<PAGE> 1
UNITED STATES
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, 2000 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
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
951 YAMATO ROAD, BOCA RATON, FLORIDA 33431-0700
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(561) 989-7000
- --------------------------------------------------------------------------------
(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 77,028,431 shares of Common Stock (par value $.01
per share) as of April 30, 2000.
<PAGE> 2
SENSORMATIC ELECTRONICS CORPORATION
INDEX
FORM 10-Q
NINE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets .................. 3
Consolidated Condensed Statements of Operations ........ 4
Consolidated Condensed Statements of Cash Flows ........ 5
Notes to Consolidated Condensed Financial Statements ... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ...................................... 16
Item 6. Exhibits and Reports on Form 8-K ....................... 16
SIGNATURES .............................................................. 17
</TABLE>
<PAGE> 3
SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS, EXCEPT PAR VALUE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED)
-----------------------
MARCH 31, JUNE 30,
2000 1999
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................................... $ 171.4 $ 209.0
Customer receivables, net ......................................... 309.6 318.6
Inventories, net .................................................. 172.2 163.7
Current portion of deferred income taxes .......................... 31.2 31.2
Other current assets .............................................. 47.9 46.0
-------- --------
Total current assets ........................................... 732.3 768.5
Customer receivables - noncurrent ................................. 55.0 76.5
Revenue equipment, net ............................................ 66.4 71.2
Property, plant and equipment, net ................................ 157.9 137.5
Costs in excess of net assets acquired, net ....................... 426.5 439.7
Deferred income taxes ............................................. 137.6 150.2
Patents and other assets, net ..................................... 133.9 132.0
-------- --------
Total assets ................................................... $1,709.6 $1,775.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and short-term debt ............. $ 56.1 $ 80.4
Accounts payable .................................................. 75.9 76.0
Other current liabilities and deferred income taxes ............... 224.8 246.1
-------- --------
Total current liabilities ...................................... 356.8 402.5
Long-term debt .................................................... 373.3 427.7
Other non-current liabilities and deferred income taxes ........... 55.5 55.7
-------- --------
Total liabilities .............................................. 785.6 885.9
Stockholders' equity:
Preferred stock, $.01 par value, 10.0 shares authorized
6 1/2% Convertible Preferred Stock, 0.7 shares outstanding ..... 166.3 166.7
Common stock, $.01 par value, 125.0 shares authorized, 76.9
and 75.6 shares outstanding at March 31, 2000 and June 30, 1999,
respectively ................................................... 758.1 743.5
Retained earnings ................................................. 167.1 133.4
Treasury stock at cost and other, 1.7 shares at March 31, 2000
and June 30, 1999 .............................................. (11.4) (10.4)
Accumulated other comprehensive loss .............................. (156.1) (143.5)
-------- --------
Total stockholders' equity ..................................... 924.0 889.7
-------- --------
Total liabilities and stockholders' equity ..................... $1,709.6 $1,775.6
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- -----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Sales ......................................... $ 216.6 $ 203.6 $ 644.0 $ 594.4
Rentals ....................................... 8.8 11.1 27.7 33.4
Installation, maintenance and other ........... 35.7 30.8 114.5 95.3
-------- -------- -------- --------
Total revenues ............................. 261.1 245.5 786.2 723.1
Cost of sales ................................. 145.0 140.3 436.6 419.3
-------- -------- -------- --------
Gross margin .................................. 116.1 105.2 349.6 303.8
Operating expenses (income):
Selling, general and administrative ........ 70.6 66.7 215.0 212.0
Provision for doubtful accounts ............ 5.8 5.0 17.9 14.8
Restructuring reversal ..................... (8.3) -- (8.3) --
Research, development and engineering ...... 7.9 5.9 21.6 19.5
Amortization of intangible assets .......... 5.7 5.6 17.4 16.4
-------- -------- -------- --------
Total operating costs and expenses ...... 81.7 83.2 263.6 262.7
-------- -------- -------- --------
Operating income .............................. 34.4 22.0 86.0 41.1
-------- -------- -------- --------
Other (expenses) income:
Interest income ............................ 4.4 4.9 13.5 12.9
Interest expense ........................... (10.2) (11.0) (31.3) (33.5)
Litigation recoveries ...................... 0.5 -- 0.5 6.3
Other, net ................................. (1.6) (2.2) (4.7) (4.0)
-------- -------- -------- --------
Total other expenses .................... (6.9) (8.3) (22.0) (18.3)
-------- -------- -------- --------
Income before income taxes .................... 27.5 13.7 64.0 22.8
Provision for income taxes .................... 7.9 4.5 21.3 7.7
-------- -------- -------- --------
Net Income ................................. $ 19.6 $ 9.2 $ 42.7 $ 15.1
======== ======== ======== ========
Earnings applicable to common stockholders .... $ 16.7 $ 6.5 $ 33.7 $ 6.7
======== ======== ======== ========
Basic earnings per common share ............... $ 0.22 $ 0.09 $ 0.44 $ 0.09
======== ======== ======== ========
Diluted earnings per common share ............. $ 0.22 $ 0.09 $ 0.44 $ 0.09
======== ======== ======== ========
Number of shares used in computation
of Basic earnings per common share ......... 76.7 75.2 76.2 74.8
======== ======== ======== ========
Number of shares used in computation
of Diluted earnings per common share ....... 77.9 75.7 77.2 75.0
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
SENSORMATIC ELECTRONICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
(UNAUDITED)
-------------------
NINE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................... $ 42.7 $ 15.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................................. 47.3 49.1
Net changes in operating assets and liabilities,
net of effects of acquisitions and divestitures:
Decrease in receivables and sales-type leases ............ 25.2 45.7
(Increase)/decrease in inventories ....................... (8.3) 10.4
Decrease in restructuring accruals ....................... (11.5) (7.6)
Other operating assets and liabilities, net .............. (3.8) (6.3)
------ ------
Net cash provided by operating activities ..................... 91.6 106.4
------ ------
Cash flows from investing activities:
Capital expenditures ............................................. (38.6) (20.7)
Increase in revenue equipment, net ............................... (7.3) (17.6)
Additional investment in acquisitions and intangible assets ...... (6.8) (16.9)
Other, net ....................................................... 0.6 1.1
------ ------
Net cash used in investing activities ......................... (52.1) (54.1)
------ ------
Cash flows from financing activities:
Debt payments .................................................... (78.8) (33.5)
Proceeds from issuance of common stock under employee benefit
plans .......................................................... 4.1 --
Other, net ....................................................... (1.4) 0.7
------ ------
Net cash used in financing activities ......................... (76.1) (32.8)
------ ------
Effect of foreign currency translation on cash balances .......... (1.0) (2.8)
------ ------
Net increase (decrease) in cash ..................................... (37.6) 16.7
Cash and cash equivalents at beginning of the year .................. 209.0 127.0
------ ------
Cash and cash equivalents at end of the period ...................... $171.4 $143.7
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
SENSORMATIC ELECTRONICS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
1. BASIS OF PRESENTATION
The consolidated condensed financial statements include the accounts of
Sensormatic Electronics Corporation and its subsidiaries (the
"Company"). The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and nine month period ended
March 31, 2000 are not necessarily indicative of the results that may
be expected for the year ending June 30, 2000. For further information,
refer to the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
June 30, 1999.
