-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QVcOw22ztGSJV3AwXXUoIOj0k1bKGBS9OYgqMfsuQFiMU43a5b2SnYYcWPsHllmh HFGsyTOfyyNNzhz7mblQ2w== 0000927016-97-001805.txt : 19970630 0000927016-97-001805.hdr.sgml : 19970630 ACCESSION NUMBER: 0000927016-97-001805 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970627 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIFELINE SYSTEMS INC CENTRAL INDEX KEY: 0000720195 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 042537528 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13617 FILM NUMBER: 97630875 BUSINESS ADDRESS: STREET 1: 640 MEMORIAL DRIVE CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6176791000 MAIL ADDRESS: STREET 2: 640 MEMORIAL DRIVE CITY: CAMBRIDGE STATE: MA ZIP: 02139-4851 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A-No. 1 /X/ Annual Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1996. / / 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 0-13617 LIFELINE SYSTEMS, INC. (Exact Name of Registrant as Specified in its Charter) MASSACHUSETTS 04-2537528 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 640 MEMORIAL DRIVE, CAMBRIDGE, MASSACHUSETTS 02139 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (617) 679-1000 The sole purpose of this Form 10K/A is to file Annual Reports on Form 11-K for Lifeline's Employee Savings and Investment Plans. Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. LIFELINE SYSTEMS, INC. (REGISTRANT) /s/ Dennis M. Hurley BY Dennis M. Hurley Vice President, Finance Chief Financial Officer DATE June 25, 1997 PAGE 1 EXHIBIT INDEX Exhibit No. Exhibit (99.1) Annual Report for the Lifeline Employees' Savings and Investment Plan (99.1a) Consent of Independent Public Accountants EX-99.1 2 ANNUAL REPORT PAGE 1 EXHIBIT (99.1) ANNUAL REPORT Pursuant to Section 15(d) of the Securities Act of 1934 For the Year Ended December 31, 1996 ----------------------------------- LIFELINE SYSTEMS, INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN -------------------------------------------------------------------- LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES TO ACCOMPANY 1996 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES for the years ended December 31, 1996 and 1995
Page(s) ------ Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Plan Benefits, with Fund Information, December 31, 1996 and 1995 3-4 Statements of Changes in Net Assets Available for Plan Benefits, with Fund Information, for the years ended December 31, 1996 and 1995 5-6 Notes to Financial Statements 7-13 Supplemental Schedules: Line 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1996 14 Line 27d - Schedule of Single Transactions in Excess of 5% of the Current Value of Plan Assets 15 Line 27d - Schedule of Series of Transactions in Excess of 5% of the Current Value of Plan Assets 16
Certain supplementary schedules have been omitted because they are either not required or not applicable under the Employee Retirement Income Security Act of 1974. 1 [LETTERHEAD OF COOPERS & LYBRAND APPEARS HERE] REPORT OF INDEPENDENT ACCOUNTANTS To the Plan Administrator of the Lifeline Systems, Inc. Employee Savings and Investment Plan: We have audited the accompanying statements of net assets available for plan benefits of the Lifeline Systems, Inc. Employee Savings and Investment Plan (the "Plan") as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits 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 plan benefits of the Plan as of December 31, 1996 and 1995, and the changes in net assets available for plan 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 supplemental schedules listed in the 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 net assets available for plan benefits and the statement of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and 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. The investments held by the Plan are stated at current value as required for presentation on Form 5500. As explained in Note D to the financial statements, the information provided by the custodian does not include the historical cost of investments. Therefore, the schedule of assets held for investment purposes and the schedules of reportable transactions do not disclose the historical cost of investments. Disclosure of this information is required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Boston, Massachusetts /s/ Coopers & Lybrand L.L.P. May 21, 1997 2 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION December 31, 1996
