<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                   For the fiscal year ended December 31, 1999

                                       OR

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         Commission file number: 0-9463

                                  ULTRAK, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                         75-2626358
  (State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                          Identification No.)


      1301 WATERS RIDGE DRIVE
           LEWISVILLE, TEXAS                                      75057
(Address of principal executive offices)                        (Zip Code)

       Registrant's telephone number, including area code: (972) 353-6500

        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 [ ]

    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. [ ]

    The aggregate market value of the voting stock held by non-affiliates of the
registrant, as of February 29, 2000 was $128,372,000. As of that date 11,670,188
shares of the Registrant's Common Stock were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

    The information required by Part III is incorporated by reference from the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A not later than 120 days after the
end of the fiscal year covered by this report.

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                                     PART I

ITEM 1.  BUSINESS

GENERAL

    Ultrak, Inc. (the "Company" or "Ultrak") designs, manufactures, markets,
sells and services innovative electronic products and systems for use in
security and surveillance, industrial video and professional audio markets
worldwide. These products and systems include high-speed dome systems, monitors,
switchers, quad processors, time lapse recorders, multiplexers, video
transmission systems, access control systems, a broad line of cameras, lenses,
computerized observation and security systems, audio equipment and accessories.
The Company has generated rapid growth with sales increasing from $1.8 million
in 1987 to $206.4 million in 1999.

    It is the Company's objective to set new standards in quality, performance
and value by providing single-source Enterprise Security Solutions to its
customers in the form of integrated systems whereby all closed circuit
television ("CCTV") components, network video, video badging, alarms, access
control, as well as facility and alarm management functions and reporting are
controlled from one single console. Integrated systems better serve the end user
by improving their ease of operation, security, health/safety and loss
prevention, and at the same time reducing maintenance and training costs.
Ultrak's management believes that integrated systems provide customers maximum
functionality at the lowest possible cost.

    The Company was incorporated in Colorado in 1980 and re-incorporated in
Delaware in December 1995. In 1997, the Company built a 170,000 square foot
warehouse and headquarters facility known as the Ultrak Worldwide Support Center
located in the north Dallas suburb of Lewisville, Texas. Since January 1, 1998,
the Company's new address is 1301 Waters Ridge Drive, Lewisville, Texas 75057
and its telephone number is (972) 353-6500.

    Ultrak operates sales, distribution and manufacturing locations worldwide.
The Company has sales facilities in six U.S. cities, England, France, Germany,
Italy, Poland, Switzerland, Singapore, Australia, and South Africa, as well as
active representation through Company sales representatives and systems
integrators in Bejing, China, Canada, Mexico and Brazil. The Company operates an
e-commerce website for the consumer/do-it-yourself markets under the name
SecurityandMore.com. The Company established a centralized, European
headquarters facility in Antwerp, Belgium in 1999 to coordinate efforts among
its foreign operations. Customers are supported by eight distribution centers
worldwide and manufacturing facilities located in the United States, Australia
and South Africa.

    Ultrak's products and systems include Enterprise Security Solutions and
Standard Products.

ENTERPRISE SECURITY SOLUTIONS

    As a technology leader in the security and surveillance markets, Ultrak
distinguishes itself from its competitors by providing Ultrak's Enterprise
Security Solutions ("ESS") for manufacturing facilities, airports, office
complexes, government agencies, hospitals, casinos, retail stores and other
organizations that increasingly need integrated electronic security and
surveillance systems. that combine CCTV matrix switching, network digital video
transmission, access control, video badging, intrusion detection, and alarm
management and communications. These products and systems play an increasingly
important role in traffic management and public safety applications.

    ESS is available in a building block approach that allows customers to
choose the applications that they need today, yet allows for system expansion at
anytime. Included as part of ESS is the Company's DAVE (Duplex Analog Video
Encoding) Technology system. Ultrak's proprietary DAVE Technology(TM) System
2000 utilizes technology that provides complete and continuous video coverage
using a large array of cameras connected by a single loop of coaxial cable. The
Company sells these products and systems to distributors, dealers and systems
integrators through its own field sales personnel. ESS are customized and scaled
to meet the needs of all of the Company's customers regardless of the business
size. It is the Company's strategy to develop and acquire a comprehensive line
of products and integrated systems, build worldwide sales, service and support
and provide single-source solutions to its customers.


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STANDARD PRODUCTS AND INTEGRATED SYSTEMS

    The following Ultrak standard products and integrated systems are sold into
the professional security and surveillance markets: cameras, lenses, domes and
housings, monitors, time-lapse and digital recorders, ruggedized cameras,
monitors and recorders for mobile video applications, digital processors (quads
and multiplexers), switchers and video management systems, video transmission
equipment, access control and facility management equipment.

     Small businesses and homeowners are installing video observation systems to
replace or supplement conventional alarm systems as CCTV continues to become
more affordable . The consumer do-it-yourself security and surveillance market
consists of those applications in which end users purchase security and
surveillance systems and install the systems themselves in their small
businesses or homes. Video products sold into this market are characterized by
affordability, aesthetically appealing designs, ease of installation and
maintenance and mobility. The typical consumer do-it-yourself market CCTV system
can be wired or wireless and consists of a camera, a monitor, a switcher or quad
processor and, optionally, a video recorder. These products are available in
either black and white or color models. Consumer do-it-yourself CCTV products
are sold through mass merchandisers, warehouse clubs, electronic retail stores,
office and juvenile product superstores, as well as through retail catalogs.
These consumer/do-it-yourself products have also been available since September
1999 through the Company's e-commerce website: SecurityandMore.com.

    It is the Company's strategy to provide easy-to-install and easy-to-operate
video products and systems that are "feature rich" and affordably priced. The
Company continues to expand these product lines and introduce these, or similar
products and systems into the European market. The Company sells these products
through a combination of its own sales force and manufacturer's representatives
under the Ultrak brand name.

    The professional audio market includes public address equipment for office
complexes, hotels, airports and retail stores. In addition, this market includes
sound reinforcement systems for concert halls, churches, arenas and theaters.
Ultrak produces and markets products for professional audio and sound
reinforcement systems such as amplifiers, speakers, mixers, equalizers,
microphones, CD players, turntables and accessories. The Company sells these
systems through a direct sales force in France and through manufacturer's
representatives in other countries.

    Industrial and commercial video products are used in various production and
manufacturing processes. The Company sells to the industrial/commercial markets
through systems integrators, who assemble and sell equipment that incorporates
video cameras. Video cameras are used for machine vision, computer imaging,
robotics, microscopy, high-speed inspection and high temperature furnace
monitoring. The use of industrial video offers more precise assessment than
human visual inspection, and can measure image parameters that are imperceptible
to the human eye. These systems are also used to remotely monitor automated
assembly lines to ensure that each process on the assembly line is accurately
and completely performed. New industrial applications are emerging as new
equipment is developed and as production automation levels increase.

    The Company's strategy with regard to the industrial video market is to
strengthen customer loyalty by backing-up advanced products with technical
expertise, a large variety of products and outstanding customer support. The
Company uses a combination of its own sales force and manufacturer's
representatives to sell these products to dealers and OEM accounts.

STRATEGY

    Ultrak's strategy is to develop and form relationships with it's
customers-the end users of the Company's solutions-and to provide them with the
high quality and performance products and systems they need and desire
worldwide. The Company is committed to satisfying its customers' needs with
complete security solutions and measures its success by the ability to achieve
this goal. The Company reaches its customers by direct contact with key
influencers/consultants and sells to these customers through its channel
partners, which are dealers, system integrators and distributors. Additionally,
Ultrak's strategy is to provide product improvement that is driven by customer
requirements and to build worldwide marketing capabilities to maximize market
coverage and decrease the time it takes to get its products to market.

    With the continued expansion of SecurityandMore.com, the Company's
consumer/do it yourself e-commerce Website launched in September 1999, new
products and information are continuously being added. In light of the high
stock market valuations bestowed upon successful e-commerce companies, the
Company is exploring the sale of a portion of SecurityandMore.com in an initial
public offering with a later spin-off of the remaining shares to Ultrak
shareholders. This scenario would provide SecurityandMore.com with sufficient
capital to grow even faster and would give it the flexibility to grow
unfettered.



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ACQUISITIONS

    Acquisitions have contributed significantly to the Company's continued
growth over the past five years. The Company believes that acquisitions are an
effective way to obtain new and related products and integrated systems, add
experienced personnel, access additional channels of distribution, expand into
new geographic territories, diversify its customer base and improve operating
efficiencies through economies of scale. As the security industry continues to
consolidate, Ultrak continues to search for growth through acquisitions. During
1997, the Company completed five acquisitions, made a minority investment in one
company and established an 80 percent-owned subsidiary in the Pacific Rim.
During 1998, the Company completed two acquisitions, acquired the minority
interest in its Pacific Rim subsidiary and sold one subsidiary to a third party.
During 1999, the Company completed three acquisitions and completed the sale of
its minority investment in one company.

1997 ACQUISITIONS:

Monitor Dynamics

    Effective February 1, 1997, the Company acquired Monitor Dynamics, Inc.
("MDI"), based in Rancho Cucamonga, California, which designs, manufactures,
markets and sells high-end security and access control systems for a total of
$26.1 million in cash. MDI's computer-based integrated security and access
control systems are sold under the SAFEnet brandname and are used in very
high-end government, defense, industrial, financial and commercial applications
throughout the U.S. and Europe. MDI's systems are sold primarily through dealers
and systems integrators. The acquisition of MDI provided the Company with
high-end security and access control systems and products.

Intervision

    Effective March 1, 1997, the Company acquired all of the outstanding share
capital of Intervision Express Limited ("Intervision"), based in Preston,
England (near Manchester), a distributor of CCTV products for 500,000 British
Pounds ($814,000) in promissory notes and 38,822 shares of restricted Common
Stock valued at $719,000. Intervision sells primarily to small and medium-sized
installing dealers and systems integrators. Intervision distributes products
from manufacturers such as Dedicated Micros, Toa, Hitachi and Mitsubishi. The
acquisition of Intervision gave the Company a presence in the United Kingdom
market and continued the expansion of its European operations.

Videosys Group

    Effective April 1, 1997, the Company acquired the Videosys Group
("Videosys"), based near Venice, Italy, for total consideration of $8.37 million
consisting of $5.55 million in cash and 160,000 shares of restricted Common
Stock valued at $2.82 million. The Videosys Group designs, imports and
distributes CCTV and related security products primarily in Italy, under the
Videosys brand name. The Videosys Group sells primarily to installing dealers
and systems integrators. The acquisition of the Videosys Group provided the
Company with a significant presence in Italy's CCTV market.

Veravision

    On April 1, 1997, the Company acquired all of the outstanding shares of
capital stock of Veravision, Inc. ("Veravision"), based in San Clemente,
California, which manufactures intra-oral camera products for use primarily in
the dental market, for $150,000 in promissory notes, assumed debt of
approximately $2.0 million and 10% of the outstanding shares of capital stock of
Dental Vision Direct, Inc., a subsidiary of the Company, which shares are
convertible into shares of restricted Common Stock using a formula set forth in
the definitive agreement. Veravision, along with Dental Vision Direct, Inc., a
90% owned subsidiary, were both sold to a third party in August 1998. See
1998-99 Divestitures below.

Securion 24

    In August 1997, the Company acquired 10% of the outstanding capital stock of
Securion 24 Co., Ltd. ("Securion"), a privately held manufacturer and
distributor of security products based near Tokyo, Japan, for total
consideration of approximately $2.0 million in cash. The minority interest in
Securion gave the Company access to the Japanese market by virtue of the
Company's association with an established Japanese security company. In March
1999, the Company sold its interest in Securion. See 1998-99 Divestitures below.




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Philtech

    Effective October 1, 1997, the Company acquired 100% of the outstanding
capital stock of Philtech Electronic Services Limited ("Philtech"), a
privately-held, South African based company, for total consideration of $600,000
in cash, $300,000 of which is payable over the three years following closing.
Philtech is a designer, manufacturer and supplier of CCTV switching and control
equipment based in Bezvalley near Johannesburg, South Africa. The acquisition of
Philtech provided the Company a presence in the rapidly growing South African
market.

Ultrak Asia Ltd.

    In November 1997, the Company established an 80% owned company in Singapore,
Ultrak Asia Ltd. ("Ultrak Asia"), to further penetrate the Asian market with
Ultrak products and systems.

1998 ACQUISITIONS:

Norbain France

    During February 1998, the Company acquired the net assets of Norbain France
SARL, a French corporation wholly owned by Norbain PLC, a UK corporation, for
assumption of the net liabilities of approximately $1.2 million.

Ultrak Asia Ltd

    In July 1998, the Company acquired the remaining 20% interest owned by a
third party of Ultrak Asia for $30,000 in cash.

1999 ACQUISITIONS:

ABM Data Systems, Inc.

    Effective March 1, 1999, the Company acquired ABM Data Systems, Inc.
("ABM"), based in Austin, Texas, which develops, sells and services computer
software for the alarm monitoring security industry, government agencies and
proprietary customers and offers support for computer software targeted for the
automated security monitoring markets, for 250,000 shares of Common Stock,
valued at $1.5 million. ABM is a market leader in the alarm monitoring industry,
selling its software products under the Phoenix brandname. ABM's products are
sold primarily through dealers, systems integrators and to Fortune 500 companies
for their proprietary command centers, major national banks, state governments,
universities, hospitals and others. The acquisition of ABM provides the Company
access to the high-end alarm monitoring market.

Multi Concepts Systemes, SA

    Effective April 1, 1999, the Company acquired 100% of the stock of Multi
Concepts Systemes, SA ("MCS"), a Switzerland based systems integrator of
electronic security systems. Total consideration included an initial payment of
$405,000 in cash and future contingent payments based upon a percentage of MCS
net income and book value, as defined. MCS has been the largest European
reseller and integrator of Ultrak's SAFEnet access control system over the past
ten years.

MACH Security Sp.z.o.o

    Effective July 1, 1999, the Company acquired 100% of the stock of MACH
Security Sp.z.o.o ("Mach"), based in Szczecin, Poland. Mach is one of the
largest distributors of CCTV products in Poland. Total consideration included an
initial payment of $275,000 in cash and future contingent payments based upon a
percentage of MACH net income, as defined.

1998-99 DIVESTITURES:

Dental Vision Direct, Inc.
and Veravision

    In August 1998, the Company completed the sale of the stock of Dental Vision
Direct, Inc. ("DVD"); a 90% owned subsidiary, to American Dental Technologies,
Inc. ("American Dental"). DVD owned all of the outstanding stock of Veravision.
The



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consideration included approximately $3.0 million in cash, a $3.9 million
short-term note (which was subsequently paid in full) and warrants to acquire
540,000 shares of American Dental common stock (which currently trades on the
NASDAQ under the symbol "ADLI"). In addition, the Company retained rights to
receive the net proceeds from the outstanding trade accounts receivable and
accounts payable at the date of closing. A gain on the sale of approximately
$78,000 was recorded and all prior periods have been restated to reflect the
operations of DVD as discontinued.

Securion 24

    On March 3, 1999, the Company completed the sale of its 10% ownership of
capital stock of Securion to Mr. Mutsuo Tananka for approximately $1.8 million
in cash.

MARKETING AND SALES

    Ultrak operates through highly focused selling groups organized according to
Ultrak's target markets. Ultrak's customer-focused structure allows for
individual attention to each target market, quick response to customer needs and
early identification of market requirements and new product ideas. Generally,
the Company reaches each target market through regional sales professionals
supported by telemarketing, product catalogs, direct mail, magazine advertising
and industry trade shows.

    Beginning in 1998 and continuing through 1999, the Company began
implementing an internal reorganization of its sales and marketing operations
known as "Team Ultrak" which promotes a unified network of sales professionals
that are highly customer focused. Under this new philosophy, product supply
units, customer service units and technology units have been unified to provide
the Company's sales force with the means to better serve customer needs. New
sales teams have been established in strategic geographic locations in the U.S.
and along product lines. This team approach has been identified as a means for
integrating the sales aspects of various operations acquired by the Company
since 1995 and to encourage cross selling of Ultrak products. With the expansion
of its sales force and its focus on "Team Ultrak" sales approach-providing
solution sales versus product sales- the Company anticipates substantial growth
in sales during 2000 and beyond.

