FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- --------------------------
Commission file number 0-24900
----------------------------------------------------------
ITI Technologies, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1340453
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2266 North Second Street, North St. Paul, MN 55109
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(Address of principal executive offices)
(Zip Code)
(651) 777-2690
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of April 30, 1999, there were 8,429,542 shares of common stock
outstanding.
<PAGE>
ITI TECHNOLOGIES, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
INDEX PAGE
----
PART I -- FINANCIAL INFORMATION
Item 1 -- Consolidated Financial Statements and Report of
Independent Accountants 3
Item 2 -- Management's Discussion and Analysis 10
of Financial Condition and Results
of Operations
PART II OTHER INFORMATION
Item 1 -- Legal Proceedings 14
Item 5 -- Other Information 14
Item 6 -- Exhibits and Reports on Form 8-K 15
Signatures 16
2
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of ITI Technologies, Inc.
We have reviewed the consolidated balance sheet of ITI Technologies, Inc. as of
March 31, 1999, and the related consolidated statements of operations and cash
flows for the three-month periods ended March 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of ITI Technologies, Inc. as of
December 31, 1998, and the related consolidated statements of operations, cash
flows and stockholders' equity for the year then ended (not presented herein);
and in our report dated March 23, 1999, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated financial statements is fairly stated, in
all material respects, in relation to the consolidated financial statements from
which it has been derived.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
May 10, 1999
3
<PAGE>
ITI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE
MONTHS ENDED
MARCH 31,
-----------------------
1999 1998
---- ----
(UNAUDITED)
Net sales......................................... $ 27,829 $ 23,914
Cost of goods sold................................ 14,829 13,050
--------- ---------
Gross profit...................................... 13,000 10,864
Operating expenses:
Marketing, general and administrative.......... 5,280 4,794
Research and development....................... 1,983 2,014
Amortization of intangible assets.............. 353 353
--------- ---------
Operating income.................................. 5,384 3,703
Other income:
Interest, net.................................. 256 180
Other, net..................................... 5 79
--------- ---------
Income before income tax expense.................. 5,645 3,962
Income tax expense................................ 2,034 1,428
--------- ---------
Net income........................................ $ 3,611 $ 2,534
========= =========
Per share amounts:
Basic............................................. $ .43 $ .30
Weighted average common shares
outstanding.................................... 8,420 8,487
Diluted........................................... $ .41 $ .29
Weighted average common and common
equivalent shares outstanding.................. 8,853 8,863
The accompanying notes are an integral part of the consolidated financial
statements.
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4
<PAGE>
ITI TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................... $ 4,903 $ 5,594
Accounts receivable .......................................... 20,541 19,037
Notes receivable-dealer financing, current portion ........... 1,221 1,096
Inventories .................................................. 25,613 25,201
Deferred income taxes ........................................ 1,223 1,223
Other current assets ......................................... 919 1,738
------------ ------------
Total current assets ..................................... 54,420 53,889
Property and equipment ............................................. 12,009 10,647
Excess of cost over net assets acquired ............................ 27,375 27,576
Other intangible assets ............................................ 19,821 19,897
Notes receivable-dealer financing, net of current portion .......... 6,309 3,948
------------ ------------
Total assets ............................................. $ 119,934 $ 115,957
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 5,178 $ 6,874
Accrued wages ................................................ 2,125 2,045
Other accrued expenses ....................................... 2,386 1,955
------------ ------------
Total current liabilities ................................ 9,689 10,874
Income taxes ....................................................... 7,676 7,676
------------ ------------
Total liabilities ........................................ 17,365 18,550
------------ ------------
Commitments and contingencies
Stockholders' equity:
Common stock ($0.01 par value; 30,000 shares authorized;
9,386 shares issued, 8,429 shares outstanding at
March 31, 1999; 9,304 shares issued, 8,347 shares
outstanding at December 31, 1998) ........................ 94 93
Additional paid-in capital ................................... 77,918 76,368
Retained earnings ............................................ 39,936 36,325
Treasury stock, at cost (957 shares at March 31, 1999
and December 31, 1998) ................................... (15,379) (15,379)
------------ ------------
Total stockholders' equity ............................... 102,569 97,407
------------ ------------
Total liabilities and stockholders' equity ............... $ 119,934 $ 115,957
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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5
<PAGE>
ITI TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
----------------------
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................................ $ 3,611 $ 2,534