Certain prior year amounts have been reclassified to conform to current
year's presentation.
2. RESTRUCTURING
The following tables set forth the details and the activity of the 1996
and 1997/1998 restructuring charge reserves as of March 31, 2000:
1996 RESERVE
<TABLE>
<CAPTION>
ACCRUAL
UTILIZATION BALANCE AT
1996 ------------------ JUNE 30,
PROVISION CASH NON-CASH 1996
--------- ----- -------- ----------
<S> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $45.3 $ -- $(34.2) $11.1
Closure of facilities and related costs ..... 23.5 (1.0) (1.6) 20.9
Employee termination and related costs ...... 16.5 (10.4) (0.7) 5.4
----- ------ ------- -----
Total ................................. $85.3 $(11.4) $(36.5) $37.4
===== ====== ======= =====
Inventory write downs recorded as
a component of cost of sales: ............ (19.6) -- 10.6 (9.0)
----- ------ ------- -----
Total ................................. $65.7 $(11.4) $(25.9) $28.4
===== ====== ======= =====
</TABLE>
1996 RESERVE (CONTINUED)
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT UTILIZATION BALANCE AT
JUNE 30, ------------------ RESERVE JUNE 30,
1996 CASH NON-CASH REALLOCATIONS 1997
---------- ----- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Product rationalization,
related equipment
charges and other ........................ $11.1 $ -- $(12.4) $ 2.8 $ 1.5
Closure of facilities
and related costs ........................ 20.9 (1.4) (6.5) (7.3) 5.7
Employee termination
and related costs ........................ 5.4 (6.6) -- 4.5 3.3
----- ----- ------ ----- -----
Total .................................... $37.4 $(8.0) $(18.9) $ -- $10.5
===== ===== ====== ===== =====
Inventory write downs
recorded as a component
of cost of sales ......................... (9.0) 9.0 --
----- ----- ------ ----- -----
Total .................................... $28.4 $(8.0) $ (9.9) $ -- $10.5
===== ===== ====== ===== =====
</TABLE>
6
<PAGE> 7
1996 RESERVE (CONTINUED)
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT UTILIZATION BALANCE AT
JUNE 30, ------------------------- JUNE 30,
1997 CASH NON-CASH 1998
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $ 1.5 $ -- $ (1.1) $ 0.4
Closure of facilities and related costs ..... 5.7 (0.7) 0.2 5.2
Employee termination and related costs ...... 3.3 (3.3) -- --
--------- --------- --------- ---------
Total .................................... $ 10.5 $ (4.0) $ (0.9) $ 5.6
========= ========= ========= =========
</TABLE>
1996 RESERVE (CONTINUED)
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT UTILIZATION BALANCE AT
JUNE 30, ------------------------- JUNE 30,
1998 CASH NON-CASH 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $ 0.4 $ -- $ -- $ 0.4
Closure of facilities and related costs ..... 5.2 (0.4) -- 4.8
Employee termination and related costs ...... -- -- -- --
--------- --------- --------- ---------
Total .................................... $ 5.6 $ (0.4) $ -- $ 5.2
========= ========= ========= =========
</TABLE>
1996 RESERVE (CONTINUED)
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT UTILIZATION BALANCE AT
JUNE 30, 2000 ------------------------ MARCH 31,
1999 (REVERSALS) CASH NON-CASH 2000
--------- ----------- --------- --------- ----------
(2)
<S> <C> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $ 0.4 $ (0.4) $ -- $ -- $ --
Closure of facilities and related
costs .................................... 4.8 (2.5) (0.1) -- 2.2
Employee termination and related
costs .................................... -- -- -- -- --
--------- --------- --------- --------- ---------
Total .................................... $ 5.2 $ (2.9) $ (0.1) $ -- $ 2.2
========= ========= ========= ========= =========
</TABLE>
1997/1998 RESERVE
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT 1998 UTILIZATION BALANCE AT
1997 JUNE 30, ADDITIONS/ --------------------- JUNE 30,
PROVISION 1997 (REVERSALS) CASH NON-CASH 1998
--------- ---------- ----------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $ 2.9 $ 2.9 $ -- $ -- $ (1.6) $ 1.3
Closure of facilities and related
Costs (1) ................................ 6.5 3.6 8.8 0.2 (5.6) 7.0
Employee termination and related
costs .................................... 0.5 0.5 20.4 (10.4) -- 10.5
Non-core business divestitures .............. 16.9 16.9 (7.3) -- -- 9.6
------- ------- ------- ------- ------- -------
Total .................................... $ 26.8 $ 23.9 $ 21.9 $ (10.2) $ (7.2) $ 28.4
------- ------- ------- ------- ------- -------
Inventory write downs recorded
as a component of cost of sales .......... -- (4.2) -- -- 3.6 (0.6)
------- ------- ------- ------- ------- -------
Total .................................... $ 26.8 $ 19.7 $ 21.9 $ (10.2) $ (3.6) $ 27.8
======= ======= ======= ======= ======= =======
</TABLE>
7
<PAGE> 8
1997/1998 RESERVE (CONTINUED)
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT UTILIZATION BALANCE AT
JUNE 30, ------------------------- JUNE 30,
1998 CASH NON-CASH 1999
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $ 1.3 $ -- $ (1.1) $ 0.2
Closure of facilities and related costs ..... 7.0 (1.3) 0.1 5.8
Employee termination and related costs ...... 10.5 (6.7) -- 3.8
Non-core business divestitures .............. 9.6 (0.4) -- 9.2
--------- --------- --------- ---------
Total .................................... $ 28.4 $ (8.4) $ (1.0) $ 19.0
--------- --------- --------- ---------
Inventory write downs recorded
