assets with fund information and the notes to
financial statements as the Old Fund B, C and D.
Effective October 1, 1995, six new mutual funds replaced the old
investment however, the ADT Limited Stock Fund remained as an investment
option. The new investment options are as follows: Fund B - Intermediate
Bond Fund is invested in Fidelity's Intermediate Bond Fund which consists
of investments in fixed income obligations in domestic and foreign debt
securities, which have an average maturity of three to ten years; Fund C -
Equity Fund is invested in Fidelity's Disciplined Equity Fund which
consists of investments in domestic common stocks in such industries as
energy, banking, health, technology, utilities and consumer products; Fund
D - Cash Management Fund is invested in the Dreyfus Cash Management Fund
which consists of investments in short-term money market obligations such
as U.S. Government securities, certificates of deposit, time deposits,
bankers' acceptances, repurchase agreements, commercial paper and other
short-term corporate obligations; Fund E - Balanced Fund is invested in
Fidelity's Puritan Fund which consists of investments in common stocks and
preferred stocks in such industries as energy, finance, durables, basic
industries and retail and investments in bonds consisting of investments
in U.S. Government and government agency securities, corporate bonds,
mortgage securities and foreign bonds; Fund F - Aggressive Equity Fund is
invested in Fidelity's Contrafund which consists of investments in common
stocks and preferred stocks, generally in small and medium-sized
companies, in such industries as finance, technology, energy, durables,
and basic industries; Fund G - Global Equity is invested in Fidelity's
Worldwide Fund which consists of investments in equity securities issued
by companies of all sizes worldwide, in such industries as finance, basic
industries, retail, durables, construction and real estate, primarily in
such countries as the U.S., the Netherlands, Germany, Japan, France,
Switzerland, and Finland.
The investment options in effect beginning October 1, 1995 are referred to
within the statements of net assets with fund information and statements
of changes in net assets with fund information and the notes to the
financial statements as the New Fund B, C, D, E, F and G. The old and the
9
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS, Continued
------------------
1. PLAN DESCRIPTION, Continued
new funds are collectively referred to as the "Trust Fund", hereafter.
Pursuant to the Plan amendment, on October 1, 1995, the balance in each of
the participants' accounts, within old funds B, C, and D were transferred
into the new funds B, C, and D, respectively.
Prior to the Plan amendment, participants were able to change their
investment options four times in a 12-month period. Effective October 1,
1995, participants may change their investment options, contribution
percentages, and transfer account balances on an unlimited basis. The
percentage contributed to each fund must be in increments of 10%. The
total number of participants in each fund at December 31, 1996 is as
follows:
Fund A - ADT Limited Share Fund 5,963
New Fund B - Intermediate Bond Fund 2,020
New Fund C - Equity Fund 2,443
New Fund D - Cash Management Fund 3.021
New Fund E - Balance Fund 492
New Fund F - Aggressive Equity Fund 810
New Fund G - Global Equity Fund 424
The total number of participants in the Plan was 6,275 as of December 31,
1996 which is less than the sum of the number of participants shown above
because participants have invested their contributions in more than one
fund.
Each participant's account is credited with the participant's
contributions. The Company's 20% basic contributions, and the Company's
supplemental contributions, if any, are invested in the ADT Limited Share
Fund and credited to the participant's account. Pension eligible
participants are entitled to direct Company contributions. Effective
January 1, 1995, the Plan was amended to limit the contributions of
"Highly Compensated" associates, as defined under IRS regulations, to the
8% maximum participating contributions only. Plan earnings and losses in
each fund are allocated to participant accounts relative to the
participant's account balance in each respective fund.
Effective November 1, 1995, a loan provision is available to participants
in which an active participant may borrow from the participant's vested
account balance a mimimum of $1,000 up to 50% of the vested account
balance. The maximum amount that can be borrowed is $50,000. Loan
transactions are treated as a transfer to (from) the investment fund from
10
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS, Continued
------------------
1. PLAN DESCRIPTION, Continued
(to) the Participant Loan Fund. Loan terms range from 1-5 years or up to
15 years for home purchase loans. The loans are collateralized by the
balance in the participants' account and bear interest at a rate
commensurate with prevailing rates at the beginning of each month and are
fixed for the duration of the loan. Principal and interest is paid ratably
through payroll deductions.
Effective January 1, 1995, the Plan was amended to allow newly hired
associates to contribute to the Plan only after they have completed one
year of employment service with ADT Security Services or one of its
subsidiaries or affiliates. Temporary employees are no longer eligible to
participate in the Plan. Termination of service for any reason other than
retirement, death, disability or layoff results in the forfeiture of the
nonvested portion of a participant's account. Under the terms of the Plan,
forfeitures are used to reduce subsequent Company contributions.