Fidelity Fidelity Fidelity Asset Blue Chip Income Balanced Allocation Growth ASSETS Fund Fund Fund Fund ------ -------- ---------- --------- Investments, at fair value (Notes C and D): Bank pooled fund $ 1,619,950 Shares of registered investment companies $ 641,432 $ 401,737 $ 2,215,056 Lifeline Systems, Inc. stock Participant loans receivable Bank account ------------ ---------- ---------- ------------ Total investments 1,619,950 641,432 401,737 2,215,056 Employer contributions receivable 13,118 8,110 6,114 26,485 Employee contributions receivable 13,173 8,819 8,153 30,538 Loan payment receivable 4,004 1,906 865 4,105 Interfund transfers 75,388 80,322 ------------ ---------- ---------- ------------ Total assets 1,725,633 740,589 416,869 2,276,184 LIABILITIES AND NET ASSETS AVAILABLE FOR PLAN BENEFITS Interfund transfers pending 84,364 106,260 Other payables 377 48 (12) 191 ------------ ---------- ---------- ------------ Total liabilities 377 48 84,352 106,451 ------------ ---------- ---------- ------------ Net assets available for plan benefits $ 1,725,256 $ 740,541 $ 332,517 $ 2,169,733 ============ ========== ========== ============ Lifeline Systems, Inc. Participant Conduit Total Stock Fund Loan Fund Account Plan ASSETS ------------- ----------- ------- ----- Investments, at fair value (Notes C and D): Bank pooled fund $ 1,619,950 Shares of registered investment companies 3,258,225 Lifeline Systems, Inc. stock $ 1,028,405 1,028,405 Participant loans receivable $ 295,447 295,447 Bank account $ 21,439 21,439 ------------ ----------- ----------- ------------ Total investments 1,028,405 295,447 21,439 6,223,466 Employer contributions receivable 10,276 64,103 Employee contributions receivable 10,114 70,797 Loan payment receivable 2,418 13,298 Interfund transfers 34,914 190,624 ------------ ----------- ----------- ------------ Total assets 1,086,127 295,447 21,439 6,562,288 LIABILITIES AND NET ASSETS AVAILABLE FOR PLAN BENEFITS Interfund transfers pending 190,624 Other payables 67 21,439 22,110 ------------ ----------- ----------- ------------ Total liabilities 67 21,439 212,734 ------------ ----------- ----------- ------------ Net assets available for plan benefits $ 1,086,060 $ 295,447 -- $ 6,349,554 ============ =========== =========== ============
The accompanying notes are an integral part of the financial statements. 3 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION December 31, 1995
Fidelity Fidelity Fidelity Asset Blue Chip Income Balanced Allocation Growth ASSETS Fund Fund Fund Fund ------ -------- ---------- --------- Investments, at fair value (Notes C and D): Bank pooled fund $ 1,261,916 Shares of registered investment companies $ 624,284 $ 252,492 $ 1,409,962 Lifeline Systems, Inc. stock Participant loans receivable Bank account Investments, at contract value (Notes C and D): Pooled separate accounts 380,617 ------------ ----------- ----------- ------------ Total investments 1,642,533 624,284 252,492 1,409,962 Employer contributions receivable 13,593 5,954 2,271 13,538 Employee contributions receivable 13,580 6,842 3,446 15,891 Loan payment receivable 4,774 1,278 422 4,251 Interfund transfers 9,026 24,688 64,687 ------------ ----------- ----------- ------------ Total assets 1,674,480 647,384 283,319 1,508,329 LIABILITIES AND NET ASSETS AVAILABLE FOR PLAN BENEFITS Payable to other funds 52,220 Other payables 331 50 175 ------------ ----------- ----------- ------------ Total liabilities 52,551 50 175 ------------ ----------- ----------- ------------ Net assets available for plan benefits $ 1,621,929 $ 647,334 $ 283,319 $ 1,508,154 ============ =========== =========== ============ Lifeline Systems, Inc. Participant Conduit Total ASSETS Stock Fund Loan Fund Account Plan ------------- ----------- ------- ----- Investments, at fair value (Notes C and D): Bank pooled fund $ 1,261,916 Shares of registered investment companies 2,286,738 Lifeline Systems, Inc. stock $ 786,913 786,913 Participant loans receivable $ 190,236 190,236 Bank account $ 24,174 24,174 Investments, at contract value (Notes C and D): Pooled separate accounts 380,617 ----------- ----------- ---------- ------------ Total investments 786,913 190,236 24,174 4,930,594 Employer contributions receivable 5,870 41,226 Employee contributions receivable 7,018 46,777 Loan payment receivable 749 11,474 Interfund transfers 98,401 ----------- ----------- ---------- ------------ Total assets 800,550 190,236 24,174 5,128,472 LIABILITIES AND NET ASSETS AVAILABLE FOR PLAN BENEFITS Payable to other funds 46,188 98,408 Other payables 24,174 24,730 ----------- ----------- ---------- ------------ Total liabilities 46,188 24,174 123,138 ----------- ----------- ---------- ------------ Net assets available for plan benefits $ 754,362 $ 190,236 -- $ 5,005,334 =========== =========== ========== ============