as a component of cost of sales .......... (0.6) -- 0.6 --
--------- --------- --------- ---------
Total .................................... $ 27.8 $ (8.4) $ (0.4) $ 19.0
========= ========= ========= =========
</TABLE>
1997/1998 RESERVE (CONTINUED)
<TABLE>
<CAPTION>
ACCRUAL ACCRUAL
BALANCE AT 2000 UTILIZATION BALANCE AT
JUNE 30, REALLOCATIONS/ ------------------------ MARCH 31,
1999 (REVERSALS) CASH NON-CASH 2000
---------- -------------- --------- --------- ---------
(2)
<S> <C> <C> <C> <C> <C>
Product rationalization, related
equipment charges and other .............. $ 0.2 $ (0.2) $ -- $ -- $ --
Closure of facilities and related costs ..... 5.8 (4.2) (1.4) -- 0.2
Employee termination and related costs ...... 3.8 2.5 (1.7) -- 4.6
Non-core business divestitures .............. 9.2 (3.5) -- (4.8) 0.9
--------- --------- --------- --------- ---------
Total .................................... $ 19.0 $ (5.4) $ (3.1) $ (4.8) $ 5.7
========= ========= ========= ========= =========
</TABLE>
(1) The 1997 provision of $6.5 million includes $2.9 million charged
directly to the impaired assets.
(2) During the third quarter of fiscal 2000, the Company recorded an $8.3
million reversal of restructuring charges (consisting of $2.9 million
and $5.4 million associated with the 1996 and 1997/1998 restructuring
plans, respectively) as a result of revised estimates to its original
restructuring plans. The reversal relates primarily to actions
pertaining to the closure of certain North America facilities, which
are no longer going to be undertaken given the increased demand for
labels and required manufacturing capacity, and remeasurements of
European restructuring requirements based on decisions not to exit
certain countries.
8
<PAGE> 9
3. CUSTOMER RECEIVABLES
Amounts due to the Company in the form of accounts receivable (which
are generally due within 90 days), deferred receivables (which are
generally due within one year), installment receivables (which have
periodic payments over a term of five years, generally) and net
investment in sales-type leases (which have periodic payments over
lease terms of five to six years, principally) at March 31, 2000 and
June 30, 1999 are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 1999
--------- ---------
<S> <C> <C>
Trade accounts receivable due within 1 year ............ $ 322.3 $ 306.1
Allowance for doubtful accounts ........................ (40.5) (30.6)
--------- ---------
Total trade accounts receivable, net ................... $ 281.8 $ 275.5
========= =========
Deferred receivables ................................... $ 1.6 $ 9.6
Installment receivables ................................ 38.3 34.1
Allowance for doubtful accounts ........................ (3.6) (5.2)
Unearned interest and maintenance ...................... (26.8) (21.4)
--------- ---------
Total deferred and installment receivables, net ..... 9.5 17.1
Less: Amounts due within 1 year, net ............... (6.2) (14.3)
--------- ---------
Total noncurrent deferred and installment
receivables, net ................................. $ 3.3 $ 2.8
========= =========
Sales-type leases-minimum lease payments receivable .... $ 107.8 $ 144.3
Allowance for uncollectible minimum lease payments ..... (8.1) (11.5)
Unearned interest and maintenance ...................... (26.4) (30.3)
--------- ---------
Total sales-type leases, net ....................... 73.3 102.5
Less: Amounts due within 1 year, net ................... (21.6) (28.8)
--------- ---------
Total noncurrent sales-type leases, net ............ $ 51.7 $ 73.7
========= =========
Total customer receivables ............................. $ 364.6 $ 395.1
Less: Amounts due within 1 year, net ................... 309.6 318.6
--------- ---------
Total noncurrent customer receivables ............. $ 55.0 $ 76.5
========= =========
</TABLE>
4. INVENTORY
Inventories are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 1999
--------- ---------
<S> <C> <C>
Finished goods .............................. $ 140.0 $ 135.7
Parts ....................................... 50.8 45.2
Work-in-process ............................. 10.2 11.2
--------- ---------
201.0 192.1
Less allowance for excess and obsolete
inventory ................................. (28.8) (28.4)
--------- ---------
Total inventories, net ............. $ 172.2 $ 163.7
========= =========
</TABLE>
9
<PAGE> 10
5. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NUMERATOR:
Net income $ 19.6 $ 9.2 $ 42.7 $ 15.1
Less: Preferred stock dividends (2.9) (2.7) (9.0) (8.4)
--------- --------- --------- ---------
Earnings applicable to common $ 16.7 $ 6.5 $ 33.7 $ 6.7
========= ========= ========= =========
stockholders
DENOMINATOR:
Basic EPS - weighted average shares 76.7 75.2 76.2 74.8
Dilutive effect: Stock options 1.2 0.5 1.0 0.2
--------- --------- --------- ---------
Diluted EPS - weighted average shares 77.9 75.7 77.2 75.0
========= ========= ========= =========
Basic earnings per share $ 0.22 $ 0.09 $ 0.44 $ 0.09
========= ========= ========= =========
Diluted earnings per share $ 0.22 $ 0.09 $ 0.44 $ 0.09
========= ========= ========= =========
</TABLE>
6. COMPREHENSIVE INCOME
For the three months ended March 31, 2000 and 1999, comprehensive
income (loss) was $9.0 million and $(26.9) million, respectively. For
the nine months ended March 31, 2000 and 1999, comprehensive income
(loss) was $30.1 million and $(11.3) million, respectively.