    Ultrak strives to meet or exceed its customers' need through the following
operating principles:

         o Knowing our customers, the market and our business partners

         o Providing business opportunities for our business partners

         o Engineering world class security solutions

         o Guaranteeing best in class customer support

         o Offering ongoing support programs to assure highest long term value

    The Company uses various brand names for products sold through each of its
selling groups to maximize market penetration of each selling group, to minimize
market channel conflicts and to differentiate products by features, applications
and price. The Company's proprietary brand names, many of which are registered
trademarks, include Ultrak, Diamond Electronics, MAXPRO, Videosys, SAFEnet,
Exxis, Smart Choice, BST, Industrial Vision Source, SecurityandMore.com and ESS.
Approximately 90% of the products sold by the Company in 1999 carried Ultrak
brand names, up from 87% in 1998 and 85% in 1997. The Company also sells brands
such as Panasonic(R), Mitsubishi(R), and Sony(R).

    Ultrak began actively pursuing the international market in 1995. In 1995 and
early 1996, Ultrak sold its products and systems in a number of countries
including Mexico, Brazil, Argentina, England, France, Germany, Denmark, India,
China, South Korea, Japan, The Philippines and Australia. Since the second
quarter of 1996, the Company acquired MAXPRO (Australia), Bisset (France), VideV
(Germany), Intervision (the UK), the Videosys Group (Italy), Philtech (South
Africa), MCS (Switzerland), Mach (Poland) and established a distribution company
in Singapore, which has substantially expanded the Company's presence
internationally. See Note K to the Company's Consolidated Financial Statements
with respect to business segments.



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PRODUCT DESIGN AND DEVELOPMENT

    In addition to traditional research and development activities, Ultrak's
engineering and product development staff worldwide works directly with its
customers to design new products and product enhancements, and coordinates with
its contract suppliers to manufacture certain Ultrak branded products. Ultrak
has developed a highly competent engineering staff to work with its selling and
marketing groups to develop new products and product line extensions that
promptly respond to customer needs on a worldwide basis. Consequently, Ultrak
believes that it can develop technologically superior products with
customer-desired performance capabilities that address new applications at lower
prices than competitive products. Increasingly, the Company's products are
computer-based and software-driven to support the integration of technologies
and functions into its customers' businesses.

    As of December 31, 1999, the Company had a full-time engineering staff of 85
employees compared to only four as of December 31, 1994. Because of the complex
and highly specialized requirements of Ultrak products and systems, these
employees are experienced in a wide range of engineering disciplines including
charged-coupled device ("CCD") technology, analog and digital signal processing,
CCTV management and switching technology, computer based access control
technology, facility management technology and high speed dome technology. In
addition, the Company's international contract manufacturers employ a number of
engineers who are primarily dedicated to research and development efforts of
products sold by Ultrak.

    In 1999, the Company introduced its computer-based SAFEnet NT system, the
Windows-NT(R) version of Ultrak's flagship line of integrated access control and
security systems. At the core of the Company's ESS offerings, SAFEnet NT
provides a stable, flexible platform for the integration of new functions and
technologies. 1999 also marked the start of a major development effort to
redesign and streamline the SAFEnet field hardware which the Company expects to
be completed by mid-2000 incorporating a new distributed architecture that was
developed specifically for the SAFEnet system.

PRODUCTS AND SYSTEMS

    The Company's motto, "Quality Products That Make a Difference," encapsulates
the Company's strategy of developing technologically advanced and cost-effective
products and systems that are unique and solve customers' specific needs or
problems. Through in-house product development, and with the product lines the
Company has obtained through acquisitions, Ultrak offers a broad line of Ultrak
branded products and systems. The Company's brand names include Ultrak, Diamond
Electronics, MAXPRO, VideV Systems, Videosys, SAFEnet, Exxis, Smart Choice, BST,
Industrial Vision Source and ESS. Approximately 90% of the products sold by the
Company in 1999 carried the Company's brand names. The Company continues to
offer brands such as Panasonic, Mitsubishi, Dedicated Micros and Sony.

    The Company's products and systems include a broad line of cameras, lenses,
high-speed dome and housings, monitors, time-lapse and digital recorders,
digital processors, switchers and video management systems, ESS, the DAVE
Technology(TM) system, video transmission equipment access control and facility
management equipment, control matrix switching systems and accessories,
professional audio products, video printers, video otoscopes and furnace viewing
products.

OPERATIONS

    A critical element of the Company's operations are its management
information systems. In early 1997, the Company selected SAP, a leading
enterprise software system, for its domestic information needs. As of February
1998, the Company and it's related domestic facilities, had successfully
completed the SAP conversion process at its Lewisville, Texas Worldwide Support
Center. As previously anticipated, SAP will unite Ultrak and all of its domestic
subsidiaries with a common inventory, sales, accounting/financial and database
management system by mid-2000. Via laptop computers, the Ultrak domestic sales
team can easily communicate with the host system from any remote location.
Internationally, the Company has selected "Exact", a multilingual, multicurrency
and Euro compliant software for its European information needs. By mid-2000, all
of the Companies European operations will be live on the "Exact" software and
will be linked together with a common inventory, sales, accounting and financial
system.

    Ultrak believes that one of the keys to its success is its commitment to be
responsive and provide excellent service to its customers. Domestic orders are
entered into the Company's Lewisville, Texas-based SAP computer system either
directly by the customer through electronic data interchange, by traveling sales
representatives using laptop computers or by in-house sales personnel. After the
computer system performs an automated check of the customer's account and credit
limit, the order is released to be shipped from available inventory at one of
the four domestic stocking warehouse locations. Because the Company maintains
domestically a relatively large inventory of products, it ships most items
within 24 hours of receipt of the order. The Company's domestic stocking



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warehouse locations are Lewisville (Dallas), Texas; Austin, Texas; Rancho
Cucamonga (Ontario), California; and Carroll (Columbus), Ohio. Approximately 91%
of all domestic shipments are made from the Lewisville, Texas warehouse.

    The Company also considers continuous training of its customers to be
critical in an ever-increasing competitive market. In 1999, the Company's
training capabilities were doubled and there are now three training rooms at the
Ultrak Worldwide Support Center in Lewisville, Texas. Multiple training sessions
on Ultrak's products and systems are continue all year with salespeople,
customers and field installation technicians attending to learn more about our
technology and products.

    With respect to Ultrak branded products produced by contract manufacturers,
most of these products are made exclusively for the Company or there are limited
or no competitive sales of such products in the areas served by the Company. The
Company believes that its relationships with its contract suppliers are good. In
most of these relationships, the Company believes that the relationship is as
important to the supplier as it is to the Company. Thus, the Company believes
that there is a strong, mutually advantageous basis for the trading relationship
to continue and grow. See Note G to the Company's Consolidated Financial
Statements with regard to Major Customers and Suppliers.

    Delivery times for products manufactured abroad vary from one week to two
months, depending on the mode of transportation. Because of foreign production
lead times, the Company normally makes purchase commitments to these foreign
suppliers three to six months in advance of shipment. Therefore, management
believes it is necessary for the Company to commit to and carry larger levels of
inventory than would be necessary if it manufactured all of its products
domestically. Given order lead times, accurate inventory forecasting is
critical.

    Substantially all of the Company's purchases from its non-affiliated
contract manufacturers are made in United States Dollars or the Euro with the
remaining purchases made in Japanese Yen, Australian Dollars, the South African
Rand and English Pounds. To date, the Company's purchases have not been
materially adversely affected by fluctuations in the valuation of any
international currency. It is expected that the Company will continue to
purchase the vast majority of its products in United States Dollars (for it's
U.S. operations) or the Euro (for it's European operations).

    To ensure complete customer service and satisfaction, Ultrak offers
third-party leasing services and after-sale service for all equipment sold by
the Company.

    Ultrak offers a limited warranty on all products shipped. The Company
generally warrants that its products will conform to Ultrak's published
specifications and be free from defects in materials and workmanship at the time
of sale.

    When goods are delivered to Ultrak, a random sampling quality assurance
procedure is performed. Selected units are verified for functionality, proper
packaging, labeling and documentation. The Company's primary contract
manufacturer is ISO9001 certified. The quality assurance procedures in the
Company's Ohio plant and California facility comply with ISO9001 specifications.
The Company is currently in the process of obtaining ISO9001 certification on
its Lewisville, Texas facility, which is expected to be completed by Q2 2001.

BACKLOG

    As of December 31, 1999 and 1998, the Company had approximately $14.9
million and $13.1 million respectively, in order backlog which it considered to
be firm. Because purchase orders are subject to cancellation or delay by
customers with limited or no penalty, the Company's backlog is not necessarily
indicative of future revenues or earnings. Since the Company ships most products
within 24 hours of receipt of the order, the Company believes that backlog is
not a significant measurement of the Company's financial position.

INTELLECTUAL PROPERTY

    As part of its ongoing engineering and development activities, Ultrak seeks
patent protection on inventions covering new products and improvements when
appropriate. Ultrak currently holds a number of United States and foreign
patents and has a number of pending patent applications. Although the Company's
patents have value, the Company believes that the success of its business
depends more on innovation, sales efforts, superior customer service, technical
expertise and knowledge of its personnel and other factors. The Company also
relies upon trade secret protection for its confidential and proprietary
information. Many of the Company's brands are registered trademarks owned by the
Company.



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COMPETITION

    The Company faces substantial competition in each of its markets.
Significant competitive factors in the Company's markets include price, quality
and product performance, breadth of product line and customer service and
support. Some of the Company's existing and potential competitors have
substantially greater financial, manufacturing, marketing and other resources
than the Company. To compete successfully, the Company must continue to make
substantial investments in its engineering and development, marketing, sales,
customer service and support activities. There can be no assurance that
competitors will not develop products that offer price or performance features
superior the Company's products.

    The Company considers its major competitors to be the CCTV and access
control operations of Sensormatic Electronics Corporation, Burle (part of
Philips Communication & Security Systems, Inc.), Panasonic, Pelco, Vicon
Industries, Inc. and Casi- Rusco.

EMPLOYEES

    As of December 31, 1999, the Company had 695 full-time employees employed
worldwide at 15 primary locations and 12 field sales offices, of which 283 were
sales and sales support personnel, 140 were warehouse/manufacturing personnel,
78 were technical/service personnel, 85 were engineering and product development
personnel and 109 were administrative and managerial personnel. The Company's
future success will depend in large part upon its ability to attract and retain
highly skilled technical, managerial, financial and marketing personnel, in a
market where such people are in demand. No employee is represented by a union or
covered by a collective bargaining agreement and the Company has not experienced
a work stoppage or strike. The Company considers its employee relations to be
good.

    The Company's newly adopted mission statement provides for Ultrak to be the
preferred worldwide provider of end user focused security solutions while
upholding these fundamental principles:

     o  Meet or exceed our customers' expectations

     o  Provide a productive, fulfilling and mutually respectful environment for
        our employees

     o  Maximize shareholder value

     o  Recognize that profitability is essential to our success

     o  Act ethically and with integrity

ITEM 2.  PROPERTIES

    The Company moved to its new Worldwide Support Center in January 1998. The
facility is comprised of approximately 170,000 square feet of leased office and
warehouse space located on 14 acres of land in Lewisville, Texas, pursuant to a
lease with an initial term expiring in April 2003. There is adequate available
space on the premises for expansion of the Worldwide Support Center if such
expansion is deemed necessary. At the conclusion of the initial lease term, the
Company has an option to acquire the facility. The Company also leases
additional office/distribution warehouse space in Austin, Texas; Las Vegas,
Nevada; Paris, France; Preston (Manchester), England; Antwerp, Belgium; San
Vendemiano (Venice), Italy; Dusseldorf, Germany; Crissier (Lausanne),
Switzerland; Szczecin, Poland; Sydney, Australia; Johannesburg, South Africa and
Singapore.

    The Company owns its 72,000 square foot manufacturing facility in Carroll
(Columbus), Ohio and leases its manufacturing facilities in Rancho Cucamonga,
California and Perth, Western Australia. The Company believes that its
manufacturing facilities are adequate to meet the Company's present and
anticipated manufacturing needs for products that it currently manufactures.

ITEM 3.  LEGAL PROCEEDINGS

    The Company is not aware of any pending or threatened legal proceedings to
which the Company is or may be a party, which may have a materially adverse
impact on the Company. The Company knows of no legal proceedings pending or
threatened or judgments entered against any director or officer of the Company.

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

    No matters were submitted to a vote of the security holders of the Company
during the fourth quarter of 1999.



                                       9
<PAGE>   10

                           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
ULTRAK, INC. PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE REFORM ACT. FORWARD
LOOKING STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
ULTRAK, INC. TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING
THE TIMELY DEVELOPMENT AND ACCEPTANCE OF NEW PRODUCTS, THE IMPACT OF COMPETITIVE
PRODUCTS AND PRICING, FLUCTUATIONS IN OPERATING RESULTS, ABILITY TO INTRODUCE
NEW PRODUCTS, TECHNOLOGICAL CHANGES, RELIANCE ON INTELLECTUAL PROPERTY AND OTHER
RISKS. MOREOVER, THE OBJECTIVES AND INTENTIONS SET FORTH IN THIS FORM 10-K ARE
SUBJECT TO CHANGE DUE TO DOMESTIC, GLOBAL MARKET AND ECONOMIC CONDITIONS BEYOND
THE CONTROL OF ULTRAK, INC.



                                       10
<PAGE>   11

                                     PART II

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

MARKET PRICE AND DIVIDENDS

    The Company's $.01 par value common stock ("Common Stock") commenced trading
on the NASDAQ Stock Market's NASDAQ National Market ("NASDAQ National Market")
on January 18, 1994, under the symbol "ULTK." Before that time, the Common Stock
was traded in the over-the-counter market. Prices shown do not include
adjustments for retail markups, markdowns or commissions. The following table
sets forth the high and low closing prices on the NASDAQ National Market for the
periods indicated:


<TABLE>
<CAPTION>
                                            HIGH               LOW
                                            ----               ---
         1999
         <S>                             <C>                <C>
            First quarter.........         $ 8.13             $5.88
            Second quarter........           6.75              5.50
            Third quarter.........           7.75              5.69
            Fourth quarter........           7.75              4.75

         1998
            First quarter.........         $10.00             $8.13
            Second quarter........          10.00              8.38
            Third quarter.........           9.13              6.69
            Fourth quarter........           8.75              6.88
</TABLE>

    As of February 29, 2000, there were approximately 1,200 holders of record of
the Common Stock.

    The Company has never paid cash dividends on the Common Stock. The Company
presently intends to retain earnings to finance the development and expansion of
its business. The declaration in the future of any cash dividends on the Common
Stock will be at the discretion of the Board of Directors and will depend upon
the earnings, capital requirements and financial position of the Company,
general economic conditions and other pertinent factors. The Company intends to
continue to pay dividends on outstanding shares of Series A Preferred Stock, all
of which are owned by George K. Broady, the Chairman and Chief Executive Officer
of the Company. Dividends in the amount of $117,210 have been paid annually to
Mr. Broady since the issuance of the Series A Preferred Stock.



                                       11
<PAGE>   12

ITEM 6.  SELECTED FINANCIAL DATA

    The following selected consolidated financial data for the Company as of and
for the five fiscal years ended December 31, 1999, have been derived from the
consolidated financial statements of the Company and its subsidiaries, which
have been audited by Grant Thornton LLP, independent certified public
accountants. The selected consolidated financial data includes the effects of
businesses acquired in 1995, 1996, 1997, 1998 and 1999. This data should be read
in conjunction with the information set forth in "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the Consolidated
Financial Statements and related notes which are included elsewhere herein. The
Company has pursued an aggressive growth strategy since 1996. See pages 4-6 for
a discussion of these acquisitions. Because of these transactions, the income
statement and balance sheet data presented below may not be comparable from year
to year.


