<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 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
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)
TYCO INTERNATIONAL LTD.
(FORMERLY ADT LIMITED)
(NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN)
THE GIBBONS BUILDING
10 QUEEN STREET, SUITE 301
HAMILTON HM 11, 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, 1998 By: /s/ Kelly Heffernan
------------------------------------
Clerk: Tyco International (US) Inc.
Retirement 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, 1997 and 1996 3-4
Statements of Changes in Net Assets
Available for Benefits with Fund Information
for the Years Ended December 31, 1997 and 1996 5-6
Notes to Financial Statements 7-15
Supplemental Schedules:
Item 27A - Schedule of Assets Held
for Investment Purposes as of
December 31, 1997 and 1996 16-17
Item 27D - Schedule of Reportable
Transactions for the year ended
December 31, 1997 18
Item 27E - Schedule of Non-Exempt
Transactions for the year ended
December 31, 1997 19
Exhibit I - Consent of Independent Accountants 20
<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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996; 2)
reportable transactions for the year ended December 31, 1997; and 3) non-exempt
transactions for the year ended December 31, 1997 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. These supplemental schedules are the
responsibility of the Plan's management. The Fund Information in the statements
of net assets available for benefits as of December 31, 1997 and 1996 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
-1-
<PAGE> 5
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, 1998
-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, 1997
<TABLE>
<CAPTION>
Participant-Directed
--------------------
Fund A Fund B Fund C Fund D Fund E
------ ------ ------ ------ ------
ASSETS: Tyco Intermediate Disciplined Cash
- ------- International Bond Equity Management Balanced
Ltd. Share Fund Fund Fund Fund Fund
--------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Tyco International Ltd. Share Fund
(cost $71,876,286) $92,714,977*
Participation in Fidelity
Intermediate Bond Fund
(cost $8,205,171) $8,216,558*
Participation in Fidelity
Disciplined Equity Fund
(cost $19,427,696) $21,306,907*
Participation in Dreyfus
Cash Management Fund
(cost $23,876,661) $22,542,490*
Participation in Fidelity
Puritan Fund (cost $3,647,409) $3,850,079
Participation in Fidelity
ContraFund (cost $9,075,269)
Participation in Fidelity
Worldwide Fund (cost $2,059,639)
Participant Loans
Participants' contribution receivable 123,282 15,026 35,032 28,344 9,239
Company contribution receivable 5,241
Participant loan receivable 24,723 3,497 5,203 8,307 615
Participant loan interest receivable
----------- ---------- ----------- ----------- ----------
Total assets $92,868,223 $8,235,081 $21,347,142 $22,579,141 $3,859,933
LIABILITIES:
- -----------
Due to Broker for Securities Purchased $ 26,859 $ 18,527 $ 44,867 $ 190,918 $ 9,660
Transfers payable 147,983 (153,604)
Administration fees payable 189,718 15,888 33,214 $ 34,323 9,743
----------- ---------- ----------- ----------- ----------
Total liabilities 364,560 34,415 78,081 71,637 19,403
----------- ---------- ----------- ----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $92,503,663 $8,200,666 $21,269,061 $22,507,504 $3,840,530
=========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nonparticipant
Participant- Directed Directed
------------------------------------------- --------------
Fund F Fund G Fund A
------ ------ ------
Aggressive Global Participant Tyco International
ASSETS: Equity Fund Equity Fund Loans Ltd. Share Fund Total
- ------- ----------- ----------- ----- --------------- -----
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Tyco International Ltd. Share Fund
(cost $71,876,286) $41,545,031* $134,260,008
Participation in Fidelity
Intermediate Bond Fund
(cost $8,205,171) 8,216,558
Participation in Fidelity
Disciplined Equity Fund
(cost $19,427,696) 21,306,907
Participation in Dreyfus
Cash Management Fund
(cost $23,876,661) 1,334,171* 23,876,661
3,850,079
Participation in Fidelity
Puritan Fund (cost $3,647,409) $9,604,454 9,604,454
Participation in Fidelity
ContraFund (cost $9,075,269) $2,041,612 2,041,612
Participation in Fidelity
Worldwide Fund (cost $2,059,639) $7,199,957 7,199,957
Participant Loans
Participants' contribution receivable 23,000 7,988 241,911
Company contribution receivable 27,514 32,755
Participant loan receivable 1,191 437 (43,973) --
Participant loan interest receivable 11,127 11,127
---------- ---------- ---------- ----------- ------------
Total assets $9,628,645 $2,050,037 $7,167,111 $42,906,716 $210,642,029
LIABILITIES:
- -----------
Due to Broker for Securities Purchased $ 20,378 $ 6,350 $ 12,639 $ 330,198
Transfers payable 3,610 2,011 --
Administration fees payable 17,156 7,170 89,279 396,491
---------- ---------- ---------- ----------- ------------
Total liabilities 41,144 15,531 - $ 101,918 726,689
---------- ---------- ---------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $9,587,501 $2,034,506 $7,167,111 $42,804,798 $209,915,340
========== ========== ========== =========== ============
</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, 1996
<TABLE>
<CAPTION>
Participant-Directed
----------------------------------------------------------------------------
Fund A Fund B Fund C Fund D 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>
Participant-Directed
------------------------------------------- Nonparticipant
Directed
Fund F 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 $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.
