FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
(Mark One)

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

For the quarterly period ended   September 30, 1999
                              --------------------------------------------------
                                       OR
[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission file number                0-24900
                      ----------------------------------------------------------

                             ITI Technologies, Inc.
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             (Exact name of registrant as specified in its charter)

               Delaware                                  06-1340453
------------------------------------        ------------------------------------
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
   incorporation or organization)

               2266 North Second Street, North St. Paul, MN 55109
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                    (Address of principal executive offices)
                                   (Zip Code)

                                 (651) 777-2690
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              (Registrant's telephone number, including area code)

                                 Not applicable
--------------------------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)

         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 ___

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         As of November 2, 1999, there were 8,529,542 shares of common stock
outstanding.


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                                       1
<PAGE>


                             ITI TECHNOLOGIES, INC.

                                    FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 1999


                                      INDEX                                 PAGE
                                      -----                                 ----

PART I --    FINANCIAL INFORMATION

             Item 1 --      Consolidated Financial Statements                  3

             Item 2 --      Management's Discussion and Analysis              11
                            of Financial Condition and Results
                            of Operations

PART II --   OTHER INFORMATION

             Item 1 --      Legal Proceedings                                 15

             Item 5 --      Other Information                                 16

             Item 6 --      Exhibits and Reports on Form 8-K                  16

             Signatures                                                       17


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                                       2
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements.



                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
     of ITI Technologies, Inc.:

We have reviewed the accompanying consolidated balance sheet of ITI
Technologies, Inc. and Subsidiaries as of September 30, 1999, and the related
consolidated statement of operations for the three-month and nine-month periods
ended September 30, 1999 and 1998, and the consolidated statement of cash flows
for the nine-month periods ended September 30, 1999 and 1998. These financial
statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the consolidated financial statements for them to be in conformity
with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of ITI Technologies, Inc. and
Subsidiaries as of December 31, 1998, and the related consolidated statements of
operations, cash flows and stockholders' equity for the year then ended (not
presented herein); and in our report dated March 23, 1999, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated financial statements
is fairly stated, in all material respects, in relation to the consolidated
financial statements from which it has been derived.


/s/ PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
November 3, 1999


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                                       3
<PAGE>


                             ITI TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                       FOR THE THREE                FOR THE NINE
                                                                       MONTHS ENDED                 MONTHS ENDED
                                                                       SEPTEMBER 30,                SEPTEMBER 30,
                                                                -------------------------     -------------------------
                                                                    1999           1998           1999          1998
                                                                    ----           ----           ----          ----
                                                                                      (UNAUDITED)
<S>                                                             <C>            <C>            <C>            <C>
Net sales ..................................................    $   31,435     $   29,326     $   88,726     $   80,379
 Cost of goods sold ........................................        16,563         16,021         47,063         43,792
                                                                ----------     ----------     ----------     ----------
Gross profit ...............................................        14,872         13,305         41,663         36,587
Operating expenses:
     Marketing, general and administrative .................         6,003          4,917         16,649         14,684
     Research and development ..............................         2,246          2,047          6,344          6,041
     Patent litigation costs ...............................                                       4,104
     Amortization of intangible assets .....................           353            353          1,059          1,059
                                                                ----------     ----------     ----------     ----------
Operating income ...........................................         6,270          5,988         13,507         14,803
Other income (expense):
     Interest, net .........................................           526            204          1,139            597
     Other, net ............................................            (8)           (13)            (3)            50
                                                                ----------     ----------     ----------     ----------
Income before income tax expense ...........................         6,788          6,179         14,643         15,450
Income tax expense .........................................         2,445          2,223          5,275          5,562
                                                                ----------     ----------     ----------     ----------
Net income .................................................    $    4,343     $    3,956     $    9,368     $    9,888
                                                                ==========     ==========     ==========     ==========
Per share amounts:
Basic ......................................................    $      .51     $      .47     $     1.11     $     1.16
Weighted average common shares
     outstanding ...........................................         8,434          8,498          8,428          8,503
Diluted ....................................................    $      .50     $      .45     $     1.07     $     1.11
Weighted average common and common
     equivalent shares outstanding .........................         8,727          8,880          8,777          8,904
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statement.
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                                       4
<PAGE>