<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                   -------------------------------------------------------------
                                                                          (In thousands)

    INCOME STATEMENT DATA:                           1995         1996        1997         1998         1999
                                                   ---------   ---------    ---------    ---------    ---------
<S>                                                <C>         <C>          <C>          <C>          <C>
Net sales .....................................    $  92,161   $ 126,539    $ 174,902    $ 195,223    $ 206,436
Cost of sales .................................       69,710      88,714      120,883      131,677      138,561
                                                   ---------   ---------    ---------    ---------    ---------
Gross profit ..................................       22,451      37,825       54,019       63,546       67,875

Marketing and sales expenses ..................       10,811      15,548       26,706       30,909       35,504
General and administrative expenses ...........        4,652       8,871       19,130       19,885       21,679
Depreciation and amortization .................          891       1,436        3,971        4,667        5,911
Special charges ...............................           --          --        3,122           --        3,875
                                                   ---------   ---------    ---------    ---------    ---------
     Total operating expenses .................       16,354      25,855       52,929       55,461       66,969
                                                   ---------   ---------    ---------    ---------    ---------

Operating profit ..............................        6,097      11,970        1,090        8,085          906
Other expense (income) ........................        1,899         214       (2,953)        (461)      (1,052)
                                                   ---------   ---------    ---------    ---------    ---------

Income from continuing operations before
     income taxes .............................        4,198      11,756        4,043        8,546        1,958
Incomes taxes .................................        1,526       4,004        1,726        3,589        1,286
                                                   ---------   ---------    ---------    ---------    ---------

Income from continuing operations .............        2,672       7,752        2,317        4,957          672
Income (loss) from discontinued operations ....           23        (153)          84       (1,402)        (107)
                                                   ---------   ---------    ---------    ---------    ---------
     Net income ...............................        2,695       7,599        2,401        3,555          565

Dividend requirements on preferred stock ......          117         117          117          117          117
                                                   ---------   ---------    ---------    ---------    ---------
Net income allocable to common stockholders ...    $   2,578   $   7,482    $   2,284    $   3,438    $     448
                                                   =========   =========    =========    =========    =========


Weighted average shares outstanding - basic ...        6,870       9,486       13,970       13,255       11,645
Income per common share from continuing
     Operations - basic .......................    $    0.38   $    0.80    $    0.16    $    0.37    $     .05
                                                   =========   =========    =========    =========    =========

Net income per common share - basic ...........    $    0.38   $    0.79    $    0.16    $    0.26    $     .04
                                                   =========   =========    =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>

    BALANCE SHEET DATA:                                   1995          1996          1997       1998       1999
                                                       ---------     ---------     ---------   ---------  ---------
<S>                                                    <C>           <C>           <C>         <C>        <C>
Working capital .................................      $  9,880       $119,163      $ 94,064   $ 90,192   $ 79,714
Total assets ....................................        52,955        172,510       185,256    196,626    200,350
Short-term debt .................................        24,482             --            --         --         --
Long-term debt ..................................         1,535             --            --     37,500     37,000
Stockholder's equity and equity put options .....        16,497        155,961       163,198    140,030    132,663
</TABLE>


                                       12
<PAGE>   13

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

OVERVIEW

    The consolidated financial statements include the accounts of Ultrak and its
15 consolidated subsidiaries. The Company is further organized in the U.S. into
separate selling divisions; all supported by common administrative functions
such as credit, accounting, payroll, purchasing, legal, warehousing, training
and computer support services. All significant intercompany balances and
transactions among subsidiaries and divisions have been eliminated in
consolidation.

    The Company has experienced substantial growth in recent years. Net sales
have grown from $1.8 million in 1987 to $206.4 million in 1999. Increases in net
sales have come from increased volume of sales of existing products and systems
to all of the markets served by the Company, introduction and sales of new
products and systems, creation of new selling groups to focus on new markets and
acquisitions of businesses in the security and surveillance, access control
industries and alarm monitoring industries.

    In 1996, the Company completed three international acquisitions and made a
minority investment in a fourth company. Effective July 1, 1996, Ultrak acquired
approximately 75% of the outstanding stock of MAXPRO, a manufacturer of large
scale CCTV switching systems based in Perth, Western Australia. On February 17,
1997, the Company acquired the remainder of the outstanding stock of MAXPRO. On
September 6, 1996, Ultrak acquired and subsequently sold in September 1997 its
interest in approximately 24% of the outstanding stock of Lenel, a domestic
security access control software company. Effective October 1, 1996, Ultrak
acquired all of the outstanding share capital of Bisset, a distributor of CCTV
and professional audio products based in Paris, France. Effective December 1,
1996, Ultrak acquired all of the outstanding stock of VideV, a distributor and
manufacturer of CCTV products based in Dusseldorf, Germany. All of these
transactions were accounted for as purchases and the operations have been
included in the Company's financial statements since the dates of acquisition.

    In 1997, the Company completed five acquisitions and made a minority
investment in a sixth company. Effective February 1, 1997, Ultrak acquired all
of the outstanding stock of MDI, a manufacturer of security and access control
systems based in Rancho Cucamonga, California. Effective March 1, 1997, the
Company acquired all of the outstanding stock of Intervision, a distributor of
CCTV products and systems based in England. Effective April 1, 1997, Ultrak
acquired all of the outstanding stock of the Videosys Group, a distributor of
CCTV and security products and systems based in Italy. Also effective April 1,
1997, the Company acquired all of the outstanding stock of Veravision, a
manufacturer of intraoral dental camera products based in San Clemente,
California. Effective October 1, 1997, the Company acquired all of the
outstanding stock of Philtech, a manufacturer and distributor of CCTV switching
and control equipment based in South Africa. Effective November 1997, the
Company established an 80% owned company in Singapore. All of these transactions
were accounted for as purchases and the operations have been included in the
Company's financial statements since the dates of acquisition.

    In 1998, the Company made one acquisition and acquired the 20% minority
interest in its Singapore operation. As of February 1, 1998, the Company
acquired the net assets of Norbain-France, a distributor of CCTV products based
in Paris, France. Effective August 1, 1998, the Company sold its 90% owned
subsidiary, DVD, to a third party.

    In 1999, the Company completed three acquisitions. Effective March 1, 1999,
Ultrak acquired all of the outstanding stock of ABM, a company that develops and
sells computer software for the alarm monitoring security industry based in
Austin, Texas. Effective April 1, 1999 Ultrak acquired all of the outstanding
stock of Multi Concepts Systemes, SA, an integrator of electronic security
systems based in Crissier, Switzerland. Effective July 1, 1999, the Company
acquired all of the outstanding stock of Mach Security, Sp. z.o.o., a
distributor of CCTV products based in Szczecin, Poland.

    Product sales are recorded when goods are shipped to the customer. Most of
the Company's sales are made to its domestic customers on Net 30 or Net 60 day
credit terms after a credit review has been performed to establish
creditworthiness and to determine an appropriate credit limit. The Company's
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 or open trade terms. Sales to one legal entity
accounted for approximately 21% of total sales during 1999, 17% of total sales
during 1998 and 12% of total sales during 1997. However, sales to this legal
entity are made independently via two separate business segments within the
Company to two separate buying organizations within the legal entity.



                                       13
<PAGE>   14

    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. Cost of sales
for products manufactured by Ultrak include material, direct labor and overhead
as well as an allocated portion of indirect overhead.

    Marketing and sales expenses are costs related to the Company's sales
efforts, which include costs incurred by both direct employees of the Company
and independent sales representatives. Marketing and sales expenses consist
primarily of salaries, commissions and related benefits, depreciation,
telephone, advertising, warranty, printing, product literature, sales promotion
and travel-related costs.

    General and administrative expenses include costs of all corporate and
general administrative functions that support the existing selling divisions as
well as provides the infrastructure for future growth. General and
administrative expenses consist primarily of salaries and related benefits of
executive, administrative, operations and engineering, research and development
personnel, legal, audit and other professional fees, supplies, other engineering
costs and travel-related costs. During 1997, 1998 and 1999 the Company added new
corporate management in several areas to help facilitate and manage its growth.

    Engineering, research and product development costs are included in general
and administrative expenses and consist primarily of salaries, overhead and
material costs associated with the development of new products offered by the
Company. All such R&D costs have been expensed when incurred.

    During the years ended December 31, 1999 and 1998, the Company capitalized
approximately $1.7 and $1.5 million, respectively, in software development costs
primarily pertaining to its SAFEnet NT software and its ESS software development
projects. The Company's investment in engineering, research and software
development projects increased significantly during 1997, and have continued to
increase on an absolute basis in 1998 and 1999.

    The Company's consolidated financial statements are denominated in dollars
and, accordingly, changes in the exchange rate between the Company's
subsidiaries' local currencies and the dollar will affect the conversion of such
subsidiaries' financial results into dollars for purposes of reporting the
Company's consolidated financial results. Translation adjustments are reported
as a separate component of stockholders' equity.

    A substantial portion of the Company's purchases and sales are derived from
operations outside the United States. Since the revenues and expenses of the
Company's foreign operations are generally denominated in local currency,
exchange rate fluctuations between local currencies and the dollar subject the
Company to currency exchange risks with respect to the results of its foreign
operations. Therefore, the Company is subject to these risks to the extent that
it is unable to denominate its purchases or sales in dollars or otherwise shift
to its customers or suppliers the effects of currency exchange rate
fluctuations. Such fluctuations in exchange rates could have a material adverse
effect on the Company's results of operations. The Company did not have foreign
exchange forward or currency option contracts outstanding at December 31, 1999.



                                       14
<PAGE>   15

    The following discussion should be read in conjunction with the Consolidated
Financial Statements and notes thereto included herein.

RESULTS OF OPERATIONS

    The following table sets forth the percentage of net sales represented by
certain items in the Company's consolidated summary of income for the indicated
periods.

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                     1997          1998          1999
                                                 ----------     ----------      ---------
<S>                                              <C>            <C>            <C>
Net sales ..................................          100.0%         100.0%         100.0%

Cost of sales ..............................           69.1           67.4           67.1
                                                 ----------     ----------     ----------
Gross profit ...............................           30.9           32.6           32.9
                                                 ----------     ----------     ----------

Marketing and sales expenses ...............           15.3           15.8           17.2
General and administrative expenses ........           10.9           10.2           10.5
Depreciation and amortization ..............            2.3            2.4            2.9
Special charges ............................            1.8           --              1.9
                                                 ----------     ----------     ----------
         Total operating expenses ..........           30.3           28.4           32.5
                                                 ----------     ----------     ----------
Operating profit ...........................             .6            4.2             .4

Other expense (income) .....................           (1.7)           (.2)           (.5)
                                                 ----------     ----------     ----------
Income from continuing operations
before income taxes ........................            2.3            4.4             .9
Income taxes ...............................            1.0            1.8             .6
                                                 ----------     ----------     ----------
Income from continuing operations ..........            1.3            2.6             .3
Discontinued operations,
net of tax effects .........................             .1            (.8)          --
                                                 ----------     ----------     ----------

Net income .................................            1.4%           1.8%            .3%
                                                 ==========     ==========     ==========
</TABLE>

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

    For the year ended December 31, 1999, net sales were $206.4 million, an
increase of $11.2 million (6%) over 1998. This increase was primarily due to the
internal growth from sales of new products and systems introduced in late 1998
and early 1999, and acquisitions completed during 1999.

    Cost of sales were $138.6 million for 1999, an increase of $6.9 million (5%)
over 1998. Gross profit margins increased to 32.9% in 1999 from 32.6% in 1998.
This increase in gross profit margin was due primarily to increased sales of
Ultrak branded products and higher margins earned on its software based
products.

    Marketing and sales expenses were $35.5 million for 1999, an increase of
$4.6 million (15%) over 1998. Marketing and sales expenses for 1999 were 17.2%
of net sales, up from 15.8% in 1998. This increase was due to the effect of
acquisitions completed during 1999, the effect of hiring additional field sales
personnel and the effect of hiring additional sales support and marketing
personnel in anticipation of new product introductions and resulting sales
activities, as well as the increased travel, printing, product literature,
advertising and promotion costs associated with the introduction of new
products.

    General and administrative expenses were $21.7 million for 1999, an increase
of $1.8 million (9%) over 1998. General and administrative expenses for 1999
were 10.5% of net sales, up from 10.2% of net sales in 1998. This increase was
primarily due to the effect of acquisitions in 1999 and the costs related to the
establishment of the Company's European headquarters in Antwerp, Belgium.
Depreciation and amortization expenses were $5.9 million for 1999, an increase
of $1.2 million (27%) over 1998. Depreciation and amortization expenses for 1999
were 2.9% of net sales, up from 2.4% of net sales in 1998 due to increased
capital expenditures in 1998 and 1999. .

    Included in the Company's 1999 results is a special charge of $3,875,000
related to restructuring of our Europe and domestic operations. This
restructuring effort is pursuant to a specific plan of action intended to take
advantage of new opportunities and consolidation and centralization of European
activities. In the first quarter of 1999, the Company recorded nonrecurring
charges of $750,000 related to domestic severance obligations. During the second
quarter of 1999, the Company recorded nonrecurring charges of $3,125,000 related
to consolidation of four locations into it's European headquarters in Antwerp,
Belgium in order to centralize



                                       15
<PAGE>   16

administrative, accounting and finance functions including centralization of
purchasing, shipping and billing activities. Also included in these nonrecurring
charges were employee severance and lease termination costs for the European
consolidation and the closing of three U.S. sales/distribution offices.

    Other income was approximately $1.1 million for 1999, an increase of
$590,000 from 1998. This increase was due to equity in earnings of Detection
Systems, Inc. ("DETC") and gains on sale of investments offset by increased
interest expense.

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

    For the year ended December 31, 1998, net sales were $195.2 million, an
increase of $20.3 million (12%) over 1997. This increase was due to the effect
of new acquisitions during 1997, sales of new products introduced during late
1997 and 1998 and increased volume of sales of existing CCTV products to most of
the markets served by the Company.

    Cost of sales were $131.7 million for 1998, an increase of $10.8 million
(9%) over 1997. Gross profit margins increased to 32.6% in 1998 from 30.9% in
1997. This increase was due to the continued increased sales levels of
Ultrak-branded products, cost reductions realized on certain Ultrak-branded
products and somewhat higher margins earned on software based products and other
new products introduced during late 1997 and 1998.

    Marketing and sales expenses were $30.9 million for 1998, an increase of
$4.2 million (16%) over 1997. Marketing and sales expenses for 1998 were 15.8%
of net sales, up from 15.3% in 1997. This increase was due to the effect of
hiring additional sales, sales support and marketing personnel in conjunction
with new product introductions and resulting sales activities, as well as the
increased travel, printing, product literature, advertising and promotion costs
associated with the introduction of new products.

    General and administrative expenses were $19.9 million for 1998, an increase
of $.8 million (4%) over 1997. General and administrative expenses for 1998 were
10.2% of net sales, down from 10.9% of net sales in 1997. This decrease was a
result of less hiring and selective employee terminations later in the year and
the Company's efforts to reduce its general and administrative costs as a
percentage of sales. Depreciation and amortization expenses were $4.7 million
for 1997, an increase of $.7 million (18%) over 1997. Depreciation and
amortization expenses for 1998 were 2.4% of net sales, slightly up from 2.3% of
net sales in 1997.

    Other income was approximately $.5 million for 1998, a decrease of $2.5
million from 1997. This decrease was due to the Company's shift during mid 1997
to invest excess funds in marketable equity securities (including the investment
in DETC) instead of interest bearing investments, the use of cash to fund the
Company's stock repurchase program and the increase in expense on bank
borrowings during 1998.

LIQUIDITY AND CAPITAL RESOURCES

    The Company had a net increase in cash and cash equivalents for 1999 of
approximately $277,000. Net cash provided by operating activities for the period
was approximately $12.8 million, primarily consisting of increases in accounts
and notes payable, and decreases in advances for inventory purchases, noncurrent
notes and other assets offset partially by increases in inventory and accounts
receivables. Net cash used in investing activities was approximately $5.8
million consisting of purchases of marketable securities, purchases of property
and equipment, primarily related to the worldwide computer software
implementations, software development capitalization costs and net cash paid for
acquisitions offset by proceeds from sales of marketable securities. Net cash
used by financing activities was approximately $7.1 million, consisting
primarily of purchases of treasury stock and the payment of dividends on the
Company's outstanding Series A Preferred Stock offset by net repayments on its
bank credit facility and proceeds from exercises of stock options.

