<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 March 31, 1995 Commission File No. 1-10739
------------------ ----------
SENSORMATIC ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 420-2000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Same
- --------------------------------------------------------------------------------
(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 72,800,032 shares of Common Stock (par value
$.01 per share) as of May 8, 1995.
<PAGE> 2
SENSORMATIC ELECTRONICS CORPORATION
INDEX
FORM 10-Q
THREE MONTHS ENDED MARCH 31, 1995
<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 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 1994 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, except par value amounts)
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
------------ -------------
<S> <C> <C>
ASSETS
Cash and marketable securities (including
marketable securities of $29,239 and $33,618
at March 31 and June 30, respectively) $ 82,389 $ 54,542
Accounts receivable, net 206,512 127,571
Deferred and installment receivables, net 100,596 71,321
Net investment in sales-type leases 136,444 109,607
Inventories, net 226,720 163,906
Revenue equipment, net 58,640 58,326
Other property, plant and equipment, net 142,955 107,152
Deferred income taxes, patents and other
assets, net 158,675 120,061
Costs in excess of net assets acquired, net 490,225 343,017
------------ -------------
$ 1,603,156 $ 1,155,503
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 48,737 $ 40,884
Accrued liabilities 189,127 143,067
Accrued and deferred income taxes payable 36,954 24,687
Debt 377,487 219,173
Stockholders' equity:
Preferred stock, $.01 par value
Common stock, $.01 par value, 72,788 and
67,612 shares outstanding at March 31
and June 30, respectively 703,251 546,577
Retained earnings 295,500 237,553
Treasury stock, at cost (6,730) (7,274)
Currency translation adjustments (38,508) (45,603)
Notes receivable from stock sales (2,662) (3,561)
------------ -------------
Total stockholders' equity 950,851 727,692
------------ -------------
$ 1,603,156 $ 1,155,503
============ =============
</TABLE>
The notes to consolidated condensed financial statements on pages 5-7
are an integral part of these statements.
2
<PAGE> 5
SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months ended Nine Months ended
March 31, March 31,
------------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Sales $204,563 $137,889 $558,956 $396,528
Rentals 13,809 11,134 36,859 33,698
Other 20,255 13,130 51,521 35,080
-------- -------- -------- --------
Total revenues 238,627 162,153 647,336 465,306
Operating costs and expenses:
Costs of sales 94,945 62,976 256,697 179,584
Depreciation on revenue
equipment 4,630 3,575 11,533 11,607
Selling, customer service and
administrative 95,388 63,448 255,505 177,749
Research, development and
engineering 5,499 4,369 15,768 12,851
Amortization of intangible
assets 3,875 2,650 9,970 7,582
-------- -------- -------- --------
Total operating costs
and expenses 204,337 137,018 549,473 389,373
-------- -------- -------- --------
Operating income 34,290 25,135 97,863 75,933
Other expenses, net (2,170) (3,241) (5,262) (9,111)
-------- -------- -------- --------
Income before income taxes 32,120 21,894 92,601 66,822
Provision for income taxes 8,000 5,500 23,100 16,800
-------- -------- -------- --------
Net income $ 24,120 $ 16,394 $ 69,501 $ 50,022
======== ======== ======== ========
Primary earnings per
common share $ .33 $ .27 $ .97 $ .82
======== ======== ======== ========
Fully diluted earnings
per common share $ .33 $ .26 $ .97 $ .79
======== ======== ======== ========
Cash dividends per common
share $ .055 $ .055 $ .165 $ .155
======== ======== ======== ========
Common shares used in
computation of:
Primary earnings per
common share 73,803 61,235 71,360 60,973
======== ======== ======== ========
Fully diluted earnings per
common share 73,803 68,515 71,459 68,253
======== ======== ======== ========
</TABLE>
The notes to consolidated condensed financial statements on pages 5-7
are an integral part of these statements.
3
<PAGE> 6
SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands)
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 69,501 $ 50,022
Adjustments to reconcile net income
to net cash provided by (used in) operating
activities:
Depreciation and amortization 28,361 26,373
Other non-cash charges to operations 11,277 8,904
Net changes in operating assets and
liabilities, net of effect of
acquisitions (159,752) (70,495)
--------- --------
Net cash provided by (used in) operating
activities (50,613) 14,804
--------- --------
Cash flows from investing activities:
Capital expenditures (39,227) (36,112)
Increase in revenue equipment
and inventory available for lease (7,879) (12,078)
Maturities of marketable securities 7,465 12,468
Cash paid for acquisitions and
other investments (1,518) (10,363)
Purchases of marketable securities (300) (18,509)
Other, net 2,532 2,193
--------- --------
Net cash used in investing activities (38,927) (62,401)
--------- --------
Cash flows from financing activities:
Bank borrowings (net of effect of
acquisitions) 122,756 6,782
Cash dividends (11,555) (9,116)
Proceeds from issuances of common stock
under employee benefit plans, net 9,247 13,147
Repayments of debt (371) (9,456)
Other, net 1,689 1,737
--------- --------
Net cash provided by financing activities 121,766 3,094
--------- --------
Net increase (decrease) in cash 32,226 (44,503)
--------- --------
Cash at beginning of period 20,924 89,101
--------- --------
Cash at end of period 53,150 44,598
Marketable securities at end of period 29,239 34,665
--------- --------
Cash and marketable securities at end of
period $ 82,389 $ 79,263
========= ========
</TABLE>
The notes to consolidated condensed financial statements on pages 5-7
are an integral part of these statements.
4
<PAGE> 7
SENSORMATIC ELECTRONICS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
a) Receivables and net investment in sales-type leases
Amounts due to the Company in the form of accounts receivable (which are
due within 90 days), deferred receivables (which are generally due within
one year), installment receivables (which generally have periodic payments
over a term of five years) and net investment in sales-type leases
(sales-type leases) (which have periodic payments over lease terms from
five to six years) at March 31, 1995 and June 30, 1994 are summarized as
follows (in millions):
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
-------- -------
<S> <C> <C>
Accounts receivable $ 217.9 $ 138.0
Deferred and installment receivables 126.0 97.2
Sales-type leases 184.3 151.6
------- -------
Gross receivables and sales-type leases 528.2 386.8
Less allowance for doubtful accounts (20.5) (20.2)
Unearned interest and maintenance (64.2) (58.1)
------- -------
Net receivables and leases $ 443.5 $ 308.5
======= =======
</TABLE>
The Company received net proceeds of $307.0 million and $221.4 million from
the sale or assignment of certain of its receivables and sales-type leases
in the nine months ended March 31, 1995 and 1994, respectively. The
uncollected principal balance of receivables and sales-type leases sold
which is subject to varying amounts of recourse totaled $297.8 million and
$199.9 million at March 31, 1995 and June 30, 1994, respectively. Adequate
provisions have been made for sold receivables and leases and are included
in accrued liabilities.
b) Inventories
At March 31, 1995 and June 30, 1994, inventories are comprised of parts
inventory of $42.4 million and $34.1 million, work-in-process of $24.6
million and $20.0 million and inventory available for sale or lease of
$159.7 million and $109.8 million, respectively; and are net of allowance
for inventory losses of $10.5 million and $10.6 million, respectively.
c) Deferred income taxes, patents and other assets
At March 31, 1995 and June 30, 1994, deferred income taxes, patents and
other assets are comprised of the following (in millions):
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
-------- -------
<S> <C> <C>
Deferred income taxes $ 46.0 $ 36.2
Patents and other intangibles 36.9 25.5
Prepaid expenses and deposits 26.0 14.6
Receivables from financing institutions
(due within one year) 18.3 29.2
Deferred charges 14.7 4.9
Other 16.8 9.7
------ ------
$158.7 $120.1
====== ======
</TABLE>
5
<PAGE> 8
d) Income taxes
For the nine months ended March 31, 1995 and 1994, the provision for income
taxes was computed using an estimated annual effective tax rate based on a
United States statutory rate of 35% adjusted principally for anticipated
United States/Puerto Rico "Section 936" tax benefits, amortization of costs
in excess of net assets acquired, international tax rate differentials and
anticipated reductions of prior years' accruals.
e) Acquisitions
On December 29, 1994, the Company acquired the operations outside of the
United States, Puerto Rico and Canada for approximately 3.1 million shares
of the Company's Common Stock of Knogo Corporation ("Knogo"). These
operations were one of the leading loss prevention businesses in Europe and
Asia. Knogo post-acquisition operations (the period from December 30, 1994
through March 31, 1995) are included in the Company's fiscal 1995 financial
statements.
