FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-24900
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
ITI TECHNOLOGIES, INC.
2266 Second Street North
North St. Paul, Minnesota 55109
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
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REPORT ON AUDITS OF FINANCIAL STATEMENTS
as of December 31, 1997 and 1996
and for the year ended December 31, 1997
AND SUPPLEMENTAL SCHEDULES
as of December 31, 1997
and for the year then ended
<PAGE>
INDEX
----------
Page(s)
-------
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996 3
Statement of Changes in Net Assets
Available for Plan Benefits, With
Fund Information, for the year ended
December 31, 1997 4
Notes to Financial Statements 5 - 8
Supplemental Schedules:
Line 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1997 9
Line 27d - Schedule of Reportable Transactions
for the year ended December 31, 1997 10
Exhibits 11
Signatures 11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of
Interactive Technologies, Inc. 401(K) Investment Plan
We have audited the financial statements of the Interactive Technologies, Inc.
401(K) Investment Plan as listed in the accompanying index on page 1. These
financial statements are the responsibility of the Plan Administrator. 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 audits 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 the
Plan Administrator, 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 plan benefits of the
Interactive Technologies, Inc. 401(K) Investment Plan as of December 31, 1997
and 1996, and the changes in net assets available for plan benefits for the year
ended December 31, 1997, 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 supplemental schedules as listed in
the accompanying index on page 1 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 statement of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the changes in net assets available for plan
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.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
June 23, 1998
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1997 and 1996
1997 1996
ASSETS
Investments:
Prudential mutual funds:
Jennison Active Balanced Fund $ 391,719 $ 344,107
Stock Index Fund 1,199,947 629,058
World Fund 749,923 688,037
Jennison Growth Fund 1,681,530 1,228,893
Moneymart Fund 208,040 131,842
Balanced Fund 566,494 522,978
Government Income Fund 138,405 147,446
---------- ----------
4,936,058 3,692,361
Guaranteed Interest Account 421,143 325,903
ITI Stock Fund 783,245
Guaranteed Insurance Contracts 1,217,299 1,293,870
Money Market Fund 28,202 53,321
---------- ----------
Total investments 7,385,947 5,365,455
Employee contributions receivable 400
---------- ----------
Total assets 7,385,947 5,365,855
LIABILITIES
Withholding taxes payable 7,201
---------- ----------
Net assets available for plan benefits $7,385,947 $5,358,654
========== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------------------------
JENNISON
ACTIVE STOCK JENNISON GOVERNMENT GUARANTEED ITI
BALANCED INDEX WORLD GROWTH MONEYMART BALANCED INCOME INTEREST STOCK
FUND FUND FUND FUND FUND FUND FUND ACCOUNT FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Investment Income:
Interest $ 24,985
Dividends $ 9,360 $ 11,100 $ 8,419 $ 8,447 $ 14,722 $ 7,837
Net appreciation in fair
value of investments 36,612 221,968 17,535 $ 311,888 48,810 2,897 $416,492
Contributions:
Employee 60,512 218,796 137,328 260,290 35,942 80,531 28,352 58,034 129,360
Employer 11,355 33,394 22,339 40,581 8,331 15,969 5,103 10,643 20,691
-------- ---------- -------- ---------- -------- -------- -------- -------- --------
Total additions 117,839 485,258 185,621 612,759 52,720 160,032 44,189 93,662 568,543
Deductions:
Benefits paid to participants (22,861) (69,315) (31,474) (81,459) (19,089) (67,790) (4,112) (24,700) (4,755)
-------- ---------- -------- ---------- -------- -------- -------- -------- --------
Increase (decrease) prior to
interfund transfers 94,978 415,943 154,147 531,300 33,631 92,242 40,077 68,962 563,788
Interfund transfers (47,366) 154,946 (92,261) (78,663) 42,567 (48,726) (49,118) 26,278 219,457
-------- ---------- -------- ---------- -------- -------- -------- -------- --------
Net increase (decrease) 47,612 570,889 61,886 452,637 76,198 43,516 (9,041) 95,240 783,245
Net assets available for plan
benefits:
Beginning of year 344,107 629,058 668,037 1,228,893 131,842 522,978 147,446 325,903
-------- ---------- -------- ---------- -------- -------- -------- -------- --------
End of year $391,719 $1,199,947 $749,923 $1,681,530 $208,040 $566,494 $138,405 $421,143 $783,245
======== ========== ======== ========== ======== ======== ======== ======== ========
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED
----------------------
GUARANTEED MONEY
INSURANCE MARKET
CONTRACTS FUND OTHER TOTAL
<S> <C> <C> <C> <C>
Additions:
Investment Income:
Interest $ 55,977 $ $ 80,962
Dividends 1,776 61,661
Net appreciation in fair
value of investments
of investments 1,058,202
Contributions:
Employee $ (400) 1,008,745
Employer 168,406
---------- ------- -------- ----------
Total additions 55,977 1,776 (400) 2,377,976
Deductions:
Benefits paid to participants (32,329) 7,201 (350,683)
---------- ------- -------- ----------
Increase (decrease) prior to
interfund transfers 55,977 (30,563) 6,801 2,027,293
Interfund transfers (132,548) 5,434
---------- ------- -------- ----------
Net increase (decrease) (76,571) (25,119) 6,801 2,027,293
Net assets available for plan
benefits:
Beginning of year 1,293,870 53,321 (6,801) 5,358,654
---------- ------- -------- ----------
End of year $1,217,299 $28,202 - $7,385,947
========== ======= ======== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the Interactive Technologies, Inc. 401(K)
Investment Plan (the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for complete information
regarding the Plan's definitions, benefits, eligibility and other matters.