7. SEGMENT INFORMATION
The Company has changed the organization of its operations as
previously reported. The reportable segments are (i) Americas and (ii)
Europe, Middle East, Africa and Asia/Pacific ("EMEA").
<TABLE>
<CAPTION>
THREE MONTHS
ENDING
MARCH 31, AMERICAS EMEA OTHER(1) TOTAL
----------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Revenues 2000 $ 157.5 $ 103.6 $ -- $ 261.1
1999 $ 149.6 $ 95.9 $ -- $ 245.5
Operating income (loss) 2000 $ 21.8 $ 4.3 $ 8.3 $ 34.4
1999 $ 23.7 $ (1.7) $ -- $ 22.0
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDING
MARCH 31, AMERICAS EMEA OTHER (1) TOTAL
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues 2000 $ 483.6 $ 302.6 $ -- $ 786.2
1999 $ 432.2 $ 290.9 $ -- $ 723.1
Operating income (loss) 2000 $ 71.2 $ 6.5 $ 8.3 $ 86.0
1999 $ 52.6 $ (11.5) $ -- $ 41.1
</TABLE>
(1) During the third quarter of fiscal 2000, the Company recorded an $8.3
million reversal of restructuring charges consisting of $4.1 million and
$4.2 million pertaining to Americas and EMEA, respectively.
10
<PAGE> 11
8. DEBT
The Company is party to a three-year $115.0 million revolving Credit
Agreement dated as of December 9, 1999 (the "Revolving Credit
Facility") with a syndicate of financial institutions. The Revolving
Credit Facility replaced the $250.0 million Amended and Restated
Multicurrency Revolving Credit Agreement dated as of March 18, 1997
with a syndicate of financial institutions which terminated in
accordance with its terms. On March 21, 2000, the amount available
under the Revolving Credit Facility was increased from $115.0 million
to $125.0 million. As of March 31, 2000, $108 million was available for
use under the Revolving Credit Facility, net of $17.0 million related
to letters of credit.
The credits extended under the Revolving Credit Facility are unsecured
obligations of the Company and the subsidiary borrowers, ranking the
same as with all of their other unsecured, unsubordinated indebtedness
(including, without limitation, the Senior Notes).
During the third quarter of fiscal 2000, the Company retired $70
million of long-term debt.
9. LITIGATION
With respect to the New Jersey, Florida and German actions involving
the Company, AlliedSignal, Inc. ("Allied") and/or Vacuumschmelze GmBH
("Vacuumschmelze") described in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1999 and Quarterly Reports on
Form 10-Q for the quarters ended September 30, and December 31, 1999,
during the third quarter of fiscal 2000, the Company and Honeywell Inc.
("Honeywell"), the corporate successor to Allied, reached an agreement
to discontinue all such actions. The agreement provides, among other
things, for the assignment by Honeywell to the Company of certain
patents held by Honeywell which were the subject of the suits and
related patents and applications, the grant by Honeywell to the Company
of an exclusive paid-up license under certain other patents and rights,
certain covenants not to sue, and the payment by the Company of $8.0
million to Honeywell in consideration of such patent assignment and
license.
The Company granted certain license rights, outside the Company's
Electronic Article Surveillance business, under the patent rights
assigned to it back to Honeywell for use in Honeywell's business. The
agreement also provides for Sensormatic and Honeywell to cooperate in
efforts to enable Honeywell to qualify as an additional source of
magnetic material for Ultra*Max labels.
On March 24, 2000, the Company made the $8.0 million payment to
Honeywell and was also reimbursed $1.2 million by Vacuumschmelze in
connection with the litigation. The net amount of $6.8 million was
capitalized and included under "Patents and other assets, net" in the
Consolidated Condensed Balance Sheets.
11
<PAGE> 12
Vacuumschmelze is presently the sole supplier of the principal
electromagnetic alloy used in the Company's Ultra*Max labels. While
there are potential alternatives to the supply of such material by
Vacuumschmelze, the loss or disruption of this source of supply could
result in increased costs or product shortages or otherwise materially
adversely affect the Company's business. The Company has been pursuing
development of alternative materials for use in the Company's Ultra*Max
labels and additional sources of supply.
12
<PAGE> 13
10. ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition," which
provides guidance on the recognition, presentation, and disclosure of
revenue in financial statements filed with the SEC. SAB 101 outlines
the basic criteria that must be met to recognize revenue and provides
guidance for disclosure related to revenue recognition policies. The
Company plans to adopt SAB 101 in the first quarter of fiscal 2001 and
is currently assessing the impact this statement will have on its
consolidated financial statements.