-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, 1997
<TABLE>
<CAPTION>
Participant-Directed
--------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Fund E
------ ------ ------ ------ ------
Tyco Intermediate Disciplined Cash
International Bond Equity Management Balanced
Ltd. Share Fund Fund Fund Fund Fund
--------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Participants $ 6,200,746 $ 759,482 $ 1,468,608 $ 1,327,893 $ 442,983
Company 311,688
Rollover 21,026 9,594 18,832 6,001 19,612
----------- ---------- ----------- ----------- ----------
Total contributions 6,533,460 769,076 1,487,440 1,333,894 442,595
----------- ---------- ----------- ----------- ----------
Income from investments:
Interest 1,241,896
Dividends
Net appreciation in fair value
of investments 44,695,475 590,078 5,324,596 644,257
----------- ---------- ----------- ----------- ----------
Total income from investments 44,695,475 590,078 5,324,596 1,241,896 644,257
----------- ---------- ----------- ----------- ----------
Total additions 51,228,935 1,359,154 6,812,036 2,575,790 1,086,852
----------- ---------- ----------- ----------- ----------
Deductions:
Distributions and withdrawals (6,419,581) (1,116,843) (2,005,871) (5,050,545) (350,755)
Administration fees (189,718) (23,447) (45,067) (56,478) (12,534)
----------- ---------- ----------- ----------- ----------
Total deductions (6,609,299) (1,140,290) (2,050,938) (5,107,023) (363,289)
Transfers between funds (8,652,966) 124,300 541,809 4,570,411 810,199
Participant loans (1,546,331) (27,649) (55,555) (248,992) (62,955)
----------- ---------- ----------- ----------- ----------
INCREASE IN NET ASSETS 34,420,339 315,515 5,247,352 1,790,186 1,470,807
----------- ---------- ----------- ----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996 58,083,324 7,885,151 16,021,709 20,717,318 2,369,723
----------- ---------- ----------- ----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1997 $92,503,663 $8,200,666 $21,269,061 $22,507,504 $3,840,530
=========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nonparticipant
Participant-Directed Directed
----------------------------------------- --------------
Fund A
Fund F Fund G -------
------ ------ Tyco
Aggressive Global Participant International Ltd. Total
Equity Fund Equity Fund Loans Share Fund -----
----------- ----------- ----- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Participants $ 948,617 $ 378,621 $ 11,506,950
Company $ 1,605,590 1,917,278
Rollover 12,179 10,994 98,238
---------- ---------- ---------- ----------- -------------
Total contributions 960,796 389,615 $ 1,605,590 13,522,466
---------- ---------- ---------- ----------- -------------
Income from investments:
Interest $ 473,795 473,795
Dividends 1,241,896
Net appreciation in fair value
of investments 1,632,624 179,391 64,192 22,805,242 75,935,855
---------- ---------- ---------- ----------- -------------
Total income from investments 1,632,624 179,391 537,987 22,805,242 77,651,546
---------- ---------- ---------- ----------- -------------
Total additions 2,593,420 569,006 537,987 24,410,832 91,174,012
---------- ---------- ---------- ----------- -------------
Deductions:
Distributions and withdrawals (1,037,385) (362,238) (431,380) (4,875,278) (21,649,876)
Administration fees (22,536) (9,447) (89,279) (448,506)
---------- ---------- ---------- ----------- -------------
Total deductions (1,059,921) (371,685) (431,380) (4,964,557) (22,098,382)
Transfers between funds 2,114,409 491,838
Participant loans (128,532) (35,476) 2,105,310 -
---------- ---------- ---------- ----------- -------------
INCREASE IN NET ASSETS 3,519,556 653,683 2,211,917 19,446,275 69,075,630
---------- ---------- ---------- ----------- -------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996 6,067,945 1,380,823 4,955,194 23,358,523 140,839,710
---------- ---------- ---------- ----------- -------------
NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1997 $9,587,501 $2,034,506 $7,167,111 $42,804,798 $ 209,915,340
========== ========== ========== =========== =============