The acquisition was accounted for under the purchase method and resulted in
cost in excess of net assets acquired of approximately $108 million (based
on a preliminary allocation of the purchase price) which is being amortized
over 40 years.
The significant assets acquired and liabilities assumed and/or incurred in
connection with the Knogo acquisition were as follows:
<TABLE>
<S> <C>
Cash and marketable securities $ 5.8
Accounts receivable, net 15.0
Net investment in sales-type leases 16.6
Inventories, net 10.2
Deferred charges, patents and other assets, net 10.5
Accrued liabilities 36.1
Debt 23.0
</TABLE>
The Company's unaudited pro forma consolidated condensed statements of
income for the nine months ended March 31, 1995 and 1994, assuming the
acquisition of Knogo was effected at the beginning of each such period, are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Total revenues $679,802 $517,172
Net income $ 69,623 $ 55,981
Primary earnings per share $ .95 $ .87
Fully diluted earnings per share $ .95 $ .84
</TABLE>
This pro forma information does not purport to be indicative of the results
which may have been obtained had the acquisition been consummated at the
dates assumed and is not necessarily indicative of results expected for the
full year (see the financial statements and other information contained in
the Company's Current Report on Form 8-K filed January 11, 1995, as amended
on Form 8-K/A filed January 27, 1995).
6
<PAGE> 9
f) Financial Instruments
(i) Currency hedging instruments
The Company has a policy of purchasing forward exchange contracts and
options designated to hedge certain intercompany transactions and
identifiable anticipatory intercompany commitments which are denominated in
foreign currencies. At March 31, 1995, the Company owned forward exchange
contracts and options which allowed it to sell currencies for the indicated
U.S. dollar amounts with respect to fiscal 1995 and 1996 intercompany
transactions and commitments, as follows (in millions):
<TABLE>
<CAPTION>
1996 1995
---- ----
Currencies Options Forwards Options Forwards
---------- ------- -------- ------- --------
<S> <C> <C> <C> <C>
French Francs $ - $ 50.0 $ 1.8 $ 15.5
Deutschemarks - 34.1 1.8 10.0
British Pounds - 34.7 - 10.3
Other - 14.7 - 10.5
---- ------ ----- ------
$ - $133.5 $ 3.6 $ 46.3
==== ====== ===== ======
</TABLE>
(ii) Interest rate swap agreements
The Company has entered into interest swap agreements with financial
institution counterparties in order to manage its exposure to interest rate
fluctuations associated with certain transactions and debt. (See notes 2.,
6. and 12. of Notes to Consolidated Financial Statements in the Company's
1994 Annual Report on Form 10-K for additional discussion). At March 31,
1995, the Company was a party to the following swap agreements (in
millions):
FIXED TO FLOATING SWAP AGREEMENTS
<TABLE>
<CAPTION>
Notional Expiration Floating Rate Fixed Rate
Amount Date to be Paid to be Received
-------- ------------- ------------- --------------
<S> <C> <C> <C>
$50.0 February 1996 6 Month LIBOR 5.45%
50.0 February 1996 6 Month LIBOR 5.40%
35.0 June 1996 6 Month LIBOR 5.01%
</TABLE>
The weighted average interest rate paid and received under all such Fixed
to Floating Swap Agreements at March 31, 1995 was 6.5% and 5.3%,
respectively.
FLOATING TO FIXED SWAP AGREEMENTS
<TABLE>
<CAPTION>
Notional Expiration Fixed Rate Floating Rate
Amount Date to be Paid to be Received
-------- ----------- ---------- --------------
<S> <C> <C> <C>
$15.5 May 1999 7.75% 1 Month LIBOR
6.0 April 2000 6.58% 1 Month LIBOR
5.6 April 1999 4.60% 1 Month LIBOR
5.0 August 1998 4.80% 1 Month LIBOR
3.6 May 1998 4.94% 1 Month LIBOR
2.3 March 1999 4.65% 1 Month LIBOR
</TABLE>
The weighted average interest rate paid and received under all such
Floating to Fixed Swap Agreements at March 31, 1995 was 6.3% and 6.1%,
respectively.
g) 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 1994 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. Cash and marketable
securities increased $28 million primarily due to an increase in net short-term
borrowings ($123 million); offset in part by: (a) net cash used in operations
($50 million) due primarily to increases in receivables, net investment in
sales-type leases (sales-type leases) and inventories, and (b) net capital
expenditures ($39 million). Total stockholders' equity at March 31 increased
$223 million over the June 30 balance to $951 million while debt increased by
$158 million to $377 million, resulting in a debt-to-total capitalization ratio
of .28 to 1 at March 31, 1995, compared to .23 to 1 at June 30, 1994.
Total receivables and sales-type leases increased to $444 million at March 31,
1995 from $309 million at June 30, 1994 resulting principally from a higher
level of business in the first nine months of fiscal 1995 and from the
acquisition of Knogo (approximately $32 million); offset in part by an increase
in net sales and assignments of receivables and sales-type leases to third
party financing institutions in the first nine months of fiscal 1995.
The Company has historically had a high level of receivables outstanding
measured as a percentage of revenues. This results in part from the strategy
of using its financial strength as a marketing tool in obtaining new business.
The Company continues to manage its receivables by, among other things, using
third party servicing agents to enhance the efficiency of its billing and
collection practices and expanding the number and use of financing institutions
to sell or assign receivables and sales-type leases. The results have been to
reduce the average time required to collect receivables and to provide the
Company with
8
<PAGE> 11
the flexibility to convert its longer term receivables and sales-type leases
into cash as needed (see Note a of Notes to Consolidated Condensed Financial
Statements.
The Company believes its allowance for doubtful accounts related to receivables
and sales-type leases, and its reserve related to receivables and sales-type
leases sold to financing institutions which are subject to full or partial
recourse, are adequate after taking into account, among other things: (a) the
aging of its receivables and sales-type leases (including those repurchased or
subject to repurchase from financing institutions); (b) the payment history of
its customers; (c) the Company's security interest in equipment financed under
deferred and installment sales contracts and the Company's retention of title
in equipment under sales-type leases; (d) its ability to re-market such
equipment if needed; (e) the prospects of its collection efforts; and (f) its
relationship with major retail customers. Additionally, with the rapid
broadening of the Company's customer base both geographically and to include
hard goods retailers, and commercial and industrial customers, the Company's
historical concentration in soft goods retailers is being reduced.
Inventories at March 31, 1995 increased $63 million over June 30, 1994 due
principally to meet forecasted production and sales levels and the acquisition
of Knogo ($10 million). In January 1995 the Company launched a focused
initiative aimed at reducing the growth of its inventory. Subsequent increases
were primarily in work-in-process and raw materials to meet forecasted fourth
quarter requirements, historically the Company's largest revenue producing
quarter.
Deferred charges and other assets increased $39 million primarily as a result
of deferred taxes and other assets related to companies acquired in the first
nine months of fiscal 1995.
The Company believes it is well positioned to meet anticipated future capital
requirements through the use of funds to be generated by future operating
activities (including the sale and assignment of receivables and sales-type
leases to financing institutions), existing cash and marketable securities and
funds available from existing worldwide credit lines ($49 million unused at
March 31, 1995).
The Company registered 4.5 million shares of Common Stock through a shelf
registration statement in February 1994. Approximately 2.5 million shares
remain available and may be used in connection with acquisitions of other
businesses or assets.
9
<PAGE> 12
Results of Operations
Three Months and Nine Months Ended March 31, 1995 Compared to Three Months and
Nine Months Ended March 31, 1994
Revenues for the three months and nine months ended March 31, 1995 increased
47% and 39%, respectively, over the three months and nine months ended March
31, 1994. The revenue growth resulted principally from increased EAS revenues
particularly from the Ultra-Max(R) product line, which is primarily for hard
goods retail customers and is used in the Company's Universal Product
Protection (UPP(SM)) program for source labeling; increased sales of CCTV
products used by retailers; and increased revenues from the U.S.-based
Commercial/Industrial Group.
Revenues from retail customers for the EAS product lines increased 40% to $137
million in the third quarter of fiscal 1995 and 25% to $375 million in the
first nine months of fiscal 1995 from the comparable periods of fiscal 1994.