The accompanying notes are an integral part of the financial statements. 4 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1996
Fidelity Fidelity Fidelity Asset Blue Chip Income Balanced Allocation Growth Fund Fund Fund Fund ---- ---- ---- ---- Additions: Employee contributions and rollovers $ 145,952 $ 96,252 $ 72,736 $ 359,562 Employer contributions 53,704 30,461 20,039 94,608 Interest and dividend income 90,095 30,440 31,680 156,823 Net appreciation in fair value of investments 25,680 11,758 132,400 Interfund transfers 148,796 103,273 31,503 300,440 ----------- --------- --------- ------------ Total additions 438,547 286,106 167,716 1,043,833 Deductions: Benefits and withdrawals 121,283 80,372 20,270 204,979 Net depreciation in fair value of investments 2,692 Administrative expenses 1,463 300 14 950 Interfund transfers 209,782 112,227 98,234 176,325 ----------- --------- --------- ------------ Total deductions 335,220 192,899 118,518 382,254 ----------- --------- --------- ------------ Net additions 103,327 93,207 49,198 661,579 Net assets available for plan benefits, beginning of year 1,621,929 647,334 283,319 1,508,154 ----------- --------- --------- ------------ Net assets available for plan benefits, end of year $ 1,725,256 $ 740,541 $ 332,517 $ 2,169,733 ============ ========== ========== ============= Lifeline Systems, Inc. Participant Total Stock Fund Loan Fund Plan ---------- --------- ---- Additions: Employee contributions and rollovers $ 121,414 $ 795,916 Employer contributions 35,612 234,424 Interest and dividend income 238 $ 18,347 327,623 Net appreciation in fair value of investments 316,414 486,252 Interfund transfers 90,261 270,209 944,482 ------------ ---------- ------------ Total additions 563,939 288,556 2,788,697 Deductions: Benefits and withdrawals 51,180 16,141 494,225 Net depreciation in fair value of investments 2,692 Administrative expenses 351 3,078 Interfund transfers 180,710 167,204 944,482 ------------ ---------- ------------ Total deductions 232,241 183,345 1,444,477 ------------ ---------- ------------ Net additions 331,698 105,211 1,344,220 Net assets available for plan benefits, beginning of year 754,362 190,236 5,005,334 ------------ ---------- ------------ Net assets available for plan benefits, end of year $ 1,086,060 $ 295,447 $ 6,349,554 ============ ========== ============
The accompanying notes are an integral part of the financial statements. 5 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION for the year ended December 31, 1995
Fidelity Fidelity Fidelity Asset Blue Chip Income Balanced Allocation Growth Fund Fund Fund Fund ---- ---- ---- ---- Additions: Employee contributions and rollovers $ 203,233 $ 114,090 $ 44,306 $ 238,429 Employer contributions 61,812 26,186 8,800 45,376 Interest and dividend income 106,276 27,847 6,698 5,172 Net appreciation in fair value of investments 58,458 27,625 249,896 Interfund transfers 230,415 25,505 43,944 386,564 ------------ ---------- ---------- ------------ Total additions 601,736 252,086 131,373 925,437 Deductions: Benefits and withdrawals 177,825 71,370 629 98,751 Net depreciation in fair value of investments 2,359 Administrative expenses 1,800 225 888 Interfund transfers 352,314 284,958 43,388 31,418 ------------ ---------- ---------- ------------ Total deductions 534,298 356,553 44,017 131,057 ------------ ---------- ---------- ------------ Net additions (deductions) 67,438 (104,467) 87,356 794,380 Net assets available for plan benefits, beginning of year 1,554,491 751,801 195,963 713,774 ------------ ---------- ---------- ------------ Net assets available for plan benefits, end of year $ 1,621,929 $ 647,334 $ 283,319 $ 1,508,154 ============ ========== ========== ============ Lifeline Systems, Inc. Participant Conduit Total Stock Fund Loan Fund Account Plan ---------- --------- ------- ---- Additions: Employee contributions and rollovers $ 81,714 $ 681,772 Employer contributions 15,598 157,772 Interest and dividend income 156 $ 17,077 163,226 Net appreciation in fair value of investments 343,544 679,523 Interfund transfers 144,529 143,355 974,312 ---------- ---------- ----------- ------------ Total additions 585,541 160,432 