    On March 22, 2000, the Company entered into a new two-year credit facility.
The credit facility provides for borrowings up to $45.0 million under a
revolving line of credit based upon available collateral. Interest for the
credit facility is payable quarterly at prime plus a range of 0% to .25% or
LIBOR plus a range of 2.25% to 2.75%, depending on the leverage ratio and other
conditions, as defined, for the quarter. The credit facility contains certain
restrictive financial and operational covenants and conditions, including a
maximum leverage ratio, a debt service ratio and minimum net worth amounts. The
Company pays a quarterly unused fee of .375% per annum.

    The Company believes that internally generated funds, available borrowings
under the new credit facility and current amounts of cash will be sufficient to
meet its presently anticipated needs for working capital, capital expenditures
and acquisitions, if any, for at least the next 12 months.



                                       16
<PAGE>   17

DERIVATIVE FINANCIAL INSTRUMENTS

    During 1997, the Company sold equity put options covering 2.6 million
shares. As of December 31, 1998, one equity put option remained outstanding and
the Company has recorded on the balance sheet its potential repurchase
obligation related to the put option totaling $1.6 million at its exercise price
of $12.51 per share. The single remaining put option was exercised on January
13, 1999 with the Company purchasing 125,000 shares of its Common Stock. As of
December 31, 1999, there were no outstanding equity put options.

YEAR 2000 COSTS

    The Year 2000 issue presented a pervasive and complex set of issues in the
business environment, as virtually every computer operation within the Company
could have been affected in some way by the rollover of the two-digit year value
to "00". The issue is whether systems would properly recognize date sensitive
information when the year changed to 2000. Systems that did not properly
recognize such information could generate erroneous data or cause complete
system failures. With respect to its internal systems, the Company continues the
process of implementing a multi-lingual and multi-currency enterprise software
at all of Ultrak's facilities worldwide. As of August 1998, the Company had
successfully completed the conversion process to SAP at its Worldwide Service
and Support Center, as well as four other domestic facilities. SAP's software
and all associated third party applications are represented to be Year 2000
compliant and the Company has not experienced any material difficulty or events
of failure with SAP. The Company's Ohio manufacturing facility existing business
systems were upgraded as of September 1999, and the Company anticipates
conversion of the Ohio facility to SAP by mid-2000. In January 2000, the Company
successfully completed implementation of SAP at its Austin, Texas location.
European implementation began in March 1999 using "Exact" software, a European
multilingual, multi-currency Y2K and Euro compliant software. For all European
systems that were not Year 2000 compliant, the Company has successfully
converted those computer systems as of December 31, 1999. During the years ended
December 31, 1999, 1998 and 1997, the Company incurred approximately $3.2
million, $6.3 million and $1.6 million, respectively, related to its
implementation of SAP in the U.S and Exact in Europe. It is expected that the
remaining phases of the "Exact" implementation in Europe will additionally cost
approximately $500,000, which will be incurred in 2000. Such costs are expected
to be capitalized and amortized over the estimated useful life of the software.

    Following the millenium event on January 1, 2000, the Company has not
experienced any material or adverse consequences as a result of a Year 2000
computer error. Based upon the completion of conversions to SAP in 1999 and
anticipated completions in 2000, and discussions with its primary suppliers and
vendors, the Company does not believe that the Year 2000 issues will have a
material impact on the financial position, results of operations or cash flows
of the Company. However, there can be no assurances that the Company will not
experience serious unanticipated negative consequences and/or material costs in
the future caused by undetected errors or defects in the technology used in the
Company's internal systems, which are composed of third party software, third
party hardware that contains embedded software and the Company's own software
products.

INFLATION

    During the years ended December 31, 1999, 1998 and 1997, the cost of
property and equipment, lease expense and salaries and wages increased modestly.
The increases have not had a material impact on the Company's results of
operations during any of the periods.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The following discussion about the Company's market risk includes
"forward-looking statements" that involve risks and uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements. The Company does not use derivative financial instruments for
speculative or trading purposes. The Company is exposed to market risk from
changes in foreign currency exchange rates and interest rates which could affect
its future results of operations and financial condition. The Company manages
its exposure to these risks through its regular operating and financing
activities.

Foreign exchange

    The Company has foreign-based operations, primarily in Western Europe, which
accounted for 31% of 1999 net sales. The Company issues intercompany loans to
its foreign subsidiaries denominated in U.S. dollars on a long-term basis,
exposing the foreign subsidiaries to the effect of changes in spot exchange
rates of their local currency relative to the U.S. dollar. In addition, many of
the



                                       17
<PAGE>   18

foreign-based operations make sales to customers denominated in different
currencies, which carry minimal market risk because the transactions normally
settle quickly. The Company does not regularly use forward-exchange contracts to
hedge these exposures. Based on the Company's foreign currency exchange rate
exposure for intercompany borrowings of approximately $20 million at December
31, 1999, a 10% adverse change in currency rates would reduce accumulated other
comprehensive income by approximately $2.0 million.

Interest rates

    The Company's credit arrangements expose it to fluctuations in interest
rates. At December 31, 1999, the Company had $37 million outstanding under its
revolving line of credit, which provided for interest to be paid quarterly based
on a variable rate. Thus, interest rate changes would result in a change in the
amount of interest to be paid each quarter. Based upon the interest rates and
borrowings at December 31, 1999, a 10% increase in interest rates would
adversely affect the Company's financial position, annual results of operations,
or cash flows by approximately $300,000.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The consolidated financial statements of the Company and its subsidiaries
that are required by this Item 8 are listed in Part IV under Item 14(a) of this
report. Such consolidated financial statements are included herein beginning on
page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

    Not applicable.




                                       18
<PAGE>   19

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    There is hereby incorporated by reference the information regarding the
Company's directors to appear under the caption "Election of Directors" in the
Company's proxy statement for its 2000 Annual Meeting of Stockholders (the "2000
Proxy Statement"), which is expected to be filed with the Securities and
Exchange Commission on or about April 30, 2000. See also the list of the
Company's executive officers and related information under "Directors and
Executive Officers" in Part I thereof.

ITEM 11.  EXECUTIVE COMPENSATION

    There is hereby incorporated by reference the information to appear under
the captions "Election of Directors" and "Executive Compensation and Other
Information" in the 2000 Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    There is hereby incorporated by reference the information with respect to
security ownership to appear under the caption "Security Ownership of Principal
Stockholders and Management" in the 2000 Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    There is hereby incorporated by reference the information to appear under
the caption "Executive Compensation and Other Information - Certain
Transactions" in the 2000 Proxy Statement.



                                       19
<PAGE>   20

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a) Financial Statement Schedules filed as part of this Annual Report on
Form 10-K.

    Financial Statements:

                  Report of Independent Certified Public Accountants.

                  Consolidated Balance Sheets as of December 31, 1999 and 1998.

                  Consolidated Statements of Income for the years ended December
                  31, 1999, 1998 and 1997.

                  Consolidated Statements of Stockholders' Equity for the years
                  ended December 31, 1999, 1998 and 1997.

                  Consolidated Statements of Cash Flows for the years ended
                  December 31, 1999, 1998 and 1997.

                  Notes to Consolidated Financial Statements.

    Additional financial information pursuant to the requirements of Form 10-K:

                  Report of Independent Certified Public Accountants on Schedule

                  Schedule II - Valuation and Qualifying Accounts

    Schedules not listed above have been omitted because they are either not
applicable or the required information has been provided elsewhere in the
Consolidated Financial Statements or notes thereto.

    (b) Reports on Form 8-K

                  A Current Report on Form 8-K was filed with the Securities and
        Exchange Commission on March 18, 1999 reporting the ABM Data Systems,
        Inc. acquisition and the resignation of James D. Pritchett, President,
        Chief Operating Officer and a director of the Company.

    (c) Exhibits

<TABLE>
        <S>     <C>
        3.1       Certificate of Incorporation of the Company (filed as Exhibit
                  3.1 to the Company's Annual Report on Form 10-K for the year
                  ended December 31, 1995)

        3.2       By-Laws of the Company (filed as Exhibit 3.2 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  1995)

        4.1       Form of certificate representing shares of the Common Stock
                  (filed as Exhibit 4.1 the Company's Registration Statement on
                  Form S-2, Registration No. 333-02891)

        10.1      Ultrak, Inc. 1988 Non-Qualified Stock Option Plan (filed as
                  Exhibit 10.6 to the Company's Registration Statement on Form
                  S-1, Registration No. 55-3-31110)

        10.2      Amendment No. 2 to Ultrak, Inc. 1988 Non-Qualified Stock
                  Option Plan (filed as Exhibit 10 to the Company's Current
                  Report on Form 8-K dated December 28, 1993)

        10.3      Amendment No. 3 to Ultrak, Inc. 1988 Non-Qualified Stock
                  Option Plan (filed as Exhibit 10.3 to the Company's Annual
                  Report on Form 10-K for the year ended December 31, 1996)
</TABLE>



                                       20
<PAGE>   21

<TABLE>
        <S>     <C>
        10.4      Agreement and Plan of Reorganization, dated as of April 28,
                  1995, among Diamond Electronics, Inc., the shareholders of
                  Diamond signing the Agreement, the Company and Diamond
                  Purchasing Corp. (filed as Annex A to the Company's Form S-4
                  dated June 28, 1995)

        10.5      Employment Agreement, dated May 25, 1995, between the Company
                  and James D. Pritchett (filed as Exhibit 10.21 to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 1995)

        10.6      Employment Agreement, dated May 25, 1995, between the Company
                  and Tim D. Torno (filed as Exhibit 10.22 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  1995)

        10.7      Ultrak, Inc. Incentive Stock Option Plan (filed as Exhibit
                  10.1 to the Company's Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1997)

        10.8      Stock Purchase Agreement dated August 7, 1996 among Chris
                  Davies, Kim Rhodes, Scott Rhodes, Rhodes Davies & Associates
                  Pty Ltd. and the Company (filed as Exhibit 10.1 to the
                  Company's Current Report on Form 8-K dated August 23, 1996)

        10.09     Stock Purchase Agreement dated September 26, 1996 among
                  Maurice Scetbon, Monda, S.A., Frida, S.A., the Company and
                  Ultrak Holdings Limited (filed as Exhibit 10.1 to the
                  Company's Current Report on Form 8-K dated October 11, 1996)

        10.10     Purchase Agreement of German GmbH Share Capital, dated
                  December 16, 1996, among all of the shareholders of VideV
                  GmbH, Ultrak and Ultrak Holdings Limited (filed as Exhibit 1
                  to the Company's Current Report on Form 8-K dated December 31,
                  1996)

        10.11     Agreement and Plan of Merger dated February 10, 1997 among
                  Monitor Dynamics, Inc., all of the shareholders of Monitor
                  Dynamics, Inc., Ultrak, Inc. and MDI Acquisition Corp. (filed
                  as Exhibit 1 to the Company's Current Report on Form 8-K dated
                  March 5, 1997)

        10.12     Amended and Restated Loan Agreement, dated effective as of
                  December 11, 1997, among Ultrak, Inc., Dental Vision Direct,
                  Inc., Diamond Electronics, Inc., Monitor Dynamics, Inc.,
                  Ultrak Operating, L.P. and NationsBank of Texas, N.A. (filed
                  as Exhibit 1 to the Company's current Annual Report on Form
                  10-K for the year ended December 31, 1997)

        10.13     Credit Agreement, dated as of February 16, 1999, among Ultrak,
                  Inc., Bank One, Texas, N.A. and Certain Lenders (filed as
                  Exhibit 10.13 to the Company's Annual Report on Form 10-K for
                  the year ended December 31, 1998)

        10.14     Stock Purchase Agreement dated August 5, 1998, between the
                  Company and American Dental Technologies, Inc. (filed as
                  Exhibit 10.14 to the Company's Annual Report on Form 10-K for
                  the year ended December 31, 1998)

        10.15     Stock Sale Agreement dated February 23, 1999 between the
                  Company and Mutsuo Tanaka (filed as Exhibit 10.15 to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 1998)

        10.16     Employment Agreement, dated January 1, 1998, between the
                  Company and Ted Wlazlowski (filed as Exhibit 10.16 to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 1998)

        10.17     Agreement and Plan of Merger dated March 15, 1999 among ABM
                  Data Systems, Inc., Robert F. James, Ultrak, Inc. and ABM
                  Acquisition Corp. (filed as Exhibit 1 to the Company's Current
                  Report on Form 8-K dated March 18, 1999)

        10.18     First Amended and Restated Credit Agreement between Ultrak,
                  Inc., Bank One of Texas, N.A. and Certain Lenders, dated
                  August 12, 1999 (filed as Exhibit 10.1 to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1999)

        10.19     Employment Agreement, dated June 1, 1999, between the Company
                  and Ted Wlazlowski (filed as Exhibit 10.2 to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1999)
</TABLE>


                                       21
<PAGE>   22

<TABLE>
        <S>     <C>
        10.20     Employment Agreement, dated June 1, 1999, between the Company
                  and Tim D. Torno (filed as Exhibit 10.3 to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1999)

        *10.21    First Amendment to First Amended and Restated Credit Agreement
                  between Ultrak, Inc., Bank One of Texas, N.A. and Certain
                  Lenders, dated November 12, 1999

        *10.22    Second Amendment to First Amended and Restated Credit
                  Agreement between Ultrak, Inc., Bank One of Texas, N.A. and
                  Certain Lenders, dated January 31, 2000

        *10.23    Third Amendment to First Amended and Restated Credit Agreement
                  between Ultrak, Inc., Bank One of Texas, N.A. and Certain
                  Lenders, dated February 29, 2000

        *10.24    Amendment No. 4 to Ultrak, Inc. 1988 Non-Qualified Stock
                  Option Plan

        *21.1     Subsidiaries of the Company

        *27.1     Financial Data Schedule
</TABLE>

----------

* Exhibits 10.21, 10.22, 10.23, 10.24, 21.1 and 27.1 are filed herewith.



                                       22
<PAGE>   23
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 27th day of
March, 2000

                                        ULTRAK, INC.

                                        By /s/ George K. Broady
                                           ------------------------------------
                                           George K. Broady
                                           Chairman and Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      NAME                                        TITLE                                  DATE
<S>                                                   <C>                                            <C>
              /s/ George K. Broady                    Chairman of the Board and Chief                 March 27, 2000
------------------------------------------------      Executive Officer
               George K. Broady                       (Principal Executive Officer)



               /s/ Tim D. Torno                       Vice President-Finance, Assistant Secretary,    March 27, 2000
------------------------------------------------      Treasurer and Chief Financial Officer
                 Tim D. Torno                         (Principal Financial and Accounting
                                                      Officer)


             /s/ Malcolm J. Guddis                    Director                                        March 27, 2000
------------------------------------------------
               Malcolm J. Guddis

              /s/ Charles C. Neal                     Director                                        March 27, 2000
------------------------------------------------
                Charles C. Neal

              /s/ Roland Scetbon                      Director                                        March 27, 2000
------------------------------------------------
                Roland Scetbon

             /s/ Robert F. Sexton                     Director                                        March 27, 2000
------------------------------------------------
               Robert F. Sexton

            /s/ George Vincent Broady                 Director                                        March 27, 2000
 -----------------------------------------------
               George Vincent Broady
</TABLE>


                                       23
<PAGE>   24


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Ultrak, Inc.


We have audited the accompanying consolidated balance sheets of Ultrak, Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 consolidated financial position of Ultrak, Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.