These increases resulted principally from growth in revenues in excess of 55%
in the third quarter and in the first nine months of fiscal 1995 (compared to
last year) from the Ultra-Max product line, and the inclusion in the third
quarter of fiscal 1995 of revenues from the Knogo product line ($12 million).
Revenues from the CCTV product lines for retailers increased 35% to $23
million and 78% to $82 million for the third quarter and the first nine months
of fiscal 1995, respectively, from the comparable periods of fiscal 1994.
Revenues from the U.S.-based Commercial/Industrial Group increased 79% to $38
million and 105% to $104 million (including installation revenues) in the third
quarter and the first nine months of fiscal 1995 compared to fiscal 1994,
respectively, due primarily to increased sales of CCTV and access control
products to non-retail customers, and revenue from recent acquisitions.
Operating income for the three and nine months ended March 31, 1995 increased
36% and 29%, respectively, over last year's comparable period primarily due to
the higher level of business; offset in part by slightly lower gross margins in
the first nine months of fiscal 1995 compared to fiscal 1994. Gross margins
for the third quarter and first nine months of fiscal 1995 were 54%, compared
to 54% and 55%, respectively, for last year's comparable periods.
10
<PAGE> 13
Total selling, customer service and administrative, and research, development
and engineering expenses, as a percentage of total revenues, was 42% for the
third quarter and the first nine months of fiscal 1995, compared to 42% and
41%, respectively, for the comparable periods in fiscal 1994. The aggregate
amount of these expenses increased by 42% in the current year's first nine
months over last year's comparable period primarily as a result of the higher
level of business in fiscal 1995.
Total net other non-operating expenses in the third quarter and the first nine
months of fiscal 1995 decreased by $1 million and $4 million, respectively,
compared to the comparable periods of fiscal 1994.
The Company utilizes interest rate swap agreements and currency forward
contracts and options (derivatives) to hedge certain of its currency and
interest rate risks. The Company does not enter into speculative derivative
transactions. The derivative instruments it does purchase are not held as
investments, and it is the Company's intent to hold such instruments for their
respective terms. Therefore, changes in their fair values will have no effect
on the Company's operations, cash flows or financial position (see Note f of
Notes to Consolidated Condensed Financial Statements; additionally see
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Notes 1., 2., 6. and 12. of Notes to Consolidated Financial
Statements in the Company's fiscal 1994 Annual Report on Form 10-K for further
discussion of the Company's currency and interest rate risks and use of
derivatives).
The provision for income taxes for the first nine months of fiscal 1995 is
based on an estimated effective annual consolidated tax rate of 25% (the same
tax rate reported on the Company's income for the full 1994 fiscal year).
Changes in U.S. and Puerto Rico tax law (effective in 1994) and the recent
acquisition of Knogo are expected to exert upward pressure on the Company's
effective tax rate. The potential effect of these items is continually being
examined by the Company in order to develop strategies to minimize this effect.
Consolidated net income for the third quarter and first nine months of fiscal
1995 increased 47% to $24 million and 39% to $70 million, respectively, when
compared to the prior year's comparable periods due primarily to the factors
discussed above.
11
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
3(b)) Amended By-Laws of the Company.
11) Computation of Earnings Per Common Share.
27) Financial Data Schedule (for SEC use only).
b) Reports on Form 8-K:
On January 11, 1995 the Company filed a Current Report on
Form 8-K with respect to the merger of Knogo
Corporation's business interests outside of the U.S. and
Canada into the Company in exchange for the Company's
Common Stock valued at approximately $100 million, which
was amended by Amendment No. 1 on Form 8-K/A filed on
January 27, 1995.
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: May 8, 1995
13
<PAGE> 1
EXHIBIT 3(b)
SENSORMATIC ELECTRONICS CORPORATION
BY-LAWS
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Dover, County of Kent, State of Delaware,
and the registered agent of the Corporation shall be The Prentice-Hall
Corporation System, Inc., whose address is 229 South State Street, Dover,
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held on the
first Friday of November in each year, if not a legal holiday, and if a legal
holiday, then on the next succeeding day not a legal holiday, or on such other
date as may be fixed from time to time by resolution of the Board of Directors,
and at the principal office of the Corporation or at such other place within or
without the State of Delaware as shall be designated by the Board of Directors.
The Board of Directors may change the date and/or place of any scheduled annual
meeting, either before or after notice of such meeting has been given.
Section 2. Special Meeting. Special meetings of the stockholders may
be called at any time only by the Chairman of the Board or the President of the
Corporation or the majority of the Board of Directors and may be so called and
held for any purpose or purposes as may be determined only by the Chairman of
the Board or the President of the Corporation or the majority of
<PAGE> 2
the Board of Directors. Such meetings shall be held at such time and
at such place within or without the State of Delaware as shall be specified in
the notice of the meeting. The date, time and/or place of any scheduled
special meeting of the stockholders may subsequently be changed, either before
or after notice of such meeting has been given, by the Chairman of the Board or
the President of the Corporation or the majority of the Board of Directors.
Section 3. Notice of Meetings. Notice of the place, date and time of
the holding of each annual and special meeting of the stockholders (and of any
change in such place, date and/or time) and the purpose or purposes thereof
shall be given personally or by mail in a postage prepaid envelope to each
stockholder entitled to vote at such meeting, not less than ten nor more than
sixty days before the date of such meeting, and, if mailed, it shall be
directed to such stockholder at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices to him be mailed to some other address, in which
case it shall be directed to him at such other address. Any such notice for any
meeting other than the annual meeting of stockholders shall indicate that it is
being issued at the direction of the Chairman of the Board, President, or a
majority of the Board of Directors. Notice of any meeting shall not be
required to be given to any stockholder who shall attend such meeting in person
or by proxy and shall not, at the beginning of such meeting, object to the
transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy. Unless the Board shall fix a new
record date for an adjourned meeting, notice of such adjourned meeting need not
be given if the time and place to which the meeting shall be adjourned were
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 4. Quorum. At all meetings of the stockholders, the holders
of one-third of the shares of stock of the Corporation issued and outstanding
and entitled to vote and
<PAGE> 3
present in person or by proxy shall constitute a quorum for the transaction of
any business, except as otherwise required by law or the Certificate of
Incorporation in respect of the vote that shall be required for a specified
action. In the absence of a quorum, the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote, or if no stockholder
entitled to vote is present, then any officer of the Corporation, may adjourn
the meeting from time to time. At any such adjourned meeting at which a quorum
may be present, any business may be transacted which might have been transacted
at the meeting as originally called.
Section 5. Organization. At each meeting of the stockholders, the
President, or in his absence or inability to act, any person designated by the
President or the Board of Directors, or in the absence of any such designation
or the absence or inability to act of such a designee, any person chosen by
majority of those stockholders present or represented, shall act as chairman of
the meeting. The Secretary, or, in his absence or inability to act, an
Assistant Secretary or any other officer appointed by the chairman of the
meeting, shall act as secretary of the meeting and keep the minutes thereof.
Section 6. Order of Business. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the meeting.
Section 7. Voting. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of such stock standing in his name on
the record of stockholders of the Corporation (a) on the date fixed by the
Board of Directors as the record date for the determination of the stockholders
who shall be entitled to notice of and to vote at such meeting; or (b) if such
record date shall not have been so fixed, then at the close of business on the
day next preceding the day on which notice thereof shall be given; or (c) if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact. Any such proxy shall be
delivered to the secretary of such meeting at or prior to the time designated
in the order of business for so delivering such proxies. No
<PAGE> 4
proxy shall be valid after the expiration of three years from the date
thereof, unless the proxy provides for a longer period. Every proxy shall be
revocable at the pleasure of the stockholder executing it, except in those
cases where an irrevocable proxy is permitted by law. Except as otherwise
required by law, the Certificate of Incorporation or these By-Laws, any
corporate action to be taken by vote of the stockholders shall be authorized by
a majority of the total votes cast at a meeting of stockholders by the holders
of shares present in person or represented by proxy and entitled to vote on
such action. Unless required by statute, or determined by the chairman of the
meeting to be advisable, the vote on any question need not be by written
ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and shall state
the number of shares voted.