2,656,605 Deductions: Benefits and withdrawals 4,518 7,826 360,919 Net depreciation in fair value of investments 2,359 Administrative expenses 250 3,163 Interfund transfers 59,005 126,924 $ 74,337 972,344 ---------- ---------- ----------- ------------ Total deductions 63,773 134,750 74,337 1,338,785 ---------- ---------- ----------- ------------ Net additions (deductions) 521,768 25,682 (74,337) 1,317,820 Net assets available for plan benefits, beginning of year 232,594 164,554 74,337 3,687,514 ---------- ---------- ----------- ------------ Net assets available for plan benefits, end of year $ 754,362 $ 190,236 -- $ 5,005,334 ========== ========== =========== ============
The accompanying notes are an integral part of the financial statements. 6 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS A. Description of the Plan: ----------------------- The following description of the Lifeline Systems, Inc. Employee Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a more complete description of the Plan's provisions. General The Plan is a defined contribution profit-sharing plan covering all employees of Lifeline Systems, Inc. (the "Company") who work at least 1,000 hours during the plan year. Employees become eligible to participate on the entry date following six months of service. The Plan was established in 1984 to provide participants an opportunity to defer taxes on their savings and is intended to be a "qualified cash or deferred arrangement" under certain sections of the Internal Revenue Code. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions Participants may contribute from 1% to 15% of their pay on a pretax basis subject to the annual dollar limits established by the Internal Revenue Service (IRS) and plan limitations. Participants are immediately vested in their contributions and earnings thereon. Rollover contributions from qualified 401(k) plans are also allowed. Withdrawals are permitted as specified by IRS regulations. Employer contributions may vary from year to year in such amounts as have been voted by the Company pursuant to the provisions of the Plan. For the year ended December 31, 1996, the Company matched 100% of the first 2% contributed and 50% of the next 2% contributed up to a maximum of $400 per quarter, or $1,600 per year. This was an increase from 1995 in which the Company contributed up to a maximum of $250 per quarter, or $1,000 per year per participant. Loans With the approval of the plan administrator, participants may borrow from their vested account balance attributable to employee pre-tax, matching, discretionary, and rollover contributions. The maximum amount that may be borrowed is 50% of a participant's vested interest or $50,000, whichever is less. The minimum loan is $1,000. The interest rate is fixed and will be equal to the prime rate plus one and one-half percent. The maximum loan period is five years. The interest rate charged on participant loans ranged from 9.75% to 10.00% in 1996 and 10.00% to 10.50% in 1995. Continued 7 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED Benefits and Withdrawals The Plan allows benefits to be paid in the form of a cash payment or an in-kind distribution for employees who invest in the Company Stock Fund. Several annuity options may be selected by participants (or their beneficiaries) with account balances exceeding $3,500 as of December 1, 1990. The Plan also provides for a preretirement survivor annuity to participants of the Plan with account balances exceeding $3,500 as of December 1, 1990, which allows 100% of a married participant's benefits to be used to provide benefits to his/her spouse if the participant dies before benefit payments commence. This provision may be waived once the participant reaches age 35 and obtains written consent from his/her spouse. Benefits to participants not married who die before retirement will be distributed to designated beneficiaries. No death benefits were paid in 1996 or 1995. Hardship withdrawals are allowed under the provisions of the Plan. Vesting Plan participants are 100% vested in the value of their own contributions, rollovers and employer matching contributions immediately. The Plan allows that, upon disability, normal retirement age or death, an employee is 100% vested in all contributions. In May 1995, when the Company acquired Tele-Response & Support Services, Inc., the Plan was amended. An employee's months of service with Tele- Response were credited towards meeting the Company's service requirements for eligibility in the Plan. Investment Options Participants may invest in the following investment options at December 31, 1996: . The Income Fund - Bankers Trust Company Pyramid Guaranteed Investment Contracts Fund - This fund invests in Guaranteed Investment Contracts and Bank Investment Contracts issued by life insurance companies or banks. The estimated range of returns for the fund is announced at the beginning of each year. Interest is credited monthly. The interest rate ranged from 5.32% to 5.68% and 5.91% to 6.14% for the years ended December 31, 1996 and 1995, respectively. . Fidelity Balanced Fund - Funds are invested in shares of a registered investment company that invests in stocks and bonds. This is a "moderate risk" mutual fund investing no greater than 75% of its assets in common stocks and no less than 25% in bonds. Continued 8 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED . Fidelity Asset Allocation Fund - Funds are invested in shares of a registered investment company that invests in stocks, bonds and short- term fixed income investments. The assets will normally be invested within the following ranges: 10% - 60% in stocks; 20% - 60% in bonds; and 0 - 70% in short-term fixed income instruments. . Fidelity Blue Chip Growth Fund - Funds are invested in shares of a registered investment company that invests in stocks, seeking long-term earnings growth. At least 65% of its assets are invested in the common stocks of large blue chip growth companies. . Lifeline Systems, Inc. Common Stock - The Plan's trustee purchases the stock on the open market. For the years ended December 31, 1996 and 1995, purchases and sales of Lifeline Systems, Inc. Common Stock amounted to $142,098 and $216,665, and $211,119 and $0, respectively. Participants may allocate their individual accounts among the five investment alternatives and may make transfers as specified in the plan document. At December 31, 1996, there were 138 employees participating in the Income Fund, 121 employees participating in the Balanced Fund, 88 employees participating in the Asset Allocation Fund, 195 employees participating in the Blue Chip Growth Fund, and 96 employees participating in the Stock Fund. The Plan also has a Conduit Account which is invested with PNC Bank and is utilized as a "pass-through" holding account for employer and employee contributions. Funds are deposited into this account and allocated to other investment options based on participant's elections. B. Summary of Significant Accounting Policies: ------------------------------------------ Basis of Presentation The financial statements of the Plan have been prepared under the accrual basis of accounting and in conformity with generally accepted accounting principles. Interest and dividend income is recorded as earned on the accrual basis. Benefit payments are recorded when paid. Investment Valuation Investments in mutual and pooled funds and the Company's common stock are valued at fair market value using year-end closing prices. Investments in group annuity contracts are valued at the contract value (see Note C). Participant loans are valued at cost which approximates fair value. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Continued 9 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED Contributions Contributions from the Company are accrued as of December 31 based upon the contribution formula. Employee contributions are recorded in the period in which the employee payroll deductions are made. Expenses All administrative expenses and fees are paid by the Company except for loan fees which are paid by the Plan. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain prior year balances have been reclassified to conform to the current year's presentation. C. Investment Contracts with Insurance Company and Bank: ---------------------------------------------------- In 1991, the Plan entered into an investment contract with Massachusetts Mutual Life Insurance Company ("Mass Mutual"). This investment is maintained in a pooled account. The account is credited with earnings on the underlying investments and charged for plan withdrawals and administrative expenses. The contract is included in the financial statements at contract value, which approximates fair value, as reported to the Plan by Mass Mutual. Contract value represents contributions made under the contract, plus earnings, less plan withdrawals and administrative expenses. Withdrawals are allowed under the terms of the