GRANT THORNTON LLP

Dallas, Texas
February 12, 2000 (except for Note D, as to
         which the date is March 22, 2000)


                                      F-1
<PAGE>   25


                          ULTRAK, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,


<TABLE>
<CAPTION>
                       ASSETS                                       1999             1998
                                                               -------------    -------------
<S>                                                            <C>              <C>
CURRENT ASSETS
    Cash and cash equivalents                                  $   4,757,512    $   4,480,721
    Marketable securities                                            600,033        3,473,563
    Trade accounts receivable, less allowance for doubtful
       accounts of $2,401,773 and $1,657,549 at
       December 31, 1999 and 1998, respectively                   41,337,442       37,404,380
    Inventories, net                                              49,097,433       46,021,960
    Advances for inventory purchases                               1,943,617        4,878,853
    Prepaid expenses and other current assets                      4,230,732        5,491,298
    Deferred income taxes                                          3,959,604        2,956,259
    Net current assets of discontinued operations                  1,905,831        3,486,181
                                                               -------------    -------------

                 Total current assets                            107,832,204      108,193,215


PROPERTY, PLANT AND EQUIPMENT, at cost                            26,879,627       20,574,475
    Less accumulated depreciation and amortization                (9,016,169)      (5,484,992)
                                                               -------------    -------------
                                                                  17,863,458       15,089,483

OTHER ASSETS
    Goodwill, net of accumulated amortization of $7,054,360
       and $4,767,601 at December 31, 1999 and 1998,
       respectively                                               56,337,690       54,861,332
    Investment in Detection Systems, Inc.                         13,354,019       12,702,909
    Software development cost, less accumulated amortization
       of $249,012 and $73,311 at December 31, 1999 and 1998       2,973,764        1,457,266
    Net noncurrent assets of discontinued operations                      --          311,050
    Other                                                          1,989,373        4,010,740
                                                               -------------    -------------
                                                                  74,654,846       73,343,297
                                                               -------------    -------------
                 Total assets                                  $ 200,350,508    $ 196,625,995
                                                               =============    =============
</TABLE>


                                      F-2
<PAGE>   26


                          ULTRAK, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS - CONTINUED

                                  December 31,




<TABLE>
<CAPTION>
           LIABILITIES AND STOCKHOLDERS' EQUITY                                1999            1998
                                                                          -------------    -------------
<S>                                                                       <C>              <C>
CURRENT LIABILITIES
    Accounts payable - trade                                              $  15,739,200    $   8,368,265
    Accrued expenses                                                          5,916,432        5,791,205
    Accrued restructuring costs                                               1,749,073               --
    Other current liabilities                                                 4,713,081        3,842,050
                                                                          -------------    -------------

                 Total current liabilities                                   28,117,786       18,001,520

LINE OF CREDIT                                                               37,000,000       37,500,000

DEFERRED INCOME TAXES                                                         2,569,870        1,094,065

COMMITMENTS AND CONTINGENCIES                                                        --               --

EQUITY PUT OPTIONS ON COMMON STOCK                                                   --        1,563,563

STOCKHOLDERS' EQUITY
    Preferred stock, $5 par value, issuable in series; 2,000,000 shares
       authorized; Series A, 12% cumulative convertible;
       195,351 shares authorized, issued and outstanding                        976,755          976,755
    Common stock, $.01 par value; 20,000,000 shares authorized;
       14,981,471 and 14,703,138 shares issued at December 31,
       1999 and 1998, respectively                                              149,815          147,031
    Additional paid-in capital                                              156,708,110      153,333,593
    Retained earnings                                                        17,578,720       17,130,398
    Accumulated other comprehensive loss                                     (4,067,437)        (967,488)
    Treasury stock, at cost (3,442,250 and 2,987,950 shares
       at December 31, 1999 and 1998, respectively)                         (38,683,111)     (32,153,442)
                                                                          -------------    -------------

                 Total stockholders' equity                                 132,662,852      138,466,847
                                                                          -------------    -------------

                 Total liabilities and stockholders' equity               $ 200,350,508    $ 196,625,995
                                                                          =============    =============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-3
<PAGE>   27


                          ULTRAK, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                            Years ended December 31,


<TABLE>
<CAPTION>
                                                           1999             1998             1997
                                                      -------------    -------------    -------------
<S>                                                   <C>              <C>              <C>
Net sales                                             $ 206,436,552    $ 195,222,550    $ 174,902,001
Cost of sales (exclusive of depreciation shown
    separately below)                                   138,561,105      131,676,673      120,882,700
                                                      -------------    -------------    -------------

                  Gross profit                           67,875,447       63,545,877       54,019,301

Other operating costs:
    Marketing and sales                                  35,504,076       30,909,127       26,705,668
    General and administrative                           21,678,426       19,885,071       19,130,365
    Depreciation and goodwill amortization                5,911,464        4,666,508        3,971,114
    Special charges                                       3,875,000               --        3,122,000
                                                      -------------    -------------    -------------
                                                         66,968,966       55,460,706       52,929,147
                                                      -------------    -------------    -------------

                  Operating profit                          906,481        8,085,171        1,090,154

Other income (expense):
    Interest expense                                     (2,964,954)      (1,373,941)        (154,965)
    Interest income                                         175,837          412,383        1,853,639
    Cost of terminated merger                                    --               --         (697,055)
    Gain on sale of investments                             669,543          675,000        1,694,664
    Foreign exchange gains (losses)                         376,948          (97,838)              --
    Equity in income of Detection Systems, Inc.           1,885,000          350,000               --
    Other, net                                              909,513          496,074          257,244
                                                      -------------    -------------    -------------
                                                          1,051,887          461,678        2,953,527
                                                      -------------    -------------    -------------

                  Income from continuing operations
                      before income taxes                 1,958,368        8,546,849        4,043,681

Income taxes                                             (1,285,814)      (3,589,676)      (1,726,458)
                                                      -------------    -------------    -------------

                  Income from continuing operations         672,554        4,957,173        2,317,223

Discontinued operations, net of taxes
    Loss (income) from operations                           107,022        1,480,243          (83,491)
    Gain on disposal                                             --          (77,946)              --
                                                      -------------    -------------    -------------

                  NET INCOME                                565,532        3,554,876        2,400,714

Dividend requirements on preferred stock                   (117,210)        (117,210)        (117,210)
                                                      -------------    -------------    -------------

Net income allocable to common stockholders           $     448,322    $   3,437,666    $   2,283,504
                                                      =============    =============    =============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-4
<PAGE>   28


                          ULTRAK, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF INCOME - CONTINUED

                            Years ended December 31,


<TABLE>
<CAPTION>
                               1999      1998      1997
                              ------    ------    ------
<S>                           <C>       <C>       <C>
Income per common share:
    Continuing operations
       Basic                  $ 0.05    $ 0.37    $ 0.16
                              ======    ======    ======

       Diluted                $ 0.05    $ 0.34    $ 0.15
                              ======    ======    ======

    Discontinued operations
       Basic                  $(0.01)   $(0.11)   $   --
                              ======    ======    ======

       Diluted                $(0.01)   $(0.10)   $   --
                              ======    ======    ======

    Net income
       Basic                  $ 0.04    $ 0.26    $ 0.16
                              ======    ======    ======

       Diluted                $ 0.04    $ 0.24    $ 0.15
                              ======    ======    ======
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>   29


                          ULTRAK, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                            Years ended December 31,


<TABLE>
<CAPTION>
                                                                                                         Deferred issuance
                                                                                                             of common
                                                                                                          stock related to
                                          Preferred Stock                  Common Stock                  companies acquired
                                   -----------------------------   -----------------------------   ------------------------------
                                      Shares           Amount         Shares          Amount           Shares          Amount
                                   -------------   -------------   -------------   -------------   -------------    -------------
<S>                                <C>             <C>             <C>             <C>             <C>              <C>
Balance at January 1, 1997               195,351         976,755      13,863,101   $     138,631          91,802    $         918

Comprehensive income
   Net income                                 --              --              --              --              --               --
   Other comprehensive
     income
       Foreign currency
          translation adjustment              --              --              --              --              --               --

              Total

Issuance of common stock                      --              --              --              --         (40,983)            (410)
Acquisition of businesses                     --              --         574,532           5,745              --               --
Exercise of stock options
   and warrants                               --              --           8,108              81              --               --
Treasury stock purchases                      --              --              --              --              --               --
Proceeds from sale of
   equity put options
   on common stock                            --              --              --              --              --               --
Redemption price of
   equity put options                         --              --              --              --              --               --
preferred stock dividends                     --              --              --              --              --               --
                                   -------------   -------------   -------------   -------------   -------------    -------------
Balance at December 31, 1997             195,351         976,755      14,445,741         144,457          50,819              508
                                   -------------   -------------   -------------   -------------   -------------    -------------
Comprehensive income
   Net income                                 --              --              --              --              --               --
   Other comprehensive
     income
       Foreign currency
          translation adjustment              --              --              --              --              --               --
       Unrealized loss on
         investments
         held for sale, net
         of taxes  of $88,541                 --              --              --              --              --               --

              Total
</TABLE>


<TABLE>
<CAPTION>
                                                                    Accumulated
                                    Additional                         other               Treasury stock
                                      paid-in        Retained       comprehensive    -----------------------------
                                      capital        earnings           loss             Shares         Amount            Total
                                   -------------   -------------    -------------    -------------   -------------    -------------
<S>                                <C>             <C>              <C>              <C>             <C>              <C>
Balance at January 1, 1997         $ 143,716,645   $  11,409,228    $     (35,000)          35,000      $ (246,068)    $155,961,109

Comprehensive income
   Net income                                 --       2,400,714               --               --              --        2,400,714
   Other comprehensive
     income
       Foreign currency
          translation adjustment              --              --       (1,833,304)              --              --       (1,833,304)
                                                                                                                      -------------
              Total                                                                                                         567,410
                                                                                                                      -------------
Issuance of common stock                      --              --               --               --              --             (410)
Acquisition of businesses              6,534,784              --               --               --              --        6,540,529
Exercise of stock options
   and warrants                           42,588              --               --               --              --           42,669
Treasury stock purchases                      --              --               --          397,850      (4,280,003)      (4,280,003)
Proceeds from sale of
   equity put options
   on common stock                     4,484,310              --               --               --              --        4,484,310
Redemption price of
   equity put options                (28,364,000)             --               --               --              --      (28,364,000)
preferred stock dividends                     --        (117,210)              --               --              --         (117,210)
                                   -------------   -------------    -------------    -------------   -------------    -------------
Balance at December 31, 1997         126,414,327      13,692,732       (1,868,304)         432,850      (4,526,071)     134,834,404
                                   -------------   -------------    -------------    -------------   -------------    -------------
Comprehensive income
   Net income                                 --       3,554,876               --               --              --        3,554,876
   Other comprehensive
     income
       Foreign currency
          translation adjustment              --              --        1,072,690               --              --        1,072,690
       Unrealized loss on
         investments
         held for sale, net
         of taxes  of $88,541                 --              --         (171,874)              --              --         (171,874)
                                                                                                                      -------------
              Total                                                                                                       4,455,692
                                                                                                                      -------------
</TABLE>


                                      F-6
<PAGE>   30


                          ULTRAK, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED

                            Years ended December 31,

<TABLE>
<CAPTION>
                                                                                                         Deferred issuance
                                                                                                             of common
                                                                                                          stock related to
                                          Preferred Stock                  Common Stock                  companies acquired
                                   -----------------------------   -----------------------------   ------------------------------
                                      Shares           Amount         Shares          Amount           Shares          Amount
                                   -------------   -------------   -------------   -------------   -------------    -------------
<S>                                <C>             <C>             <C>             <C>             <C>              <C>

Issuance of common stock                      --   $          --              --   $          --         (50,819)   $        (508)
Acquisition of businesses                     --              --         123,065           1,231              --               --
Adjustment to earnout contingency             --              --              --              --              --               --
Exercise of stock options
   and warrants                               --              --         134,332           1,343              --               --
Treasury stock purchases                                                      --              --              --               --
Equity put options expired                    --              --              --              --              --               --
Equity put options redeemed                   --              --              --              --              --               --
Preferred stock dividends                     --              --              --              --              --               --
                                   -------------   -------------   -------------   -------------   -------------    -------------

Balance at December 31, 1998             195,351         976,755      14,703,138         147,031              --               --

Comprehensive loss
   Net income                                 --              --              --              --              --               --
   Other comprehensive
     loss
       Foreign currency
          translation adjustment              --              --              --              --              --               --
       Unrealized loss on
           investments held for
           sale, net of tax of
           $292,541                           --              --              --              --              --               --
       Plus:  reclassification
         adjustment for losses
         included in net
         earnings, net of tax
         effect of $88,541                    --              --              --              --              --               --

              Total

Acquisition of business                       --              --         250,000           2,500              --               --
Exercise of stock options
   and warrants                               --              --          28,333             284              --               --
Stock-based compensation                      --              --              --              --              --               --
Treasury stock purchases                      --              --              --              --              --               --
Equity put options expired                                    --              --              --              --               --
Preferred stock dividends                     --              --              --              --              --               --
                                   -------------   -------------   -------------   -------------   -------------    -------------
Balance at December 31, 1999             195,351   $     976,755      14,981,471   $     149,815              --    $          --
                                   =============   =============   =============   =============   =============    =============
</TABLE>


<TABLE>
<CAPTION>
                                                                     Accumulated
                                    Additional                          other              Treasury stock
                                      paid-in         Retained       comprehensive   -----------------------------
                                      capital         earnings           loss            Shares         Amount            Total
                                   -------------    -------------    -------------   -------------   -------------    -------------
<S>                                <C>              <C>              <C>             <C>             <C>              <C>
Issuance of common stock           $          --    $          --    $          --              --   $          --    $        (508)
Acquisition of businesses                     --               --               --              --              --            1,231
Adjustment to earnout contingency       (104,508)              --               --              --              --         (104,508)
Exercise of stock options
   and warrants                          223,337               --               --              --              --          224,680
Treasury stock purchases                      --               --               --         435,100      (4,139,433)      (4,139,433)
Equity put options expired             3,312,499               --               --              --              --        3,312,499
Equity put options redeemed           23,487,938               --               --       2,120,000     (23,487,938)              --
Preferred stock dividends                     --         (117,210)              --              --              --         (117,210)
                                   -------------    -------------    -------------   -------------   -------------    -------------

Balance at December 31, 1998         153,333,593       17,130,398         (967,488)      2,987,950     (32,153,442)     138,466,847

Comprehensive loss
   Net income                                 --          565,532               --              --              --          565,532
   Other comprehensive
     loss
       Foreign currency
          translation adjustment              --               --       (2,703,949)             --              --       (2,703,949)
       Unrealized loss on
           investments held for
           sale, net of tax of
           $292,541                           --               --         (567,874)             --              --         (567,874)
       Plus:  reclassification
         adjustment for losses
         included in net
         earnings, net of tax
         effect of $88,541                    --               --          171,874              --              --          171,874
                                                                                                                      -------------
              Total                                                                                                      (2,534,417)
                                                                                                                      -------------
Acquisition of business                1,492,389               --               --              --              --        1,494,889
Exercise of stock options
   and warrants                           68,565               --               --              --              --           68,849
Stock-based compensation                 250,000               --               --              --              --          250,000
Treasury stock purchases                      --               --               --         454,300      (6,529,669)      (6,529,669)
Equity put options expired             1,563,563               --               --              --              --        1,563,563
Preferred stock dividends                     --         (117,210)              --              --              --         (117,210)
                                   -------------    -------------    -------------   -------------   -------------    -------------
Balance at December 31, 1999       $ 156,708,110    $  17,578,720    $  (4,067,437)      3,442,250   $ (38,683,111)   $ 132,662,852
                                   =============    =============    =============   =============   =============    =============
</TABLE>


        The accompanying notes are an integral part of these statements.