</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, 1996
<TABLE>
<CAPTION>
Participant-Directed
------------------------------------------------------------------------
Fund A Fund B Fund C Fund D 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 in fair value
of investments 19,325,240 332,338 4,033,775 102,608 267,040
----------- ---------- ----------- ----------- ----------
Total income from investments 19,325,240 332,338 4,033,775 1,132,868 267,040
----------- ---------- ----------- ----------- ----------
Total additions 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
------------------------------------------- --------------
Fund F Fund G Fund A
------ ------ ------
Aggressive Global Participant ADT Limited Total
Equity Fund Equity Fund Loans Share Fund -----
----------- ----------- ----- ----------
<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 in fair value
of investments 1,120,240 144,083 8,609,527 33,934,851
---------- ---------- ---------- ----------- -------------
Total income from investments 1,120,240 144,083 328,537 8,609,527 35,293,648
---------- ---------- ---------- ----------- -------------
Total additions 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>
-6-
The accompanying notes are an integral part of the financial statements
<PAGE> 10
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) made by the 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 years ended December 31, 1997 and 1996.
On July 2, 1997, a wholly-owned subsidiary of what was formerly called
ADT Limited ("ADT") merged with Tyco International Ltd. (the "Former
Tyco"). Upon consummation of the merger, ADT (the surviving
corporation) changed its name to Tyco International Ltd. Shareholders
of ADT, through a reverse stock split, received 0.48133 shares of Tyco
International Ltd. common stock for each share of ADT common stock
outstanding. Prior to July 2, 1997, investments in Fund A - ADT Limited
Share Fund were invested in common shares of ADT Limited. Effective
with the merger on July 2, 1997, the investment in common shares of ADT
Limited were exchanged for common shares of Tyco International Ltd.
and Fund A is renamed, "Fund A - Tyco International Ltd Share Fund".
The other investment options remained the same and 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
7
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS, Continued
------------------
1. PLAN DESCRIPTION, Continued
-----------------
in Fidelity's Puritan Fund which consists of investments in common
stocks and preferred stocks in such industries as energy, finance,
durables, retail, basic industries 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 funds are collectively referred to as the 'Trust Fund',
hereafter.
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, 1997 is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Fund A - Tyco International, Ltd. Share Fund 6,234
Fund B - Intermediate Bond Fund 1,919
Fund C - Equity Fund 2,552
Fund D - Cash Management Fund 2,906
Fund E - Balance Fund 784
Fund F - Aggressive Equity Fund 1,335
Fund G - Global Equity Fund 756
</TABLE>
The total number of participants in the Plan was 6,365 as of
December 31, 1997 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, were invested in the ADT Limited
Share Fund prior to July, 1997 and in the Tyco International Ltd.
Share Fund thereafter 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.
8
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS, Continued
--------------------
1. PLAN DESCRIPTION, Continued
-----------------
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 (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 prime plus 1% at the
beginning of each month and are fixed for the duration of the loan.
Principal and interest is paid ratably through payroll deductions.
The Plan allows newly hired associates to contribute to the Plan only
after they have completed one year of employment service with ADT
Security Services, Inc. or one of its subsidiaries or affiliates.
