SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-4821
PITTWAY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-5616408
(State of Incorporation) (I.R.S. Employer Identification No.)
200 South Wacker Drive, Chicago, Illinois 60606-5802
(Address of Principal Executive Offices) (Zip Code)
312/831-1070
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (April 26,
1996).
Common Stock 3,938,832
Class A Stock 16,973,313
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PITTWAY CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1996
INDEX
PART I. FINANCIAL INFORMATION Page
ITEM 1. Financial Statements
Consolidated Statement of Income -
Three Months Ended March 31, 1996 and 1995 3
Consolidated Balance Sheet -
March 31, 1996 and December 31, 1995 4 - 5
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7 - 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 11
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 11 - 12
ITEM 4. Submission of Matters to a Vote of Security
Holders 13
ITEM 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
2
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PITTWAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited; Dollars in Thousands, Except Per Share Data)
1996 1995
NET SALES.................................. $257,477 $220,404
OPERATING EXPENSES:
Cost of sales............................ 157,637 134,546
Selling, general and administrative...... 75,609 66,523
Depreciation and amortization............ 6,810 5,073
240,056 206,142
OPERATING INCOME........................... 17,421 14,262
OTHER INCOME (EXPENSE):
Gain on sale of investment............... 13,162
Gain from stock offering of affiliate.... 23,432
Income from marketable securities,
investments and other interest......... 833 258
Interest expense......................... (1,990) (961)
Miscellaneous, net....................... 187 273
35,624 (430)
INCOME BEFORE INCOME TAXES................. 53,045 13,832
INCOME TAXES............................... 19,757 5,112
NET INCOME................................. $ 33,288 $ 8,720
NET INCOME PER SHARE OF COMMON
AND CLASS A STOCK ....................... $ 1.59 $ .42
CASH DIVIDENDS DECLARED PER SHARE:
Common................................... $ .067 $ .067
Class A.................................. $ .083 $ .083
AVERAGE NUMBER OF SHARES OUTSTANDING
(in thousands) .......................... 20,912 20,911
See accompanying notes.
3
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PITTWAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 AND DECEMBER 31, 1995
(Unaudited; Dollars in Thousands)
March 31, December 31,
1996 1995
ASSETS
CURRENT ASSETS:
Cash and equivalents................... $ 47,002 $ 31,407
Marketable securities.................. 23,706 25,586
Accounts and notes receivable, less
allowance for doubtful accounts of
$9,039 and $8,493.................... 183,265 175,432
Inventories............................ 162,836 152,636
Future income tax benefits............. 18,182 16,996
Prepayments, deposits and other........ 13,052 11,929
448,043 413,986
PROPERTY, PLANT AND EQUIPMENT, at cost:
Buildings.............................. 28,019 25,797
Machinery and equipment................ 196,992 190,780
225,011 216,577
Less: Accumulated depreciation......... (114,842) (109,021)
110,169 107,556
Land................................... 2,666 2,188
112,835 109,744
INVESTMENTS:
Marketable securities.................. 136,482 20,000
Equity investment in affiliate......... 30,855 7,689
Leveraged leases....................... 20,911 21,046
Real estate and other ventures......... 34,704 33,874
222,952 82,609
OTHER ASSETS:
Goodwill, less accumulated
amortization of $8,102 and $8,432.... 53,596 48,714
Other intangibles, less accumulated
amortization of $10,261 and $10,360.. 5,305 5,422
Notes receivable....................... 5,975 5,892
Miscellaneous.......................... 6,669 6,607
71,545 66,635
$855,375 $672,974
See accompanying notes.
4
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PITTWAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 AND DECEMBER 31, 1995
(Unaudited; Dollars in Thousands)
March 31, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable........................... $ 32,744 $ 32,212
Long-term debt due within one year...... 3,239 3,788
Dividends payable....................... 1,732 1,766
Accounts payable........................ 74,308 68,700
Accrued expenses........................ 45,911 46,310
Income taxes payable.................... 19,239 5,644
Retirement and deferred
compensation plans.................... 7,283 6,503
Unearned income......................... 3,291 3,185
187,747 168,108
LONG-TERM DEBT, less current maturities... 86,037 85,966
DEFERRED LIABILITIES:
Income taxes............................ 101,075 46,920
Other................................... 12,408 8,954
113,483 55,874
STOCKHOLDERS' EQUITY:
Preferred stock, none issued............
Common capital stock, $1 par value-
Common stock.......................... 3,939 3,939
Class A stock......................... 16,973 16,973
Capital in excess of par value.......... 21,423 21,423
Retained earnings....................... 357,032 325,420
Cumulative marketable securities
valuation adjustment.................. 71,603 (2,019)
Cumulative foreign currency translation
adjustment............................ (2,862) (2,710)
468,108 363,026
$855,375 $672,974
See accompanying notes.