GENERAL
The Plan is a contributory defined contribution plan available to all eligible
employees of Interactive Technologies, Inc. (the Company), a wholly owned
subsidiary of ITI Technologies, Inc. (ITI). The Company is the plan sponsor and
administrator. Three employees of the Company have been appointed trustees of
the Plan. The Prudential Insurance Company of America (Prudential) is the
custodian of the Plan's assets, except for the guaranteed insurance contracts,
for which the custodians are the respective insurance companies, and the money
market fund, for which The Vanguard Group is the custodian. Employee
participation is voluntary. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
CONTRIBUTIONS
Participants may contribute up to a maximum of 18% of their compensation.
Matching contributions by the Company for the benefit of participants are
discretionary and are determined annually by the Board of Directors. For 1997,
Company matching contributions were equal to 50% of each participant's
contributions to a maximum of 1.5% of each participant's compensation. The
Company also has the option to make a discretionary profit sharing contribution
to the Plan. During 1997, the Company did not make a profit sharing contribution
to the Plan.
PARTICIPANT ACCOUNTS
As of December 31, 1997, contributions are invested, at the participant's
direction, in the following investment funds:
Prudential Jennison Active Balanced Fund: Consists of investments in equity
securities, fixed-income securities and money market instruments.
Prudential Stock Index Fund: Consists of investments in equity securities that
are as a group, designed to duplicate the price and yield performance of the S&P
500.
Prudential World Fund: Consists of investments of at least 65% in common stock
and preferred stock of foreign issuers, and up to 35% in other equity-related
securities of foreign issuers; common stock, preferred stock and other
equity-related securities of U.S. issuers; investment grade debt securities of
domestic and foreign corporations, governments, governmental entities and
supranational entities; and high-quality domestic money market instruments and
short-term fixed income securities.
Prudential Jennison Growth Fund: Consists primarily of investments in common
stock, preferred stock and securities convertible into common stock of
established companies which Prudential has stated as having above average growth
prospects.
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN (CONTINUED)
Prudential Moneymart Fund: Consists of investments in money market instruments
with maturities of thirteen months or less.
Prudential Balanced Fund: Consists of investments in a diversified portfolio of
equity securities (including securities convertible into equity securities),
debt obligations and money market instruments.
Prudential Government Income Fund: Consists of investments in U.S. Government
securities, including U.S. treasury bills, notes, bonds and other debt
securities issued by the U.S. Treasury, and obligations issued or guaranteed by
U.S. Government agencies or instrumentalities, and investments in various
derivative transactions such as the purchase and sale of put and call options.
Guaranteed Interest Account: Consists of investments in fixed income securities
with short to intermediate maturities.
ITI Stock Fund: Consists of investments in common stock of ITI.
The allocation of the participant's contributions to these investment funds is
selected by the participant and may be changed daily.
Non-participant directed investments consist of investments in guaranteed
insurance contracts and money market instruments and represent investments of
the Plan prior to the provision of participant directed investment options. The
plan is in the process of liquidating these investments. However, amounts which
may be withdrawn from the insurance contracts without penalty are restricted as
defined by the terms of the contracts. Amounts withdrawn from the insurance
contracts are allocated to each participants' accounts based on the
participants' relative investment percentage in such contracts.
