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, 1999
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
---------------------------------------------------------------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
as of December 31, 1999 and 1998
and for the year ended December 31, 1999
AND SUPPLEMENTAL SCHEDULES
as of December 31, 1999
and for the year then ended
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INDEX
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Page(s)
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Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for
Benefits as of December 31, 1999 and 1998 3
Statement of Changes in Net Assets
Available for Benefits for the year ended
December 31, 1999 4
Notes to Financial Statements 5-9
Supplemental Schedules:
Schedule of Assets Held for
Investment Purposes as of December 31, 1999 10
Schedule of Nonexempt Transactions
for the year ended December 31, 1999 12
Exhibits 13
Signatures 13
1
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
Interactive Technologies, Inc. 401(k) Investment Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Interactive Technologies, Inc. 401(k) Investment Plan (the "Plan") as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. 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 of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes as of December 31, 1999 and Nonexempt Transactions for
the year ended December 31, 1999 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 supplemental schedules 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.
As discussed in Note 1, effective May 2, 2000, the shareholders of ITI
Technologies, Inc. approved the merger of ITI Technologies, Inc. and SLC
Technologies, Inc.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
May 24, 2000
2
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
as of December 31, 1999 and 1998
1999 1998
ASSETS
Investments $12,633,039 $ 9,846,177
Receivables:
Participant contributions 43,396 36,362
Employer contribution 7,144 6,000
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Total assets 12,683,579 9,858,539
LIABILITIES
Other liabilities 938 938
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Net assets available for plan benefits $12,682,641 $ 9,857,601
=========== ===========
The accompanying notes are an integral part of the financial statements.
3
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
for the year ended December 31, 1999
Additions
Investment income:
Net appreciation in fair value of investments $ 1,701,605
Interest 85,629
Dividends 57,522
Contributions:
Participant 1,137,966
Employer 190,091
------------
Total additions 3,172,813
------------
Deductions:
Benefits paid to participants (158,068)
Rollover to qualified plans (189,705)
------------
Total deductions (347,773)
------------
Net increase 2,825,040
Net asset available for plan benefits:
Beginning of year 9,857,601
------------
End of year $ 12,682,641
============
The accompanying notes are an integral part of the financial statements.
4
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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).
SUBSEQUENT EVENT
On May 2, 2000, ITI's shareholders approved a merger with SLC Technologies, Inc.
(SLC). SLC, headquartered in Portland, Oregon, is a global integrated
communications technology company with products for commercial security, fire
protection, CCTV, electronic access control and fiber optic communications
systems.
It has not yet been determined whether the Plan will be merged into any existing
or newly formed plans or whether participants will be allowed to roll over their
account balances directly into one of these plans. Until such determination, the
Plan shall continue to be maintained as designed.
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 1999
and 1998, Company matching contributions were equal to 50% of each participant's
contributions limited to a maximum contribution of 1.5% of each participant's
compensation. The Company also has the option to make a discretionary profit
sharing contribution to the Plan which would be allocated to participants based
on the participants' relative compensation as defined by the Plan. During 1999
and 1998, the Company did not make a discretionary profit sharing contribution
to the Plan.
PARTICIPANT ACCOUNTS
Participants direct the investment of their contributions into various
investment options offered by the Plan. The Plan currently offers seven mutual
funds, a guaranteed interest fund and a Company Stock Fund as investment options
for participants.
The allocation of the participant's contributions to these investment funds is
selected by the participant and may be changed daily. Each participant's account
is credited with the participant's contributions and his or her share of
employer matching contributions, if any. Allocation of investment income is
based on the value of participant's account at the close of each day.
Non-participant directed investments consist of investments in guaranteed
insurance contracts and money market instruments and represent investments of
the Plan prior to the adoption of participant
5
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT ACCOUNTS (CONTINUED)
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
participant's account based on the participant's relative investment percentage
in such contracts.
ELIGIBILITY
Employees are eligible to participate in the Plan and to receive employer
contributions upon reaching 19 years of age and completing one year of service
during which the employee must earn at least 1,000 hours.
VESTING
Participants are immediately fully vested in the value of their accounts,
including participant and employer contributions and related net investment
earnings.
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 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 terminates the Plan, the net
assets of the Plan will be allocated among the participants or beneficiaries
based on the participants' account balances. See also the subsequent event
described above.
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 accepted accounting principles generally accepted
in the United States.
BASIS OF PRESENTATION
On September 15, 1999, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
(SOP) 99-3, "Accounting for and Reporting of Certain Employee Benefit Plan
Investments and Other Disclosure Matters." SOP 99-3 is effective for financial
statements of plan years ending after December 15, 1999 and was implemented by
the plan as of and for the Plan year ended December 31, 1999. SOP 99-3 revised
the requirements for disclosure of separate fund information for
participant-directed investment options and other investment-related
disclosures, but had no effect on net assets available for benefits.
6
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 mutual funds are recorded at fair value based on the
quoted market price of these funds. The guaranteed interest fund and guaranteed
insurance contracts are stated at estimated 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. 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.
NET APPRECIATION IN FAIR VALUE OF INVESTMENTS
The Plan presents in the Statement of Changes in Net Assets Available for
Benefits the net appreciation in the fair value of its investments which
consists of realized gains or losses and the unrealized appreciation on those
investments.
PLAN EXPENSES
Administrative expenses of the Plan are paid by the Company.
PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with accounting
principles generally accepted in the United States requires the Plan
Administrator to make significant estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date of the
financial statements and the changes in net assets available for 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 Benefits in future periods.