                             ITI TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEET
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                         SEPTEMBER 30,     DECEMBER 31,
                                                                             1999              1998
                                                                         -------------     -------------
                                                                          (UNAUDITED)
<S>                                                                      <C>               <C>
                                     ASSETS
Current assets:
      Cash and cash equivalents .....................................    $       3,880     $       5,594
      Accounts receivable ...........................................           20,727            19,037
      Notes receivable-dealer financing, current portion ............            6,162             1,096
      Inventories ...................................................           24,959            25,201
      Deferred income taxes .........................................            1,223             1,223
      Other current assets ..........................................            1,581             1,738
                                                                         -------------     -------------
           Total current assets .....................................           58,532            53,889
Notes receivable, net of current portion ............................           11,629             3,948
Property and equipment ..............................................           13,408            10,647
Excess of cost over net assets acquired .............................           26,973            27,576
Other intangible assets .............................................           15,608            19,897
                                                                         -------------     -------------
           Total assets .............................................    $     126,150     $     115,957
                                                                         =============     =============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable ..............................................    $       5,323     $       6,874
      Accrued wages .................................................            2,839             2,045
      Income taxes payable ..........................................            1,148
      Other accrued expenses ........................................            2,162             1,955
                                                                         -------------     -------------
           Total current liabilities ................................           11,472            10,874
Income taxes ........................................................            6,199             7,676
                                                                         -------------     -------------
           Total liabilities ........................................           17,671            18,550
                                                                         -------------     -------------

Commitments and contingencies

Stockholders' equity:
      Common stock ($.01 par value; 30,000 shares authorized;
           9,395 shares issued, 8,438 shares outstanding at
           September 30, 1999; 9,304 shares issued, 8,347 shares
           outstanding at December 31, 1998) ........................               94                93
      Additional paid-in capital ....................................           78,071            76,368
      Retained earnings .............................................           45,693            36,325
      Treasury stock, at cost (957 shares at September 30, 1999
            and December 31, 1998) ..................................          (15,379)          (15,379)
                                                                         -------------     -------------
           Total stockholders' equity ...............................          108,479            97,407
                                                                         -------------     -------------
           Total liabilities and stockholders' equity ...............    $     126,150     $     115,957
                                                                         =============     =============
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statement.
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                                       5
<PAGE>


                             ITI TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       FOR THE NINE
                                                                       MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                              -----------------------------
                                                                  1999             1998
                                                                  ----             ----
                                                                       (UNAUDITED)
<S>                                                           <C>              <C>
OPERATING ACTIVITIES:
Net income ...............................................    $      9,368     $      9,888
Adjustments to reconcile net income to net cash
     provided by operating activities:
     Amortization of intangible assets ...................           1,161            1,137
     Depreciation and amortization .......................           1,908            1,654
     Provision for doubtful accounts .....................             433              282
     Patent litigation costs .............................           4,104
     Deferred income taxes ...............................          (1,477)
     Changes in operating assets and liabilities:
          Accounts receivable ............................          (2,123)          (2,860)
          Inventories ....................................             242           (1,647)
          Notes receivable-dealer financing ..............         (11,838)          (1,279)
          Other current assets ...........................            (610)             129
          Accounts payable ...............................          (1,551)             188
          Income taxes payable ...........................           1,915              469
          Accrued wages and other accrued expenses .......           1,001              963
                                                              ------------     ------------
Net cash provided by operating activities ................           2,533            8,924
                                                              ------------     ------------

INVESTING ACTIVITIES:
Additions to property and equipment ......................          (4,669)          (2,250)
Additions to other intangible assets .....................            (373)          (1,611)
Issuance of notes receivable .............................            (909)
                                                              ------------     ------------
Net cash used in investing activities ....................          (5,951)          (3,861)
                                                              ------------     ------------