The Company plans to adopt Statement of Financial Accounting Standards
("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging
Activities" in the first quarter of fiscal 2001. The impact of SFAS 133
on the Company's financial statements will depend on a variety of
factors, including the future level of forecasted and actual foreign
currency transactions, the extent of the Company's hedging activities,
the types of hedging instruments used and the effectiveness of such
instruments. However, given the Company's current use of derivatives
and hedging activities, the Company does not believe the effect of
adopting SFAS 133 will be material to its consolidated financial
statements.
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 1999 Annual Report on Form 10-K) and is intended to
assist the reader in understanding the financial results and condition
of the Company.
Following the reorganization of the Company's sales regions, the
Company now reports performance for two business segments: (i) Americas
and (ii) Europe, Middle East, Africa and Asia/Pacific, or EMEA.
RESULTS OF OPERATIONS - THREE MONTHS AND NINE MONTHS ENDED MARCH 31,
2000 COMPARED TO THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1999
REVENUES
For the third quarter of fiscal 2000, revenues increased $15.6 million,
or 6.3%, to $261.1 million compared to revenues of $245.5 million for
the same period in fiscal 1999. For the first nine months of fiscal
2000, revenues were $786.2 million compared to $723.1 million for the
first nine months of fiscal 1999, an 8.7% increase. Improved
performance in the Company's EMEA operations was the primary
contributor to the current quarter's revenue growth. For both current
year periods, results were adversely impacted by the weakening of
Euro-based currencies against the U.S. dollar.
For the third quarter of fiscal 2000, Americas revenues increased 5.3%
to $157.5 million from $149.6 million for the third quarter of fiscal
1999. For the nine months ended March 31, 2000, Americas revenue
increased to $483.6 million, or 11.9%, from $432.2 million for the
equivalent period in fiscal 1999. Sales of anti-shoplifting equipment
and supplies in the Americas rose 10.3% during the quarter over the
prior year period, while aggregate sales of video and access control
product declined 9.0%. Sales of video products in the Americas were
impacted by recent pricing pressures related to surveillance cameras.
EMEA reported an 8.0% increase in revenues from $95.9 million to $103.6
million for the third quarter of fiscal 2000 as compared to the same
period for fiscal 1999. The strength in EMEA was geographically
broad-based, and product sales to Asia/Pacific retailers were
particularly strong during the quarter. For the nine months ended March
2000, EMEA reported a revenue increase of 4.0% to $302.6 million from
$290.9 million for the same period of fiscal year 1999. Sales of
anti-shoplifting equipment and supplies in EMEA rose 12.3% during the
quarter over the prior year period, and aggregate sales of video and
access control product increased 6.1%.
13
<PAGE> 14
Revenue improvements in both segments were driven by Ultra*Max.
Revenues for the Ultra*Max product, the Company's flagship
anti-shoplifting line, grew 24.1% for the current quarter compared to
the third quarter of fiscal 1999, from $100.1 million to $124.2
million, and 15.2% for the first nine months of fiscal 2000 versus the
same period a year ago, from $293.0 million to $337.6 million. Total
label revenues increased 23.7% from $27.8 million for the third quarter
in fiscal 1999 to $34.4 million for the current quarter, making label
products a significant source of recurring revenues for the Company.
Included in the increase in total label revenues, source tagging unit
volume increased 96.0% as more than one billion source tagging labels
were sold during the first nine months of fiscal 2000. Global sales of
video products declined 3.7%, from $67.9 million for the third quarter
of fiscal 1999 to $65.4 million for the current third quarter, due to
increasing price competition. On a year-to-date basis, sales of video
products increased 7.1% from $198.5 million for the nine-month period
ended March 31, 1999 to $212.6 million for the first nine months of
fiscal 2000.
The Company is investing increasing amounts in new product development
and specifically in digital video products to maintain its technology
and market leadership. Access control revenues increased slightly to
$11.3 million, or 1.4%, in the current third quarter compared to the
third quarter of fiscal 1999, a slower pace than the first half of
fiscal 2000, as expected. On a year-to-date basis, access control
revenues grew 18.9% from $31.5 million for the prior year period to
$37.5 million for the current nine-month period.
GROSS MARGINS, OPERATING EXPENSES AND OPERATING INCOME
Gross margin improved for both the third quarter and the first nine
months of fiscal 2000 compared with the prior year periods. Gross
margin for the third quarter of fiscal 2000 was 44.5% compared with
42.9% in the third quarter of fiscal 1999. For the first nine months of
fiscal 2000, gross margin was 44.5% compared with 42.0% in the prior
year period. The higher gross margins relative to fiscal 1999 reflect
product cost reductions, efficiency improvements in the Company's
manufacturing facilities and improved profitability of service.
Operating expenses for the third quarter of fiscal 2000 were $90.0
million (34.5% of revenues), excluding the reversal of restructuring
charges totaling $8.3 million, compared with $83.2 million (33.9% of
revenues) in the third quarter of fiscal 1999, an increase of 8.2%, but
relatively flat with the first and second quarters of fiscal 2000. For
the first nine months of fiscal 2000, operating expenses, excluding the
reversal of restructuring charges, were $271.9 million (34.6% of
revenues), compared with operating expenses of $262.7 million (36.3% of
revenues) in the prior year period, an increase of 3.5%. Operating
expenses for the third quarter and first nine months of fiscal 2000
reflect increases due to higher sales volume, increased research and
development expenditures, and investments in strategic marketing
programs.
Provision for doubtful accounts, as a percentage of revenue, was 2.3%
for both the third quarter and first nine months of fiscal 2000, as
compared with 2.0% for both corresponding prior year periods.
