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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

Commission file number: 0-9463

AMERICAN BUILDING CONTROL, INC.

Registrant’s telephone number, including area code: (972) 353-6458

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.01 PAR VALUE

       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 o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in a definitive proxy to be filed or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      The aggregate market value of the voting stock held by non-affiliates of the registrant, as of March 15, 2003 was $13,303,281. As of that date 14,046,588 shares of the Registrant’s Common Stock were outstanding.

AMERICAN BUILDING CONTROL, INC.

Forward Looking Statements

      Certain statements contained or incorporated in this annual report on Form 10-K, which are not statements of historical fact, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward looking statements are made in good faith by American Building Control, Inc. (the “Company”) pursuant to the “safe harbor” provisions of the Reform Act. These statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from any future results, performance or achievements, whether expressed or implied. These risks, uncertainties and factors include the timely development and acceptance of new products and services, the impact of competitive pricing, fluctuations in operating results, the ability to introduce new products and services, technological changes, reliance on intellectual property and other risks. The objectives set forth in this Form 10-K are subject to change due to global market and economic conditions beyond the control of the Company.

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PART I

General

      American Building Control, Inc. (the “Company” or “American Building Control”) is a leading electronic security company. The Company was incorporated in Delaware in 1995 as Ultrak, Inc. On December 20, 2002, following stockholder approval, the Company sold its closed-circuit television (“CCTV”) business to Honeywell International, Inc. (“Honeywell”) for $36 million, subject to post-closing adjustments (the “Honeywell Asset Sale”). A total of $28.4 million in cash was received by the Company at the closing. The Company changed its name to American Building Control, Inc. in connection with the Honeywell Asset Sale. Additional information regarding the Honeywell Asset Sale is set forth at the end of this Item 1 under the heading “Honeywell Asset Sale”.

Businesses

      Following the Honeywell Asset Sale, the Company is focused on designing, marketing, selling and servicing niche security products for use in industrial, governmental and consumer surveillance markets worldwide. The Company sells its products through two operating segments: Professional Security Group (“PSG”) and Diversified Sales Group (“DSG”). The total 2002 revenues of the PSG business were approximately $17 million and represented 39% of the Company’s remaining business after the Honeywell Asset Sale. The DSG’s total 2002 revenues were approximately $27 million and represented 61% of the Company’s remaining business after the Honeywell Asset Sale.

      PSG is comprised primarily of Monitor Dynamics, Inc., doing business as MDI Security Systems (“MDI”), and is the anchor of the access control business. For the past two years, the greatest part of the Company’s intellectual property development has been centered on MDI. MDI’s new digital SAFEnet platform has been launched successfully and management believes it is the first fully-integrated system to incorporate access control, video, alarm monitoring, and audio functions. The new SAFEnet is at the forefront of the digital revolution now unfolding in the security industry. In addition, MDI’s position should be further enhanced by integrating biometrics technology into its product offerings. MDI expects to be an important participant in the Homeland Security programs of the U.S. Government.

      Besides SAFEnet, MDI has PointGuard, a smaller access control system serving mostly commercial customers. MDI plans to continue providing CCTV products to government agencies, currently its largest market, and to its other customers in connection with the sale of access control systems. During the next two years, MDI is contractually required to purchase its CCTV products from Honeywell’s Automation and Control Solutions group. The domestic access control business is supplemented by a fast growing international integration and distribution business based in Switzerland. The product range of the international unit is the same as the one for the United States.

      DSG is comprised of the Company’s consumer/do-it-yourself business as well as its industrial video and alarm management business.

      The consumer/do-it-yourself business, “SecurityandMore^TM”, has stabilized and management expects it to grow significantly in 2003. After losing the Sam’s Club business in 2001, SecurityandMore finally established a stable presence with another major retailer in 2002. The number of stores where SecurityandMore’s products are sold is increasing. Its call center and Internet site, www.SecurityandMore.com, continue to perform well. Management believes that there are many opportunities for profitable growth in the consumer business.