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of intangible assets ..................................... 379 378
Depreciation and amortization ......................................... 600 548
Provision for doubtful accounts ....................................... 207 59
Changes in operating assets and liabilities:
Accounts receivable ............................................... (1,711) 1,172
Inventories ....................................................... (412) 449
Notes receivable-dealer financing ................................. (1,577) (74)
Other current assets .............................................. 56 471
Accounts payable .................................................. (1,696) (225)
Income taxes payable .............................................. 978 498
Accrued wages and other accrued expenses .......................... 296 191
-------- --------
Net cash provided by operating activities ................................. 731 6,001
-------- --------
INVESTING ACTIVITIES:
Additions to property and equipment ....................................... (1,962) (533)
Additions to other intangible assets ...................................... (102) (1,385)
Issuance of notes receivable related to dealer financing .................. (909)
-------- --------
Net cash used in investing activities ..................................... (2,973) (1,918)
-------- --------
FINANCING ACTIVITIES:
Proceeds from exercise of common stock options ............................ 1,551 110
-------- --------
Net cash provided by financing activities ................................. 1,551 110
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ...................................................... (691) 4,193
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD ................................................ 5,594 5,838
-------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD ...................................................... $ 4,903 $ 10,031
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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6
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited consolidated statement of operations for the
three-month periods ended March 31, 1999 and 1998, reflect, in the
opinion of management of ITI Technologies, Inc. (the "Company"), all
normal, recurring adjustments necessary for a fair statement of the
results of operations for the interim periods. The results of
operations for any interim period are not necessarily indicative of
results for the full year. The consolidated balance sheet data as of
December 31, 1998, was derived from audited consolidated financial
statements but does not include all disclosures required by
generally accepted accounting principles. The unaudited consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto incorporated in
the Company's Annual Report on Form 10-K for the year ended December
31, 1998. PricewaterhouseCoopers LLP, the Company's independent
accountants, have performed reviews of the interim consolidated
financial statements included herein and their review report thereon
accompanies this filing.
The unaudited consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
2. NOTES RECEIVABLE-DEALER FINANCING
The Company provides financing to qualified dealers for their
business needs. Loans to dealers that finance the cost of equipment
and other account acquisition costs of the dealer are treated as
cash flows from operations on the accompanying Consolidated
Statement of Cash Flows. Loans to dealers to purchase account
portfolios in an effort to expand their business are treated as
investing activities on the accompanying Consolidated Statement of
Cash Flows. In both cases, the Company receives a perfected security
interest in the dealers monitoring contacts as well as other
collateral considerations. All notes are made at market interest
rates adjusted for credit and collateral factors with varied
repayment terms between 36 to 72 months.
3. SIGNIFICANT CUSTOMER
As of March 31, 1999, one customer participating in the Company's
dealer financing program had a note receivable balance due to the
Company of $3.4 million.
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7
<PAGE>
4. LITIGATION
On August 17, 1995, the Company commenced an action for patent
infringement against Pittway Corporation and its subsidiary, Ademco
Distribution Inc., in the United States District Court for the
District of Minnesota. On March 9, 1998, the jury found that the
Ademco VISTA Plus/5800 family of wireless security systems infringes
the Company's Learn Mode patent and awarded the Company damages of
approximately $36.0 million for lost profits and royalties. On April
9, 1998, the Court entered an injunction prohibiting Pittway
Corporation from manufacturing and marketing the Ademco 5800 series
wireless products that infringe ITI's Learn Mode patent and awarded
the Company prejudgment interest of approximately $3 million,
bringing the total judgement to approximately $39 million. Pittway
Corporation appealed the verdict. On March 4, 1999, the Federal
Circuit Court of Appeals heard oral arguments on the case. The
Company anticipates that the appeal will be resolved during the
first half of 1999.
Pittway has announced that in 1997 it had "introduced an improved
method of enrolling transmitters in its VISTA series of control
panels." Pittway calls this new method "QED." While the Company has
maintained that Pittway's QED products also infringe the Company's
Learn Mode patent, the judge would not allow the Company to add
Pittway's QED products to the action commenced in August of 1995 to
avoid any additional complication and delay. Accordingly, the
Company commenced a second patent infringement lawsuit against
Pittway and Ademco Distribution, Inc. on August 3, 1998, for
infringement of the Company's Learn Mode patent. The suit was also
filed in the United States District Court for the District of
Minnesota.