Temporary employees are not 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 1997 and 1996 were $214,303 and $201,975, 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.
9
<PAGE> 13
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 1997 and 1996.
Valuation of Investment Assets
------------------------------
The Plan's investments are stated at fair value. Investments in Tyco
International Ltd. common stock are valued based on the closing price
of the stock at December 31, 1997 and investments in ADT Limited common
stock are valued based on the closing price of the stock at December
31, 1996 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 1997 and
1996, derivative investments comprised an immaterial portion of the
total net assets available for benefits.
10
<PAGE> 14
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
-----------------------------------
The 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. INVESTMENTS
-----------
The number of shares and carrying value per share at December 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Fund A: Tyco International Share Fund
- -------------------------------------
Units 6,862,126* 7,784,288
Unit Value $ 19.74 $ 10.48
Cash $ 135,812 $ 46,862
Fund B: Intermediate Bond Fund
- ------------------------------
Shares 807,166 780,582
Market Value $ 10.17 $ 10.08
Cash $ 7,680 $ 30,426
Fund C: Disciplined Equity Fund
- -------------------------------
Shares 823,095* 727,728
Market Value $ 25.86 $ 22.04
Cash $ 21,670 $ 12,015
Fund D: Cash Management Fund
- ----------------------------
Shares 22,529,695* 20,673,913
Market Value $ 1.00 $ 1.00
Cash $ 12,795 $ 7,854
</TABLE>
11
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, Continued
-----------------
4. INVESTMENTS, Continued
-----------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Fund E: Balanced Fund
- ---------------------
Shares 198,518 137,234
Market Value $ 19.38 $ 17.24
Cash $ 2,800 $ 1,570
Fund F: Aggressive Equity Fund
- ------------------------------
Shares 205,849 144,395
Market Value $ 46.63 $ 42.15
Cash $ 5,715 $ 40
Fund G: Global Equity Fund
- --------------------------
Shares 127,908 90,236
Market Value $ 15.95 $ 15.39
Cash $ 1,479 $ 22
</TABLE>
* Represents at least 5% of net assets available for benefits at
December 31, 1997.
The Trustee maintains a minimal amount of cash within each fund. The
cash balances arise from the timing of the securities transactions, and
are not held for extensive amounts of time.
5. 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 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.
6. 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, 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.
12
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS, Continued
-------------------
7. 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,
1997 1996
---- ----
<S> <C> <C>
Net assets available for benefits
per the financial statements $ 209,915,340 $ 140,839,710
Amounts allocated to withdrawing
participants (11,888) (26,595)
------------- -------------
Net assets available for benefits
per the Form 5500 $ 209,903,452 $ 140,813,115
============= =============
</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,
1997 1996
---- ----
<S> <C> <C>
Benefits paid to participants per
the financial statements $ 21,649,876 $ 17,919,074
Add: Amounts allocated to withdrawing
participants at December 31,
1997 and 1996 11,888 26,595
Less: Amounts allocated to withdrawing
participants at December 31,
1996 and 1995 (26,595) (61,235)
------------ ------------
Benefits paid to participants per the
Form 5500 $ 21,635,169 $ 17,884,434
============ ============
</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, 1997 and 1996 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).
13
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS, Continued
---------------------
8. RELATED PARTY TRANSACTIONS
---------------------------
For the Plan year ended December 31, 1996 and prior to July, 1997, Fund
A - ADT Limited Share Fund invested in common shares of ADT Limited,
the ultimate parent of the Company. As such, these transactions
qualified as parties-in-interest. The Plan purchased common shares of
ADT Limited amounting to $3,841,468 during 1996. The Plan sold common
shares of ADT Limited amounting to $8,664,990 and $2,588,148 during
1997 and 1996, respectively.
On July 2, 1997, a wholly-owned subsidiary of what was formerly called
ADT Limited (`ADT') merged with Tyco International, Ltd. Upon
consummation of the merger, ADT (the surviving corporation) changed its
name to Tyco International Ltd. Shareholders of ADT, through a reverse
stock split, received 0.48133 shares of the Tyco International common
stock for each share of ADT common stock outstanding. Effective with
the merger on July 2, 1997, the investment in common shares of ADT
Limited were exchanged for common shares of Tyco International Ltd. As
such, these transactions qualify as parties-in-interest. During 1997,
the Plan purchased common shares of Tyco International Ltd. Amounting
to $3,228,343 and sold common shares of Tyco International Ltd.
amounting to $5,661,464.