Research, development and engineering expenses increased 33.4% from
$5.9 million, or 2.4% of revenue, to $7.9 million or 3.0% of revenue,
in the three months ended March 31, 2000 as compared to the same period
in fiscal 1999. Research, development and engineering expenses for the
first nine months of fiscal 2000 were $21.6 million compared to $19.5
million for the same period in fiscal 1999, a 10.8% increase. The
Company continues to invest in high-potential technologies including
radio frequency identification RFID/Smart EAS and digital video.
Operating income continued to improve in the third quarter and first
nine months of fiscal 2000 compared with the prior year periods.
Operating income for the third quarter of fiscal 2000, excluding the
reversal of $8.3 million in restructuring reserves, increased 18.6% to
$26.1 million, or 10.0% of revenues, compared to $22.0 million, or 9.0%
of revenues, in the third quarter of fiscal 1999. Operating income for
the first nine months of fiscal 2000, excluding the reversal of $8.3
million in restructuring reserves, increased 89% to $77.7 million, or
9.9% of revenues, compared to $41.1 million, or 5.7% of revenues, for
the first nine months of fiscal 1999. The increase in operating income
14
<PAGE> 15
was a result of revenue growth, improved gross margin, and controlling
operating expenses, partially offset by increased research, development
and engineering expenses.
RESTRUCTURING
During the third quarter of fiscal 2000, the Company recorded an $8.3
million reversal of restructuring charges as a result of revised
estimates to its original restructuring plans. The reversal relates
primarily to actions pertaining to the closure of certain North America
facilities, which are no longer going to be undertaken given the
increased demand for labels and required manufacturing capacity, and
remeasurements of European restructuring requirements based on
decisions not to exit certain countries.
15
<PAGE> 16
OTHER (EXPENSES) INCOME AND TAXES
Net interest and other expenses of $7.4 million and $22.5 million for
the third quarter and first nine months of fiscal 2000, respectively,
reflected a decrease of $0.9 million and $2.1 million respectively,
from the comparable periods of fiscal 1999 after adjusting for
litigation recoveries. Strong free cash flow and lower debt levels
drove this decline in interest expense. Increases in the Company's cash
levels and short-term investments yielded higher interest income for
the nine months ended March 2000. Cash and cash equivalents totaled
$171.4 million at March 31, 2000 compared to $143.7 million at March
31, 1999. Litigation recovery of $0.5 million in the third quarter of
fiscal 2000 and insurance recovery of $6.3 million in the second
quarter of fiscal 1999 resulted from settlement agreements related to
the shareholder litigation settled in the first quarter of fiscal 1998.
The provision for income taxes for the third quarter and first nine
months of fiscal 2000 is based on an estimated effective annual
consolidated tax rate of 32.0%. The provision for income taxes for the
third quarter and first nine months of fiscal 1999 was based on a then
estimated effective annual consolidated tax provision of 30.0%. The
increased effective tax rate is due primarily to the mix of earnings
and income tax rates of international subsidiaries.
The Company reported earnings applicable to common stockholders of
$16.7 million, or $0.22 per share, for the third quarter of fiscal
2000. This included an $0.08 per share benefit from the reversal of
$8.3 million pre-tax restructuring reserves and litigation recovery of
$0.5 million. Excluding this reversal and recovery, earnings were $0.14
per share, an increase of 55.6% compared with earnings applicable to
common stockholders of $6.5 million, or $0.09 per share, in the third
quarter of fiscal 1999. Excluding restructuring reversals and insurance
recoveries, the Company reported earnings applicable to common
stockholders of $27.5 million, or $0.36 per share, for the first nine
months of fiscal 2000 as compared with earnings applicable to common
stockholders of $2.4 million or $0.03 per share, for the same period in
fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of fiscal 2000, cash and cash equivalents
decreased $37.6 million to $171.4 million. For the nine-month period
ended March 31, 2000, cash flow provided by operating activities was
$91.6 million compared with $106.4 million for the same period a year
ago. The decline in operating cash flow in the nine-month period ended
March 31, 2000 was due primarily to a planned increase in inventories
to meet expected fourth quarter product requirements. Included in cash
flow from operations for the nine-month periods ended March 31, 2000
and March 31, 1999 were litigation recoveries of $0.5 million and $6.3
million, respectively. These litigation recoveries resulted from
settlement agreements related to the shareholder litigation settled in
the first quarter of fiscal 1998.
In the first nine months of fiscal 2000, the Company used $52.1 million
of cash in investing activities compared with $54.1 million in the
first nine months of fiscal 1999. During the first nine months of
fiscal 2000, the Company increased capital expenditures from $20.7
million to $38.6 million due to investments in new production equipment
to expand label manufacturing capacity to meet increasing global
demand. These increases were offset by lower expenditures for revenue
equipment.
For the nine-month period ended March 31, 2000, $76.1 million of cash
was used for financing activities as compared to $32.8 million during
the nine-month period ended March 31, 1999. The principal use of cash
in financing activities during the first nine months of fiscal 2000 was
to retire $70 million of long-term debt partially offset by proceeds of
$4.1 million from exercises of stock options.
The Company's percentage of total debt to total capital was 31.7% at
March 31, 2000 as compared with 36.4% at June 30, 1999. Certain of the
Company's financial agreements currently prohibit the payment of cash
dividends, as well as the purchase of Company securities, until certain
profit levels are achieved, as reflected in the Company's annual
audited financial statements. Under these provisions, the Company is
precluded from paying cash dividends until after the preparation of its
audited financial statements for fiscal year 2001, at the earliest. The
Company intends to pay any dividends declared on the Convertible
Preferred Stock with shares of Common Stock prior to the time it is
able to pay such cash
16
<PAGE> 17
dividends. The Company issued approximately 614,791 shares of common
stock in payment of the October 1, 1999, January 3, 2000 and April 3,
2000 dividends (and certain premium payments) on the Preferred Stock.
