Financial Information
4. SELECTED ANNUAL INFORMATION (continued)
Most companies in the residential security industry purchase subscriber accounts and capitalize those acquisition costs amortizing them over the term of the subscriber contract. AlarmForce is one of the few companies whose growth is internally generated and therefore the accounting treatment is not directly comparable. AlarmForce’s annual budget for marketing expenditures has increased steadily, reflecting acceleration of new subscriber account creation and due to the discretionary nature of the marketing budget the Company provides the following reconciliation of Adjusted EBITDA to GAAP net income figures reported for the three years 2006-2008 below.
| 2008 | 2007 | 2006 | |
| $ | $ | $ | |
| EBITDA | 4,747,901 | 4,747,901 | 5,217,159 |
| Add: marketing expenditures | 8,823,086 | 9,363,333 | 6,179,652 |
| EBITDA (adjusted for marketing) | 16,230,733 | 14,111,234 | 11,396,811 |
| Less: | |||
| Amortization of property, plant and equipment | 2,367,729 | 1,922,644 | 1,821,279 |
| Amortization of intangible assets | 866,315 | 822,767 | 754,173 |
| Amortization of deferred charges | 8,457 | 9,591 | 9,591 |
| Foreign exchange loss/(gain) on consolidation | 189,275 | (214,450) | 40,346 |
| Interest expense | 90,131 | 102,258 | 82,072 |
| Income before income taxes | 3,885,740 | 2,105,091 | 2,509,697 |
| Less income taxes | 1,275,155 | 824,919 | 1,017,361 |
| Net income | 2,610,585 | 1,280,172 | 1,492,336 |
5. RESULTS OF OPERATIONS
Sales
For the 2008 fiscal year, the Company’s total consolidated revenue was $29,942,385 compared to $25,136,125 in 2007, which is an increase of $4,806,260 or 19%. This increase is primarily attributable to monthly recurring monitoring services generated from the increasing subscriber base. The total number of subscribers in 2008 increased by 15% to 91,000 up from 79,200 in 2007. Monthly recurring monitoring services make up 89% of total sales.
Cost of sales
Cost of sales was $6,596,303 in 2008 compared to $5,130,323 in 2007, for a total increase of $1,465,980 or 29%. These costs relate to the cost of providing monitoring services, technical support and field service repairs. The increase is primarily due to the growth in the subscriber base resulting in additional staffing requirements and general wage augmentation in each of the central station staff, the technical support staff and related field service fees.
Certain costs pertaining to the Company’s central monitoring station remain relatively fixed as the Company is vertically integrated, and manufactures, installs, monitors and services alarm systems. The alarm system facilitates live two-way voice communication with the Central Station thereby offering immediate response and/or assistance in certain emergencies. The Central Station is located at the Company’s head office in Toronto from which the subscriber accounts are monitored.
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Testimonials
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Still the best value in the industry!
-Dave, ON -
AlarmForce is the best choice. They make sure you get the best system that not only works with your budget..and does NOT try to sell you anything you will not need or is no use for your home/garage...I have been fortunate enough not to have any one try to break into my home since I got the system..couldn't say that before...they make me feel more secure because they are very caring and no matter where I am in my travels I know I can count on them to protect my sons and my home..I always worried about my sons and my house when I was away..Not now.. Knowing that even when my sons sleep they are as I say "being watched over by the Angels at AlarmForce" My experience with AlarmForce has always been pleasant and reassuring..They answer all and every question I have..They are always willing to help with testing my equipment.. Letting me know what needs to be replaced if anything(batteries etc)..When I go away they ALWAYS ask details of my departure and arrival back home..who to contact if there is an emergency..t hey never question me why I want the police called and not one of their own security...Full of information and always so caring! My best experience was when I was so unhappy with my other alarm company the staff at AlarmForce made it so easy for me to say YES to using AlarmForce and leaving the 'other" company… that was over 3 years ago!! Thank You for making it so easy! It is a Perfect Fit in Security for My Family! I am always recommending folks to AlarmForce..I simply tell them there is no price you can put on your families safety...with AlarmForce it is cost efficient..You wouldn't get the care their team provides any where else..most of all The Peace of Mind You have knowing not only your house but your family is being taken care of at all times!! They make life simple for you and your family.. Thank You AlarmForce for treating my Family like it is your own, you are keeping safe at all times!
-Kelli P - Edmonton, AB -
Unfortunately at this point my girlfriend and I can only afford the bare minimum and so we live in one of the worst parts of the city in Calgary. Our neighborhood is full of drug deals, prostitution, stealing and constant fighting. We have a dog but even still we are so grateful to have Alarm Force. AlarmForce makes us feel safe and we know that if we are out of town our house will be protected. The system is easy to use and makes us feel better when we are not at home. Thanks AlarmForce!
-Stephen V - Calgary, AB -
Installer was very. very helpful. Made sure I knew how to operate system. Questions answered.
-William, OH -
Fantastic in all ways. I tell everyone about you.
-Deb, BC -
Very happy from first call to install. The people in the call department very helpful. New installer very good. Nothing but impressed.
-Bill, AB -
I'm very pleased with the voice response system. I have set off my alarm a couple of times and the representatives are always very helpful and courteous.
-Paula, BC -
Not long ago our alarm went off for the first time in 2 years. We were very impressed by the way your team handled the call. Very prompt and professional. What a small amount to pay each month for peace of mind.
-Paul & Anita, BC