9. SUBSEQUENT EVENTS
------------------
On March 6, 1998, the Tyco Retirement Committee voted to merge the
assets of the ADT Security Systems, Inc. Profit Sharing and Savings
Plan with the assets of the Tyco International (US) Inc. Retirement
Savings and Investment Plan IV as of midnight, December 31, 1998.
The Tyco International (US) Inc. Retirement Savings and Investment Plan
IV is a defined contribution plan sponsored by Tyco International (US)
Inc. and is available to certain salaried and non-union hourly
employees of Tyco affiliated companies. The affiliated companies that
participate in the Plan are wholly-owned subsidiaries of Tyco. The Plan
is subject to the provisions of the Employee Retirement Income Security
Act of 1974. The Plan participates in the Tyco International (US) Inc.
Retirement Savings & Investment Plans Master Trust with other Tyco
sponsored defined contribution plans. Selected plan provisions are
described as follows.
Plan participants must be at least eighteen years old and have
completed 90 days of service with the participating employer.
Participants make a minimum voluntary contribution and may increase
their voluntary contributions up to a certain limit of compensation.
Certain voluntary contributions are matched by the Company. Certain
additional employer contributions are made based on the participants'
years of services, in accordance with the terms of the Plan agreement.
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's contribution portion of
their accounts plus actual earnings thereon is based on years of
continuous service. A participant is 100 percent vested after five
years of credited service. Amounts forfeited prior to vesting are used
to pay Plan expenses.
Plan participants are able to direct the investment of their Plan
holdings into the following investment options on a daily basis: Stable
Value Fund is invested in Interest Income Fund I which is comprised of
insurance contracts and common trust funds; Balanced Fund is invested
in Fidelity's Puritan Fund; Bond Fund is invested in The Bond Fund of
America; Growth and Income Fund is invested in Neuberger and Berman's
Guardian Trust Fund; Growth Fund is invested in Fidelity's Growth Fund;
and Company Stock Fund is invested in Tyco International Ltd. Stock
Fund. In addition to the above investment options, the Tyco Retirement
Committee approved the addition of new investment options effective
August 1, 1998, as follows: Growth Opportunistic Fund will invest in
PIMCO's Capital Appreciation Fund; Growth Small Cap Fund will invest in
Franklin's Small Cap Fund; Growth Index Fund will invest in Fidelity's
US Spartan Equity Index Fund; International Equities Fund will invest
in Templeton's Foreign Fund; and Asset Allocation Fund will invest in
Fidelity's Freedom Funds.
14
<PAGE> 18
9. SUBSEQUENT EVENTS, Continued
-----------------
Participants are allowed to borrow from their account. The minimum
amount that a participant may borrow is $1,000. The maximum amount that
a participant may borrow is the least of: (a) 100% of participant
contributions plus earnings thereon; (b) 50% of the participant's
vested balance; or (c) $50,000 less the highest loan balance
outstanding in the previous twelve months. The interest rate on loans
will be the prime rate as published by the Wall Street Journal at the
time of the loan plus 1%. Loans must be repaid by payroll deductions
and upon termination of service, all loans must be repaid in full.