Section 8. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make or cause to be prepared
and made, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 9. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If inspectors shall not be so appointed or if any
of them shall fail to appear or act, the chairman of the meeting may, and on
the request of any stockholder entitled to vote thereat shall, appoint one or
more inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability. The inspectors shall determine the number of shares
<PAGE> 5
outstanding, the number of shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting or any stockholder entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, request or matter determined
by them and shall execute a certificate of any fact found by them. No director
or candidate for the office of director shall act as inspector of an election
of directors. Inspectors need not be stockholders.
Section 10. No Action by Consent. No action required to be taken or
which may be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting and the power of stockholders to
consent in writing to the taking of any action is specifically denied.
Section 11. Notice of Stockholder Business. At an annual meeting of
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors or by the Chairman of the Board or the President of the Corporation
or (c) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice must be received at
the principal office of the Corporation not less than sixty (60) days nor more
than ninety (90) days prior to the meeting; provided, however, that in the
event that less than seventy (70) days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. As used in
this Section 11 and in paragraph B of Section 2 of Article III of these
By-Laws, the phrase "notice or prior public disclosure
<PAGE> 6
of the date of the meeting" shall mean notice or prior public
disclosure of the date on which the meeting is originally scheduled to be
called to order and shall not refer to notice or prior public disclosure of any
date to which such meeting may be adjourned. A stockholder's notice to the
Secretary shall set forth, as to each matter the stockholder proposes to bring
before the annual meeting, (a) a brief description of the business desired to
be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear on the
Corporation's stock transfer books, of the stockholder proposing such business,
(c) the class and number of shares of capital stock of the Corporation which
are beneficially owned (such term being used in this Section 11 and in
paragraph B of Section 2 of Article III of these By-Laws with the meaning
ascribed to such term in Rule 13d-3 of the rules under the Securities Exchange
Act of 1934, as amended, as such Rule was in effect on July 1, 1990) by the
stockholder and (d) any material interest of the stockholder in such business.
Notwithstanding any other provision of these By-Laws, no business shall be
conducted at an annual meeting except in accordance with the procedures set
forth in this Section 11. If the presiding officer of an annual meeting
determines and declares that business was not properly brought before the
meeting in accordance with this Section 11, any such business shall not be
transacted.
ARTICLE III
Board of Directors
Section 1. General Powers. The property, business and affairs of the
Corporation shall be managed by the Board of Directors. The Board of Directors
may exercise all such authority and powers of the Corporation and do all such
lawful acts and things as are not by statute or the Certificate of
Incorporation or these By-Laws directed or required to be exercised or done by
the stockholders.
Section 2. A. Number, Classification, Term of Office, Qualifications
and Election. The Board of Directors shall initially consist of six directors.
Thereafter, the number of directors of the Corporation shall be determined by
resolution approved by at least a majority of the then authorized number of
directors, but shall not be more than fifteen nor less than five.
<PAGE> 7
The Board of Directors shall be divided into three classes as nearly equal
in number as possible, with the term of office of one class expiring each year.
The terms of office of the directors elected at the annual meeting of
stockholders in 1977 and initially classified shall be as follows: directors
of the first class shall hold office for a term expiring at the next succeeding
annual meeting; directors of the second class shall hold office for a term
expiring at the second succeeding annual meeting; and directors of the third
class shall hold office for a term expiring at the third succeeding annual
meeting. At each annual meeting of stockholders after the annual meeting in
1977, directors elected to succeed the class of directors whose terms expire at
such annual meeting shall be elected to hold office for a term expiring at the
third succeeding annual meeting after their election. When the number of
directors is changed, any newly created directorships or any decrease in
directorships shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible. Subject to the foregoing, the
respective classes for which directors shall be selected or chosen shall be
determined by resolution approved by at least a majority of the then authorized
number of directors. Each director shall hold office for the specified term
and until his successor shall be duly elected and qualified, or until his
death, or until he shall have resigned or he shall have been removed, as
hereinafter provided in these By-Laws, or as otherwise provided by statute or
by the Certificate of Incorporation. All the directors shall be of full age.
Directors need not be stockholders. Except as otherwise required by statute or
the Certificate of Incorporation or these By-Laws, directors to be elected at
each annual meeting of stockholders shall be elected by a plurality of the
votes cast at the meeting by the holders of shares present in person or
represented by proxy and entitled to vote for the election of directors.
B. Nomination of Directors. Only persons who are nominated in
accordance with the procedures set forth in this paragraph B shall be eligible
for election as a director at any meeting of stockholders for the election of
directors (an "Election Meeting"). Nominations of candidates for election to
the Board of Directors of the Corporation at an Election Meeting may be made
only by or at the direction of the Board of Directors or by a stockholder
entitled to vote at such Election Meeting. All such nominations, except those
made by or at the direction of the Board of Directors, shall be made pursuant
to timely notice in writing to the Secretary of the Corporation of the
stockholder's
<PAGE> 8
intention to make such nomination. To be timely, any such notice must be
received at the principal office of the Corporation not less than sixty (60)
nor more than ninety (90) days prior to the date of the Election Meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the Election Meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the fifteenth day following the day on which such
notice of the date of the Election Meeting was mailed or such public disclosure
was made. Such stockholder's notice with respect to a proposed nomination shall
set forth (a) as to each person whom the stockholder proposes to nominate as a
candidate for election to the Board of Directors (i) the name, age, business
address and residence address and the principal occupation or employment of
such person, (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by such person, (iii) such other
information concerning such person as would be required, under the rules of the
Securities and Exchange Commission, in a proxy statement soliciting proxies for
the election of such person and (iv) a signed consent of such person to serve
as a Director of the Corporation, if elected, and (b) as to the stockholder
giving the notice (i) the name and address of such stockholder, as they appear
in the Corporation's stock transfer books and (ii) the class and number of
shares of capital stock of the Corporation which are beneficially owned by such
stockholder. In the event that a person is validly designated as a nominee in
accordance with the procedures specified above and shall thereafter become
unable or unwilling to stand for election to the Board of Directors, the Board
of Directors or the stockholder who proposed such nominee, as the case may
be, may designate a substitute nominee; provided, however, that in the case of
persons not nominated by the Board of Directors, such a substitution may be
made only if notice as provided above in this paragraph B is received at the
principal office of the Corporation not later than the later of (x) thirty
(30) days prior to the date of the Election Meeting or (y) five (5) days after
the stockholder proposing the original nominee first learned that such original
nominee has become unable or unwilling to stand for election. If the presiding
officer of an Election Meeting determines and declares that a Director
nomination was not made in accordance with the foregoing procedures, such
nomination shall be void and shall be disregarded for all purposes.
Section 3. Annual Meeting. The Board of Directors
<PAGE> 9
shall meet for the purpose of organization, the election of officers and
the transaction of other business, as soon as practicable after each annual
meeting of the stockholders, on the same day and at the same place where such
annual meeting shall be held. Notice of such meeting need not be given. Such
meeting may be held at any other time or place (within or without the State of
Delaware) which shall be specified in a notice thereof given as hereinafter
provided in Section 6 of this Article III, or in a waiver of notice thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places within or without the State of
Delaware as the Board of Directors may from time to time by resolution
determine. If any day fixed for a regular meeting shall be a legal holiday at
the place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at the same hour on the next
succeeding business day. Notice of regular meetings of the Board of Directors
need not be given except as otherwise required by statute or these By-Laws.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board, the President
or any two directors of the Corporation and shall be held at such time and at
such place within or without the State of Delaware as shall be specified in the
notice of meeting or waiver thereof.
Section 6. Notice of Meetings. Notice of each special meeting of the
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 6, in which notice shall be stated the time and place of the meeting.
Notice of each such meeting shall be delivered to each director, either
personally (including by courier) or by telephone, telex, telegraph, or
facsimile transmission at least twenty-four hours before the time at which such
meeting is to be held, or shall be mailed to each director by first-class mail
postage prepaid, addressed to him at his residence or usual place of business,
at least three days before the day on which such meeting is to be held. Notice
of any such meeting need not be given to any director who shall, either before
or after the meeting, submit a signed waiver of notice or who shall attend such
meeting without objecting, at the beginning of such meeting, to the transaction
of any business because the meeting is not lawfully called or
<PAGE> 10
convened. Except as otherwise specifically required by these By-Laws, a
notice or waiver of notice of any regular or special meeting of the Board of
Directors need not state the purpose or purposes of such meeting.