The Company uses the U.S. dollar as its reporting currency for
financial statement purposes. The Company conducts business in numerous
countries through its international subsidiaries that use local
currencies to denominate their transactions, and is, therefore, subject
to certain risks associated with fluctuating foreign currencies. The
resulting changes in the financial statements do not indicate any
underlying changes in the financial position of the international
subsidiaries but merely reflect the adjustment in the carrying value of
the net assets of these subsidiaries at the current U.S. dollar
exchange rate. Due to the long-term nature of the Company's investment
in these subsidiaries, the translation adjustments resulting from these
exchange rate fluctuations are excluded from the results of operations
and are recorded in a separate component of consolidated stockholders'
equity. Currency translation adjustments at March 31, 2000, compared to
June 30, 1999, which is reflected in the balance sheet caption
"Accumulated other comprehensive loss", increased approximately $9.3
million. The Company monitors its currency exposures but does not hedge
its translation exposures due to the high economic costs of such a
program and the long-term nature of its investment in its international
subsidiaries.
The Company requires significant cash flow to meet its debt service and
other continuing obligations. As of March 31, 2000, the Company had
$429.4 million of total indebtedness outstanding. The Company's
expected principal liquidity requirements are working capital,
financing of customer equipment purchases, investments in revenue
equipment and capital expenditures, potential acquisitions, interest
and a $50.0 million principal payment on the Senior Notes due on March
31, 2001.
On December 9, 1999, the Company entered into a new $115 million
three-year revolving credit agreement, which was increased to $125
million on March 21, 2000. No borrowings were outstanding under the
facility at the end of the current quarter. As of March 31, 2000, the
facility was utilized for standby letters of credit totaling $17
million resulting in $108 million available for use under the facility.
The total cost of the new facility is comparable to the previous
facility. At March 31, 2000, the Company's principal sources of
liquidity are (i) cash on hand, (ii) cash flow from operations, (iii)
borrowings under the new $125.0 million Revolving Credit Facility, and
(iv) receivable securitization facilities. The Company believes that
cash flow from operations together with borrowings under the Revolving
Credit Facility and receivable securitizations will be sufficient to
meet its liquidity needs for the foreseeable future.
17
<PAGE> 18
YEAR 2000 ISSUE
Since January 1, 2000, the Company has experienced no disruptions in
its business operations as a result of Year 2000 compliance problems
and received no reports of any Year 2000 compliance issues from either
internal or external sources. Nonetheless, some problems related to
Year 2000 risks may not appear until several months after January 1,
2000. Year 2000 issues could include problems with the Company's own
products and services or with third-party products or technology. The
Company can provide no assurance that all supplier and customer Year
2000 compliance plans were successfully completed in a timely manner,
although it is not currently aware of any problems, which would
significantly impact its operations.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Except for historical matters, the matters discussed in this Form 10-Q
are forward-looking statements that reflect the Company's current views
with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and
uncertainties which could cause actual results to differ materially
from historical results or those anticipated. Readers are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of their dates. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The following
factors could cause actual results to differ materially from historical
results or those anticipated: 1) changes in international operations,
2) exchange rate risk, 3) market conditions for the Company's products,
4) the Company's ability to provide innovative and cost-effective
solutions, 5) development risks, 6) changes in regulations or standards
applicable to the Company's products, 7) competition and 8) changes in
the economic climate.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
With respect to the New Jersey, Florida and German actions involving
the Company, AlliedSignal, Inc. ("Allied") and/or Vacuumschmelze GmBH
("Vacuumschmelze") described in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1999 (the "Form 10-K") and
Quarterly Reports on Form 10-Q for the quarters ended September 30, and
December 31, 1999, the Company and Honeywell Inc. ("Honeywell"), the
corporate successor to Allied, have reached an agreement to discontinue
all such actions. The agreement provides, among other things, for the
assignment by Honeywell to the Company of certain patents held by
Honeywell which were the subject of the suits and related patents and
applications, the grant by Honeywell to the Company of an exclusive
paid-up license under certain other patents and rights, certain
covenants not to sue, and the payment by the Company of $8 million to
Honeywell in consideration of such patent assignment and license. The
Company granted certain license rights, outside the Company's core
Electronic Article Surveillance business, under the patent rights
assigned to it back to Honeywell for use in Honeywell's business. The
agreement also provides for Sensormatic and Honeywell to cooperate in
efforts to enable Honeywell to qualify as an additional source of
magnetic material for Ultra*Max labels.
Reference is made to Item 3. Legal Proceedings of the Form 10-K for
additional information relating to the actions between the Company and
Allied.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits.
10.1 Amendment No. 1 to Credit Agreement
27 Financial Data Schedule (for SEC use only)
18
<PAGE> 19
b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the
three-month period ended March 31, 2000.
19
<PAGE> 20
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/ GARRETT E. PIERCE
----------------------------------
Garrett E. Pierce
EXECUTIVE VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
Date: May 15, 2000
20
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 1 TO
CREDIT AGREEMENT
THIS AMENDMENT AGREEMENT is made and entered into this 21st day of
March, 2000, by and among SENSORMATIC ELECTRONICS CORPORATION, a Florida
corporation (herein called the "Parent"), the BORROWING SUBSIDIARIES parties
hereto, if any (the Parent and each Borrowing Subsidiary is individually
referred to as a "Borrower" and collectively as the "Borrowers"), BANK OF
AMERICA, N.A. (the "Administrative Agent"), as Administrative Agent for the
lenders (the "Lenders") party to a Credit Agreement dated December 9, 1999 among
such Lenders, the Parent and the Administrative Agent, as amended (the
"Agreement") and a new Lender party to this Amendment Agreement (the "New
Lender").