FINANCING ACTIVITIES:
Proceeds from exercise of common stock options ...........           1,704              919
Payments for treasury stock ..............................                           (6,318)
                                                              ------------     ------------
Net cash provided by (used in) financing activities ......           1,704           (5,399)
                                                              ------------     ------------
NET DECREASE IN CASH AND CASH
     EQUIVALENTS .........................................          (1,714)            (336)

CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD ..............................           5,594            5,838
                                                              ------------     ------------

CASH AND CASH EQUIVALENTS
     AT END OF PERIOD ....................................    $      3,880     $      5,502
                                                              ============     ============
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statement.
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                                       6
<PAGE>


NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

         The unaudited consolidated financial statements for the three-month and
         nine-month periods ended September 30, 1999 and 1998, reflect, in the
         opinion of management of ITI Technologies, Inc. (the "Company" or
         "ITI"), all normal, recurring adjustments necessary for a fair
         statement of the financial position and results of operations for the
         interim periods. The results of operations for any interim period are
         not necessarily indicative of results for the full year. The
         consolidated balance sheet data as of December 31, 1998, was derived
         from audited consolidated financial statements but does not include all
         disclosures required by generally accepted accounting principles. The
         unaudited consolidated financial statements should be read in
         conjunction with the consolidated financial statements and notes
         thereto included in the Company's Annual Report on Form 10-K for the
         year ended December 31, 1998. PricewaterhouseCoopers LLP, the Company's
         independent accountants, have performed limited reviews of the interim
         financial information included herein. Their report on such reviews
         accompanies this filing.

         The unaudited consolidated financial statements include the accounts of
         the Company and its wholly owned subsidiaries. All significant
         intercompany accounts and transactions have been eliminated

2.       PROPOSED MERGER

         On September 28, 1999, the Company entered into a definitive agreement
         to merge with SLC Technologies, Inc. ("SLC"). SLC, headquartered in
         Portland, Oregon, is a global integrated communications technology
         company with products for commercial security, fire protection, CCTV,
         electronic access control and fiber optic communication systems. SLC
         has sales and technical support organizations in 27 countries and
         manufacturing and logistics organizations in the United States, the
         Netherlands, Ireland, Australia and China.

         The transaction, which will be treated as a purchase of the Company by
         SLC for accounting purposes, is structured as a stock-for-stock merger
         of SLC into the Company, with the Company issuing approximately 15.2
         million shares to SLC. In addition, the Company's shareholders will
         have the right to elect to receive from the newly merged company $36.50
         in cash at closing for each share of the Company's common stock,
         subject to the limitation that no more than 50% of the total number of
         shares of the Company's common stock issued and outstanding immediately
         prior to the closing be exchanged for cash. As a result of the
         transaction, SLC shareholders will have an approximate 63.5% ownership
         position in the new company on an equivalent share basis calculated
         under the treasury stock method without giving effect to the cash
         election. Assuming that 50% of the Company's outstanding common stock
         outstanding immediately prior to the closing is exchanged for cash, SLC
         shareholder's percentage of ownership would increase to approximately
         78%. The merger has been approved by the Board of Directors of both
         companies and is subject to approval by the Company's shareholders,
         receipt by SLC of a supplemental federal tax ruling, approval by
         regulatory authorities, and other customary closing conditions.


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                                        7
<PAGE>


3.       PATENT LITIGATION COSTS

         On August 17, 1995, the Company commenced an action for patent
         infringement against Pittway Corporation and its subsidiary, Ademco
         Distribution Inc., in the United States District Court for the District
         of Minnesota. On March 9, 1998, the jury found that the Ademco VISTA
         Plus/5800 family of wireless security systems infringed the Company's
         Learn Mode patent. The Court awarded the Company damages of
         approximately $36 million for lost profits and royalties as well as
         prejudgment interest of approximately $3 million, bringing the total
         judgment to approximately $39 million. Pittway Corporation appealed the
         verdict.

         On June 1, 1999, the United States Court of Appeals for the Federal
         Circuit upheld the patent's validity but reversed the jury's finding of
         infringement. The United States Court of Appeals has also denied the
         Company's request for a rehearing of the case. As a result, the Company
         recorded in the second quarter of 1999 a non-cash write-off of $4.1
         million for certain litigation costs incurred in connection with the
         patent litigation against Pittway that were previously capitalized.

         On October 6, 1999, the Company filed a petition for a Writ of
         Certiorari with the United States Supreme Court asking the Court to
         review the ruling by the Federal Circuit Court of Appeals. The United
         States Supreme Court has not yet acted on the Company's petition.

         Pittway announced that in 1997 it had "introduced an improved method of
         enrolling transmitters in its Vista series of control panels." Pittway
         calls this new method "QED." While the Company has maintained that
         Pittway's QED products also infringe the Company's Learn Mode patent,
         the judge would not allow the Company to add Pittway's QED products to
         the action commenced in August of 1995 to avoid any additional
         complication and delay. Accordingly, the Company commenced a second
         patent infringement lawsuit against Pittway and Ademco Distribution,
         Inc. on August 3, 1998, for infringement of the Company's Learn Mode
         patent. The suit was also filed in the United States District Court for
         the District of Minnesota and is currently pending. The Company is in
         the process of consulting with its legal advisors and technical experts
         regarding the impact the reversal of the verdict in the first suit may
         have on this suit.


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                                        8
<PAGE>


4.       EARNINGS PER SHARE

         The difference in the weighted average shares outstanding for
         calculating basic and diluted earnings per share is attributable to the
         assumed exercise of stock options under the Company's Stock Option
         Incentive Plan.

         The dilutive effect of all stock options outstanding during the
         three-month and nine-month periods ended September 30, 1999 and 1998,
         were included in the calculation of the diluted per share earnings.
         Stock options with exercise prices greater than the average market
         value of the Company's common stock were excluded from the computation
         of diluted earnings per share for the three-month and nine-month
         periods ended September 30, 1999 and 1998. The number of excluded stock
         options were as follows:

                                                1999        1998
                                                ----        ----
         Three months ended September 30      413,000     416,000
         Nine months ended September 30       278,000     258,000

5.       NOTES RECEIVABLE-DEALER FINANCING

         The Company provides financing to qualified dealers for their business
         needs. Activity related to loans to dealers that finance the cost of
         equipment and other costs of the dealer are treated as cash flows from
         operations in the accompanying consolidated statement of cash flows.
         Activity related to loans to dealers to purchase account portfolios in
         an effort to expand their business are treated as investing activities
         in the accompanying consolidated statement of cash flows. In both
         cases, the Company receives a perfected security interest in the
         dealer's monitoring contacts as well as other collateral
         considerations. All notes are made at market interest rates adjusted
         for credit and collateral factors with varied repayment terms between
         12 to 72 months.

6.       SIGNIFICANT CUSTOMER

         As of September 30, 1999, and December 31, 1998, one customer
         participating in the Company's dealer financing program had a note
         receivable balance due to the Company of $10.8 million and $2.3
         million, respectively.


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                                       9
<PAGE>


7.       OTHER FINANCIAL STATEMENT DATA (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                        September 30,      December 31,
                                                            1999               1998
                                                        -------------     -------------
                                                         (Unaudited)
<S>                                                     <C>               <C>
Accounts receivable:
   Accounts receivable .............................    $      22,047     $      20,182
   Allowance for doubtful accounts .................           (1,320)           (1,145)
                                                        -------------     -------------
          Total ....................................    $      20,727     $      19,037
                                                        =============     =============
Inventories:
   Raw materials ...................................    $      12,332     $      12,600
   Allowance for obsolescence ......................           (1,360)           (1,360)
                                                        -------------     -------------
                                                               10,972            11,240
   Work-in-process .................................            5,881             5,615
   Finished goods ..................................            8,106             8,346
                                                        -------------     -------------
          Total ....................................    $      24,959     $      25,201
                                                        =============     =============

Property and equipment:
   Machinery and equipment .........................    $      15,043     $      12,433
   Furniture and fixtures ..........................            5,141             4,545
   Building and improvements .......................            3,249             1,786
                                                        -------------     -------------
                                                               23,433            18,764
   Accumulated depreciation and amortization .......          (10,025)           (8,117)
                                                        -------------     -------------
          Total ....................................    $      13,408     $      10,647
                                                        =============     =============

Other intangible assets:
   Trademarks and trade names ......................    $      13,829     $      13,829
   Technology and patents ..........................            1,605             5,336
   Customer lists ..................................            3,007             3,007
   Other ...........................................              626               626
                                                        -------------     -------------
                                                               19,067            22,798
   Accumulated amortization ........................           (3,459)           (2,901)
                                                        -------------     -------------
          Total ....................................    $      15,608     $      19,897
                                                        =============     =============

Other accrued expenses:
   Warranty ........................................    $         650     $         650
   Professional fees ...............................              416               432
   Other ...........................................            1,096               873
                                                        -------------     -------------
          Total ....................................    $       2,162     $       1,955
                                                        =============     =============
</TABLE>



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                                       10
<PAGE>


Item 2.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations.

          When used in this discussion, the words "believes," "anticipates" and
     similar expressions are intended to identify forward-looking statements.
     Such statements are subject to certain risks and uncertainties which could
     cause actual results to differ materially from those projected. Readers are
     cautioned not to place undue reliance on these forward-looking statements
     which speak only as of the date hereof. The Company undertakes no
     obligation to publish revised forward-looking statements to reflect events
     or circumstances after the date hereof or to reflect the occurrence of
     unanticipated events. Readers are also urged to carefully review and
     consider the various disclosures made by the Company which attempt to
     advise interested parties of the factors which affect the Company's
     business, not only in this report, but also in the Company's periodic
     reports filed with the Securities and Exchange Commission.

GENERAL:

          On September 28, 1999, the Company entered into a definitive agreement
     to merge with SLC Technologies, Inc. ("SLC"). SLC, headquartered in
     Portland, Oregon, is a global integrated communications technology company
     with products for commercial security, fire protection, CCTV, electronic
     access control and fiber optic communication systems. SLC has sales and
     technical support organizations in 27 countries and manufacturing and
     logistics organizations in the United States, the Netherlands, Ireland,
     Australia and China.

          The transaction, which will be treated as a purchase of the Company by
     SLC for accounting purposes, is structured as a stock-for-stock merger of
     SLC into the Company, with the Company issuing approximately 15.2 million
     shares to SLC. In addition, the Company's shareholders will have the right
     to elect to receive from the newly merged company $36.50 in cash at closing
     for each share of the Company's common stock, subject to the limitation
     that no more than 50% of the total number of shares of the Company's common
     stock issued and outstanding immediately prior to the closing be exchanged
     for cash. As a result of the transaction, SLC shareholders will have an
     approximate 63.5% ownership position in the new company on an equivalent
     share basis calculated under the treasury stock method without giving
     effect to the cash election. Assuming that 50% of the Company's outstanding
     common stock outstanding immediately prior to the closing is exchanged for
     cash, SLC shareholder's percentage of ownership would increase to
     approximately 78%. The merger has been approved by the Board of Directors
     of both companies and is subject to approval by the Company's shareholders,
     receipt by SLC of a supplemental federal tax ruling, approval by regulatory
     authorities, and other customary closing conditions.


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                                       11
<PAGE>


RESULTS OF OPERATIONS:

          NET SALES. Net sales increased by $2.1 million, or 7.2%, from $29.3
     million for the three months ended September 30, 1998, to $31.4 million for
     the three months ended September 30, 1999. Net sales increased by $8.3
     million, or 10.4%, from $80.4 million for the nine months ended September
     30, 1998, to $88.7 million for the nine months ended September 30, 1999.
     Sales to the Company's traditional dealers increased 7.3% and 26.0% over
     the third quarter of 1998 and from the nine months ended September 30,
     1998, respectively. Sales into the utility channel increased 28.4% and
     21.1% over the third quarter of 1998 and over the nine months ended
     September 30, 1998, respectively. Sales into the international markets in
     the third quarter of 1999 increased 11.4% over the third quarter of 1998
     and increased 10.7% over the nine-month period ended September 30, 1998.
     During the quarter ended September 30, 1999, CADDX Controls, Inc., a wholly
     owned subsidiary of the Company, moved into its new facility in Gladewater,
     Texas. This caused temporary production problems that in turn affected
     sales for the quarter. As a result, domestic distribution and commercial
     product sales for the third quarter of 1999 and nine months ended September
     30, 1999, were flat to slightly down from the same periods during 1998.
     This transition is now complete and CADDX will be shipping at normal levels
     in the fourth quarter of 1999. The increases in sales are primarily
     attributable to volume increases.

          GROSS PROFIT. Gross profit increased $1.6 million from $13.3 million
     in the third quarter of 1998 to $14.9 million for the third quarter of 1999
     and increased as a percentage of net sales from 45.4% to 47.3% for the
     respective three-month periods. Gross profit increased from $36.6 million
     for the first nine months of 1998 to $41.7 million for the first nine
     months of 1999, and increased as a percentage of net sales from 45.5% to
     47.0% for the respective nine-month periods. The increase in gross margin
     is due primarily to the leveraging of fixed manufacturing costs over the
     increased sales volumes. Margins were also favorably impacted by an
     increased mix of higher margin wireless products being sold with the
     NX-hybrid product offerings.

          MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES. Marketing, general and
     administrative expenses increased from $4.9 million for the third quarter
     of 1998 to $6.0 million for the third quarter of 1999, and increased from
     $14.7 million for the first nine months of 1998 to $16.6 million for the
     first nine months of 1999. The increases are primarily due to expenses
     related to the proposed merger transaction with SLC and increased
     employment costs associated with the increased sales volume and the
     anticipated introduction in the second half of 1999 of the new Advent(R)
     and Concord(TM) Express product lines.

          RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
     for the three-month and nine-month periods ended September 30, 1999,
     increased $199,000 from the third quarter of 1998 and $303,000 from the
     first nine months of 1998, respectively. The increase for both periods was
     primarily due to the Company's continued emphasis on research and new
     product development. The Company released the Concord Express security
     system in the third quarter of 1999. The Concord Express is a very low cost
     control panel aimed directly at the hardwire installation market. The
     Company also continues development on its Advent platform, which is
     designed for the commercial burglary and fire market. The Company


--------------------------------------------------------------------------------
                                       12
<PAGE>


     anticipates that expenditures for research and development activities for
     the year ended December 31, 1999, will be between 7% and 8% of net sales.

          PATENT LITIGATION COSTS. During the second quarter of 1999, the
     Company recorded a non-cash charge of $4.1 million related to certain
     litigation costs incurred in connection with the patent litigation against
     Pittway that were previously capitalized. This one-time charge, net of
     applicable income tax benefits, impacted the earnings of the Company
     approximately $2.6 million or $0.30 per diluted share for the nine months
     ended September 30, 1999.

          AMORTIZATION OF INTANGIBLE ASSETS. Amortization of acquisition-related
     intangible assets remained constant for both the third quarter of 1999 and
     1998 and for the nine-month periods ended September 30, 1999 and 1998 at
     $353,000 and $1.1 million, respectively.

          NET INTEREST INCOME. Net interest income increased from $204,000 for
     the third quarter of 1998 to $526,000 for the third quarter of 1999, and
     increased from $597,000 during the first nine months of 1998 to $1.1
     million for the first nine months of 1999. The increases are the result of
     additional participation in the Company's dealer financing program. The
     Company's loan portfolio increased from $3.3 million at September 30, 1998
     to $17.8 million at September 30, 1999.

          INCOME TAX EXPENSE. Income tax expense increased from $2.2 million for
     the third quarter of 1998 to $2.4 million for the third quarter of 1999,
     and decreased from $5.6 million for the first nine months of 1998 to $5.3
     million for the first nine months of 1999. The Company's effective tax rate
     for these periods varies from the federal statutory rate primarily due to
     state income taxes, net of federal benefit, and the non-deductibility for
     income tax purposes of the amortization of excess of cost over net assets
     acquired.

LIQUIDITY AND CAPITAL RESOURCES

          The Company has funded its operations primarily with cash from
     operations. For the nine months ended September 30, 1999, cash from
     operations was provided by net income, adjusted for the $2.6 million
     non-cash patent litigation charge, including the related tax benefit, and
     $3.1 million of non-cash depreciation and amortization charges. Cash used
     in operations during the nine-month period consisted primarily of $11.8
     million for funding of the Company's dealer financing program and $1.1
     million used from changes in other operating assets and liabilities,
     principally increased accounts receivable and a reduction in accounts
     payable.

          During the first nine months of 1999, the Company has invested $4.7
     million in property and equipment, $1.6 million of which related to the
     plant and equipment expansion at the Company's Gladewater, Texas facility.
     For the year ended December 31, 1999, the Company expects that purchases of
     property and equipment will be approximately $5.5 million. The Company has
     also invested $909,000 in notes receivable related to dealer financing for
     account acquisitions.

          For the first nine months of 1999, cash provided by the exercise of
     stock options, including the related tax benefit, was $1.7 million.


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          A substantial amount of the Company's working capital is invested in
     accounts and notes receivable and inventories. The Company periodically
     reviews accounts and notes receivable for noncollectibility and inventories
     for obsolescence and establishes allowances it believes are appropriate.

          The Company believes that its current cash position, along with cash
     flows from operations and funds available through the Company's credit
     facility, will be adequate to fund its working capital and capital
     expenditure requirements along with any activity related to its stock
     repurchase program at least through the end of 1999.

EFFECT OF INFLATION AND FOREIGN CURRENCY TRANSACTIONS

          The Company believes that inflation and foreign currency fluctuations
     have not had a significant effect on its operations. Currently, the Company
     does not conduct any transactions or maintain any accounting records in any
     European currency. As such, the Company has not incurred and does not
     anticipate that there will be a material effect on its operations as a
     result of the conversion by eleven member states of the European Union to a
     common currency that occurred on January 1, 1999.

IMPACT OF THE YEAR 2000 ISSUE

          The Year 2000 issue is the inability of many computer programs to
     correctly identify dates occurring after December 31, 1999, because they
     use two digits rather than four digits to identify years. This could cause
     a computer system failure or miscalculations, resulting in disruptions of
     operations including, among other things, a temporary inability to process
     transactions or engage in similar normal business activities.

          The Company's assessment of the Year 2000 issue is substantially
     complete. The Company believes that with modifications to existing software
     and conversions to new software, the Year 2000 issue will not pose
     significant operational problems for its computer systems or the Company
     and the cost of such modifications to be immaterial.

          In addition to internal Year 2000 remediation activities, the Company
     is in contact with key suppliers and customers to ensure no interruption in
     the relationship between the Company and these important third parties from
     the Year 2000 issue. A comprehensive survey of all vendors and customers
     has not been, nor will be, undertaken. All efforts thus far have been
     focused on key vendors and customers. If these third parties do not convert
     their systems in a timely manner and in a way that is compatible with the
     Company's systems, the Year 2000 issue could have a material adverse effect
     on Company operations. The Company believes that its actions with key
     suppliers and customers will minimize these risks.

          The vast majority of the Company's products are not date-sensitive.
     The Company has collected information on current and discontinued
     date-sensitive products. This information is available to customers as of
     the date of this filing. At this time, the Company does not have in place a
     comprehensive, global contingency plan relative to potential Year 2000
     disruptions. Rather, each significant system either has been repaired and
     tested, or is being reworked. For systems currently being reworked,
     contingency plans exist to address unforeseen problems.