                                      F-7
<PAGE>   31


                          ULTRAK, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                            Years ended December 31,


<TABLE>
<CAPTION>
                                                                   1999            1998            1997
                                                               ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>
Cash flows from operating activities:
   Net income                                                  $    565,532    $  3,554,876    $  2,400,714
   Adjustments to reconcile net income to net cash
      provided by (used in) operating activities from
      continuing operations:
        Loss (income) from discontinued operations                  107,022       1,480,243         (83,491)
        Gain on disposal                                                 --         (77,946)             --
        Gain on sale of investments                                (669,543)       (675,000)     (1,694,664)
        Equity in income of Detection Systems, Inc.              (1,885,000)       (350,000)             --
        Depreciation and amortization                             5,911,464       4,666,508       3,971,114
        Provision for losses on accounts receivable                 813,178          (8,103)        316,937
        Provision for inventory obsolescence                      2,177,637       2,104,636         717,062
        Noncash special charges                                     287,713              --       3,122,000
        Deferred income taxes                                       676,460       1,605,341      (2,070,458)
        Changes in operating assets and liabilities
              Accounts and notes receivable                      (4,992,471)     (3,719,551)        894,098
              Inventories                                        (5,459,658)    (10,440,583)     (4,709,115)
              Advances for inventory purchases                    2,935,236       6,541,157      (6,482,564)
              Prepaid expenses and other current assets           1,697,813      (2,408,931)        409,396
              Noncurrent notes and other assets                   1,980,668         702,546       3,532,780
              Accounts payable                                    6,974,493      (4,240,203)     (6,065,780)
              Accrued restructuring costs                         1,749,073              --              --
              Accrued and other current liabilities                 (87,801)      1,075,151      (3,254,452)
                                                               ------------    ------------    ------------

                    Net cash provided by (used in) operating
                    activities of continuing operations          12,781,816        (189,859)     (8,996,423)

Cash flows from investing activities:
   Proceeds from sale of marketable securities                    7,776,652       1,050,000      17,948,298
   Purchases of marketable securities                            (4,458,165)     (4,018,995)    (16,253,634)
   Purchases of common stock of Detection Systems, Inc.            (531,018)    (12,352,949)             --
   Purchases of property and equipment                           (6,182,785)    (12,322,627)     (1,995,652)
   Software development costs                                    (1,692,199)     (1,530,577)             --
   Proceeds from sale of discontinued operations                         --       3,000,000              --
   Acquisitions, net of cash acquired                              (679,878)             --     (32,859,912)
                                                               ------------    ------------    ------------

                   Net cash used in investing activities
                      of continuing operations                   (5,767,393)    (26,175,148)    (33,160,900)
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-8
<PAGE>   32


                          ULTRAK, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                            Years ended December 31,


<TABLE>
<CAPTION>
                                                                           1999            1998            1997
                                                                       ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>
Cash flows from financing activities:
   Proceeds from revolving line of credit                              $ 47,804,192    $ 37,500,000    $         --
   Repayments on revolving line of credit                               (48,304,192)             --              --
   Decrease (increase) in restricted cash                                        --       3,949,690      (3,949,690)
   Proceeds from equity put options                                              --              --       4,484,310
   Issuance of common stock                                                  68,849         120,895          42,669
   Purchase of treasury stock                                            (6,529,669)    (27,627,371)     (4,280,003)
   Payment of preferred stock dividends                                    (117,210)       (117,210)       (117,210)
                                                                       ------------    ------------    ------------

                 Net cash provided by (used in) financing
                     activities of continuing operations                 (7,078,030)     13,826,004      (3,819,924)
                                                                       ------------    ------------    ------------

Net decrease in cash and cash equivalents                                   (63,607)    (12,539,003)    (45,977,247)

Effect of exchange rate changes on cash                                  (1,443,980)       (247,464)       (815,761)

Cash provided by (used in) discontinued operations                        1,784,378       3,167,504     (10,918,015)

Cash and cash equivalents at beginning of the year                        4,480,721      14,099,684      71,810,707
                                                                       ------------    ------------    ------------

Cash and cash equivalents at end of the year                           $  4,757,512    $  4,480,721    $ 14,099,684
                                                                       ============    ============    ============

Supplemental cash flow information:
   Cash paid during the period for:
      Interest                                                         $  2,322,093    $  1,451,248    $    144,965
                                                                       ============    ============    ============

      Income taxes                                                     $  1,203,710    $  4,049,242    $  4,783,883
                                                                       ============    ============    ============

Supplemental schedule of noncash investing and financing:
   Acquisition of businesses
      Assets acquired                                                  $  3,581,198    $  1,244,800    $ 56,335,806
      Liabilities assumed                                                (1,228,350)     (1,200,000)    (12,549,752)
      Common stock issued or issuable                                    (1,494,889)             --      (6,540,529)
                                                                       ------------    ------------    ------------
                                                                            857,959          44,800      37,245,525
      Less cash acquired                                                    178,081          44,800       4,385,613
                                                                       ------------    ------------    ------------

      Net cash paid for acquisitions                                   $    679,878    $         --    $ 32,859,912
                                                                       ============    ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-9
<PAGE>   33


                          ULTRAK, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Nature of Operations

    Ultrak, Inc. (the "Company") is a U.S.-based multinational corporation that
    designs, manufactures, markets sells and services electronic products and
    systems for the security and surveillance, industrial and medical video and
    professional audio markets worldwide. These products and systems include a
    broad line of cameras, lenses, high-speed dome systems, monitors, switchers,
    quad processors, time-lapse recorders, multiplexers, video transmission
    systems, access control systems, computerized observation and security
    systems, audio equipment and accessories.

    Principles of Consolidation

    The accompanying consolidated financial statements include the accounts of
    the Company and its subsidiaries. All significant intercompany balances and
    transactions have been eliminated in consolidation.

    Cash and Cash Equivalents

    The Company considers all highly liquid investments with original maturities
    of three months or less to be cash equivalents.

    Marketable Securities

    The Company accounts for its marketable securities, all of which are
    designated as available for sale, using Statement of Financial Accounting
    Standards No. 115, "Accounting for Certain Investments in Debt and Equity
    Securities." Securities available for sale are reported at fair value, with
    unrealized gains and losses, net of tax, excluded from earnings and reported
    as a separate component of stockholders' equity. Realized gains and losses
    on securities available for sale are reported in income in the year of sale.

    Inventories

    Inventories are comprised principally of goods held for resale, which are
    valued at the lower of cost (first-in, first-out) or market.

    Advances for Inventory

    Advances for inventory represents payments in advance for goods purchased
    primarily from the Far East. Upon receipt of the goods, advances are
    classified as inventories.

    Property, Plant and Equipment and Depreciation

    Property, plant and equipment are carried at cost. The provision for
    depreciation is computed using the straight-line method over the estimated
    useful lives of the assets.


                                      F-10
<PAGE>   34


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
         Continued

    Income Per Share

    The Company computes basic income per share based on the weighted average
    number of common shares outstanding. Diluted income per share is computed
    based on the weighted average number of shares outstanding, plus the number
    of additional common shares that would have been outstanding if dilutive
    potential common shares had been issued.

    Goodwill and Amortization

    Goodwill resulting from acquisitions is being amortized using the
    straight-line method over periods ranging from twenty to forty years.

    Accounting for Impairment of Long-Lived Assets

    The Company evaluates long-lived assets and intangibles held and used for
    impairment whenever events or changes in circumstances indicate that the
    carrying amounts may not be recoverable. Impairment is recognized when the
    undiscounted cash flows estimated to be generated by those assets are less
    than the carrying amounts of such assets.

    Fair Value of Financial Instruments

    The Company's financial instruments consist of cash and cash equivalents,
    notes receivable, debt and equity put options for which the fair value
    approximates the carrying value.

    Stock-Based Compensation

    The Company accounts for stock-based compensation to employees using the
    intrinsic value method. Accordingly, compensation cost for stock options is
    measured as the excess, if any, of the quoted market price of the Company's
    stock at the date of the grant over the amount an employee must pay to
    acquire the stock.

    Software Development Costs

    The Company capitalizes software development costs incurred from the time
    technological feasibility of the software is established until the software
    is ready for use in its products. Research and development costs related to
    software development are expensed as incurred. The capitalized costs relate
    to software which will become an integral part of the Company's revenue
    producing products and are amortized in relation to expected revenues from
    the product or a maximum of five years, whichever is greater. The carrying
    value of software development costs is regularly reviewed by the Company,
    and a loss is recognized when the net realizable value by product falls
    below the unamortized cost.


                                      F-11
<PAGE>   35


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
         Continued

    Currency Translation

    Translation adjustments to the financial statements of foreign subsidiaries
    are reflected in the consolidated financial statements as a component of
    other comprehensive income.

    Advertising Expense

    The Company expenses advertising costs as incurred. Total advertising
    expense amounted to approximately $1,099,000, $1,306,000, and $987,000 for
    the years ended December 31, 1999, 1998, and 1997, respectively.

    Use of Estimates

    In preparing financial statements in conformity with generally accepted
    accounting principles, management is required 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 revenues and expenses during the reporting period. Actual
    results could differ from those estimates.

    Income Taxes

    The Company utilizes the asset and liability approach to financial
    accounting and reporting for income taxes. Deferred income tax assets and
    liabilities are computed annually for differences between the financial
    statement and tax bases of assets and liabilities that will result in
    taxable or deductible amounts in the future based on enacted tax laws and
    rates applicable to the periods in which the differences are expected to
    affect taxable income.

    Derivative Financial Instruments

    Equity put options on common stock represent the number of options sold at
    their respective strike price. Proceeds from the sale of equity put options
    on common stock are accounted for as additional paid-in capital.

    Reclassifications

    Certain reclassifications have been made to prior years financial statements
    to conform with the 1999 presentation.


                                      F-12
<PAGE>   36


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - BUSINESS COMBINATIONS

    1999 Business Combinations:

    ABM Data Systems, Inc.

    Effective March 1, 1999, the Company acquired 100% of the common stock of
    ABM Data Systems, Inc. ("ABM"), an Austin, Texas based software developer
    for the alarm-monitoring segment of the security industry. Total
    consideration was 250,000 shares of registered Ultrak common stock valued at
    approximately $1.5 million. ABM develops, sells, and services computer
    software for the alarm monitoring security industry, governmental agencies,
    and proprietary customers and offers support for computer software targeted
    for automated security monitoring markets.

    Multi Concepts Systems, SA

    Effective April 1, 1999, the Company acquired 100% of the stock of Multi
    Concepts Systems, SA ("MCS"), a Switzerland based systems integrator of
    electronic security systems. Total consideration included an initial payment
    of $405,000 in cash and future contingent payments based upon a percentage
    of MCS income and book value, as defined. MCS has been the largest European
    reseller and integrator of Ultrak's SAFEnet access control system over the
    past ten years.

    Mach Security Sp.z.o.o.

    Effective July 1, 1999, the Company acquired 100% of the stock of MACH
    Security Sp.z.o.o. ("Mach"), based in Szczecin, Poland. Mach is one of the
    largest distributors of CCTV products in Poland. Total consideration
    included an initial payment of $275,000 in cash and a future contingent
    payment based upon a percentage of Mach income, as defined.

    1998 Business Combinations and Divestitures:

    During February 1998, the Company acquired the net assets of Norbain France
    SARL, a French corporation wholly-owned by Norbain PLC, a United Kingdom
    corporation, for assumption of the net liabilities of approximately $1.2
    million.

    In August 1998, the Company completed the sale of the stock of Dental Vision
    Direct, Inc. ("DVD"), a 90% owned subsidiary, and its subsidiary,
    Veravision, to American Dental Technologies, Inc. ("American Dental"). The
    consideration included approximately $3.0 million in cash, a $3.9 million
    short-term note and warrants to acquire 540,000 shares of American Dental
    common stock. A gain on the sale of approximately $78,000 was recorded and
    all prior periods have been restated to reflect the operations of DVD as
    discontinued.

    In March 1999, the Company completed the sale of its 10% interest in a
    company in Japan for approximately $1.8 million in cash. A loss of $200,000
    was recorded in other income (expense) in 1998 related to the sale.


                                      F-13
<PAGE>   37


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - BUSINESS COMBINATIONS - Continued

    1997 Business Combinations:

    Monitor Dynamics, Inc.

    Effective February 1, 1997, the Company acquired all of the outstanding
    shares of capital stock of Monitor Dynamics, Inc. ("MDI") for $26.1 million
    in cash. MDI designs, manufactures, markets and sells high-end security and
    access control systems under the SAFEnet brand name. MDI's systems are used
    in government, defense, industrial, financial and commercial applications
    throughout the United States and Europe.

    Intervision Express, Ltd.

    Effective March 1, 1997, the Company acquired all of the outstanding share
    capital of Intervision Express, Ltd. ("Intervision"), a United Kingdom
    limited liability company. The total consideration was approximately $1.53
    million dollars, including 38,822 shares of common stock valued at $719,000.
    Intervision distributes security and surveillance products, primarily in the
    United Kingdom, manufactured by the Company, Dedicated Micros, Toa, Hitachi,
    Mitsubishi and others.

    Videosys Group

    Effective April 1, 1997, the Company acquired the Videosys Group (the
    "Videosys Group") for total consideration of $8.37 million consisting of
    $5.55 million in cash and $2.82 million (160,000 shares) in common stock. In
    connection with the acquisition, the Company guaranteed the value of the
    common stock by granting put rights covering 160,000 shares at $25 per
    share. During 1999, the seller of Videosys exercised the put right and
    required the Company to repurchase 160,000 shares for $4,000,000. The
    Videosys Group designs, imports, and distributes security and surveillance
    products primarily in Italy, under the Videosys brand name.

    Veravision, Inc.

    Effective April 1, 1997, the Company acquired all of the issued and
    outstanding capital stock of Veravision, Inc. ("Veravision"). The
    consideration consisted of $150,000 in promissory notes, approximately $2.0
    million in notes and accounts receivable due from Veravision and 10% of the
    common stock of DVD, a wholly-owned subsidiary of the Company. Veravision
    manufactures intra-oral camera products for use primarily in the dental
    market.

    Other Acquisitions:

    Additionally, in 1997, the Company acquired a 10% interest in a company in
    Japan for approximately $2.0 million in cash and 100% of a company based in
    South Africa for $300,000 in cash and $300,000 of amounts payable over a
    three-year period and an 80% interest in a company based in Singapore for
    $95,000 in cash.

    Acquisitions during 1998 and 1999 were not significant; as a result, no pro
    forma information is presented.


                                      F-14
<PAGE>   38


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - PROPERTY, PLANT AND EQUIPMENT

    The components of property, plant and equipment are as follows:

<TABLE>
<CAPTION>
                                          December 31,
                                  ----------------------------
                                      1999            1998
                                  ------------    ------------
<S>                               <C>             <C>
       Machinery and equipment    $  6,094,410    $  4,802,388
       Furniture and fixtures       16,397,208      13,816,787
       Buildings and land            4,388,009       1,955,300
                                  ------------    ------------
                                    26,879,627      20,574,475
       Accumulated depreciation     (9,016,169)     (5,484,992)
                                  ------------    ------------

                                  $ 17,863,458    $ 15,089,483
                                  ============    ============
</TABLE>

NOTE D - FINANCING ARRANGEMENTS


    On March 22, 2000, the Company entered into a new two-year credit facility.
    The credit facility provides for borrowings up to $45.0 million under a
    revolving line of credit based upon available collateral. Interest for the
    credit facility is payable quarterly at prime plus a range of 0% to .25% or
    LIBOR plus a range of 2.25% to 2.75%, depending on the leverage ratio, as
    defined, for the quarter. The credit facility contains certain restrictive
    financial and operational covenants and conditions, including a maximum
    leverage ratio, a debt service ratio and minimum net worth amounts. The
    Company pays a quarterly unused fee of .375% per annum.

    At December 31, 1999, the Company had $37.0 million outstanding under its
    previous line of credit and term loan. The line of credit provided for
    borrowings up to $30 million, of which $17 million was outstanding at
    December 31, 1999. The term loan had $20 million outstanding at December 31,
    1999. Interest on the line of credit and term loan was payable monthly at
    the lesser of LIBOR plus 2.75% or prime. The Company was in violation of
    certain financial covenants and obtained a waiver on January 31, 2000.
    Amounts outstanding were to be paid in full with proceeds from the new $45.0
    million credit facility on March 22, 2000.

    At December 31, 1998, the Company had $37.5 million outstanding under its
    previous line of credit. Interest on the line of credit at December 31, 1998
    was at LIBOR plus 3%.

NOTE E - STOCKHOLDERS' EQUITY

    The Series A preferred stock earns dividends at the rate of 12% per annum,
    payable quarterly. All dividends accrue whether or not such dividends have
    been declared and whether or not there are profits, surplus, or other funds
    of the Company legally available for payment.


                                      F-15
<PAGE>   39


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE E - STOCKHOLDERS' EQUITY - Continued

    The Company may at any time redeem all or any portion of the Series A
    Preferred Stock then outstanding at the liquidation value of $5.00 per share
    plus unpaid dividends. The holder of the Series A Preferred Stock may
    convert any or all of the 195,351 preferred shares into shares of the
    Company's common stock at any time at a conversion rate equal to 2.08 shares
    of common stock per preferred share or a total of 406,981 shares of common
    stock.

    Holders of Series A preferred stock are entitled to vote on all matters
    submitted to a vote of stockholders. Each Series A preferred share is
    entitled to voting rights equal to 16.667 shares of common stock.

NOTE F - STOCK-BASED COMPENSATION

    The Company's 1988 Nonqualified Stock Option Plan (the "1988 Plan") provides
    for grants of options for up to 1,200,000 shares and the 1997 Incentive
    Stock Option Plan (the "1997 Plan") provides for grants of options for up to
    400,000 shares. Shares under the 1997 Plan are awarded based upon the
    Company achieving one or more definitive performance measurements for a
    fiscal year, including minimum levels of economic value added, minimum
    levels of market value added or attainment of the financial budget. The 1997
    Plan is a formula-based plan administered by the Compensation Committee of
    the Board of Directors. Option grants under the 1997 Plan are limited to 1%
    of the outstanding common stock of the Company. At December 31, 1999,
    384,669 and 261,359 shares were available for grant under the 1988 Plan and
    the 1997 Plan, respectively.

    Option exercise prices are equal to the market price at the date of grant.
    Shares under grant generally become exercisable in five equal annual
    installments beginning one year after the date of grant, and expire after
    ten years.

    If the Company recognized compensation expense as permitted under Statement
    of Financial Accounting Standards No. 123, based upon the fair value at the
    grant date for options granted after 1994 under the 1988 Plan and 1997 Plan,
    the Company's net income from continuing operations and income per share
    would be reduced to the pro forma amounts indicated as follows:

<TABLE>
<CAPTION>
                                                                           Years ended December 31,
                                                                ---------------------------------------------
                                                                     1999            1998            1997
                                                                -------------   -------------   -------------
<S>                                                             <C>             <C>             <C>
         Net income from continuing operations:
              As reported                                       $     672,554   $   4,957,173   $   2,317,223
              Pro forma                                         $     252,656   $   4,381,640   $   1,884,927

         Basic income per share from continuing operations:
              As reported                                       $         .05   $         .37   $         .16
              Pro forma                                         $         .01   $         .32             .13

         Diluted income per share from continuing operations:
              As reported                                       $         .05   $         .34   $         .15
              Pro forma                                         $         .01   $         .30   $         .12
</TABLE>


                                      F-16
<PAGE>   40


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE F - STOCK-BASED COMPENSATION - Continued

    The fair value of these options was estimated at the date of grant using the
    Black-Scholes option pricing model with the following weighted-average
    assumptions: expected volatility of 55 to 80 percent; risk-free interest
    rates of 4.8 to 6.5 percent; no dividend yield; and expected lives of seven
    years.

    The pro forma amounts presented are not representative of the amounts that
    will be disclosed in the future because they do not take into effect pro
    forma expense related to grants before 1995.

    Additional information with respect to options outstanding at December 31,
    1999 and changes for the three years then ended is as follows:

<TABLE>
<CAPTION>
                                                     1999                       1998                      1997
                                            ------------------------   ------------------------   ------------------------
                                                          Weighted                   Weighted                   Weighted
                                                          average                    average                    average
                                                          exercise                   exercise                   exercise
                                              Shares        price        Shares        price        Shares        price
                                            ----------    ----------   ----------    ----------   ----------    ----------
<S>                                         <C>           <C>          <C>           <C>          <C>           <C>
       Outstanding at beginning of year        859,170    $     9.94    1,000,656    $     9.26      658,775    $     4.42
          Granted                              360,500          6.15       69,500          8.80      369,641         17.96
          Exercised                            (28,333)         2.43     (134,332)         1.67       (8,108)         5.26
          Forfeited                           (237,365)        18.91      (76,654)        16.13      (19,652)        12.16
                                            ----------                 ----------                 ----------

       Outstanding at end of year              953,972    $     6.56      859,170    $     9.94    1,000,656    $     9.26
                                            ==========    ==========   ==========    ==========   ==========    ==========

       Options exercisable at end of year      490,549    $     5.83      475,937    $     4.79      511,768    $     3.44
                                            ==========    ==========   ==========    ==========   ==========    ==========
</TABLE>

        Weighted average fair value per share of options granted for 1999, 1998
        and 1997 were $6.17, $6.55 and $9.68, respectively.

        Information about stock options outstanding at December 31, 1999 is
        summarized as follows:

<TABLE>
<CAPTION>
                                             Options outstanding               Options exercisable
                                   ---------------------------------------  -------------------------
                                                  Weighted
                                                   average      Weighted                     Weighted
                                                  remaining     average                      average
                                     Number      contractual    exercise      Number         exercise
       Range of exercise prices    outstanding       life         price     exercisable        price
       ------------------------    -----------   -----------   -----------  -----------      --------
       <S>                         <C>           <C>           <C>          <C>             <C>
       $1.20 to $5.62                 224,935     1.4 years     $    2.73     216,936       $    2.65
       $5.63 to $9.00                 575,151     7.6 years          6.19     190,501            6.00
       $9.01 to $13.50                 74,500     7.8 years          9.58      38,000            9.58
       $13.51 to $20.00                78,386     7.0 years         17.11      44,512           17.11
       $20.01 to 26.75                  1,000     6.7 years         23.75         600           23.75
                                    ---------                               ---------

                                      953,972                                 490,549
                                    =========                               =========
</TABLE>


                                      F-17
<PAGE>   41


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE G - MAJOR CUSTOMERS AND SUPPLIERS

    Sales to one legal entity accounted for approximately 21% of total sales
    during 1999, 17% of total sales during 1998 and 12% of total sales during
    1997. However, sales to this legal entity are made independently via two
    separate business segments of the Company to two separate buying
    organizations within the legal entity. Loss of one of these customers may
    have a material adverse effect on the operations of the Company.

    The Company purchased in excess of 20% of its products from one contract
    manufacturer in each of the three years in the period ended December 31,
    1999. Although there are a limited number of manufacturers of the Company's
    products, management believes there are suppliers who could provide similar
    products on comparable terms. A change in suppliers could cause a delay in
    and a possible loss of sales.

NOTE H - COMMITMENTS AND CONTINGENCIES

    The Company leases office and warehouse space and data processing equipment
    under long-term, noncancelable leases.

    Minimum future rental payments for all long-term, noncancelable operating
    leases are presented below:

<TABLE>
<CAPTION>
         Year ending
         December 31,
         ------------
<S>                       <C>
           2000           $2,998,000
           2001            2,525,000
           2002            1,943,000
           2003              744,000
           2004              245,000
           Thereafter        761,000
                          ----------
                          $9,216,000
                          ==========
</TABLE>


    Total rent expense was as follows:

<TABLE>
<S>                       <C>
           1999           $2,704,000
           1998            2,351,000
           1997            1,588,000
</TABLE>


                                      F-18
<PAGE>   42


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE I - INCOME TAXES

    The provision for taxes consists of the following:

<TABLE>
<CAPTION>
                             Years ended December 31,
                     -----------------------------------------
                        1999            1998           1997
                     -----------    -----------    -----------
<S>                  <C>            <C>            <C>
       Federal
          Current    $   596,425    $ 2,553,617    $ 3,330,467
          Deferred       742,446      1,860,482     (1,842,118)
       State              82,313        102,871        267,428
       Foreign          (135,370)      (927,294)       (29,319)
                     -----------    -----------    -----------

                     $ 1,285,814    $ 3,589,676    $ 1,726,458
                     ===========    ===========    ===========
</TABLE>

    The Company's effective income tax rate differed from the U.S. Federal
    statutory rate as follows:

<TABLE>
<CAPTION>
                                              Years ended December 31,
                                             --------------------------
                                              1999      1998      1997
                                             ------    ------    ------
<S>                                          <C>       <C>       <C>
       U.S. Federal statutory rate             34.0%     34.0%     34.0%
       State taxes, net of Federal benefit      2.5       0.8       2.1
       Meals and entertainment                  3.5       0.9       1.7
       Goodwill amortization                   20.8       4.8       9.3
       Tax exempt interest and dividends         --        --      (3.2)
       Other, net                               4.9       1.5      (1.2)
                                             ------    ------    ------

                                               65.7%     42.0%     42.7%
                                             ======    ======    ======
</TABLE>

    The components of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                         December 31,
                                   -----------------------
                                      1999         1998
                                   ----------   ----------
<S>                                <C>          <C>
       Current
          Deferred tax assets:
             Inventories           $1,447,979   $1,576,125
             Accounts receivable      310,382      338,204
             Accrued expenses       1,918,341    1,041,930
             Other                    282,902           --
                                   ----------   ----------
                                    3,959,604    2,956,259
                                   ==========   ==========
</TABLE>


                                      F-19
<PAGE>   43


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE I - INCOME TAXES - Continued

<TABLE>
<CAPTION>
                                                            December 31,
                                                     --------------------------
                                                         1999           1998
                                                     -----------    -----------
<S>                                                  <C>            <C>
       Noncurrent
          Deferred tax assets:
             Net operating loss carryforward         $ 1,370,889    $ 1,170,866

          Deferred tax liabilities:
             Property, plant and equipment            (2,924,793)    (1,540,375)
             Investment in Detection Systems, Inc.      (826,950)      (129,500)
             Other                                      (189,016)      (595,056)
                                                     -----------    -----------
                                                      (2,569,870)    (1,094,065)
                                                     -----------    -----------

                                                     $ 1,389,734    $ 1,862,194
                                                     ===========    ===========
</TABLE>

    At December 31, 1999, the Company had federal, state and foreign net
    operating loss carryforwards of approximately $206,000, $1,200,000 and
    $3,340,000, respectively. The federal net operating loss carryforwards are
    limited in use each year to approximately $135,000 through expiration in
    2010. The state net operating loss carryforwards expire in 2005.
    Substantially all foreign net operating loss carryforwards do not expire.

    Management believes the Company will obtain the full benefit of its deferred
    tax assets on the basis of its evaluation of the Company's anticipated
    domestic and international profitability.

NOTE J - INVESTMENT IN DETECTION SYSTEMS, INC.

    The Company has acquired since 1998 an approximate 21% interest in Detection
    Systems, Inc. In the fourth quarter of 1998, the Company began accounting
    for its investment in Detection Systems, Inc. under the equity method and
    the Company's share of earnings is included in income as earned. The
    difference between the Company's cost and the underlying equity in Detection
    Systems, Inc. of approximately $1.6 million represents goodwill and is being
    amortized over thirty years. Condensed financial information as of March 31,
    1999 and 1998 for Detection Systems, Inc. is as follows (in thousands):

<TABLE>
<CAPTION>
                                     March 31,
                                -----------------
                                  1999      1998
                                -------   -------
<S>                             <C>       <C>
       Current assets           $66,341   $68,520
       Noncurrent assets         26,471    25,524
       Current liabilities       17,244    23,576
       Noncurrent liabilities    19,824    19,204
       Net assets                55,744    51,264
</TABLE>


                                      F-20
<PAGE>   44


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE J - INVESTMENT IN DETECTION SYSTEMS, INC. - Continued

<TABLE>
<CAPTION>

                         Years ended March 31,
                         ---------------------
                            1999       1998
                          --------   --------
<S>                       <C>        <C>
       Revenues           $138,045   $126,343
       Operating income      8,648      4,832
       Net income            4,471      1,382
</TABLE>

    The market value of the Company's investment in Detection Systems, Inc. was
    $12,599,730 and $11,493,000 at December 31, 1999 and 1998, respectively.

NOTE K - SEGMENT DISCLOSURE AND FOREIGN OPERATIONS

    The Company has four business segments: United States-Professional Security
    Group (US-PSG), United States-Diversified Group (US-DSG),
    International-Professional Security Group (International-PSG), and Supply.
    The segments are differentiated by the customers serviced as follows:

        US-PSG

        This segment consists of sales in the United States to professional
        security dealers, distributors, installers and certain large end users
        of professional security products.

        US-DSG

        This segment sells video and security products to industrial markets and
        consumers in the United States.

        International-PSG

        This segment consists of sales to professional security dealers,
        distributors, installers and certain large end users of professional
        security products outside the United States.

        Supply

        This segment sells to the US-PSG and International-PSG segments products
        and systems manufactured by the Company's Ohio and California
        facilities.

        The Company's underlying accounting records are maintained on a legal
        entity basis for government and public reporting requirements. Segment
        disclosures are on a performance basis consistent with internal
        management reporting. The Company evaluates performance based on
        earnings from continuing operations before income taxes and other income
        and expense. The Corporate column includes corporate overhead related
        items. The accounting policies of the segments are the same as those
        described in the summary of significant accounting policies (Note A).


                                      F-21
<PAGE>   45


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE K - SEGMENT DISCLOSURE AND FOREIGN OPERATIONS - Continued

    The following tables provide financial data by segment for the years ended
    December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                    US               US         International
1999                                PSG              DSG             PSG            Supply          Corporate          Total
----                           -------------    -------------   -------------    -------------    -------------    -------------
<S>                            <C>              <C>             <C>              <C>              <C>              <C>
Total revenue                  $  90,743,713    $  53,188,272   $  81,675,409    $  22,555,516    $          --    $ 248,162,910
Intersegment revenue              (1,512,222)              --     (17,658,620)     (22,555,516)              --      (41,726,358)
                               -------------    -------------   -------------    -------------    -------------    -------------

Revenue from external
   customers                   $  89,231,491    $  53,188,272   $  64,016,789    $          --    $          --    $ 206,436,552
                               =============    =============   =============    =============    =============    =============

Operating profit (loss)
   including special charges   $   7,418,109    $   7,235,687   $    (325,109)   $    (629,465)   $ (12,792,741)   $     906,481
Total assets                      48,475,248       27,700,142      46,530,723       14,099,110       63,545,285      200,350,508
Depreciation and
   amortization expense            3,401,530        1,774,544         672,710           62,680               --        5,911,464
Capital additions                  2,386,005        1,422,227       2,374,553               --               --        6,182,785

1998
----
Total revenue                  $  92,319,817    $  50,345,605   $  66,957,207    $  29,385,900    $          --    $ 239,008,529
Intersegment revenue             (10,168,609)              --      (4,231,470)     (29,385,900)              --      (43,785,979)
                               -------------    -------------   -------------    -------------    -------------    -------------

Revenue from external
   customers                   $  82,151,208    $  50,345,605   $  62,725,737    $          --    $          --    $ 195,222,550
                               =============    =============   =============    =============    =============    =============

Operating profit (loss)        $   8,994,267    $   8,977,049   $   2,009,647    $  (2,016,891)   $  (9,878,901)   $   8,085,171
Total assets                      43,732,291       28,905,974      36,037,253       19,127,020       68,823,457      196,625,995
Depreciation and
   amortization expense            2,365,987        1,428,234         641,591          230,696               --        4,666,508
Capital additions                  7,492,423        4,083,349         746,855               --               --       12,322,627

1997
----
Total revenue                  $  78,892,610    $  47,615,223   $  53,473,573    $  26,966,587    $          --    $ 206,947,993
Intersegment revenue              (2,153,532)              --      (2,925,873)     (26,966,587)              --      (32,045,992)
                               -------------    -------------   -------------    -------------    -------------    -------------

Revenue from external
   customers                   $  76,739,078    $  47,615,223   $  50,547,700    $          --    $          --    $ 174,902,001
                               =============    =============   =============    =============    =============    =============

Operating profit (loss)
   including special charges   $   6,447,233    $   8,221,438   $     831,999    $  (2,007,458)   $ (12,403,058)   $   1,090,154
Total assets                      33,903,773       11,971,792      28,870,890       19,870,066       90,639,655      185,256,176
Depreciation and
   amortization expense            1,842,123        1,164,271         770,135          194,585               --        3,971,114
Capital additions                  1,358,233           79,096         558,323               --               --        1,995,652
</TABLE>


                                      F-22
<PAGE>   46


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE K - SEGMENT DISCLOSURE AND FOREIGN OPERATIONS - Continued

    Financial information relating to the Company's Corporate segment is as
    follows:

<TABLE>
<CAPTION>
                                                   Years ended December 31,
                                           ---------------------------------------
                                               1999          1998          1997
                                           -----------   -----------   -----------

<S>                                        <C>           <C>           <C>
Sales and marketing expenses               $ 1,364,125   $ 1,398,736   $ 1,220,932
Engineering and other corporate expenses     3,511,859     4,517,287     4,219,669
General and administrative expenses          4,271,515     3,962,878     3,840,457
Special charges                              3,645,242            --     3,122,000
                                           -----------   -----------   -----------

   Operating loss                          $12,792,741   $ 9,878,901   $12,403,058
                                           ===========   ===========   ===========
</TABLE>

    Sales by geographic area were as follows:

<TABLE>
<CAPTION>
                                                     Years ended December 31,
                                           ------------------------------------------
                                               1999           1998           1997
                                           ------------   ------------   ------------
<S>                                        <C>            <C>            <C>
United States                              $142,419,763   $132,496,813   $124,354,301
Europe                                       58,012,411     53,855,400     44,510,358
Other                                         6,004,378      8,870,337      6,037,342
                                           ------------   ------------   ------------

   Total revenues                          $206,436,552   $195,222,550   $174,902,001
                                           ============   ============   ============
</TABLE>


                                      F-23
<PAGE>   47


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE L - EARNINGS PER SHARE

    Following is a reconciliation of basic and diluted earnings per share from
    continuing operations:

<TABLE>
<CAPTION>
                                                1999                                    1998
                                -------------------------------------   -------------------------------------
                                  Income                                  Income
                               allocable to                   Per      allocable to                  Per
                                 common                      share        common                    share
                               stockholders    Shares        amount    stockholders    Shares       amount
                               ------------  ----------   -----------  ------------  ----------   -----------
<S>                            <C>           <C>          <C>          <C>           <C>          <C>
Income from continuing
  operations allocable to
  common stockholders           $  555,344   11,644,941   $      0.05   $4,839,963   13,254,782   $      0.37
                                                          ===========                             ===========

Effect of dilutive securities
   Contingently issuable
      shares                            --       98,773                         --      366,690           --
   Put options                          --           --                         --      428,640           --
   Stock options                        --      149,587                         --      319,057           --
   Convertible preferred
      stock                        117,210      406,981                    117,210      406,981           --
                                ----------   ----------                 ----------   ----------


Income from continuing
 operations allocable to
 common stockholders after
 assumed conversions            $  672,554   12,300,282   $      0.05   $4,957,173   14,776,150   $      0.34
                                ==========   ==========   ===========   ==========   ==========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                                1997
                                -------------------------------------
                                 Income
                               allocable to                  Per
                                  common                    share
                               stockholders    Shares       amount
                               ------------  ----------   -----------
<S>                            <C>          <C>          <C>
Income from continuing
  operations allocable to
  common stockholders           $2,200,013   13,969,698   $      0.16
                                                          ===========

Effect of dilutive securities
   Contingently issuable
      shares                           --       301,981
   Put options                         --        78,126
   Stock options                       --       467,499
   Convertible preferred
      stock                       117,210       406,981
                                ----------   ----------


Income from continuing
 operations allocable to
 common stockholders after
 assumed conversions            $2,317,223   15,224,285   $      0.15
                                ==========   ==========   ===========
</TABLE>


    For 1999, 1998 and 1997, 201,053, 367,919 and 286,655 stock options were
    outstanding, respectively, but not included in the computation of diluted
    income per share because the options exercise price was greater than the
    average market price of the common shares and, therefore, the effect would
    have been antidilutive.


                                      F-24
<PAGE>   48


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE M - UNAUDITED QUARTERLY OPERATING RESULTS

    Unaudited quarterly operating results for the years ended December 31, 1999,
    1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                  First         Second           Third         Fourth
                                 Quarter        Quarter         Quarter        Quarter
                              ------------   ------------    ------------   ------------
1999:
-----
<S>                           <C>            <C>             <C>            <C>
   Sales                      $ 48,668,384   $ 52,323,827    $ 51,281,007   $ 54,163,334
   Gross profit                 15,896,840     17,125,867      16,869,988     17,982,752
   Net income (loss)               338,167       (735,914)        875,760         87,519

   Income (loss) per share:
      Basic                   $       0.03   $      (0.07)   $       0.07   $       0.01
      Diluted                         0.03          (0.07)           0.07           0.01


1998:
-----
   Sales                      $ 44,259,934   $ 48,518,345    $ 52,618,516   $ 49,825,755
   Gross profit                 13,730,647     15,529,383      17,176,078     17,109,769
   Net income (loss)               580,337      1,211,673       1,863,180       (100,314)

   Income (loss) per share:
      Basic                   $       0.04   $       0.09    $       0.14   $      (0.01)
      Diluted                         0.04           0.08            0.13          (0.01)

1997:
-----
   Sales                      $ 38,461,730   $ 41,800,882    $ 47,724,006   $ 46,915,383
   Gross profit                 12,415,540     13,248,807      14,928,491     13,426,463
   Net income (loss)             2,034,433        876,443       2,016,607     (2,526,769)

   Income (loss) per share:
      Basic                   $       0.14   $       0.06    $       0.14   $      (0.18)
      Diluted                         0.14           0.06            0.13          (0.18)
</TABLE>

    See Note O for special charges and changes in estimates in the fourth
    quarter of 1997 and the first, second and fourth quarters of 1999.


                                      F-25
<PAGE>   49


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - DISCONTINUED OPERATIONS

    In December 1998, the Company discontinued operations of its Mobile Video
    division which markets and installs video equipment on transit vehicles. As
    discussed in Note B, the Company sold Dental Vision Direct, Inc. on August
    5, 1998. The Company expects to complete the disposal in 2000.

    Summarized financial information for discontinued operations follows:

<TABLE>
<CAPTION>
                                                               Years ended December 31,
                                                      -----------------------------------------
                                                          1999           1998           1997
                                                      -----------    -----------    -----------

<S>                                                   <C>            <C>            <C>
Revenues                                              $   615,993    $ 9,222,863    $13,838,734

Income (loss) from the discontinued operations,
   net of taxes (benefit) of $(55,132), $(750,487),
   and $43,011                                           (107,022)    (1,480,243)        83,491

Gain on disposal, net of taxes of $23,414                      --         77,946             --
</TABLE>

    The net assets of discontinued operations consists of the following:

<TABLE>
<CAPTION>
                             December 31,
                       -----------------------
                          1999         1998
                       ----------   ----------
<S>                    <C>          <C>
Accounts receivable    $  724,072   $1,060,966
Inventories             1,058,624    1,953,726
Other current assets      123,135      471,489
Equipment and other            --      311,050
                       ----------   ----------

Total                  $1,905,831   $3,797,231
                       ==========   ==========
</TABLE>


                                      F-26
<PAGE>   50


                          ULTRAK, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE O - SPECIAL CHARGES AND CHANGES IN ESTIMATES

    During the fourth quarter of 1997, the Company recorded nonrecurring charges
    of approximately $3.1 million which consist of (1) the write-off of computer
    hardware and software made obsolete by the implementation of new software,
    (2) the cost of moving to a new headquarters building including charges for
    the write-off of leasehold improvements and other abandonment costs and (3)
    implementation costs related to new software through December 1997.

    During the fourth quarter of 1997, the Company also made certain changes in
    estimates totaling $2.0 million consisting of provisions for excess and
    obsolete inventory of $1.0 million and increases in allowance for doubtful
    accounts for accounts receivable and other assets of $1.0 million.

    During the first quarter of 1999, the Company incurred nonrecurring charges
    totaling $750,000 related to severance obligations. During the second
    quarter of 1999, the Company incurred nonrecurring charges totaling
    $3,125,000 pertaining to restructuring costs for (1) its four European
    locations including costs for employee severance, terminating leases, and
    consolidation of all purchasing, shipping, and billing activity to Antwerp,
    Belgium and (2) closing costs of three United States sales and distribution
    offices.

    The Company's exit plan commenced in June 1999 and provides for the
    termination of 54 employees (19 employees in the United States and 35
    employees in Europe). The exit plan is expected to be completed in 2000. The
    restructuring charge and the amount settled are summarized as follows:

<TABLE>
<CAPTION>
                                                                               Accrued at
                                                                              December 31,
                                                   Charge        Settled         1999
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Severance and other related employee costs      $ 2,608,150    $(1,689,343)   $   918,807
Leased facilities and other termination costs     1,266,850       (436,584)       830,266
                                                -----------    -----------    -----------

                                                $ 3,875,000    $(2,125,927)   $ 1,749,073
                                                ===========    ===========    ===========
</TABLE>

    During the fourth quarter of 1999, the Company increased its allowance for
    doubtful accounts for its European and South African subsidiaries by
    approximately $1 million.


                                      F-27
<PAGE>   51


         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULES




Board of Directors
Ultrak, Inc.


In connection with our audit of the consolidated financial statements of Ultrak,
Inc. and Subsidiaries referred to in our report dated February 12, 2000, which
is included in Part IV of this Form 10-K, we have also audited Schedule II for
each of the three years in the period ended December 31, 1999. In our opinion,
this schedule presents fairly, in all material respects, the information
required to be set forth therein.


GRANT THORNTON LLP

Dallas, Texas
February 12, 2000


                                      S-1
<PAGE>   52


                                                                     SCHEDULE II

                          ULTRAK, INC. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

                  Years ended December 31, 1999, 1998, and 1997


<TABLE>
<CAPTION>
                                        Balance at      Charged        Charged                        Balance at
                                        Beginning    (credited) to     to other                          End
    Description                         of Period      Operations      Accounts      Deductions       of Period
    -----------                         ----------     ----------    ------------    ----------       ----------
<S>                                     <C>            <C>           <C>             <C>              <C>
Allowance for doubtful trade accounts
    Year ended December 31, 1999        $1,657,549     $  813,178    $   22,599(1)   $  (91,553)(2)   $2,401,773
    Year ended December 31, 1998         1,741,920         (8,103)        4,790(1)      (81,058)(2)    1,657,549
    Year ended December 31, 1997           717,840        316,937       955,084(1)     (247,941)(2)    1,741,920
</TABLE>




Notes

(1) Balances recorded from business combinations.

(2) Balances written off.




                                      S-2
<PAGE>   53
                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
INDEX                    DESCRIPTION
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<S>         <C>
  3.1       Certificate of Incorporation of the Company (filed as Exhibit
            3.1 to the Company's Annual Report on Form 10-K for the year
            ended December 31, 1995)

  3.2       By-Laws of the Company (filed as Exhibit 3.2 to the Company's
            Annual Report on Form 10-K for the year ended December 31,
            1995)

  4.1       Form of certificate representing shares of the Common Stock
            (filed as Exhibit 4.1 the Company's Registration Statement on
            Form S-2, Registration No. 333-02891)

  10.1      Ultrak, Inc. 1988 Non-Qualified Stock Option Plan (filed as
            Exhibit 10.6 to the Company's Registration Statement on Form
            S-1, Registration No. 55-3-31110)

  10.2      Amendment No. 2 to Ultrak, Inc. 1988 Non-Qualified Stock
            Option Plan (filed as Exhibit 10 to the Company's Current
            Report on Form 8-K dated December 28, 1993)

  10.3      Amendment No. 3 to Ultrak, Inc. 1988 Non-Qualified Stock
            Option Plan (filed as Exhibit 10.3 to the Company's Annual
            Report on Form 10-K for the year ended December 31, 1996)

  10.4      Agreement and Plan of Reorganization, dated as of April 28,
            1995, among Diamond Electronics, Inc., the shareholders of
            Diamond signing the Agreement, the Company and Diamond
            Purchasing Corp. (filed as Annex A to the Company's Form S-4
            dated June 28, 1995)

  10.5      Employment Agreement, dated May 25, 1995, between the Company
            and James D. Pritchett (filed as Exhibit 10.21 to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1995)

  10.6      Employment Agreement, dated May 25, 1995, between the Company
            and Tim D. Torno (filed as Exhibit 10.22 to the Company's
            Annual Report on Form 10-K for the year ended December 31,
            1995)

  10.7      Ultrak, Inc. Incentive Stock Option Plan (filed as Exhibit
            10.1 to the Company's Quarterly Report on Form 10-Q for the
            quarter ended March 31, 1997)

  10.8      Stock Purchase Agreement dated August 7, 1996 among Chris
            Davies, Kim Rhodes, Scott Rhodes, Rhodes Davies & Associates
            Pty Ltd. and the Company (filed as Exhibit 10.1 to the
            Company's Current Report on Form 8-K dated August 23, 1996)

  10.09     Stock Purchase Agreement dated September 26, 1996 among
            Maurice Scetbon, Monda, S.A., Frida, S.A., the Company and
            Ultrak Holdings Limited (filed as Exhibit 10.1 to the
            Company's Current Report on Form 8-K dated October 11, 1996)

  10.10     Purchase Agreement of German GmbH Share Capital, dated
            December 16, 1996, among all of the shareholders of VideV
            GmbH, Ultrak and Ultrak Holdings Limited (filed as Exhibit 1
            to the Company's Current Report on Form 8-K dated December 31,
            1996)
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<PAGE>   54

<TABLE>
<S>         <C>
  10.11     Agreement and Plan of Merger dated February 10, 1997 among
            Monitor Dynamics, Inc., all of the shareholders of Monitor
            Dynamics, Inc., Ultrak, Inc. and MDI Acquisition Corp. (filed
            as Exhibit 1 to the Company's Current Report on Form 8-K dated
            March 5, 1997)

  10.12     Amended and Restated Loan Agreement, dated effective as of
            December 11, 1997, among Ultrak, Inc., Dental Vision Direct,
            Inc., Diamond Electronics, Inc., Monitor Dynamics, Inc.,
            Ultrak Operating, L.P. and NationsBank of Texas, N.A. (filed
            as Exhibit 1 to the Company's current Annual Report on Form
            10-K for the year ended December 31, 1997)

  10.13     Credit Agreement, dated as of February 16, 1999, among Ultrak,
            Inc., Bank One, Texas, N.A. and Certain Lenders (filed as
            Exhibit 10.13 to the Company's Annual Report on Form 10-K for
            the year ended December 31, 1998)

  10.14     Stock Purchase Agreement dated August 5, 1998, between the
            Company and American Dental Technologies, Inc. (filed as
            Exhibit 10.14 to the Company's Annual Report on Form 10-K for
            the year ended December 31, 1998)

  10.15     Stock Sale Agreement dated February 23, 1999 between the
            Company and Mutsuo Tanaka (filed as Exhibit 10.15 to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1998)

  10.16     Employment Agreement, dated January 1, 1998, between the
            Company and Ted Wlazlowski (filed as Exhibit 10.16 to the
            Company's Annual Report on Form 10-K for the year ended
            December 31, 1998)

  10.17     Agreement and Plan of Merger dated March 15, 1999 among ABM
            Data Systems, Inc., Robert F. James, Ultrak, Inc. and ABM
            Acquisition Corp. (filed as Exhibit 1 to the Company's Current
            Report on Form 8-K dated March 18, 1999)

  10.18     First Amended and Restated Credit Agreement between Ultrak,
            Inc., Bank One of Texas, N.A. and Certain Lenders, dated
            August 12, 1999 (filed as Exhibit 10.1 to the Company's
            Quarterly Report on Form 10-Q for the quarter ended March 31,
            1999)

  10.19     Employment Agreement, dated June 1, 1999, between the Company
            and Ted Wlazlowski (filed as Exhibit 10.2 to the Company's
            Quarterly Report on Form 10-Q for the quarter ended March 31,
            1999)

  10.20     Employment Agreement, dated June 1, 1999, between the Company
            and Tim D. Torno (filed as Exhibit 10.3 to the Company's
            Quarterly Report on Form 10-Q for the quarter ended March 31,
            1999)

  *10.21    First Amendment to First Amended and Restated Credit Agreement
            between Ultrak, Inc., Bank One of Texas, N.A. and Certain
            Lenders, dated November 12, 1999

  *10.22    Second Amendment to First Amended and Restated Credit
            Agreement between Ultrak, Inc., Bank One of Texas, N.A. and
            Certain Lenders, dated January 31, 2000

  *10.23    Third Amendment to First Amended and Restated Credit Agreement
            between Ultrak, Inc., Bank One of Texas, N.A. and Certain
            Lenders, dated February 29, 2000

  *10.24    Amendment No. 4 to Ultrak, Inc. 1988 Non-Qualified Stock
            Option Plan

  *21.1     Subsidiaries of the Company

  *27.1     Financial Data Schedule
</TABLE>

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* Exhibits 10.21, 10.22, 10.23, 10.24, 21.1 and 27.1 are filed herewith.