contract. The withdrawal method used for administrative purposes is the Current Contract Pro Rata Withdrawal Method. The contract expired on January 2, 1996 resulting in a transfer of $380,697 of assets to the Bankers Trust Pyramid Guaranteed Investment Contracts Fund. In January 1992 the Plan entered into an investment agreement with Bankers Trust Company to enter into the Bankers Trust Pyramid Guaranteed Investment Contracts Fund, a separate pooled fund established and managed by Bankers Trust Company. The Fund invests primarily in Guaranteed Investment Contracts ("GICs") and Bank Investment Contracts issued by life insurance companies, banks or other financial institutions, and any of the Bankers Trust Commingled short-term investments funds. The Fund's assets are valued at fair market value, provided, however, assets for which there is no readily ascertainable market value are valued at fair value determined in good faith by the Trustee of the Fund. The Fund expects to maintain a constant unit Continued 10 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED value of $1.00. Withdrawals are permitted and are subject to a deferred payout schedule which may have an average maturity of no greater than 2.5 years and a final payment no later than 5 years from the receipt of such notice by the Trustee of the Fund. D. Investments: ----------- Investments held by the Plan at December 31, 1996 and 1995 are summarized as follows:
1996 1995 Fair Fair Description Value Value ----------- ----- ----- Income Fund: Bankers Trust Company Pyramid Guaranteed Investment Contracts Fund $1,619,950* $1,261,916* Massachusetts Mutual Life Insurance Company Group Annuity Contract - 380,617* Fidelity Balanced Fund 641,432* 624,284* Fidelity Asset Allocation Fund 401,737* 252,492* Fidelity Blue Chip Growth Fund 2,215,056* 1,409,962* Lifeline Systems, Inc. Common Stock 1,028,405* 786,913* Participant Loan Fund 295,447 190,236 PNC Bank Conduit Account 21,439 24,174 ---------- ---------- $6,223,466 $4,930,594 ========== ==========
* Investment represents 5% or more of net assets available for plan benefits. Information provided by the custodian does not disclose the historical cost of investments. This information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 is not available and is not disclosed. Continued 11 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED E. Reconciliation of Financial Statements to Form 5500: --------------------------------------------------- The following is a reconciliation of net assets available for plan benefits per the financial statements to the Form 5500:
December 31, ---------------------------- 1996 1995 ---- ---- Net assets available for plan benefits per the financial statements $6,349,554 $5,005,334 Amounts allocated to withdrawing participants (830,362) (874,388) ---------- ---------- Net assets available for plan benefits per the Form 5500 $5,519,192 $4,130,946 ========== ==========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year Ended December 31, 1996 ----------------- Benefits paid to participants per the financial statements $494,225 Add: amounts allocated to withdrawing participants at December 31, 1996 830,362 Less: amounts allocated to withdrawing participants at December 31,1995 (874,388) --------- Benefits paid to participants per the Form 5500 $450,199 ========
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, but not yet paid as of that date. F. Tax Status: ---------- The Internal Revenue Service has determined and informed the Company by a letter dated July 10, 1995 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Continued 12 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED G. Plan Termination: ---------------- The Company intends to continue the Plan indefinitely but reserves the right to terminate the Plan at any time without any liability whatsoever for such discontinuance or termination. After payment of expenses by the trustee, the Plan would be liquidated and each participant would receive his or her interest in the form of a lump-sum payment. H. Subsequent Event: ---------------- Effective January 1, 1997, the Company changed its Plan administrator from New York Life Benefit Services to State Street Solutions. In addition, the Plan has changed its investment advisor to State Street Global Advisors and as such now offers ten investment options including stock of the Company to which employees may allocate their contributions and the Company-matching contributions. Also, the Company match was increased to a maximum of $500 per quarter, or $2,000 per year. 13 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN SUPPLEMENTAL SCHEDULE Line 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1996