Forfeitures for 1996 and 1995 were $201,975 and $199,734, respectively.
A participant is fully vested at all times in the amount credited to the
Plan account attributable to the participant's own contributions. A
participant becomes fully vested in the amount attributable to Company
contributions after three years of service, as defined in the Plan
document. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
The financial statements of the Plan have been prepared on the accrual
basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make significant
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets available for benefits during the reporting
period. Actual results could differ from those estimates.
11
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, Continued
------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Risks and Uncertainties
The Plan provides for various investment options in a combination of
mutual funds and other investment securities. Investment securities are
exposed to various risks, such as interest rate, market and credit. Due to
the level of risk associated with certain investment securities and the
level of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in risks in
the near term would materially affect participants' account balances and
the amounts reported in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan
benefits.
Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date. Dividend income
is recorded on the ex-dividend date and interest income is accrued as
earned.
Fees and Expenses
All taxes, expenses, fees and charges of any kind in respect of the Trust
Fund and most reasonable expenses of administering the Plan shall be paid
by the Plan, unless the Company, at its discretion, elects to pay such
taxes, expenses, fees or charges. All administrative fees, other than such
costs as direct labor and related support costs, of the Plan were paid by
the Plan during 1996 and 1995.
Valuation of Investment Assets
The Plan's investments are stated at fair value. Investments in ADT
Limited common stock are valued based on the closing price of the stock at
December 31, 1996 and 1995 as determined by the New York Stock Exchange.
Investments in pooled funds of the Trustee are valued at fair value as
reported by the Trustee. Quoted market prices are used to value
investments in the mutual funds of Fidelity Investments. These investments
are valued every business day by the mutual fund manager based on the
fund's share price called the net asset value. Investments in the Dreyfus
Cash Management Fund are valued at fair value as reported by the Trustee.
Derivative Financial Instruments
The Plan has only limited involvement with derivative financial
instruments and does not use them for trading purposes. During 1996 and
1995, derivative investments comprised an immaterial portion of the total
net assets available for benefits.
Withdrawals and Distributions
Withdrawals and distributions are recorded when paid.
12
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS, Continued
------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Net Appreciation (Depreciation) in the Fair Value of Investments
The Plan presents in the statements of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments, which consists of the realized gains (losses) and the
unrealized appreciation (depreciation) on those investments.
3. VALUATION OF PARTICIPANTS' ACCOUNTS
Prior to October 1, 1995, participants' accounts are valued at fair value
at the end of each calendar month by the Plan Trustee on a cash and share
equivalent basis. Effective October 1, 1995, participants' accounts are
valued at fair value at the close of each business day by the Plan Trustee
on a cash and share equivalent basis.
4. FEDERAL INCOME TAX STATUS
On November 21, 1995, a favorable updated determination letter was
received from the IRS stating that the Plan is qualified under Sections
401(a) and 401(k) of the Internal Revenue Code and, therefore, the trust
established under the Plan is exempt from Federal income tax under Section
501(a) of the Code. As long as the Plan is qualified under the tax laws,
participants will not be taxed currently on Company contributions and
before tax [401(k)] participant contributions to the Plan or on income
earned by the Trust Fund. When a participant, beneficiary or estate of a
participant receives a distribution under the Plan, such distribution is
taxable, except to the extent such distribution represents the return of
the participant's own after-tax contributions. The tax treatment of the
balance of such distribution depends on the form and time of payment.
5. PRIORITIES UPON TERMINATION OF THE PLAN
The Company can amend the Plan at any time and any amendment may be given
retroactive effect as the Company may determine, subject to the
qualification that, except for the return of Company contributions under
certain circumstances, the assets of the Plan must be used exclusively for
the benefit of participants and their beneficiaries, and no participant
may be deprived of any vested interest under the Plan. The Plan may be
terminated or contributions under the Plan may be permanently discontinued
at any time by the Company, in which event the Trustee will continue to
act until the Plan's assets shall have been distributed in accordance with
the Plan. Upon termination or discontinuance of the Plan, participants
shall fully vest in the Plan.
13
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
Net assets available for benefits
per the financial statements $ 140,835,170 $ 110,857,217
Amounts allocated to withdrawing
participants (26,595) (61,235)
------------- -------------
Net assets available for benefits
per the Form 5500 $ 140,808,575 $ 110,795,982
============= =============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Benefits paid to participants per
the financial statements $ 17,919,074 $ 10,804,132
Add: Amounts allocated to withdrawing
participants at December 31,
1996 and 1995 26,595 61,235
Less: Amounts allocated to withdrawing
participants at December 31,
1995 and 1994 (61,235) (646,244)
------------ ------------
Benefits paid to participants per the
Form 5500 $ 17,884,434 $ 10,219,123
============ ============
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 1996 and 1995 but not yet paid as of that date. The Plan's
financial statements reflect amounts allocated to withdrawing participants for
benefit claims when paid (see Note 2).