Costs associated with these actions and related appeal are being
capitalized as a patent asset associated with the related technology
and are included in other intangible assets on the consolidated
balance sheet. As of March 31, 1999, and December 31, 1998, the
Company has capitalized $4.9 million and $4.8 million of costs
related to these lawsuits, respectively.
5. EARNINGS PER SHARE
The difference in the weighted average shares outstanding for
calculating basic and diluted earnings per share is attributable to
the assumed exercise of stock options under the Company's Stock
Option Incentive Plan.
The dilutive effect of all stock options outstanding during the
three months ended March 31, 1999, was included in the calculation
of the diluted per share earnings. During the three months ended
March 31, 1998, approximately 140,000 stock options with exercise
prices greater than the average market value of the Company's common
stock were excluded from the computation of dilutive earnings per
share.
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8
<PAGE>
6. OTHER FINANCIAL STATEMENT DATA (IN THOUSANDS):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
Accounts receivable:
Accounts receivable ............................. $ 21,893 $ 20,182
Allowance for doubtful accounts ................. (1,352) (1,145)
------------ ------------
Total ..................................... $ 20,541 $ 19,037
============ ============
Inventories:
Raw materials ................................... $ 12,269 $ 12,600
Allowance for obsolescence ...................... (1,369) (1,360)
------------ ------------
10,900 11,240
Work-in-process ................................. 5,711 5,615
Finished goods .................................. 9,002 8,346
------------ ------------
Total ..................................... $ 25,613 $ 25,201
============ ============
Property and equipment:
Machinery and equipment ......................... $ 14,236 $ 12,433
Furniture and fixtures .......................... 4,699 4,545
Land, building and improvements ................. 1,790 1,786
------------ ------------
20,725 18,764
Accumulated depreciation and amortization ....... (8,716) (8,117)
------------ ------------
Total ..................................... $ 12,009 $ 10,647
============ ============
Other intangible assets:
Trademarks and trade names ...................... $ 13,829 $ 13,829
Technology and patents .......................... 5,438 5,336
Customer lists .................................. 3,007 3,007
Other ........................................... 626 626
------------ ------------
22,900 22,798
Accumulated amortization ........................ (3,079) (2,901)
------------ ------------
Total ..................................... $ 19,821 $ 19,897
============ ============
Other accrued expenses:
Warranty ........................................ $ 650 $ 650
Professional fees ............................... 419 432
Other ........................................... 1,317 873
------------ ------------
Total ..................................... $ 2,386 $ 1,955
============ ============
</TABLE>
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9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
When used in this discussion, the words "believes," "anticipates"
and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The
Company undertakes no obligation to publish revised forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. Readers are also urged to
carefully review and consider the various disclosures made by the Company
which attempt to advise interested parties of the factors which affect the
Company's business, not only in this report, but also in the Company's
periodic reports filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS:
NET SALES. Net sales increased $3.9 million, or 16.4%, from $23.9
million for the three months ended March 31, 1998, to $27.8 million for
the three months ended March 31, 1999. International sales, excluding
Canada, increased 24.4% over the first quarter of 1998 driven primarily by
the NX product line. Sales to utilities, commercial and domestic
distribution channels were flat or slightly down from the first quarter of
1998. Sales to the Company's traditional dealers, both large and small,
increased 24.8% from the first quarter of 1998. The increases in sales are
primarily attributable to volume increases.
GROSS PROFIT. Gross profit increased $2.1 million from the first
quarter of 1998 to $13.0 million for the first quarter of 1999 and
increased as a percentage of net sales from 45.4% to 46.7%. The increase
in gross margin is due primarily to the leveraging of fixed manufacturing
costs over the increased sales volume. Margins were also favorably
impacted by an increased volume of higher margin wireless products being
incorporated with the NX-hybrid product offerings.
MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES. Marketing, general
and administrative expenses increased from $4.8 million for the first
quarter of 1998 to $5.3 million for the first quarter of 1999. The
increase is primarily due to increased employment costs and additions to
the bad debt reserve to reflect the more diverse nature of the Company's
customer base. As a percentage of net sales, marketing, general and
administrative expenses for the first quarter decreased from 20.0% in 1998
to 19.0% in 1999.