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                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.

          On August 17, 1995, the Company commenced an action for patent
          infringement against Pittway Corporation and its subsidiary, Ademco
          Distribution Inc., in the United States District Court for the
          District of Minnesota. On March 9, 1998, the jury found that the
          Ademco VISTA Plus/5800 family of wireless security systems infringed
          the Company's Learn Mode patent and awarded the Company damages of
          approximately $36 million for lost profits and royalties. On April 9,
          1998, the Court entered an injunction prohibiting Pittway Corporation
          from manufacturing and marketing the Ademco 5800 series wireless
          products that infringe ITI's Learn Mode patent and awarded the Company
          prejudgment interest of approximately $3 million, bringing the total
          judgment to approximately $39 million. Pittway Corporation appealed
          the verdict.

          On June 1, 1999, the United States Court of Appeals for the Federal
          Circuit upheld the patent's validity but reversed the jury's finding
          of infringement. The United States Court of Appeals has also denied
          the Company's request for a rehearing of the case. As a result, the
          Company recorded in the second quarter of 1999 a non-cash write-off of
          $4.1 million for certain litigation costs incurred in connection with
          the patent litigation against Pittway that were previously
          capitalized.

          On October 6, 1999, the Company filed a petition for a Writ of
          Certiorari with the United States Supreme Court asking the Court to
          review the ruling by the Federal Circuit Court of Appeals. The United
          States Supreme Court has not yet acted on the Company's petition.

          Pittway announced that in 1997 it had "introduced an improved method
          of enrolling transmitters in its Vista series of control panels."
          Pittway calls this new method "QED." While the Company has maintained
          that Pittway's QED products also infringe the Company's Learn Mode
          patent, the judge would not allow the Company to add Pittway's QED
          products to the action commenced in August of 1995 to avoid any
          additional complication and delay. Accordingly, the Company commenced
          a second patent infringement lawsuit against Pittway and Ademco
          Distribution, Inc. on August 3, 1998, for infringement of the
          Company's Learn Mode patent. The suit was also filed in the United
          States District Court for the District of Minnesota and is currently
          pending. The Company is in the process of consulting with its legal
          advisors and technical experts regarding the impact the reversal of
          the verdict in the first suit may have on this suit.

          In addition, the Company experiences routine litigation in the normal
          course of its business. The Company does not believe that any of this
          routine litigation will have a material adverse effect on the
          financial condition or results of operations of the Company.


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Item 5.   Other Information.

          None.

Item 6.   Exhibits and Reports on Form 8-K.

          (a)  The following exhibits are filed as part of this Quarterly Report
               on Form 10-Q:

               15.   Letter regarding unaudited interim financial information.

               27.1  Financial data schedule (for electronic filing purposes
                     only).

          (b)  The following Current Reports on Form 8-K were filed by the
               Company during the quarter ended September 30, 1999, or during
               the period from September 30, 1999, to the date of this Quarterly
               Report on Form 10-Q:

               (i)  A Current Report on Form 8-K was filed by the Company on
                    September 30, 1999, to report the information contained in
                    the Company's press release dated September 29, 1998,
                    regarding the merger agreement entered into by the Company
                    and SLC.

               (ii) An Amendment No. 1 to Current Report was filed by the
                    Company on Form 8-K/A-1 on October 12, 1999, to amend the
                    Current Report on Form 8-K filed on September 30, 1999, for
                    the purpose of filing additional financial information
                    included in the investor presentations, Exhibit 99.2.


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                                   SIGNATURES

Pursuant to the Requirements 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.


Dated: November 8, 1999                ITI TECHNOLOGIES, INC.



                                       By  /s/ Jack A. Reichert
                                         ---------------------------------------
                                               Jack A. Reichert
                                               Vice President of Finance
                                               (Chief Accounting Officer)


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