      The industrial video business consists of Industrial Vision Source (“IVS”) and Mobile Video Products (“MVP”) and caters to the video and security needs of manufacturing facilities, scientific laboratories, research organizations and mass transit vehicles. Both IVS and MVP sell third-party products as well as the Company’s own branded products.

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      The alarm management software business, ABM Data Systems (“ABM”), sells software products to central monitoring stations that are owned by either organizations for their own use such as large universities or commercial operators such as surveillance companies. ABM has a substantial customer list that includes large blue-chip organizations purchasing or licensing ABM’s software products.

Markets and Strategy

      American Building Control participates in the industrial, governmental and consumer surveillance markets through a variety of sources including Internet technology. The Company’s technology has strong applications and growth opportunities in the following markets:

      Access Control: MDI is a leading global provider of integrated access control security systems to large scale government and commercial customers.

      Consumer: Security-and-More^TM provides a complete range of “Do it Yourself” security systems to small businesses through consumer retail stores and direct marketing.

      Industrial Video: IVS is a distributor of industrial machine vision components. IVS distributes cameras, lenses, monitors, cables, and accessories from manufacturers such as Sony, Hitachi, Panasonic and Toshiba.

      Mobile Video: MVP is a manufacturer of video and audio recording systems for the school bus and public conveyance market.

      Alarm Management Software: ABM designs, develops, markets, installs and supports computerized software systems for the commercial and proprietary central station security market.

      The public’s heightened security consciousness provides a favorable environment for the electronic security industry. The additional funding for the Homeland Security initiatives significantly increased the scope and numbers of projects that are within the competence of American Building Control. The evolution of security products from an analog environment to a digital one also opens new opportunities for the Company. The Company expects that the future of the electronic security market will involve network management of the security elements over a global Internet protocol (“IP”) network. This development will require extensive security management of the customer security network. In early 2003, the Company launched certain digital products in order to take advantage of the current trend.

Products and Services

      SAFEnet is the “flagship” product for MDI’s access control business. The end users for the SAFEnet products tend to be governments or large corporations that have sophisticated and centralized security needs. MDI also sells PointGuard, a smaller access control system, to mostly commercial customers who need simpler applications. SAFEnet and PointGuard are sold to integrators or dealers who work with the end users for installation. In addition, MDI provides architectural and consultative advice to end users and dealers.

      SecurityandMore, the consumer/do-it-yourself business, sells security products under the brand names Focus, Exxis and Smart Choice through retail outlets, a call center and e-commerce.

      Both IVS and MVP sell third-party video products such as Sony and Mitsubushi to industrial plants, research laboratories, scientific institutions, other distributors and mass transit systems.

      ABM develops and sells alarm management software under the brand name Phoenix to central monitoring stations and proprietary commercial accounts.

Product Design and Development

      MDI develops its SAFEnet and PointGuard product lines at its Rancho Cucamonga, California facility. MDI has eleven engineers dedicated to software and hardware development.

      SecurityandMore’s product development activities are conducted at the Lewisville, Texas facility.

      ABM has eleven technical staff in Austin, Texas that develop software for alarm management applications.

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Supplier Relationships

      The Company believes that its relationships with its suppliers are good and stable. Honeywell, Hitron and Sony are the most significant suppliers for electronic video products. Ameritron Inc. is the largest vendor for access control equipment. Loss of any one of these vendors could result in material short-term supply problems.

Backlog

      Although MDI’s and ABM’s purchase orders from customers are subject to cancellation or delay by customers with limited or no penalty, management believes that backlog is not indicative of future revenues or earnings and is not a significant measure of the Company’s financial position. SecurityandMore, IVS and MVP’s customers are generally on a just-in-time basis.

Competition

      Substantial competition exists in all of the markets where the Company competes. Significant competitive factors include price, quality, product performance, customer service, breadth of product line and ease of integration.

      PSG’s major competitors in access control are Softwarehouse (a division of Tyco), Lenel Systems International, Inc. and the Northern Computers division of Ademco, part of Honeywell. Samsung, Strategic Vista International, Inc. and Philips are the major competition for the DSG segment.