14
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------
7. RELATED PARTY TRANSACTIONS
Fund A - ADT Limited Share Fund invests in common shares of ADT Limited,
the ultimate parent of the Company. As such, these transactions qualify as
parties-in interest. The Plan purchased common shares of ADT Limited
amounting to $3,841,468 and $7,017,735 during 1996 and 1995, respectively.
The Plan sold common shares of ADT Limited amounting to $2,588,148 and
$509,653 during 1996 and 1995, respectively.
15
<PAGE> 19
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
Item 27A - Schedule of Assets Held for Investment Purposes
<TABLE>
<CAPTION>
Fair Value Cost
------------------------------ ------------------------------
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FUND A:
ADT Limited Share Fund (rates of return
for the years ended December 31, 1996
and 1995 were 50.44% and 38.69%, respectively) $80,875,500 $54,530,520 $42,088,788 $43,632,962
Dreyfus Cash Management Class A Fund
(effective interest rate for the year ended
December 31, 1996 was 5.42% and for the 3
months ended December 31, 1995 was 1.45%) 750,700 1,000,739 750,700 1,000,739
----------- ----------- ----------- -----------
$81,626,200 $55,531,259 $42,839,488 $44,633,701
=========== =========== =========== ===========
FUND B:
Fidelity Commonwealth Trust Intermediate Bond
Fund (rate of return for the year
ended December 31, 1996 was 4.3% and for the 3
months ended December 31, 1995 was 3.33%) $ 7,898,693 $10,573,420 $ 7,999,430 $10,400,970
FUND C:
Fidelity Capital Trust Disciplined Equity Fund
(rate of return for the year ended December 31,
1996 was 29.69% and for the 3 months ended
December 31, 1995 was <11.41%>) $16,051,140 $16,576,656 $16,336,798 $18,033,851
FUND D:
Dreyfus Cash Management Class A Fund
(effective interest rate for the year ended
December 31, 1996 was 5.42% and for the 3
months ended December 31, 1995 was 1.45%) $20,681,767 $23,243,884 $20,681,767 $23,243,884
FUND E:
Fidelity Puritan Fund (rate of return for the
year ended December 31, 1996 was 17.97%
and for the 3 months ended December 31,
1995 was 2.99%) $ 2,367,484 $ 891,707 $ 2,343,150 $ 868,953
FUND F:
Fidelity ContraFund Inc. (rate of return
for the year ended December 31, 1996
was 31.16% and for the 3 months ended
December 31, 1995 was <5.30%>) $ 6,086,289 $ 2,854,149 $ 5,766,012 $ 2,926,890
FUND G:
Fidelity Investment Trust Worldwide Fund
(rate of return for the year ended
December 31, 1996 was 18.91% and for the 3
months ended December 31, 1995 was .94%) $ 1,388,754 $ 401,439 $ 1,318,387 $ 396,042
PARTICIPANT LOANS:
ADT Participant Loans (interest rate of
9.25% - 9.50% for the year ended
December 31, 1996 and 9.75% for the
2 months ended December 31, 1995) $ 4,950,654 $ 2,430,708 $ 4,950,654 $ 2,430,708
</TABLE>
16
<PAGE> 20
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
Item 27D - Schedule of Reportable Transactions
for the year ended December 31, 1996
------------------
<TABLE>
<CAPTION>
Purchases Sales
--------------------------- --------------------------------------------
Number of Transaction Expenses Number of Transaction Net Gain
Description of Asset Transactions Amount Incurred Transactions Amount (Loss)
- -------------------- ------------ ----------- -------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Series Transactions:
ADT Limited Share Fund 8 $ 3,841,468 $17,830 5 $ 2,588,148 $ 866,559
Fidelity Capital Trust
Disciplined Equity Fund 82 $ 3,496,883 - 169 $ 5,038,267 $(200,085)
Dreyfus Cash Management
Class A Fund 251 $20,919,266 - 296 $23,407,620 -
Fidelity ContraFund, Inc. 161 $ 4,231,910 - 87 $ 1,475,007 $ 8,011
</TABLE>
17
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
ADT Security Services, Inc.
Profit Sharing and Savings Plan:
We consent to the incorporation by reference in the Registration Statement of
ADT Security Services, Inc. Profit Sharing and Savings Plan on Form S-8 (File
No. 33-26970) of our report dated June 30, 1997 on our audits of the financial
statements and financial statement schedules of ADT Security Systems, Inc.
Profit Sharing and Savings Plan as of and for the years ended December 31, 1996
and 1995, which report is included in this Annual Report on Form 11-K.
Coopers & Lybrand, L.L.P.
Denver, Colorado
June 30, 1997
18