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,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
FUND A:
Tyco International Ltd. Share Fund (rates
of return for the six months ended
December 31, 1997 were 30.49%)
ADT Limited Share Fund (rates of return for the
six months ended June 30, 1997 were 42.49%
and for the year ended December 31, 1996
were 50.44%) $134,260,008 $80,875,500 $71,876,286 $42,088,788
Dreyfus Cash Management Class A Fund
(Effective interest rate for the years ended
December 31, 1997 and 1996 were 5.56%
and 5.42%, respectively) 1,334,171 750,700 1,334,171 750,700
------------ ----------- ----------- -----------
$135,594,179 $81,626,200 $73,210,457 $42,839,488
============ =========== =========== ===========
FUND B:
Fidelity Commonwealth Trust Intermediate Bond
Fund (rate of return for the years ended
December 31, 1997 and 1996 were 7.55% and
4.3%, respectively) $ 8,216,558 $ 7,898,693 $ 8,205,171 $ 7,999,429
FUND C:
Fidelity Capital Trust Disciplined Equity Fund
(rate of return for the years ended December 31,
1997 and 1996 were 33.36% and 29.69%,
respectively) $ 21,306,907 $16,051,140 $19,427,696 $16,336,798
FUND D:
Dreyfus Cash Management Class A Fund
(effective interest rate for the years ended
December 31, 1997 and 1996 were 5.56% and
5.42%, respectively) $ 22,542,490 $20,681,767 $22,542,490 $20,681,767
FUND E:
Fidelity Puritan Fund (rate of return for the
years ended December 31, 1997 and 1996
were 21.71% and 17.97%, respectively) $ 3,850,079 $ 2,367,484 $ 3,647,409 $ 2,343,150
FUND F:
Fidelity ContraFund Inc. (rate of return
for the years ended December 31, 1997
and 1996 were 22.84% and 31.16%,
respectively) $ 9,604,454 $ 6,086,289 $ 9,075,269 $ 5,766,012
FUND G:
Fidelity Investment Trust Worldwide Fund
(rate of return for the years ended
December 31, 1997 and 1996 were 12.15%
and 18.91%, respectively) $ 2,041,612 $ 1,388,754 $ 2,059,639 $ 1,318,387
</TABLE>
16
<PAGE> 20
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
Item 27A - Schedule of Assets Held for Investment Purposes, Continued
<TABLE>
<CAPTION>
Fair Value Cost
------------------------------ ------------------------------
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
PARTICIPANT LOANS:
ADT Participant Loans (interest rate of
9.25% - 9.50% for the year ended
December 31, 1997 and 9.25% - 9.50%
for the year ended December 31, 1996 $7,199,957 $4,955,194 -- --
</TABLE>
17
<PAGE> 21
ADT SECURITY SERVICES, INC.
PROFIT SHARINGS AND SAVINGS PLAN
Item 27D - Schedule of Reportable Transactions
for the year ended December 31, 1997
------------------
<TABLE>
<CAPTION>
Purchases Sales
------------------------------- -----------------------------------------------------
Number of Transaction Expenses Number of Transaction NetGain
Description of Asset Transactions Amount Incurred Transaction Amount Cost (Loss)
- -------------------- ------------ ------ -------- ----------- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Series Transactions:
ADT Limited Share Fund -- -- -- 10 $ 8,664,990 $ 3,312,096 $5,352,894
Tyco International Ltd,
MA Common Stock 10 $ 3,228,343 $2,837 5 $ 5,661,464 $ 1,718,742 $3,942,722
Dreyfus Cash Management
Class A Fund 258 $41,166,200 -- 300 $38,730,766 $38,730,766 --
Fidelity Capital Trust
Disciplined Equity Fund 110 $ 7,842,607 -- 140 $ 5,371,708 $ 5,371,708 --
Fidelity ContraFund, Inc. 149 $ 7,250,290 -- 101 $ 4,476,291 $ 4,476,291 --
</TABLE>
18
<PAGE> 22
ADT SECURITY SERVICES, INC.
PROFIT SHARING AND SAVINGS PLAN
Item 27E - Schedule of Non-Exempt
Transactions for the year ended
December 31, 1997
<TABLE>
<CAPTION>
Purchases Sales
--------- ---------------------------
Name Affiliation Cost Sales Price Gain/Loss Expenses
- ---- ----------- ---- ----------- --------- --------
<S> <C> <C> <C> <C> <C>
ADT, Ltd. Share Fund Ultimate Parent
of ADT Security
Services, Inc.
(Plan
Administrator) $37,274,051 - -
Tyco International Ltd. Ultimate Parent
New MA Common Stock of ADT Security
Services, Inc.
(Plan
Administrator) $37,274,051 - - -
</TABLE>
19
<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, 1998 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, 1997
and 1996, which report is included in this Annual Report on Form 11-K.
Coopers & Lybrand, L.L.P
Denver, Colorado
June 30, 1998
19