      Certain current and potential competitors have substantially greater resources than the Company. In order to compete successfully, the Company must continue to invest in engineering, marketing, product development and customer service. There is no assurance that these competitors will not develop products that offer superior price or performance features.

Research and Development

      The Company has two facilities with research and development capacity - the access control business in Rancho Cucamonga, California and the alarm management software business in Austin, Texas. During the fiscal years ended December 31, 2002, 2001 and 2000, the Company expensed approximately $1.6 million, $1.1 million and $0.6 million, respectively, on research and development costs.

Employees

      As of December 31, 2002, the Company had approximately 150 full-time employees worldwide, compared with 545 full-time employees worldwide as of December 31, 2001. Approximately 280 of the Company’s former employees joined Honeywell in December 2002 as a result of the Honeywell Asset Sale. Other personnel reductions can be attributed to the closure of the Ohio manufacturing plant, involuntary workforce reductions and attrition.

      The Company’s future success will depend in large part on its ability to attract and retain highly skilled technical, managerial, financial and sales personnel. None of the Company’s employees are represented by a union or covered by a collective bargaining agreement. The Company has not experienced a work stoppage or strike. Relations with the Company’s employees are considered good.

Honeywell Asset Sale

      The CCTV business sold by the Company in the Honeywell Asset Sale consisted of assets in the United States, Germany, Italy, Poland, South Africa, Australia, Singapore and the United Kingdom. The $36 million purchase price is subject to adjustment up or down based on the change in the net asset value of the assets sold between March 31, 2002 and December 20, 2002 and the amount is to be determined in 2003. See Note 2 to the Company’s Consolidated Financial Statements for additional detail on the Honeywell Asset Sale.

ITEM 2. PROPERTIES

      American Building Control’s corporate headquarters (the “Headquarters Facility”) is located in Lewisville, Texas. The Headquarters Facility consists of approximately 170,000 square feet of office and warehouse space located on 14 acres. In December 2001, the Headquarters Facility was sold to Briarwood

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      As part of the Honeywell Asset Sale, the Company subleased a part of the Headquarters Facility (the “sublease”) to Pittway Corporation (“Pittway”), a wholly-owned subsidiary of Honeywell. The sublease allows Pittway to occupy approximately half of the office space and two thirds of the warehouse space in the Headquarters Facility through December 20, 2003. Pittway is obligated to pay American Building Control approximately $23,000 per month in rent during the initial term of 12 months. Pittway also has the option to extend the sublease through June 30, 2004. If the renewal option is exercised, the monthly rent will increase to approximately $55,000.

      In addition to the Headquarters Facility, the Company’s principal offices as of December 31, 2002 consisted of the following:

	•	Rancho Cucamonga, California - approximately 35,000 square-foot leased facility; used for engineering, sales and support for the U.S. access control business.
	•	Austin, Texas - approximately 7,000 square-foot leased facility; used for engineering, sales and support for the alarm management business.
	•	Fairfax, Virginia - approximately 1,450 square-foot leased facility; used for sales and support for the U.S. access control business.
	•	Lausanne, Switzerland - approximately 1,400 square-foot leased facility; used for sales and support for the international access control business.

      These facilities are suitable for their respective uses and adequate to meet the Company’s current needs.

      In June 2002, the Company announced the closure of a manufacturing facility it owns in Carroll, Ohio. The Company is in the process of selling the facility and expects the sale to be completed in 2003.

      Honeywell did not assume the lease for the Company’s Warrington (Manchester) facility in the United Kingdom, because Honeywell already had a CCTV office nearby. The Company is actively searching for a new tenant to assume all or a part of the lease commitment. Although the Company intends to sublet this facility, the current lease commitment extends through 2011 (terminable in 2006). Because the facility was abandoned by the Company, an accrual for all remaining rental payments was made in conjunction with the sale to Honeywell of $600,000 and represents the Company’s continuing obligation.