Identity of Issue, Borrower, Rate of Current Lessor or Similar Party Description of Investment Interest Cost ** Value - ---------------------------- ------------------------- -------- ------- ----- Bankers Trust Company Pyramid Guaranteed Investment Contracts Fund Bank Pooled Fund 5.32% - 5.68 % $1,619,950 Fidelity Balanced Fund Mutual Fund N/A 641,432 Fidelity Asset Allocation Fund Mutual Fund N/A 401,737 Fidelity Blue Chip Growth Fund Mutual Fund N/A 2,215,056 * Lifeline Systems, Inc. Common Stock Shares of Common Stock N/A 1,028,405 * Participant loans, payment schedule: fully amortized Participant Loans 9.75% - 10.00% 295,447 PNC Bank Conduit Account Cash Account Floating 21,439 ---------- $6,223,466 ==========
* Party-in-interest ** NYL Benefit Services Company does not maintain historical cost information required by the Department of Labor's Rules and Regulations for reporting and disclosure under the Employee Retirement Income Security Act of 1974. Accordingly, for the purpose of this schedule, historical cost information is not presented. 14 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN SUPPLEMENTAL SCHEDULE Line 27d - SCHEDULE OF REPORTABLE TRANSACTIONS SINGLE TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS for the year ended December 31, 1996 Transactions in excess of 5% of the current value of plan assets as of the beginning of the plan year are summarized as follows:
Purchase Selling Cost of Net Gain Identity of Party Involved Description of Asset Price Price Assets * (Loss) * - -------------------------- -------------------- --------- ------- ------- ---------- Massachusetts Mutual Life Insurance Company Group Annuity Contract Group Annuity Contract $380,697 Bankers Trust Company Pyramid Guaranteed Investment Contracts Fund Bank Pooled Fund $380,697 PNC Bank Conduit Account $380,697 $380,697
* NYL Benefit Services Company does not maintain historical cost information required by the Department of Labor's Rules and Regulations for reporting and disclosure under the Employee Retirement Income Security Act of 1974. Accordingly, for the purpose of this schedule, historical cost information and the related net gain (loss) are not presented. 15 LIFELINE SYSTEMS, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN SUPPLEMENTAL SCHEDULE Line 27d - SCHEDULE OF REPORTABLE TRANSACTIONS SERIES OF TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS for the year ended December 31, 1996 Series of transactions in excess of 5% of the current value of plan assets as of the beginning of the plan year are summarized as follows:
Number Number Description of Purchase of Selling Cost of Net Identity of Party Involved of Asset Transactions Price Transactions Price Asset * Gain (Loss)* - -------------------------- ----------- ------------ -------- ------------ ------- -------- ------------ Massachusetts Mutual Life Insurance Company Group Annuity Contract Group Annuity Contract 1 $ 380,697 Fidelity Balanced Fund Mutual Fund 18 $ 153,754 15 $ 161,813 Fidelity Blue Chip Growth Fund Mutual Fund 24 $ 774,652 Bankers Trust Company Pyramid Guaranteed Investment Contracts Fund Bank Pooled Fund 16 $ 629,561 14 $ 357,973 Lifeline Systems, Inc. Stock Fund 17 $ 142,098 13 $ 216,665 PNC Bank Conduit Account Cash Account 97 $2,447,549 170 $2,425,973
* NYL Benefit Services Company does not maintain historical cost information required by the Department of Labor's Rules and Regulations for reporting and disclosure under the Employee Retirement Income Security Act of 1974. Accordingly, for the purpose of this schedule, historical cost information and the related net gain (loss) are not presented. 16 EX-99.1A 3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit 99.1(a) CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Lifeline Systems, Inc. on Form S-8 (File Nos. 33-40684, 33-58632, 33-79294, 33- 59499, 333-03949, 333-03953, 333-03951) of our report dated May 21, 1997, on our audits of the financial statements of the Lifeline Systems, Inc. Employee Savings and Investment Plan as of December 31, 1996 and 1995 and for the years then ended, which report is included in this Annual Report on Form 11-K. /s/ Coopers & Lybrand L.L.P. Boston, Massachusetts COOPERS & LYBRAND L.L.P. June 25, 1997 -----END PRIVACY-ENHANCED MESSAGE-----