W I T N E S S E T H:
WHEREAS, the Parent, the Agent and the Lenders have entered into the
Agreement pursuant to which the Lenders have agreed to make revolving loans to
the Borrowers in the principal amount of $115,000,000 as evidenced by the Notes
(as defined in the Agreement); and
WHEREAS, the New Lender has agreed to provide to the Borrowers Loans
and participations in Letters of Credit of up to $15,000,000, $5,000,000 of
which shall be by an assignment pursuant to SECTION 12.1 of the Agreement and
$10,000,00 of which shall increase the Total Revolving Credit Commitment to
$125,000,000 and the parties hereto desire to amend the Agreement in the manner
herein set forth effective as of the date hereof;
NOW, THEREFORE, the Borrower, the Administrative Agent and the New
Lender do hereby agree as follows:
1. DEFINITIONS. The term "Agreement" as used herein and in the Loan
Documents (as defined in the Agreement) shall mean the Agreement as hereby
amended and modified. Unless the context otherwise requires, all terms used
herein without definition shall have the definition provided therefor in the
Agreement.
2. AMENDMENTS. Subject to the conditions hereof, the Agreement is
hereby amended, effective as of the date hereof, by deleting EXHIBIT A and
inserting in lieu thereof EXHIBIT A attached hereto, and the New Lender agrees
by the execution of this Amendment Agreement that it shall be a party to the
Agreement as a "Lender" and shall provide to the Borrower its Revolving Credit
Commitment in the amount set forth in EXHIBIT A attached hereto.
3. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby certifies that:
1
<PAGE> 2
(a) The representations and warranties made by Borrower in
ARTICLE VII thereof are true in all material respects on and as of the
date hereof except to the extent that such representations and
warranties expressly relate to an earlier date and except that the
financial statements referred to in SECTION 7.6(a) shall be those most
recently furnished to each Lender pursuant to SECTION 8.1(a) and (b);
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Parent and its Material
Subsidiaries since the date of the most recent financial reports of the
Parent received by each Lender under SECTION 7.6(A), or if more recent,
those received under SECTION 8.1 thereof, other than changes in the
ordinary course of business, none of which has been a material adverse
change; and
(c) No event has occurred and no condition exists which, upon
the consummation of the transaction contemplated hereby, constituted a
Default or an Event of Default on the part of the Borrower under the
Agreement or the Notes either immediately or with the lapse of time or
the giving of notice, or both.
4. CONDITIONS. As a condition to the effectiveness of this Amendment
Agreement, the Borrower shall deliver, or cause to be delivered to the
Administrative Agent, the following:
(a) Four (4) executed counterparts of this Amendment
Agreement; and
(b) A fully-executed Revolving Note and Competitive Bid Note
payable to the Lender in the amount of Lender's Revolving Credit
Commitment.
5. OTHER DOCUMENTS. All instruments and documents incident to the
consummation of the transactions contemplated hereby shall be satisfactory in
form and substance to the Administrative Agent and its counsel; the
Administrative Agent shall have received copies of all additional agreements,
instruments and documents which it may reasonably request in connection
therewith, including evidence of the authority of Borrower to enter into the
transactions contemplated by this Amendment Agreement, in each case such
documents, when appropriate, to be certified by appropriate corporate or
governmental authorities; and all proceedings of the Borrower relating to the
matters provided for herein shall be satisfactory to the Administrative Agent
and its counsel.
6. ENTIRE AGREEMENT. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, conditions, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that, except
as in this Amendment Agreement or otherwise expressly stated, no
representations, warranties or commitments, express or implied, have been made
by any other party to the other. None of the terms of conditions of this
Amendment Agreement may be changed, modified, waived or canceled orally or
otherwise, except by writing, signed by all the parties hereto, specifying such
change, modification, waiver or cancellation of such terms or conditions, or of
any proceeding or succeeding breach thereof.
2
<PAGE> 3
7. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically
amended, modified or supplemented, the Agreement and all of the other Loan
Documents are hereby confirmed and ratified in all respects and shall remain in
full force and effect according to their respective terms.
[Remainder of page intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
SENSORMATIC ELECTRONICS CORPORATION
WITNESS:
illegible By: /s/ THOMAS F. DONAHUE
- ---------------------------- -------------------------------
Name: Thomas F. Donahue
illegible Title: Vice President & Treasurer
- ----------------------------
4
<PAGE> 5
BANK OF AMERICA, N.A., as Administrative
Agent
By: /s/ RICHARD M. STARKE
-------------------------------------
Name: Richard M. Starke
Title: Managing Director
5
<PAGE> 6
BANKATLANTIC
By: /s/ ANA C. BOLDUC
----------------------------
Name: Ana C. Bolduc
Title: Senior Vice President
6
<PAGE> 7
EXHIBIT A
Applicable Commitment Percentages
APPLICABLE
REVOLVING CREDIT COMMITMENT
LENDER COMMITMENT PERCENTAGE
- ------ ----------------- ----------
Bank of America, N.A $ 25,000,000 20%
SunTrust Bank, South Florida, N.A $ 25,000,000 20%
Bank One, N.A. (Chicago Main Office) $ 25,000,000 20%
BankBoston, N.A $ 20,000,000 16%
Dresdner Bank Lateinamerika AG,
Miami Agency $ 15,000,000 12%
BankAtlantic $ 15,000,000 12%
------------ ---
$125,000,000 100%
============ ===
7
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<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
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<SECURITIES> 0
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<ALLOWANCES> 52
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<CURRENT-ASSETS> 732
<PP&E> 280
<DEPRECIATION> 122
<TOTAL-ASSETS> 1,710
<CURRENT-LIABILITIES> 357
<BONDS> 429
0
166
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