      During the third quarter of 2002, Mr. Zenger, the Company’s CEO at the time, authorized the execution of a five-year lease (terminable after three years) for executive office space in Zurich, Switzerland. The Company now has no plan to utilize the space and has vacated the site. Though the Company is negotiating for a release of the lease obligations, there is no assurance that the Company will be successful. In December 2002, an accrual for $230,000 for all remaining rental payments was made.

      American Building Control is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted with certainty, management does not believe that any of these existing legal matters will have a material adverse effect on the Company’s financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      At a special meeting of stockholders held on December 20, 2002, the Company’s stockholders approved the Honeywell Asset Sale and the change in the Company’s name from “Ultrak, Inc.” to “American Building Control, Inc.”

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company’s Common Stock, $0.01 par value, has been listed on the NASDAQ under the symbol “ABCX” since January 2, 2003. It previously traded under the symbol “ULTK” since its original listing on NASDAQ on January 18, 1994.

      The following table sets forth the high and low closing prices of the Company’s Common Stock (“Common Stock”) for each quarter during the years ended December 31, 2002 and 2001:

      As of March 31, 2003, there were approximately 1,011 holders of record of the Common Stock.

      The Company has not declared or paid any cash dividends on the Common Stock since inception. The declaration of any future cash dividends on the Common Stock will depend upon the earnings, capital requirements and financial position of the Company, general economic conditions and other pertinent factors.

      Dividends in the amount of $117,210 have been paid annually since the issuance of the Company’s Series A preferred stock. The preferred dividends are expected to continue.

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ITEM 6. SELECTED FINANCIAL DATA

      The following selected consolidated financial data for the five fiscal years ended December 31, 2002, have been derived from the Company’s condensed consolidated financial statements, which have been audited by Grant Thornton LLP, independent certified public accountants. In the opinion of management, all adjustments have been made to present the operations effected by the Honeywell Asset Sale as discontinued operations for all periods presented. This data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and the consolidated financial statements and related notes set forth in Item 8 of this Form 10-K.

Years Ended December 31

1	On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets (see Notes to Consolidated Financial Statements)
2	There were significant charges in 2000 which affect the comparability of data. See Notes to Consolidated Financial Statements. The following table reflects losses from continuing operations allocated to the 2000 Statement of Operations resulting from these charges (in thousands):

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

      The consolidated financial statements include the Company’s accounts and its consolidated subsidiaries. The Company is organized into separate selling divisions, which are supported by common administrative functions such as credit, accounting, human resources, legal and computer support services. All significant inter-company balances and transactions among subsidiaries and divisions have been eliminated in consolidation.

      Product sales are recorded when goods are shipped and invoiced to the customer. Most sales made to domestic customers are on net 30-day or net 60-day credit terms after a credit review is performed to establish creditworthiness and to determine an appropriate credit limit. International sales are made under varying terms depending upon the creditworthiness of the customer and include the use of letters of credit, payment in advance of shipment and open trade terms and revenue is deferred when collection is determined not to be probable.

      Cost of sales for most of the Company’s products includes the cost of the product shipped plus freight, customs and other costs associated with delivery from foreign contract manufacturers or from domestic suppliers.

      Selling, general and administrative costs include salaries, commissions and related benefits, depreciation, telephone, advertising, warranty, printing, product literature, sales promotion, legal, audit and other professional fees, supplies, engineering and travel.

      The consolidated financial statements are denominated in U.S. Dollars and, accordingly, changes in the exchange rate between the subsidiaries’ local currencies and the U.S. Dollar will affect the conversion of such subsidiaries’ financial results into U.S. Dollars for purposes of reporting the consolidated financial results. Translation adjustments are reported as a separate component of stockholders’ equity.