Each participant's account is credited with the participant's contributions and
his or her share of employer contributions, if any. Allocation of investment
income is based on the value of participants' accounts at the close of each day.
As of December 31, 1997, approximately 414 employees were participating in the
Plan and the approximate number of participants in each investment fund was as
follows:
Prudential Jennison Active Balanced Fund 128
Prudential Stock Index Fund 230
Prudential World Fund 181
Prudential Jennison Growth Fund 272
Prudential Moneymart Fund 86
Prudential Balanced Fund 157
Prudential Government Income Fund 82
Guaranteed Interest Account 129
ITI Stock Fund 109
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN (CONTINUED)
VESTING
Participants are immediately fully vested in the value of their accounts,
including participant and Company contributions and related net investment
earnings.
PAYMENT OF BENEFITS
Vested interests are distributed to participants upon death, retirement or
termination of employment. Participants may elect payment in a lump sum or in
the form of an annuity as described in the Plan document. Distributions are also
permitted for reasons of proven financial hardship as outlined in the Plan
document. Participant benefit payments may be subject to federal income tax.
PLAN EXPENSES
Administrative expenses of the Plan are paid by the Company.
PLAN TERMINATION
While the Company has not expressed any intent to discontinue the Plan, it is
free to do so at any time. In the event the Company terminated the Plan, the net
assets of the Plan will be allocated among the participants or beneficiaries
based on the participants' account balances.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared on the accrual basis.
The following significant accounting policies were used to prepare the financial
statements in accordance with generally accepted accounting principles.
VALUATION OF INVESTMENTS
Investments in money market funds are recorded at the underlying net asset value
per unit, which approximates fair value based on the quoted market price of
these funds. Investments in Prudential mutual funds are recorded at the
underlying net asset value per unit, which approximates fair value based on the
quoted market price of these funds. The Guaranteed Interest Account is stated at
fair value, which approximates contract value. Fair value represents
contributions made under the contract plus interest at the guaranteed rate, less
funds used to pay benefits.
Investments in guaranteed insurance contracts are valued at fair value as
determined by the insurance company which approximates contract value,
representing cost of contributions plus interest earned, less funds used to pay
benefits. The viability and return of each of the guaranteed insurance contracts
is dependent on, among other factors, the financial results of the underlying
issuers. Investments in the ITI Stock Fund are recorded at the underlying fair
value of ITI's common stock based on the quoted market price.
INTEREST AND DIVIDEND INCOME
Interest income is recorded as earned on an accrual basis and dividend income is
recorded on the ex dividend date.
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS
The Plan presents in the Statement of Changes in Net Assets Available for Plan
Benefits, With Fund Information, the net appreciation (depreciation) in the fair
value of its investments which consists of realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with generally
accepted accounting principles requires the Plan Administrator to make
significant estimates and assumptions that affect the reported amounts of net
assets available for Plan benefits at the date of the financial statements and
the changes in net assets available for Plan benefits during the reporting
period and, when applicable, disclosures of contingent assets and liabilities at
the date of the financial statements. Actual results could differ from those
estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in various combinations of
investment securities. Investment securities are exposed to various risks
including, but not limited to, interest rate, market and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the Statement of Net
Assets Available for Plan Benefits in future periods.
3. TAX STATUS
The Plan received a favorable determination letter from the Internal Revenue
Service, dated September 22, 1995, indicating that the Plan constitutes a
qualified trust under Section 401(a) of the Internal Revenue Code (IRC) and is
therefore generally exempt from federal income taxes under provisions of Section
501(a). The Plan Administrator believes that the Plan is currently designed and
being operated in compliance with the applicable requirements of the IRC.
Therefore, no provision for income taxes has been recorded in the Statement of
Changes in Net Assets Available for Plan Benefits, With Fund Information.
4. PARTY-IN-INTEREST TRANSACTIONS
In 1997, at the participants' election, participant and employer matching
contributions were invested in the ITI Stock Fund consisting of ITI common
stock. In 1997, purchases and sales of ITI common stock were $1,455,669 and
$1,090,916, respectively.
In 1997, at the participants' election, participant and employer matching
contributions were invested in the Guaranteed Interest Account and mutual funds
under the control of Prudential. In 1997, purchases and sales of these
investments were $3,003,204 and $2,057,912, respectively.
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1997
EIN 41-1387419
Plan Number 001
<TABLE>
<CAPTION>
(c)
(b) DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE, (e)
(a) IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL (d) CURRENT
LESSOR OR SIMILAR PARTY PAR OR MATURITY DATE COST VALUE
<S> <C> <C> <C>
The Vanguard Group Money Market Fund, 28,202 units $ 28,202 $ 28,202
* ITI Technologies, Inc. (ITI)/The Prudential
Insurance Company of America (Prudential) ITI Stock Fund, 36,011 units 709,107 783,295
Guaranteed insurance contracts:
Guaranteed Insurance Contract, #ON890313, 4.5%,
American Life maturing April 1, 2019 120,839 120,839
Guaranteed Insurance Contract, #2990002645, 5.0%,
Bradford National Life maturing January 28, 2000 166,890 166,890
Guaranteed Insurance Contract, #10GA001586, 5.8%,
Massachusetts General Life maturing January 29, 2015 213,008 213,008
Guaranteed Insurance Contract, #10GA009835, 4.0%,
Massachusetts General Life maturing March 23, 2022 132,212 132,212
Guaranteed Insurance Contract, #10GA006548, 4.2%,
Massachusetts General Life maturing January 29, 2014 211,497 211,497
Guaranteed Insurance Contract, #US097474, 4.7%,
USG Life maturing June 5, 2021 372,853 372,853
* Prudential Guaranteed Interest Account, 6.3% 421,143 421,143
Mutual funds:
* Prudential Jennison Active Balanced Fund, 27,463 units 380,401 391,719
* Prudential Stock Index Fund, 37,069 units 935,407 1,199,947
* Prudential World Fund, 40,049 units 709,394 749,923
* Prudential Jennison Growth Fund, 107,515 units 1,501,432 1,681,530
* Prudential Moneymart Fund, 131,996 units 208,040 208,040
* Prudential Balanced Fund, 41,705 units 590,070 566,494
* Prudential Government Income Fund, 16,698 units 133,874 138,405
---------- ----------
Total investments $6,834,369 $7,385,947
========== ==========
</TABLE>
*Denotes party-in-interest.
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1997
EIN 41-
Plan Number 001
<TABLE>
<CAPTION>
(h)
CURRENT VALUE
(a) (c) (d) (g) OF ASSET ON (i)
IDENTITY OF (b) PURCHASE SELLING COST OF TRANSACTION NET GAIN
PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS)
<S> <C> <C> <C> <C> <C>
Series of Transactions:
Prudential Guaranteed Interest Account 507,897 507,897 507,897
412,657 412,657 412,657
Prudential Jennison Active Balanced Fund 188,358 188,358 188,358
149,546 137,248 149,546 12,298
ITI/Prudential ITI Stock Fund 1,455,669 1,455,669 1,455,669
1,090,916 751,932 1,090,916 338,984
Prudential Stock Index Fund 652,571 652,571 652,571
283,830 237,640 283,830 46,190
Prudential Jennison Growth Fund 769,258 769,258 769,258
486,384 450,549 486,384 35,835
Prudential World Fund 415,946 415,946 415,946
355,559 317,333 355,559 38,226
Prudential Balanced Fund 232,185 232,185 232,185
172,069 172,020 172,069 49
Single Transactions:
Prudential Guaranteed Interest Account 343,556 343,556 343,556
ITI/Prudential ITI Stock Fund 615,590 615,590 615,590
436,400 296,118 436,400 140,282
</TABLE>
Note (1): Columns (e) and (f) were not included as they are not applicable.
Note (2): Series of transactions are inclusive of single transactions for each
respective fund.
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
EXHIBITS
The following documents are filed as exhibits to this Report:
Exhibit No. Document
- ----------- --------
23 Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
INTERACTIVE TECHNOLOGIES, INC. 401(K)
INVESTMENT PLAN
DATE July 14, 1998 By: /s/ Charles A. Durant
------------------------
Charles A. Durant
Vice President and General Counsel
<PAGE>
EXHIBIT INDEX
Exhibit No. Document Method of Filing
- ----------- -------- ----------------
23 Consent of Independent Accountants Filed herewith electronically
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
ITI Technologies, Inc. on Form S-8 (Registration Nos. 33-89826, 333-08943,
333-08945, 333-23751, and 333-58257) of our report dated June 23, 1998 on our
audits of the financial statements of the Interactive Technologies, Inc. 401(K)
Investment Plan as of December 31, 1997 and 1996 and for the year ended December
31, 1997, and related supplemental schedules as of and for the year ended
December 31, 1997, which report is included in this Annual Report on Form 11-K.
/s/ PricewaterhouseCoopers LLP
-----------------------------------------
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
July 14, 1998