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10
<PAGE>
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expenses
totaled approximately $2.0 million for both the first quarter of 1998 and
1999. As a percentage of net sales, research and development expenses for
the first quarter decreased from 8.4% in 1998 to 7.1% in 1999. The
decrease in research and development expense as a percentage of net sales
was primarily due to a combination of increased sales during the first
quarter of 1999 and the fact that the Company had a high level of product
in the prototype and regulatory approval stages in 1998 due to new product
introductions and changes in UL regulations. The Company also continues
development on its Advent(TM) platform, which is designed for the
commercial burglary and fire market. The Company is committed to
maintaining a high level of product development efforts. Anticipated
expenditures for research and development activities for the year ended
December 31, 1999, will be between 7% and 8% of net sales.
AMORTIZATION OF INTANGIBLE ASSETS. Amortization of
acquisition-related intangible assets remained constant at $353,000 for
both the first quarter of 1998 and 1999.
NET INTEREST INCOME. Net interest income increased from $180,000 for
the first quarter of 1998 to $256,000 for the first quarter of 1999. The
increase is the result of additional participation in the dealer financing
program. Interest earned under this program increased from $63,000 in 1998
to $206,000 in 1999.
INCOME TAX EXPENSE. Income tax expense increased from $1.4 million
for the first quarter of 1998 to $2.0 million for the first quarter of
1999. The Company's effective tax rate remained constant for these periods
and varied from the federal statutory rate primarily due to state income
taxes, net of federal benefit, and the non-deductibility for income tax
purposes of the amortization of excess of cost over net assets acquired.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations primarily with
cash from operations. For the first three months of 1999, the Company
generated net cash from operating activities of $731,000. Net cash
provided by operating activities resulted primarily from $3.6 million in
net income, adjusted for $979,000 of non-cash depreciation and
amortization charges, less $4.1 million used from changes in operating
assets and liabilities, principally accounts receivable, accounts payable
and funding of the Company's dealer financing program.
During the first quarter of 1999, the Company invested $2.0 million
in property and equipment, $1.2 million of which related to the expansion
at the Company's Gladewater, Texas facility. For the year ended December
31, 1999, the Company expects that purchases of property and equipment
will be approximately $4.0 million. In addition, the Company invested
$909,000 in notes receivable related to dealer financing of a purchased
account portfolio.
For the first three months of 1999, cash provided by the exercise of
stock options, including the related tax benefit, was $1.6 million.
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11
<PAGE>
A substantial amount of the Company's working capital is invested in
accounts and notes receivable and inventories. The Company periodically
reviews accounts and notes receivable for noncollectibility and
inventories for obsolescence and establishes allowances it believes are
appropriate.
On June 18, 1998, the Board of Directors of the Company authorized
the repurchase, from time to time, of up to 1,000,000 shares of the
Company's common stock in the open market or in private transactions.
Total repurchases under this authorization of 245,200 shares at a total
cost of $6.3 million occurred during the third quarter of 1998. The Board
also canceled the previous stock repurchase program authorized on November
22, 1996, to repurchase up to 900,000 shares, under which the Company had
acquired 711,500 shares in 1996 and 1997.
The Company believes that its current cash position, along with cash
flows from operations and funds available through the Company's credit
facility, will be adequate to fund its working capital and capital
expenditure requirements along with any activity related to its stock
repurchase program at least through the end of 1999.
EFFECT OF INFLATION AND FOREIGN CURRENCY TRANSACTIONS
The Company believes that inflation and foreign currency
fluctuations have not had a significant effect on its operations.
Currently, the Company does not conduct any transactions or maintain any
accounting records in any European currency. As such, the Company
anticipates that there will be no material effect on its operations as a
result of the recent conversion by eleven member states of the European
Union to a common currency on January 1, 1999.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the inability of many computer programs to
correctly identify dates occurring after December 31, 1999, because they
use two digits rather than four digits to identify years. This could cause
a computer system failure or miscalculations, resulting in disruptions of
operations including, among other things, a temporary inability to process
transactions or engage in similar normal business activities.
The Company's assessment of the Year 2000 issue is substantially
complete. The Company believes that with modifications to existing
software and conversions to new software, the Year 2000 issue will not
pose significant operational problems for its computer systems or the
Company and the cost of such modifications to be immaterial.
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12
<PAGE>
In addition to internal Year 2000 remediation activities, the
Company is in contact with key suppliers and customers to ensure no
interruption in the relationship between the Company and these important
third parties from the Year 2000 issue. A comprehensive survey of all
vendors and customers has not been, nor will one be, undertaken. All
efforts thus far have been focused on key vendors and customers. If these
third parties do not convert their systems in a timely manner and in a way
that is compatible with the Company's systems, the Year 2000 issue could
have a material adverse effect on Company operations. The Company believes
that its actions with key suppliers and customers will minimize these
risks.
The vast majority of the Company's products are not date-sensitive.
The Company has collected information on current and discontinued
date-sensitive products. This information is available to customers as of
the date of this filing.
At this time, the Company does not have in place a comprehensive,
global contingency plan relative to potential Year 2000 disruptions.
Rather, each significant system either has been repaired and tested, or is
being reworked. For systems currently being reworked, contingency plans
exist to address unforeseen problems.
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13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On August 17, 1995, the Company commenced an action for patent
infringement against Pittway Corporation and its subsidiary, Ademco
Distribution Inc., in the United States District Court for the
District of Minnesota. On March 9, 1998, the jury found that the
Ademco VISTA Plus/5800 family of wireless security systems infringes
the Company's Learn Mode patent and awarded the Company damages of
approximately $36 million for lost profits and royalties. On April
9, 1998, the Court entered an injunction prohibiting Pittway
Corporation from manufacturing and marketing the Ademco 5800 series
wireless products that infringe the Company's Learn Mode patent and
awarded the Company prejudgment interest of approximately $3
million, bringing the total judgment to approximately $39 million.
Pittway Corporation has appealed the verdict. On March 4, 1999, the
Federal Circuit Court of Appeals heard oral arguments on the case.
The Company anticipates that the appeal will be resolved during the
first half of 1999.
Pittway has announced that in 1997 it had "introduced an improved
method of enrolling transmitters in its VISTA series of control
panels." Pittway calls this new method "QED." While the Company has
maintained that Pittway's QED products also infringe the Company's
Learn Mode patent, the judge would not allow the Company to add
Pittway's QED products to the action commenced in August of 1995 to
avoid any additional complication and delay. Accordingly, the
Company commenced a second patent infringement lawsuit against
Pittway and Ademco Distribution, Inc. on August 3, 1998, for
infringement of the Company's Learn Mode patent. The suit was also
filed in the United States District Court for the District of
Minnesota. Costs associated with these actions and related appeal
are being capitalized as a patent asset associated with the related
technology.
In addition, the Company experiences routine litigation in the
normal course of its business. The Company does not believe that any
of this routine litigation will have a material adverse effect on
the financial condition or results of operations of the Company.
Costs associated with routine litigation are expensed in the period
incurred.
Item 5. Other Information.
None.
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14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as part of this Quarterly
Report on Form 10-Q:
15. Letter regarding unaudited interim financial information.
27.1 Financial data schedule (for electronic filing purposes
only).
(b) No Current Reports on Form 8-K were filed by the Company
during the quarter ended March 31,1999, or during the period
from March 31, 1999, to the date of this Quarterly Report on
Form 10-Q.
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15
<PAGE>
SIGNATURES
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 17, 1999 ITI TECHNOLOGIES, INC.
By /s/ Jack A. Reichert
---------------------------------
Jack A. Reichert
Vice President of Finance
(Chief Accounting Officer)
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16
EXHIBIT 15 - LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 10549
Commissioners:
We are aware that our report dated May 10, 1999, on our reviews of interim
financial information of ITI Technologies, Inc. for the periods ended March 31,
1999 and 1998, and included in the Company's quarterly report on Form 10-Q for
the quarter ended March 31, 1999, is incorporated by reference in the
registration statements of ITI Technologies, Inc. on Form S-8 (Registrations
Nos. 33-89826, 333-08943, 333-08945, 333-23751 and 333-58257).
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
May 17, 1999
- --------------------------------------------------------------------------------
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,903
<SECURITIES> 0
<RECEIVABLES> 20,541
<ALLOWANCES> 1,352
<INVENTORY> 25,613
<CURRENT-ASSETS> 54,420
<PP&E> 12,009
<DEPRECIATION> 8,716
<TOTAL-ASSETS> 119,934
<CURRENT-LIABILITIES> 9,689
<BONDS> 0
0
0
<COMMON> 94
<OTHER-SE> 102,475
<TOTAL-LIABILITY-AND-EQUITY> 119,934
<SALES> 27,829
<TOTAL-REVENUES> 27,829
<CGS> 14,829
<TOTAL-COSTS> 14,829
<OTHER-EXPENSES> 7,616
<LOSS-PROVISION> 207
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 5,645
<INCOME-TAX> 2,034
<INCOME-CONTINUING> 3,611
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,611
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.41
</TABLE>