      A small portion of the Company’s purchases and sales are derived from operations outside the U.S. Since the revenues and expenses of the Company’s foreign operations are denominated in local currency, exchange rate fluctuations between local currencies and the U.S. Dollar expose the Company to currency exchange risks. These risks increase when the Company is unable to denominate sales and purchases in U.S. Dollars or shift the effect of these fluctuations to customers or suppliers. Management does not believe that such fluctuations in exchange rates will have a material adverse effect on the Company’s results of operations. The Company does not have any foreign exchange forward or currency contracts.

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Application of Critical Accounting Policies and Estimates

      Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements 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 revenues and expenses during the reporting period. Because of the use of estimates in the preparation of financial statements, actual results could differ from those estimates.

      The following critical accounting policies are affected by significant judgments and estimates used in the preparation of the Company’s consolidated financial statements:

	Revenue is recognized when a firm sales agreement is in place, the price is fixed and determinable, delivery has occurred and collectibility is reasonably assured.
	Deferred income from the non-compete and supply agreements (see Note 2 to Consolidated Financial Statements) is recognized over the two-year term of the agreements.

          Inventory Valuation

The Company’s inventories are comprised principally of goods held for resale, which are valued at the lower of cost (first in-first out) or market. Inventories are written down to their estimated net realizable value for estimated obsolescence, returned inventory deemed not economical to repair or discontinued product lines. This estimate is based upon historical results, current inventories on hand, market conditions and current and expected sales trends. If market conditions become less favorable than those expected by management, then additional inventory write-downs may be required.

          Goodwill & Other Intangible Assets

The Company adopted SFAS No. 142, Goodwill and Intangible Assets, on January 1, 2002. It requires suspension of amortization on intangible assets with indefinite lives and establishes a requirement to test goodwill for impairment annually or at other times if events have occurred or circumstances exist that indicate the carrying value of goodwill may no longer be recoverable. The impairment test for goodwill involves a two-step process: step one consists of a comparison of the fair value of a reporting unit with its carrying amount, including the goodwill allocated to each reporting unit. If the carrying amount exceeds the fair value, step two requires the comparison of the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill. Any excess of the carrying value of the reporting unit goodwill over the implied fair value of the reporting unit goodwill will be recorded as an impairment loss. Fair value of the business units is determined using the income approach. Under the income approach, value is dependent on the present value of future cash flows and discount rates.

          Long-lived Assets

Whenever certain events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable, an evaluation is performed. Such events or circumstances include, but are not limited to, a prolonged industry downturn, a significant decline in the Company’s market value or significant reductions in projected future cash flows. In assessing the recoverability of long-lived assets, the carrying value is compared to the undiscounted future cash flows the assets are expected to generate. If the total of the undiscounted future cash flows is less than the carrying amount of the assets, then the net book values of such assets are written down based on the excess of the carrying amount over the fair value of the assets. Fair value is generally determined by calculating the discounted future cash flows, including long-term forecasts of the amounts and timing of overall market growth and the

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	percentage of that market, grouping of assets, discount rate and terminal growth rates. Changes in these estimates effect the assessment of long-lived assets that could result in future impairment charges.

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets or liabilities are recognized for the expected future tax consequences of temporary differences between the book and tax bases of assets and liabilities. Deferred tax assets are regularly assessed for their likelihood and the amounts believed to be realizable. Projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance are incorporated in the considerations. Significant management judgment is required in determining the realization of net deferred tax assets and the associated valuation allowance. Due to uncertainties related to the Company’s ability to utilize the net deferred tax asset, a valuation allowance has been recorded against the net deferred tax asset balance. Based on results of operations in future periods, the valuation allowance may need to be adjusted.

Results of Operations

      Financial statements for the years ended December 31, 2002, 2001 and 2000 have been restated to report the Company’s CCTV Business as discontinued operations (see note 2 to the Company’s Consolidated Financial Statements for additional detail).

      The results of operations are discussed as a whole, and where appropriate, by segment (see note 13 to the Company’s Consolidated Financial Statements for additional detail).

      The following table contains information regarding the percentage of net sales of certain income and expense items for the years ended December 31, 2002, 2001 and 2000 and the percentage changes in these income and expense items from year to year: