<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
( X ) QUARTERLY REPORT ( ) TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly
Period Ended December 31, 1993 Commission File No. 0-3953
----------------- --------
SENSORMATIC ELECTRONICS CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 34-1024665
- -------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
500 N.W. 12th Avenue, Deerfield Beach, Florida 33442-1795
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(Address of principal executive offices) (Zip Code)
(305) 420-2000
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(Registrant's telephone number, including area code)
Same
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(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 Sections 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 .
--- ---
The Registrant had outstanding 59,386,094 shares of Common Stock (par value
$.01 per share) as of February 4, 1994.
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SENSORMATIC ELECTRONICS CORPORATION
INDEX
FORM 10-Q
THREE MONTHS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Condensed Balance Sheets . . . . . . . . . . . . . . 2
Consolidated Condensed Statements of
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of
Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Condensed
Financial Statements . . . . . . . . . . . . . . . . . . . . 5-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . 8-11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the
financial statements have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission,
although the Company believes that the disclosures made are adequate
to make the information presented not misleading. These financial
statements should be read in conjunction with the financial
statements and related notes contained in the Company's 1993 Annual
Report on Form 10-K. Other than as indicated herein, there have been
no significant changes from the financial data published in said
report. In the opinion of Management, such unaudited information
reflects all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of the unaudited
information shown.
Results for the interim period presented herein are not necessarily
indicative of results expected for the full year.
1
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SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1993 1993
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<S> <C> <C>
ASSETS
Cash and marketable securities (including
marketable securities of $34,882 and $28,798
at December 31 and June 30, respectively) $ 101,956 $ 117,899
Accounts receivable, net 129,881 128,137
Receivables under deferred terms
and installment contract obligations, net 66,283 61,201
Net investment in sales-type leases 69,247 65,240
Inventories, net 112,572 102,759
Revenue equipment, less accumulated
depreciation of $31,978 and $26,832 at
December 31 and June 30, respectively 59,572 53,867
Other property, plant and equipment, net 88,932 67,236
Deferred charges, patents and other assets, net 92,008 39,177
Costs in excess of net assets acquired, net 308,642 291,338
---------- -------
$ 1,029,093 $ 926,854
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 33,547 $ 27,462
Accrued liabilities 114,454 84,576
Accrued and deferred income taxes payable 24,492 16,670
Debt 208,996 194,224
7% convertible subordinated debentures 114,095 114,165
Stockholders' equity:
Preferred stock, $.01 par value
Common stock, $.01 par value, 59,017 and
58,079 shares outstanding at December
31 and June 30, respectively 411,548 392,891
Retained earnings 205,795 178,018
Treasury stock, at cost (13,210) (14,757)
Foreign currency adjustments (66,306) (61,495)
Notes receivable from stock sales (4,318) (4,900)
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Total stockholders' equity 533,509 489,757
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$ 1,029,093 $ 926,854
========= ========
</TABLE>
The notes to consolidated condensed financial statements on pages 5-7
are an integral part of these statements.
2
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SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
December 31, December 31,
-------------------------------- ------------------------------
<S> <C> <C> <C> <C>
1993 1992 1993 1992
------------ --------------- --------------- ------------
Revenues:
Sales $ 136,052 $ 100,674 $ 258,639 $ 198,851
Rentals 11,715 11,564 22,564 23,181
Other 12,102 9,882 21,950 19,805
------------ --------------- --------------- ------------
Total revenues 159,869 122,120 303,153 241,837
Operating costs and expenses:
Costs of sales 61,273 48,859 116,608 99,517
Depreciation on revenue
equipment 4,361 3,848 8,032 8,165
Selling and customer service 49,262 39,047 96,496 77,624
Administrative 9,932 8,644 17,805 15,982
Research, development and
engineering 3,997 3,222 8,482 6,453
Amortization of intangible
assets 2,516 1,887 4,932 3,227
------------ --------------- --------------- ------------
Total operating costs
and expenses 131,341 105,507 252,355 210,968
------------ --------------- --------------- ------------
Operating income 28,528 16,613 50,798 30,869
Other income (expenses), net (3,406) 1,591 (5,870) 1,726
------------ --------------- --------------- ------------
Income before income taxes 25,122 18,204 44,928 32,595
Provision for income taxes 6,300 4,600 11,300 8,100
------------ --------------- --------------- ------------
Net income $ 18,822 $ 13,604 $ 33,628 $ 24,495
============ =============== =============== ============
Primary earnings per
common share $ .31 $ .24 $ .55 $ .45
============ =============== =============== ============
Fully diluted earnings
per common share $ .29 $ .23 $ .53 $ .44
============ =============== =============== ============
Cash dividends per common
share $ .05 $ .05 $ .10 $ .10
============ =============== =============== ============
Common shares used in
computation of:
Primary earnings per
common share 61,070 56,782 60,671 54,372
============ =============== =============== ============
Fully diluted earnings per
common share 68,665 64,307 68,333 62,128
============ =============== =============== ============
</TABLE>
The notes to consolidated condensed financial statements on pages 5-7
are an integral part of these statements.
3
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SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1993 AND 1992
(In thousands)
<TABLE>
<CAPTION>
1993 1992
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,628 $ 24,495
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 17,545 14,761
Other non-cash charges to operations 5,772 3,311
Net changes in operating assets and
liabilities, net of effect of
acquisitions (41,239) (45,708)
----------- ------------
Net cash provided by (used in) operating
activities 15,706 (3,141)
----------- ------------
Cash flows from investing activities:
Capital expenditures (26,954) (3,073)
Purchases of marketable securities (16,769) (1,786)
Increase in revenue equipment
and inventory available for lease (14,654) (10,759)
Maturities of marketable securities 10,560 17,748
Acquisitions and other investments (5,957) (299,654)
Other, net 1,507 1,567
----------- ------------
Net cash used in investing activities (52,267) (295,957)
Cash flows from financing activities:
Bank borrowings 15,454 120,786
Cash dividends (5,851) (4,919)
Proceeds from issuances of common stock
under employee benefit plans and for
acquisitions, net 5,390 198,563
Repayments of debt (610) (4,470)
Other, net 582 444
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Net cash provided by financing activities 14,965 310,404
----------- ------------
Effect of exchange rate changes on cash (431) (764)
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Net increase (decrease) in cash (22,027) 10,542
Cash at beginning of period 89,101 16,082
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Cash at end of period 67,074 26,624
Marketable securities at end of period 34,882 28,450
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Cash and marketable securities at end of
period $ 101,956 $ 55,074
=========== ============
</TABLE>
The notes to consolidated condensed financial statements on pages 5-7
are an integral part of these statements.
4
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SENSORMATIC ELECTRONICS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
a) Receivables and net investment in sales-type leases
Accounts receivable are stated net of the following at December 31 and June
30, 1993 (in thousands):
December 31 June 30
----------- ---------
Allowance for doubtful accounts
$ 6,007 $ 4,694
Receivables under deferred terms, the majority of which mature
within one year, and installment contract obligations, are stated net of
the following at December 31 and June 30, 1993 (in thousands):
December 31 June 30
----------- --------
Allowance for doubtful accounts $ 6,087 $ 6,908
Unearned interest and maintenance $ 16,954 $ 17,239
Net investment in sales-type leases are stated net of the following at
December 31 and June 30, 1993 (in thousands):
December 31 June 30
----------- --------
Allowance for doubtful accounts $ 1,717 $ 1,943
Unearned interest and maintenance $ 30,098 $ 25,975
The Company had accrued loss contingencies at December 31 and June 30,
1993 of $1.6 million and $1.4 million, respectively, related to
approximately $161.8 million and $125.9 million, respectively, of
receivables and leases sold to third party financing institutions which are
outstanding and subject to full or partial repurchase, should certain
events (primarily related to customer non-payment) occur. At December 31
and June 30, 1993, accounts receivable assigned to a third party financing
institution on a non-recourse basis was $43 million and $24.5 million,
respectively, of which the financing institution had advanced $43 million
and $20 million, respectively, to the Company (bearing interest at
fluctuating rates), resulting in $4.5 million due from the financing
institution at June 30, 1993 which is included in "Accounts receivable,
net". The Company received net proceeds of $134.4 million and $28.9
million upon the sale and assignment of receivables and leases in the six
months ended December 31, 1993 and 1992, respectively.
b) Inventories
Inventories at December 31 and June 30, 1993 consisted of parts
inventory of $25.5 million and $18.5 million, work-in-process of $14
million and $5.1 million and inventory available for sale or lease of $73.1
million and $79.2 million; and are net of allowance for inventory losses of
$8.7 million and $8.6 million, respectively.
5
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c) Debt
Debt at December 31 and June 30, 1993 is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
December 31 June 30
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<S> <C> <C>
Senior Notes $135,000 $ 135,000
Unsecured revolving credit notes
payable 56,706 41,332
Acquisition indebtedness 10,651 11,136
Capital lease obligations and other,
net 6,639 6,756
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$208,996 $ 194,224
======== ==========
</TABLE>
At December 31, 1993, the Company had approximately $50.5 million
of unused credit under all of its line of credit arrangements.
Interest expense for the six months ended December 31, 1993 and 1992
was $11.6 million and $8.1 million, respectively.
d) Income taxes
In the three-month period ended September 30, 1993, the Company
adopted Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (FASB 109). As permitted by FASB 109,
the Company has elected not to restate the financial statements of
any prior periods. The cumulative effect of the change was not
material and therefore no adjustment was separately reported in the
Consolidated Condensed Statement of Income for the six months ended
December 31, 1993. However, the adoption of FASB 109 required
certain of the Company's tax balances at July 1, 1993 (the effective
date of the change) to be reclassified. Deferred income tax balances
which were not attributable to the same tax jurisdiction were no
longer presented on a net basis at July 1, 1993. Related deferred
tax assets at July 1, 1993 (the effective date of the change)
aggregating approximately $20 million resulted primarily from
reserves and liabilities not currently deductible (approximately $7
million), accelerated income recognition on leased equipment
(approximately $5 million) and intercompany inventory profit
elimination not currently taxable (approximately $4 million). The
approximately $10 million of remaining deferred tax assets at July 1,
1993 resulted from the application of FASB 109 to the accounting for
the valuation of assets acquired (approximately $6 million related to
inventories) and liabilities assumed (approximately $4 million
related to accrued liabilities) in prior years' business
combinations.
The provisions for income taxes were computed using an estimated
annual effective tax rate based on a United States statutory rate of
35% and 34%, respectively, adjusted principally for anticipated
United States/Puerto Rico "Section 936" tax benefits, amortization of
costs in excess of net assets acquired and foreign tax rate
differentials.
6
<PAGE> 9
e) Acquisitions
The Company's unaudited pro forma consolidated condensed statement of
income for the six months ended December 31, 1992, assuming the
acquisitions of Automated Loss Prevention Systems (July 29, 1992) and
Security Tag Systems, Inc. (June 1993) were effected at July 1, 1992,
is summarized as follows (in thousands, except per share amounts):
Total revenues $ 257,469
Net income $ 24,274
Primary earnings per share $ .42
Fully diluted earnings per share $ .39
This pro forma information does not purport to be indicative of the
results which may have been obtained had the acquisitions been
consummated at the dates assumed and is not necessarily indicative of
results for the full year.
f) Supplemental cash flow information
Cash paid by the Company for interest and income taxes for the six
months ended December 31, 1993 and 1992 was as follows (in
thousands): 1993 - $10,773 and $6,023; 1992 - $6,153 and $3,839,
respectively.
In connection with certain acquisitions, the market value of
the assets acquired for the six months ended December 31, 1993 and
1992 was as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
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<S> <C> <C>
Cash paid (net of cash acquired) $ 4,623 $ 299,654
Liabilities assumed and/or incurred 2,235 67,306
Common stock issued 14,938 1,869
-------- ---------
Market value of assets acquired $ 21,796 $ 368,829
======== =========
</TABLE>
g) Stock dividend
On November 11, 1993 the Company's Board of Directors declared a
three-for-two stock split effected in the form of a 50% stock
dividend to shareholders of record on November 30, 1993, payable on
December 17, 1993. All share and per share amounts previously
reported have been adjusted to give retroactive effect to the
increased number of common shares outstanding due to the stock split.
h) Reclassifications
Certain amounts in the prior period's consolidated condensed
financial statements have been reclassified to conform to the current
period's condensed presentation.
7
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company's consolidated condensed financial statements present a
consolidation of its worldwide operations. This discussion supplements the
detailed information presented in the Consolidated Condensed Financial
Statements and Notes thereto (which should be read in conjunction with the
financial statements and related notes contained in the Company's 1993 Annual
Report on Form 10-K) and is intended to assist the reader in understanding the
financial results and condition of the Company.
Financial Condition
The Company's overall financial condition remained strong as reflected
in the Consolidated Condensed Balance Sheet at December 31, 1993 compared to
June 30, 1993. Cash and marketable securities decreased $15.9 million
primarily due to (a) net capital expenditures ($27 million), (b) an increase in
revenue equipment and inventory available for lease ($14.7 million) and (c)
acquisitions and other investments ($6 million); offset in part by (a) net cash
provided by operations ($15.7 million) and (b) net short-term bank borrowings
($15.5 million). Total stockholders' equity at December 31 increased $43.8
million over the June 30 balance to $533.5 million (of which approximately $15
million resulted from the issuance of Common Stock for the acquisition of Robot
Research Inc. (Robot), a U.S. manufacturer of sophisticated closed circuit
television (CCTV) equipment) while debt increased by $14.7 million (due to an
increase in short term credit line borrowings by European subsidiaries) to
$323.1 million, resulting in a debt-to-equity ratio of .61 to 1 at December 31,
1993 compared to .63 to 1 at June 30, 1993.
Total receivables and net investment in sales-type leases increased to $265.4
million at December 31, 1993 from $254.6 million at June 30, 1993 resulting
principally from the higher level of business offset in part by net sales and
assignments of receivables and sales-type leases to third party financial
institutions in the first half of fiscal 1994.
The Company has historically had a high level of outstanding receivables as a
percentage of revenues. This results in part from the use of its financial
strength as a marketing tool in obtaining new business by, for example,
offering to customers flexible, deferred payment arrangements (the majority of
which mature within one year), or longer term installment sales financing
(subject to stated or imputed interest) to facilitate purchases. Additionally,
the Company has experienced an historical pattern of delayed payments to the
Company by certain of its major retail customers which has extended its
receivables aging profile. During fiscal 1993 the Company increased its
efforts to reduce receivables by, among other things, (a) implementing an
enhanced invoicing and accounts receivable system; (b) employing the use of
third party servicing agents to increase the efficiency of its billing and
collection practices; (c) expanding the number and use of relationships with
third party financing institutions to sell or assign receivables and
8
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sales-type leases; and (d) generally increasing its collection efforts. The
results of such ongoing efforts have been to reduce thetime required to collect
receivables and to provide the Company with the flexibility to convert its
receivables into cash as needed.
The Company believes its allowance for doubtful accounts is adequate
after taking into account the aging of its receivables and net investment in
sales-type leases, the payment history of its customers, the Company's security
interest position in equipment financed under deferred terms and installment
sales contracts (and its ability to re-market such equipment if needed), the
prospects of its collection efforts and its relationships with major retail
accounts. Additionally, with the rapid broadening of the Company's customer
base geographically and to include hard goods retailers, commercial and
industrial customers, and manufacturers and vendors providing retailers with
"source labeled" merchandise under Sensormatic's Universal Product Protection
(UPP)(SM) program, the Company's historical concentration in soft goods
retailers is being reduced.
Inventories at December 31, 1993 increased $9.8 million over June 30, 1993 as a
result of a $15.9 million increase in raw material and work-in-process
inventories in order to meet forecasted production levels, offset by a decrease
in finished goods inventory of $6.1 million. Deferred charges and other assets
increased $52.8 million primarily as a result of the Company's adoption of FASB
109 in the first quarter of fiscal 1994 (see note d of Notes to Consolidated
Condensed Financial Statements).
The Company believes it is well positioned to meet anticipated future capital
requirements through the use of funds to be generated by operating activities,
existing cash and marketable securities ($102 million at December 31, 1993),
its ability to sell and assign receivables and sales-type leases to financing
institutions under existing agreements ($10.6 million of aggregate unused
facilities at December 31, 1993) and funds available from existing worldwide
credit lines ($50.5 million at December 31, 1993).
Results of Operations
Three Months and Six Months Ended December 31, 1993 Compared to Three and Six
Months Ended December 31, 1992
Revenues for the three months and six months ended December 31, 1993 increased
31% and 25%, respectively, over the three months and six months ended December
31, 1992. The revenue growth resulted principally from increased revenues from
the UltraoMax(R) product line primarily for hard goods retail customers and
used in the Company's UPP program for source labeling; increased revenues from
the Commercial/Industrial Group which markets electronic asset protection
(EAP), CCTV and access control systems to non-retail customers; and revenues
generated from the sale of Security Tag products (of which approximately $13.6
million in the six months ended December 31, 1993 is a result of the
acquisition and consolidation of Security Tag Systems, Inc. effective June
1993; see Note e of Notes to Consolidated Condensed Financial Statements);
offset in part by the effect on
9
<PAGE> 12
the international subsidiaries' local currency revenues when translated into
U.S. dollars for financial statement purposes caused by the stronger average
U.S. dollar (relative to the internationalsubsidiaries' local currencies, in
the aggregate) throughout the first six months of fiscal 1994 compared to the
first six months of fiscal 1993 (approximately $21.8 million).
Revenues from retail customers for the electronic article surveillance (EAS)
product lines increased 21% to $102.8 million in the second quarter of fiscal
1994 and 22% to $200.2 million in the first six months of fiscal 1994 compared
to $84.8 million and $164.5 million, respectively, in the comparable periods of
fiscal 1993. These increases resulted principally from growth of 59% and 54%
in the second quarter and in the first six months of fiscal 1994, respectively,
(compared to last year) in revenues from the UltraoMax product line and the
addition of revenue from the Security Tag product lines; offset in part by a 4%
and an 8% decline in revenues in the second quarter and in the first six months
of fiscal 1994, respectively, (compared to last year) from U.S. soft goods
retailers for the traditional microwave product line, and the translation
effect caused by the strengthening of the U.S. dollar. Revenues from the
Commercial/Industrial Group increased 83% to $17 million and 67% to $29.4
million (including installation revenues) in the second quarter and the first
six months of fiscal 1994 compared to fiscal 1993, respectively, due primarily
to increased sales of CCTV products to non-retail customers and the acquisition
of Robot in September 1993 ($5.8 million and $6.7 million, respectively).
Operating income in the three and six months ended December 31, 1993 increased
72% and 65%, respectively, over last year's comparable periods primarily due to
the higher level of business and improved gross margins. Gross margins for the
second quarter and first six months of fiscal 1994 increased to 55% compared
with 51% and 50%, respectively, for last year's comparable periods, primarily
from increased manufacturing efficiencies resulting from increased volumes and
long-term programs aimed at reducing manufacturing costs, the inclusion of the
manufacturer's gross margin (as a result of the acquisition of Security Tag) on
the Security Tag product line and favorable changes in product mix.
Total selling and customer service, administrative, and research, development
and engineering expenses, as a percentage of total revenues, decreased to 40%
for the second quarter from 42% for the comparable period of fiscal 1993 while
remaining at 41% for the first six months of fiscal 1994 and fiscal 1993. The
aggregate amount of these expenses increased by 23% in the current year's first
six months over last year's comparable period primarily as a result of the
higher level of business in fiscal 1994 offset in part by the translation
effect on the international subsidiaries' local currency operating expenses
caused by the stronger average U.S. dollar (relative to the international
subsidiaries' local currencies, in the aggregate) throughout the first six
months of fiscal 1994 compared to the first six months of fiscal 1993
(approximately $8.8 million).
10
<PAGE> 13
Total net other non-operating expenses in the second quarter and the
first six months of fiscal 1994 were $3.4 million and $5.9 million,
respectively, compared to $1.6 million and $1.7 million of net other non-
operating income for the comparable periods of fiscal 1993, principally due to
an increase in interest expense resulting from the higher levels of borrowings
throughout the first six months of fiscal 1994 (primarily resulting from the
acquisition of Automated Loss Prevention Systems (ALPS) and increased net
short-term bank borrowings by the Company's European subsidiaries) and a
decrease in interest income due primarily to a decline in the amounts of longer
term receivables and sales-type leases (which earn interest income) outstanding
throughout the first six months of fiscal 1994 compared to the first six months
of fiscal 1993.
The provision for income taxes for the first six months of fiscal 1994 is based
on an estimated effective annual consolidated tax rate of 25%, (the same tax
rate reported on the Company's income from continuing operations for the full
1993 fiscal year). The adoption of Financial Accounting Standards Board
Statement No. 109 "Accounting for Income Taxes" did not have a material effect
on the Company's results of operations (see Note d of Notes to Consolidated
Condensed Financial Statements).
Consolidated net income for the second quarter and first six months of fiscal
1994 increased $5.2 million and $9.1 million, respectively, when compared to
the prior year's comparable period due primarily to the factors discussed
above.
11
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
An Annual Meeting of stockholders of the Company was held on November 12, 1993.
The following business was transacted:
Re-elected as directors of the Company were Ronald G. Assaf, President and
Chairman of the Board and Dr. Arthur G. Milnes, to serve for a three-year term.
In addition, the terms of office of the following, as directors, continued
after the meeting: Thomas V. Buffett, Jerome M. LeWine, James E. Lineberger,
Michael E. Pardue and John T. Ray, Jr.
The Company's Certificate of Incorporation was amended to increase the number
of authorized shares of Common Stock from 60,000,000 to 125,000,000, with
31,268,288 shares (on a pre-stock dividend basis) of the outstanding Common
Stock of the Company voting in favor of and 2,501,480 shares voting against
its adoption, with 120,512 shares abstaining.
The Company's amended 1989 Stock Incentive Plan, was further amended to: (a)
limit the aggregate number of shares issuable pursuant to options, or which may
be used as a basis for stock appreciation rights, granted to any individual
participant under such plan to 800,000 shares (on a pre-stock dividend basis)
during any three consecutive years, subject to proportional adjustment upon the
occurrence of certain events; and (b) eliminate the provisions of such plan
which permitted, under special circumstances and subject to certain
limitations, the granting of options exercisable at a price less than the fair
market value of the Common Stock on the date of grant was approved, with
32,034,551 shares (on a pre-stock dividend basis) of the outstanding Common
Stock of the Company voting in favor of and 1,631,212 shares voting against
its adoption, with 224,517 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11) Computation of earnings per common share.
b) Reports on Form 8-K:
On December 7, 1993, the Company filed
a Current Report on Form 8-K, as
amended February 9, 1994, reporting
under "Other Events" an action
commenced on November 22, 1993 in
the United States District Court for
the Southern District of Florida
by Bayer Silver against the
Company and its Chairman of the
Board, President and CEO, alleging
that favorable public statements by
the Company concerning its growth
and the quality of its products were
false. The suit arose out of the
controversy resulting from the
Company's UltraoMax product being
named the recommended standard for
electronic article surveillance
protection of pre-recorded music by
the National Association of
Recording Merchandisers (NARM) and the
rejection of NARM's recommendations
by certain music manufacturers.
12
<PAGE> 15
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 hereunto duly authorized.
SENSORMATIC ELECTRONICS CORPORATION
By /S/ Michael E. Pardue
------------------------------
Michael E. Pardue
Executive Vice President,
Chief Operating Officer, Chief
Financial Officer and Director
/S/ Lawrence J. Simmons
----------------------------
Lawrence J. Simmons
Vice President of Finance and Chief
Accounting Officer
Date: February 10, 1994
13
<PAGE> 1
EXHIBIT 11
SENSORMATIC ELECTRONICS CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
December 31, December 31,
--------------------- ----------------------
1993 1992 1993 1992
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Income:
Net income for primary
computation $18,822 $ 13,604 $ 33,628 $ 24,495
Add interest expense (net
of tax) on 7% convertible
subordinated debentures 1,247 1,330 2,538 2,660
-------- -------- -------- --------
Adjusted net income for fully
diluted computation $ 20,069 $ 14,934 $ 36,166 $ 27,155
======== ========= ======== ========
Common shares (1):
Weighted average shares
outstanding during the period 58,952 54,709 58,620 52,529
Potential dilutive exercise of
stock options and warrants (2) 2,118 2,073 2,051 1,843
-------- ------- -------- --------
Shares included in computation
of primary earnings per share 61,070 56,782 60,671 54,372
Shares issuable on conversion
of 7% convertible subordinated
debentures 7,283 7,341 7,283 7,341
Maximum dilution of stock
options and warrants (3) 312 184 379 415
-------- -------- ------- --------
Shares included in computation of
fully diluted earnings per
share 68,665 64,307 68,333 62,128
======== ======== ======== ========
</TABLE>
(1) Share amounts reflect the three-for-two stock split declared in
November 1993.
(2) Computed under the treasury stock method based on the average stock
price during the periods.
(3) Computed under the treasury stock method based on stock price at
end of periods if higher than the average price during the periods.