Section 7. Quorum and Manner of Acting. Except as provided in Section
5 of Article IX of these By-Laws, a majority of the directors shall be present
in person at any meeting of the Board of Directors in order to constitute a
quorum for the transaction of business at such meeting, and, except as
otherwise expressly required by statute or the Certificate of Incorporation,
the act of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors. In the absence of a
quorum at any meeting of the Board of Directors, a majority of the directors
present thereat, or if no director be present, the Secretary, may adjourn such
meeting to another time and place, or such meeting, unless it be the annual
meeting of the Board of Directors, need not be held. At any adjourned meeting
at which a quorum is present, any business may be transacted which might have
been transacted at the meeting as originally called. Except as provided in
Section 11 of this Article III, Article IV and Section 4 of Article IX of these
By-Laws and as otherwise specifically authorized by resolution of the Board of
Directors, the directors shall act only as a Board of Directors and the
individual directors shall have no power as such.
Section 8. Organization. At each meeting of the Board of Directors,
the Chairman of the Board, or, in his absence or inability to act, the
President, or, in his absence or inability to act, another director chosen by a
majority of the directors present, shall act as chairman of the meeting and
preside thereat. The minutes of the meeting shall be recorded by any officer
of the Corporation present and designated by the chairman.
Section 9. Resignations. Any director of the Corporation may resign
at any time by giving written notice of his resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
<PAGE> 11
Section 10. Removal of Directors. Except as otherwise provided in the
Certificate of Incorporation or in these By-Laws, any director may be removed,
but only for cause, at any time, by the affirmative vote of the holders of a
majority of the outstanding shares of stock entitled to vote for the election
of directors of the Company at a meeting of the stockholders called and held
for that purpose.
Section 11. Vacancies. Except as otherwise required by statute or by
the Certificate of Incorporation, during the intervals between annual meetings
of stockholders, any vacancies and any newly-created directorships resulting
from an increase in the authorized number of directors shall be filled by a
majority vote of the directors then in office, whether or not a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
the next election of the class for which such directors shall have been chosen
and until their successors shall be duly elected and qualified, unless sooner
displaced. If there are no directors in office, then a special meeting of
stockholders for the election of directors may be called and held in the manner
provided by statute. When one or more directors shall resign from the Board of
Directors, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.
Section 12. Compensation. The Board of Directors or a committee of
the Board designated by it shall have authority to fix the compensation,
including without limitation fees and reimbursement of expenses, of directors
for services to the Corporation in any capacity; provided, however, that no
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 13. Action without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 14. Participation in Meetings by Telephone and
<PAGE> 12
Other Equipment. Members of the Board of Directors or of any committee thereof
may participate in a meeting of the Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
ARTICLE IV
Executive and Other Committees
Section 1. Executive and Other Committees. The Board of Directors
may, by a resolution passed by a majority of the whole Board, designate an
Executive Committee, to consist of three or more directors of the Corporation,
and one or more other committees, each such other committee to consist of one
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of the Executive Committee or
such other committee or committees, the member or members thereof present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. The Executive Committee, while the Board of Directors is not in
session, shall have and may exercise, and any such other committee to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise, all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to
amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-Laws of the Corporation; and,
unless the resolution or By-Laws expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of stock. Each committee shall keep
<PAGE> 13
written minutes of its proceedings and shall report such minutes to the Board
of Directors when required. All such proceedings shall be subject to revision
or alteration by the Board of Directors; provided, however, that rights of
third parties shall not be prejudiced by such revision or alteration. The
Board of Directors, by action of a majority of the entire Board, may at any
time fill vacancies in, change the membership of, or dissolve any such
committee.
Section 2. Executive Committee: General. Regular meetings of the
Executive Committee shall be held at such times and places, within or without
the State of Delaware, as a majority of such Committee may from time to time by
resolution determine. Special meetings of the Executive Committee may be
called at the request of any member thereof and may be held at such times and
places, within or without the State of Delaware, as such Committee may from
time to time by resolution determine or as shall be specified in the respective
notices or waivers of notice thereof. Notice of regular meetings of such
Committee need not be given except as otherwise required by statute or these
By-Laws. Notice of each special meeting of such Committee shall be given to
each member of such Committee in the manner provided for in Section 6 of
Article III of these By-Laws. Subject to the provisions of this Article IV, the
Executive Committee, by resolution of a majority of such Committee, shall fix
its own rules of procedure. A majority of the Executive Committee shall be
present in person at any meeting of the Executive Committee in order to
constitute a quorum for the transaction of business at such meeting, and the
act of a majority of those present at any meeting at which a quorum is present
shall be the act of the Executive Committee. The members of the Executive
Committee shall act only as a committee, and the individual members shall have
no power as such.
Section 3. Other Committees: General. A majority of any committee
may fix its rules of procedure, determine its action, and fix the time and
place, within or without the State of Delaware, of its meetings, unless the
Board of Directors shall otherwise by resolution provide. Notice of such
meetings shall be given to each member of the committee in the manner provided
for in Section 6 of Article III of these By-Laws. Nothing in this Article IV
shall be deemed to prevent the Board of Directors from appointing one or more
committees consisting in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall have or may
<PAGE> 14
exercise any authority of the Board.
ARTICLE V
Officers
Section 1. Number and Qualifications. The officers of the Corporation
shall be a Chairman of the Board, a President, an Executive Vice President, a
Vice President of Finance, one or more other Vice Presidents, and a Secretary.
Any two or more offices may be held by the same person. Such officers shall be
elected from time to time by the Board of Directors, each to hold office until
the meeting of the Board following the next annual meeting of the stockholders,
or until his successor shall have been duly elected and shall have qualified,
or until his death, or until he shall have resigned or until he shall have been
removed, as hereinafter provided in these By-Laws. The Board of Directors may
from time to time appoint such other officers (including a Treasurer and one or
more Assistant Treasurers and Assistant Secretaries) and such agents as it may
deem necessary or desirable for the business of the Corporation. The Board of
Directors may from time to time authorize any principal officer or committee to
appoint, and to prescribe the authority and duties of, any such subordinate
officers or agents. Each of such other officers and agents shall have such
authority, perform such duties, and hold office for such period, as are
provided in these By-Laws or as may be prescribed by the Board of Directors or
by the principal officer or committee appointing such officer or agent.
Section 2. Resignations. Any officer of the Corporation may resign
at any time by giving written notice of his resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3. Removal. Any officer or agent of the Corporation may be
removed, either with or without cause, at any time, by the vote of the majority
of the entire Board of Directors at any meeting of the Board, or, except in the
case of
<PAGE> 15
an officer or agent elected or appointed by the Board, by any principal
officer or committee upon whom such power of removal may be conferred by the
Board.
Section 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, disqualification, removal or any other cause, may be filled
for the unexpired portion of the term of the office which shall be vacant, in
the manner prescribed in these By-Laws for the regular election or appointment
to such office.
Section 5. Chairman of the Board. The Chairman of the Board shall, if
present, preside at all meetings of the Board of Directors and shall be an ex
officio member of all committees of the Board. In general, he shall have such
other powers and perform such other duties as may be incidental to the office
of the Chairman of the Board or as from time to time may be assigned to him by
the Board of Directors or the President.
Section 6. President. The President shall be the chief executive
officer of the Corporation and shall have general and active supervision and
direction over the business and affairs of the Corporation and over its several
officers, subject, however, to the control of the Board of Directors. He
shall, if present, preside at all meetings of the stockholders and, in the
absence or inability to act of the Chairman of the Board, at all meetings of
the Board of Directors. In general, the President shall have such other powers
and perform such other duties as may usually pertain to the office of the
President and chief executive officer, or as from time to time may be assigned
to him by the Board of Directors.
Section 7. Executive Vice President. The Executive Vice President
shall have such powers and perform such duties as from time to time may be
assigned to him by the Board of Directors, the Chairman of the Board or the
President.
Section 8. Vice President of Finance. The Vice President of Finance
shall:
(a) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and have control of all books of account of
the Corporation;
(b) receive, and give receipts for, moneys due and
<PAGE> 16
payable to the Corporation from any source whatsoever;
(c) disburse funds of the Corporation, taking proper vouchers
therefor;
(d) render to the Chairman of the Board, the President, the Board or
any committee thereof, whenever required, an account of the financial condition
of the Corporation and of his transactions as Vice President of Finance; and
(e) in general, have such other powers and perform such other duties
as usually pertain to the office of Vice President of Finance or as from time
to time may be assigned to him by the Board of Directors, the Chairman of the
Board or by the President or the Executive Vice President.