7
<PAGE>
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
4. INVESTMENTS
The following present investments that represent 5% or more of the Plan's net
assets:
December 31,
------------------------------
1999 1998
------------- ------------
Prudential Funds:
Stock Index Fund $1,881,454 $1,695,085
World International Stock Fund 814,919 680,997
Jennison Growth Fund 3,160,351 2,242,003
Balanced Fund 635,553 592,221
Guaranteed Interest Account 668,749 470,676
ITI Stock Fund 3,198,442 2,063,802
* Nonparticipant-directed
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$1,701,605 as follows:
Mutual funds $1,535,845
ITI common stock 165,760
----------
$1,701,605
==========
5. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments are as
follows:
December 31,
------------------------------
1999 1998
------------- ------------
Net assets:
Guaranteed insurance contracts $1,331,238 $1,273,077
Money market funds 15,266 14,766
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$1,346,504 $1,287,843
========== ==========
Year Ended
December 31, 1999
---------------------
Changes in net assets:
Interest income $58,911
Contributions 1,200
Benefits paid to participants (1,450)
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$58,661
=======
8
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
6. 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 Benefits.
7. PARTY-IN-INTEREST TRANSACTIONS
In 1999, at the participants' election, participant and employer matching
contributions were invested in the ITI Stock Fund. In 1999, purchases and sales
of ITI common stock were $2,214,350 and $1,245,469, respectively.
In 1999, at the participants' election, participant and employer matching
contributions were invested in funds under the control of Prudential. In 1999
purchases and sales of these investments were 3,312,644 and 2,974,687,
respectively.
9
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SUPPLEMENTAL SCHEDULES
INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1999
EIN 41-1387419
Plan Number 001
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL CURRENT
LESSOR OR SIMILAR PARTY PAR OR MATURITY DATE COST** VALUE
<S> <C> <C> <C> <C>
The Vanguard Group Money Market Fund 15,266 units $ 15,266 $ 15,266
---------- ----------
* ITI Technologies, Inc. (ITI)/The Prudential Investment in the common stock of ITI, 106,615
Insurance Company of America (Prudential) shares 3,198,442
ITI Stock Fund ----------
Guaranteed insurance contracts:
American Life Guaranteed Insurance Contract, #ON890313, 4.5%,
maturing April 1, 2019 130,920 130,920
Bradford National Life Guaranteed Insurance Contract, #90002645, 5.0%,
maturing January 28, 2000 184,006 184,006
Massachusetts General Life Guaranteed Insurance Contract, #10GA001586, 5.8%,
maturing January 29, 2015 236,749 236,749
Massachusetts General Life Guaranteed Insurance Contract, #10GA009835, 4.0%,
maturing March 23, 2022 143,001 143,001
Massachusetts General Life Guaranteed Insurance Contract, #10GA006548, 4.2%,
maturing January 29, 2014 229,094 229,094
USG Life Guaranteed Insurance Contract, #US097474, 4.7%,
maturing June 5, 2021 407,468 407,468
---------- ----------
Total Guaranteed Insurance Contracts: 1,331,238 1,331,238
---------- ----------
* Prudential Guaranteed Interest Account Portfolio of investments in fixed income
securities with short to intermediate maturities,
6.3% 668,749
----------
Mutual funds:
* Prudential Active Balanced Fund Portfolio of equity securities, fixed-income
securities and money market instruments, 30,879
units 412,237
* Prudential Stock Index Fund Portfolio of equity securities that are as a
group, designed to duplicate the price and yield
performance of the S&P 500, 57,802 units 1,881,454
</TABLE>
10
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (continued)
as of December 31, 1999
EIN 41-1387419
Plan Number 001
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL CURRENT
LESSOR OR SIMILAR PARTY PAR OR MATURITY DATE COST** VALUE
<S> <C> <C> <C> <C>
* Prudential World International Stock Fund Portfolio of common stock and preferred stock of 814,919
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, 33,481
units
* Prudential Jennison Growth Fund Portfolio of common stock, preferred stock and 3,160,351
securities convertible into common stock of
established companies which Prudential has
stated as having above average growth prospects,
127,898 units
* Prudential Moneymart Fund Portfolio of money market instruments with 309,731
maturities of thirteen months or less, 309,731
units
* Prudential Balanced Fund Portfolio of equity securities (including 635,553
securities convertible into equity securities),
debt obligations and money market instruments,
51,213 units
* Prudential Government Income Fund Portfolio of U.S. government securities, 205,099
including U.S. treasury bills, notes, bonds and -----------
other debt securities listed 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, 24,388 units
Total Mutual Funds 8,088,093
-----------
Total Investments $12,633,039
===========
</TABLE>
* Denotes party-in-interest.
** Historical cost information is not required for participant directed
investments.
11
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
LINE 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS
for the year ended December 31, 1999
EIN 41-1387419
Plan Number 001
<TABLE>
<CAPTION>
(a) (b) (c) (e) (h) (i)
CURRENT
VALUE
OF ASSET ON
IDENTITY OF RELATIONSHIP DESCRIPTION OF SELLING COST OF TRANSACTION
PARTY INVOLVED TO PLAN TRANSACTIONS PRICE ASSET DATE
<S> <C> <C> <C> <C> <C>
ITI / The Vanguard Group Employer / Non-participant Advance on Withdrawal to $1,450 $1,450 $1,450
Money Market Fund Direct Investment Employee
</TABLE>
Note (1): Columns (d), (f), (g), and (j) were not included as they are not
applicable.
12
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INTERACTIVE TECHNOLOGIES, INC. 401(K) INVESTMENT PLAN
EXHIBITS
The following documents are filed as exhibits to this Report:
Exhibit No. Document
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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: June 29, 2000 By: /s/ Charles A. Durant
------------------------------------------
Charles A. Durant
Vice President and General Counsel
13
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EXHIBIT INDEX
Exhibit No. Document Method of Filing
----------- -------- ----------------
23 Consent of Independent Accountants Filed herewith electronically