At the request of the Treasurer or in case of the absence or inability
to act of the Treasurer, the Vice President of Finance shall perform all the
duties of the Treasurer, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the Treasurer.
Section 9. Other Vice Presidents. Each other Vice President shall
have such powers and perform such duties as usually pertain to his office or as
from time to time may be assigned to him by the Board of Directors, the
Chairman of the Board or the President.
Section 10. Treasurer. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) cause all moneys and other valuables to be deposited to the credit
of the Corporation in such depositaries as may be designated by the Board of
Directors;
(c) supervise the investment of the Corporation's funds as ordered or
authorized by the Board of Directors, taking proper vouchers therefor; and
(d) in general, have such other powers and perform such other duties
as from time to time may be assigned to him by the Board of Directors, the
Chairman of the Board, the President or the Executive Vice President.
<PAGE> 17
At the request of the Vice President of Finance or in case of the
absence or inability to act of the Vice President of Finance, the Treasurer
shall perform all the duties of the Vice President of Finance, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the Vice President of Finance.
Section 11. Assistant Treasurers. Each Assistant Treasurer shall have
such powers and perform such duties as usually pertain to his office or as from
time to time may be assigned to him by the Board of Directors, the Chairman of
the Board, the President, the Executive Vice President, or the Treasurer.
Section 12. Secretary. The Secretary shall:
(a) keep, or cause to be kept, in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, of the
committees of the Board and of the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation
(unless the seal of the Corporation on such certificates shall be a facsimile,
as hereinafter provided) and affix and attest the seal to all other documents
to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept
and filed; and
(e) in general, have such other powers and perform such other duties
as usually pertain to the office of Secretary or as from time to time may be
assigned to him by the Board of Directors, the Chairman of the Board or the
President.
Section 13. Assistant Secretaries. At the request of the Secretary or
in case of his absence or inability to act, the Assistant Secretary, or if
there be more than one, the Assistant Secretary designated by the Board of
Directors or, in the absence of such designation, by the President, shall
perform all the
<PAGE> 18
duties of the Secretary, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the Secretary. In general, each
Assistant Secretary shall have such other powers and perform such other duties
as from time to time may be assigned to him by the Board of Directors, the
Chairman of the Board, the President or the Secretary.
Section 14. Officers' Bonds or Other Security. If required by the
Board of Directors, any officer of the Corporation shall give a bond for the
faithful performance of his duties, for such term and in such amount and with
such surety or sureties as the Board may require.
Section 15. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to
time by the Board of Directors or a committee of the Board designated by it,
and no officer of the Corporation shall be prevented from receiving
compensation by reason of the fact that he is also a director of the
Corporation.
ARTICLE VI
Checks, Drafts, Bank Accounts, Etc.
Section 1. Checks, Drafts, etc. All checks, drafts, bills of exchange
or other orders for the payment of money out of the funds of the Corporation,
and all notes or other evidences of indebtedness of the Corporation shall be
signed in the name and on behalf of the Corporation by such person or persons
and in such manner as shall from time to time be authorized by the Board of
Directors.
Section 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositaries as the Board of Directors
may from time to time designate or as may be designated by any officer or
officers of the Corporation to whom such power of designation may from time to
time be delegated by the Board of Directors. For the purpose of deposit and
for the purpose of collection for the account of the Corporation, checks,
drafts and other orders for the payment of money which are payable to the order
of the Corporation may be endorsed, assigned and delivered by any officer or
agent of the Corporation.
<PAGE> 19
Section 3. General and Special Bank Accounts. The Board of Directors
may from time to time authorize the opening and keeping of general and special
bank accounts with such banks, trust companies or other depositaries as the
Board may designate or as may be designated by any officer or officers of the
Corporation to whom such power of designation may from time to time be
delegated by the Board of Directors. The Board of Directors may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with provisions of these By-Laws, as it may deem expedient.
Section 4. Proxies in Respect of Securities of Other Corporations.
Unless otherwise provided by resolution adopted by the Board of Directors, the
Chairman of the Board, the President or any Vice President may from time to
time appoint an attorney or attorneys or agent or agents of the Corporation in
the name and on behalf of the Corporation to cast the votes which the
Corporation may be entitled to cast as the holder of stock or other securities
in any other corporation, any of whose stock or other securities may be held by
the Corporation, at meetings of the holders of the stock or other securities of
such other corporation, or to consent in writing in the name of the Corporation
as such holder to any action by such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent, and may execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the
premises.
ARTICLE VII
Shares and Their Transfer - Examination of Books
Section 1. Stock Certificates. Every holder of stock of the
Corporation shall be entitled to have a certificate, in such form as shall be
approved by the Board of Directors, certifying the number and class of shares
of stock of the Corporation owned by him. The certificates representing shares
of the respective classes of stock shall be numbered in order of their issue
and shall be signed in the name of the Corporation by the Chairman of the Board
or the President or a Vice President and by the Vice President of Finance, the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
<PAGE> 20
and sealed with the seal of the Corporation (which seal may be a facsimile,
engraved or printed). Any or all the signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
Section 2. Books of Account and Record of Stockholders. The books
and records of the Corporation may be kept at such places, within or without
the State of Delaware, as the Board of Directors may from time to time
determine. The stock record books and the blank stock certificate books shall
be kept by the Secretary or by any other officer or agent designated by the
Board of Directors.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent or transfer clerk, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of all taxes thereon. Except as
otherwise provided by law, the Corporation shall be entitled to recognize the
exclusive right of a person in whose name any share or shares stand on the
record of stockholders as the owner of such share or shares for all purposes,
including without limitation the rights to receive dividends or other
distributions and to vote as such owner, and the Corporation may hold any such
stockholder of record liable for calls and assessments and the Corporation
shall not be bound to recognize any equitable or legal claim to or interest in
any such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof. Whenever any transfers of shares
shall be made for collateral security and not absolutely, and both the
transferor and transferee request the Corporation to do so, such fact shall be
stated in the entry of the transfer.
Section 4. Regulations. The Board of Directors may make such
additional rules and regulations, not inconsistent with these By-Laws, as it
may deem expedient concerning the issue,
<PAGE> 21
transfer and registration of certificates for shares of stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer agents or one or more transfer clerks and one or more
registrars and may require all certificates for shares of stock to bear the
signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of
any certificate representing shares of stock of the Corporation shall
immediately notify the Corporation of any loss, destruction or mutilation of
such certificate, and the Corporation may issue a new certificate of stock in
the place of any certificate theretofore issued by it which the owner thereof
shall allege to have been lost, stolen or destroyed or which shall have been
mutilated, and the Board of Directors may, in its discretion, require such
owner or his legal representatives to give the Corporation and/or any agent of
the Corporation designated by it a bond in such sum, limited or unlimited, and
in such form and with such surety or sureties as the Board in its absolute
discretion shall determine, to indemnify the Corporation and/or such agent
against any claim that may be made against it on account of the alleged loss
theft, or destruction of any such certificate, or the issuance of a new
certificate. Anything herein to the contrary notwithstanding, the Board of
Directors, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal proceedings under the laws of the State
of Delaware.
Section 6. Stockholder's Right of Inspection. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
of business to inspect for any proper purpose the Corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies
or extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 7. Fixing of Record Date. In order that the
<PAGE> 22
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to express consent
to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall be not more than
sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
ARTICLE VIII
Dividends
Subject to the provisions of the Certificate of Incorporation relating
thereto, if any, dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Subject to the provisions of the Certificate of Incorporation,
dividends may be paid in cash, in property or in shares of the capital stock of
the Corporation.
Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose or purposes as the Board of Directors shall determine to be in the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
ARTICLE IX
Indemnification
Section 1. Right to Indemnification. The Corporation
<PAGE> 23
shall, to the fullest extent permitted by applicable law as then in effect,
indemnify any person (the "Indemnitee") who was or is involved in any manner
(including, without limitation, as a party or a witness) or was or is
threatened to be made so involved in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation, any action,
suit or proceeding by or in the right of the Corporation to procure a judgment
in its favor)(a "Proceeding") by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation or of a
partnership, joint venture, trust or other enterprise (including, without
limitation, service with respect to any employee benefit plan), whether the
basis of any such Proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving as a director or
officer, against all expenses, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) actually and reasonably incurred
by him in connection with such Proceeding. The right to indemnification
conferred in this Article IX shall include the right to receive payment in
advance of any expenses incurred by the Indemnitee in connection with such
Proceeding, consistent with applicable law as then in effect. All right to
indemnification conferred in this Article IX, including such right to advance
payments and the evidentiary, procedural and other provisions of this Article
IX, shall be a contract right. The Corporation may, by action of its Board of
Directors, provide indemnification for employees, agents, attorneys and
representatives of the Corporation with up to the same scope and extent as
provided for officers and directors.
Section 2. Insurance, Contracts and Funding. The Corporation may
purchase and maintain insurance to protect itself and any person who is, was or
may become an officer, director, employee, agent, attorney or representative of
the Corporation or, at the request of the Corporation, an officer, director,
employee, agent, attorney or representative of another corporation or entity,
against any expense, liability or loss asserted against him or incurred by him
in connection with any Proceeding in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such expense, liability or loss under the provisions of
this Article IX or otherwise. The Corporation may
<PAGE> 24
enter into contracts with any director, officer, employee, agent,
attorney or representative of the Corporation, or any person serving as such at
the request of the Corporation for another corporation or entity, in
furtherance of the provisions of Article TENTH of the Certificate of
Incorporation or this Article IX and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification of any person entitled thereto.
Section 3. Indemnification; Not Exclusive Right. The right of
indemnification provided in this Article IX shall not be exclusive of any other
rights to which any person seeking indemnification may otherwise be entitled
under any provision of the Certificate of Incorporation, By-Laws or agreement
or otherwise. The provisions of this Article IX shall inure to the benefit of
the heirs and legal representatives of any person entitled to indemnity under
this Article IX and shall be applicable to all Proceedings, whether arising
from acts or omissions occurring before or after the adoption of this Article
IX. No amendment or repeal of any provision of this Article IX shall remove,
abridge or adversely affect any right of indemnification or any other benefits
of the Indemnitee under the provisions of this Article IX with respect to any
Proceeding involving any act or omission which occurred prior to such
amendment.
Section 4. Advancement of Expenses; Procedures; Presumptions and
Effect of Certain Proceedings; Remedies. In furtherance, but not in
limitation, of the provisions of the Certificate of Incorporation or the
foregoing provisions of this Article IX, the following procedures, presumptions
and remedies shall apply with respect to advancement of expenses and the right
to indemnification under the Certificate of Incorporation or this Article IX:
(a) Advancement of Expenses. All reasonable expenses incurred by or
on behalf of the Indemnitee in connection with any Proceeding shall be advanced
to the Indemnitee by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements reasonably shall
evidence the expenses incurred by the Indemnitee and, if required by law at the
time of such advance,
<PAGE> 25
shall include or be accompanied by an undertaking by or on behalf of the
Indemnitee to repay the amounts advanced if it should ultimately be determined
that the Indemnitee is not entitled to be indemnified against such expense
pursuant to this Article IX.
(b) Procedure for Determination of Entitlement to Indemnification.
(i) To obtain indemnification, an Indemnitee shall submit
to the President or Secretary of the Corporation a written request,
including such documentation and information as is reasonably available
to the Indemnitee and reasonably necessary to determine whether and to
what extent the Indemnitee is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's entitlement to
indemnification shall be made not later than 60 days after receipt by the
Corporation of the written request for indemnification together with the
Supporting Documentation. The President or Secretary of the Corporation
shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that the Indemnitee has requested
indemnification.
(ii) The Indemnitee's entitlement to indemnification shall
be determined in one of the following ways: (A) by a majority vote of the
Disinterested Directors (as hereinafter defined) (or the Disinterested
Director, if only one); (B) by a written opinion of Independent Counsel
(as hereinafter defined) if (x) a Change in Control (as hereinafter
defined) shall have occurred and the Indemnitee so requests or (y) there
is no Disinterested Director or a majority of the Disinterested Directors
(or the Disinterested Director, if only one) so directs; (C) by the
stockholders of the Corporation (but only if a majority of the
Disinterested Directors (or the Disinterested Director, if only one)
determines that the issue of entitlement to indemnification should be
submitted to the stockholders for their determination); or (D) as
provided in Section 4(c) of this Article IX.
(iii) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section
4(b)(ii) of this Article IX, a majority of the Disinterested Directors
(or the Disinterested Director, if only one) shall select the Independent
Counsel,
<PAGE> 26
but only an Independent Counsel to which the Indemnitee does not
reasonably object; provided, however, that if a Change in Control shall
have occurred, the Indemnitee shall select such Independent Counsel,
but only an Independent Counsel to which the Board of Directors does not
reasonably object.
(c) Presumptions and Effect of Certain Proceedings. Except as otherwise
expressly provided in this Article IX, the Indemnitee shall be presumed to be
entitled to indemnification upon submission of a request for indemnification
together with the Supporting Documentation in accordance with Section 4(b)(i) of
this Article IX, and thereafter the Corporation shall have the burden of proof
to overcome that presumption in reaching a contrary determination. In any
event, if the person or persons empowered under Section 4(b) of this Article IX
to determine entitlement to indemnification shall not have been appointed or
shall not have made a determination within 60 days after receipt by the
Corporation of the request therefor together with the Supporting Documentation,
the Indemnitee shall be deemed to be entitled to indemnification. With regard
to the right to indemnification for expenses, if and to the extent that the
Indemnitee has been successful on the merits or otherwise in any Proceeding, or
if and to the extent that the Indemnitee was not a party to the Proceeding or if
a Proceeding was terminated without a determination of liability on the part of
the Indemnitee with respect to any claim, issue or matter therein or without any
payments in settlement or compromise being made by the Indemnitee with respect
to a claim, issue or matter therein, the Indemnitee shall be deemed to be
entitled to indemnification, which entitlement shall not be diminished by any
determination which may be made pursuant to Sections (4)(b)(ii)(A), (B) or (C).
In either case, the Indemnitee shall be entitled to such indemnification,
unless (A) the Indemnitee misrepresented or failed to disclose a material fact
in making the request for indemnification or in the Supporting Documentation or
(B) such indemnification is prohibited by law, in either case as finally
determined by adjudication or, at the Indemnitee's sole option, arbitration (as
provided in Section 4(d)(i) of this Article IX). The termination of any
Proceeding described in Section 1 of this Article IX; or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, adversely affect the
right of the Indemnitee to indemnification or create any presumption with
respect to any standard of conduct or belief or any other matter which might
form a basis for a determination
<PAGE> 27
that the Indemnitee is not entitled to indemnification.
(d) Remedies of Indemnitee.
(i) In the event that a determination is made pursuant to
Section 4(b) of this Article IX that the Indemnitee is not entitled to
indemnification under this Article IX, (A) the Indemnitee shall be
entitled to seek an adjudication of his entitlement to such
indemnification either, at the Indemnitee's sole option, in (x) an
appropriate court of the State of Delaware or any other court of competent
jurisdiction or (y) an arbitration to be conducted by three arbitrators
(or, if the dispute involves less than $100,000, by a single arbitrator)
pursuant to the rules of the American Arbitration Association; (B) any
such judicial proceedings or arbitration shall be de novo and the
Indemnitee shall not be prejudiced by reason of such adverse
determination; and (C) in any such judicial proceeding or arbitration the
Corporation shall have the burden of proof that the Indemnitee is not
entitled to indemnification under this Article IX.
(ii) If a determination shall have been made or deemed to
have been made, pursuant to Section 4(b) or (c) of this Article IX, that
the Indemnitee is entitled to indemnification, the Corporation shall be
obligated to pay the amounts constituting such indemnification within five
days after such determination has been made or deemed to have been made
and shall be conclusively bound by such determination, unless (A) the
Indemnitee misrepresented or failed to disclose a material fact in making
the request for indemnification or in the Supporting Documentation or (B)
such indemnification is prohibited by law, in either case as finally
determined by adjudication or, at the Indemnitee's sole option,
arbitration (as provided in Section 4(d)(i) of this Article IX). In the
event that (C) advancement of expenses is not timely made pursuant to
Section 4(a) of this Article IX or (D) payment of indemnification is not
made within five days after a determination of entitlement to
indemnification has been made or deemed to have been made pursuant to
Section 4(b) or (c) of this Article IX, the Indemnitee shall be entitled
to seek judicial enforcement of the Corporation's obligation to pay to
the Indemnitee such advancement of expenses or indemnification.
Notwithstanding the foregoing, the Corporation may bring an action, in an
<PAGE> 28
appropriate court in the State of Delaware or any other court of competent
jurisdiction, contesting the right of the Indemnitee to receive
indemnification hereunder due to the occurrence of an event described in
subclause (A) or (B) of this clause (ii) (a "Disqualifying Event"),
provided, however, that if the Indemnitee shall elect, at his sole option,
that such dispute shall be determined by arbitration (as provided in
Section 4(d)(I) of this Article IX), the Corporation shall proceed by
such arbitration. In any such enforcement or other proceeding or action
in which whether a Disqualifying Event has occurred is an issue, the
Corporation shall have the burden of proving the occurrence
of such Disqualifying Event.
(iii) The Corporation shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this Section
4(d) that the procedures and presumptions of this Article IX are not
valid, binding and enforceable and shall stipulate in any such court
or before any such arbitrator or arbitrators that the Corporation is
bound by all the provisions of this Article IX.
(iv) In the event that the Indemnitee, pursuant to this
Article IX, seeks a judicial adjudication of or an award in arbitration
to enforce his rights under, or to recover damages for breach of, this
Article IX, or is otherwise involved in any adjudication or arbitration
with respect to his right to indemnification, the Indemnitee shall be
entitled to recover from the Corporation, and shall be indemnified by the
Corporation against, any expenses actually and reasonably incurred by him
if the Indemnitee prevails in such judicial adjudication or arbitration.
If it shall be determined in such judicial adjudication or arbitration
that the Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred
by the Indemnitee in connection with such judicial adjudication or
arbitration shall be prorated accordingly.
(e) Definitions. For purposes of this Section 4:
(i) "Change in Control" means a change in control of the
Corporation a nature that would be required to be reported in response to
Item 6(e) Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act
<PAGE> 29
of 1934 (the "Act"), as such Item was in effect on July 1, 1990,
whether or not the Corporation is then subject to such reporting
requirement; provided that, without limitation, such a change in control
shall be deemed to have occurred if (A) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Corporation representing 20 percent or more of the
combined voting power of the Corporation's then outstanding securities
without the prior approval of at least two-thirds of the members of the
Board of Directors in office immediately prior to such acquisition; (B) the
Corporation is a party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest, as a consequence of which members of
the Board of Directors in office immediately prior to such transaction or
event constitute less than a majority of the Board of Directors thereafter;
or (C) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (including for
this purpose any new director whose election or nomination for election
by the Corporation's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(ii) "Disinterested Director" means a director of the
Corporation is not or was not a material party to the Proceeding in
respect of indemnification is sought by the Indemnitee.
(iii) "Independent Counsel" means a law firm or a member of
a law firm that neither presently is, nor in the past five years has been,
retained to represent: (A) the Corporation or the Indemnitee in any
matter or (B) any other party to the Proceeding giving rise to a claim
for indemnification under this Article IX. Notwithstanding the foregoing,
the term "Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing under the law
of the State of Delaware, would have a conflict of interest in representing
either the Corporation or the Indemnitee in an action to determine the
Indemnitee's rights under this Article IX.
<PAGE> 30
Section 5. Acts of Disinterested Directors. Disinterested Directors
considering or acting on any indemnification matter under this Article IX or
otherwise may consider or take action as the Board of Directors or may consider
or take action as a committee or individually or otherwise. In the event
Disinterested Directors consider or take action as the Board of Directors,
one-third of the total number of directors shall constitute a quorum.
Section 6. Severability. If any provision or provisions of this
Article IX shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (I) the validity, legality and enforceability of the remaining
provisions of this Article IX (including, without limitation, all portions of
any paragraph of this Article IX containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (ii) to
the fullest extent possible, the provisions of this Article IX (including,
without limitation, all portions of any paragraph of this Article IX containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE XI
Seal
The Board of Directors shall provide a corporate seal, which shall be
circular in form and bear the name of the Corporation and the words and figures
denoting its organization under the laws of the State of Delaware and the year
thereof.
<PAGE> 31
ARTICLE XII
Amendments
These By-Laws may be amended or repealed, or new By-Laws may be adopted,
except as provided in Section 3 of Article IX of these By-Laws, (a) at any
annual or special meeting of the stockholders, by a majority of the total votes
of the stockholders or when stockholders are entitled to vote by class, by a
majority of the appropriate class, present in person or represented by proxy and
entitled to vote on such action; provided, however, that the notice of such
meeting shall have been given as provided in these By-Laws, which notice shall
mention that amendment or repeal of these By-Laws or the adoption of new By-Laws
is one of the purposes of such meeting, or (b) by the Board of Directors at any
meeting thereof; provided, however, that notice of such meeting shall have been
given as provided in these By-Laws, which notice shall mention that amendment or
repeal of the By-Laws or the adoption of new By-Laws is one of the purposes of
such meeting; provided, further, that By-Laws adopted by the Board of Directors
may be amended or repealed by the stockholders as hereinabove provided;
provided, further, that the stockholders may limit the power of the Board of
Directors to make, amend, alter or repeal the By-Laws of the Company.
Notwithstanding the foregoing, the provisions of these By-Laws with respect to
the number, classification, term of office, qualifications, election and removal
of directors and the filling of vacancies and newly created directorships, and
the amendment thereof, that is, Sections 2, 10 and 11 of Article III and this
Article XII, may be amended or repealed or new By-Laws affecting such provisions
may be adopted only with the unanimous approval of the entire Board of Directors
or by the affirmative vote of the holders of at least 80% of the outstanding
shares of stock of the Corporation entitled to vote in elections of directors
(except that if such proposed amendment or repeal or adoption of new By-Laws
shall be submitted to the stockholders with the unanimous recommendation of the
entire Board of Directors, such provisions may be amended or repealed or such
new By-Laws may be adopted by the affirmative vote of the holders of a majority
of such stock).
<PAGE> 1
Exhibit 11
SENSORMATIC ELECTRONICS CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months ended Nine Months ended
March 31, March 31,
-------------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income:
Net income for primary
computation $ 24,120 $ 16,394 $ 69,501 $ 50,022
Add interest expense (net
of tax) on 7% convertible
subordinated debentures - 1,335 - 3,871
-------- -------- -------- --------
Adjusted net income for fully
diluted computation $ 24,120 $ 17,729 $ 69,501 $ 53,893
======== ======== ======== ========
Common shares:
Weighted average shares
outstanding during the period 72,542 59,507 70,047 58,916
Potential dilutive exercise of
stock options and warrants (1) 1,211 1,728 1,313 2,057
-------- -------- -------- --------
Shares included in computation
of primary earnings per share 73,803 61,235 71,360 60,973
Shares issuable on conversion
of 7% convertible subordinated
debentures - 7,225 - 7,225
Maximum dilution of stock
options and warrants (2) - 55 99 55
-------- ---------- -------- --------
Shares included in computation of
fully diluted earnings per
share 73,803 68,515 71,459 68,253
======== ========== ======== ========
</TABLE>
(1) Computed under the treasury stock method based on the average stock price
during the periods.
(2) Computed under the treasury stock method based on stock price at end of
periods if higher than the average price during the periods.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SENSORMATIC ELECTRONICS CORPORATION FOR THE NINE MONTHS
ENDED MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 53,150
<SECURITIES> 29,239
<RECEIVABLES> 464,061
<ALLOWANCES> 20,509
<INVENTORY> 226,720
<CURRENT-ASSETS> 0
<PP&E> 212,045
<DEPRECIATION> 69,090
<TOTAL-ASSETS> 1,603,156
<CURRENT-LIABILITIES> 0
<BONDS> 144,987
<COMMON> 703,251
0
0
<OTHER-SE> 274,600
<TOTAL-LIABILITY-AND-EQUITY> 1,603,156
<SALES> 558,956
<TOTAL-REVENUES> 647,336
<CGS> 256,697
<TOTAL-COSTS> 268,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,322
<INTEREST-EXPENSE> 20,248
<INCOME-PRETAX> 92,601
<INCOME-TAX> 23,100
<INCOME-CONTINUING> 69,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,501
<EPS-PRIMARY> .97
<EPS-DILUTED> .97
</TABLE>