5
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PITTWAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited; Dollars in Thousands)
1996 1995
Cash Flows From Operating Activities:
Net Income....................................... $ 33,288 $ 8,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.................. 6,810 5,073
Gain on sale of investment, net of taxes....... (8,149)
Gain from stock offering of affiliate,
net of taxes.................................. (14,507)
Deferred income taxes.......................... (1,354) (1,464)
Retirement and deferred compensation plans..... 2,159 690
Income/loss from investments adjusted
for cash distributions received............... 102 577
Provision for losses on accounts receivable.... 1,168 859
Change in assets and liabilities, excluding
effects from acquisitions, dispositions
and foreign currency adjustments:
Increase in accounts and notes receivable.... (7,113) (8,066)
Increase in inventories...................... (9,217) (2,291)
Increase in prepayments and deposits......... (1,574) (872)
Increase (decrease) in accounts payable
and accrued expenses....................... 2,063 (3,015)
Increase in income taxes payable............. 13,586 3,606
Other changes, net............................. (955) (2,137)
Net cash provided by operating activities........ 16,307 1,680
Cash Flows From Investing Activities:
Capital expenditures............................. (6,962) (12,627)
Proceeds from sale of investment, net of taxes... 10,748
Proceeds from the sale of marketable securities.. 4,186 6,028
Purchases of marketable securities............... (2,500) (4,862)
Disposition of property and equipment............ 141 635
Additions to investments......................... (558) (8)
Decrease in notes receivable..................... 145 320
Net assets of businesses acquired, net of cash... (2,682)
Net cash provided (used) by investing activities. 2,518 (10,514)
Cash Flows From Financing Activities:
Net (decrease) increase in notes payable......... (1,093) 3,498
Proceeds of long-term debt....................... 75 3,240
Repayments of long-term debt..................... (507) (319)
Dividends paid................................... (1,711) (1,676)
Net cash (used) provided by financing activities. (3,236) 4,743
Effect of Exchange Rate Changes on Cash............ 6 197
Net Increase (Decrease) in Cash and Equivalents.... 15,595 (3,894)
Cash and Equivalents at Beginning of Period........ 31,407 10,359
Cash and Equivalents at End of Period.............. $ 47,002 $ 6,465
Supplemental Cash Flow Disclosure: 1996 1995
Interest paid.................................... $ 701 $ 1,016
Income tax (refunds) payments, net............... (1,269) 2,968
See accompanying notes.
6
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PITTWAY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; Dollars in Thousands)
NOTE 1. STOCK SPLIT
In January 1996 the Board of Directors declared a 3-for-2 stock split in
the form of a 50% stock dividend on the Company's Common and Class A stock,
payable March 1, 1996 to stockholders of record on February 14, 1996. All
share and per share data, as appropriate, reflect this split.
NOTE 2. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Pittway Corporation and its majority-owned subsidiaries (the "Company" or
"Registrant"). Summarized financial information for the limited real
estate partnership ventures and other affiliates is omitted because, when
considered in the aggregate, they do not constitute a significant
subsidiary. Certain prior year amounts in the consolidated financial
statements have been reclassified to conform to the current year
classification.
The accompanying consolidated financial statements are unaudited but
reflect all adjustments of a normal recurring nature which are, in the
opinion of management, necessary for a fair presentation of the financial
statements contained herein. However, the financial statements and related
notes do not include all disclosures normally provided in the Company's
Annual Report on Form 10-K. Accordingly, these financial statements and
related notes should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
NOTE 3. ACQUISITION
During the first quarter of 1996, the Company acquired a foreign
distributor of alarm systems for $2,682 cash and $2,494 payable over three
years. The acquisition was accounted for as a purchase transaction in the
consolidated financial statements from the date of acquisition. The impact
on consolidated results of operations was not significant.
NOTE 4. MARKETABLE SECURITIES
Information about the Company's available-for-sale securities at March 31,
1996 and December 31, 1995 is as follows:
1996 1995
Current - Adjustable Rate Preferred Stocks -
Aggregate cost $ 27,135 $ 28,952
Net unrealized holding loss (3,429) (3,366)
Aggregate fair value $ 23,706 $ 25,586
7
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1996 1995
Non-Current - USSB Common Stock -
Aggregate cost $ 17,401 $ 20,000
Unrealized holding gain 119,081 101,280
Aggregate fair value $136,482 $121,280
In February 1996, the Company reduced its holdings in United States
Satellite Broadcasting Company, Inc. (USSB) by selling 622,500 of its
4,789,875 shares in connection with an initial public offering of USSB's
common stock. The sale of the shares resulted in an after-tax gain of
$8,149, or $.39 per share. At December 31, 1995, prior to the initial
public offering, the Company's investment in USSB was recorded at a cost of
$20 million, or $4.175 per share.
The $119,081 unrealized gain on the 4,167,375 shares of USSB common stock
held at March 31, 1996 is included, net of $45,355 deferred taxes, in the
cumulative marketable security valuation adjustment component of
stockholders' equity.
Realized gains and losses are based upon the specific identification
method. Such gains and losses on the adjustable rate preferred stock, for
the quarters ended March 31, 1996 and 1995 were not significant.
NOTE 5. INVESTMENT IN AFFILIATE
The investment in affiliate consists of the Company's interest in Cylink
Corporation (Cylink), which is carried at equity. The carrying value of
this investment was increased by $23,432 to reflect the increase in the
Company's equity in Cylink's net book value as a result of an initial public
offering in February 1996. The after-tax gain recorded on the increase in
Cylink's equity was $14,507, or $.69 per share. The quoted market value of
the Company's investment in Cylink was approximately $153 million at March
31, 1996.
NOTE 6. INVENTORIES
Inventories at March 31, 1996 and December 31, 1995 consist of the
following:
1996 1995
Raw materials $ 36,967 $ 34,440
Work in process 17,930 18,654
Finished goods -
Manufactured by the Company 59,306 55,523
Manufactured by others 49,783 45,007
Total 163,986 153,624
Less LIFO reserve (1,150) (988)
$162,836 $152,636
8
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NOTE 7. EARNINGS PER SHARE
Net income per share of common capital stock is based on the combined
weighted average number of Common and Class A shares outstanding during
each period and does not include Class A shares issuable upon exercise of
stock options because the dilutive effect is not significant.
NOTE 8. LEGAL PROCEEDINGS
In 1989 a judgment was entered against Saddlebrook Resorts, Inc.
("Saddlebrook"), a former subsidiary of the Company, in a lawsuit which
arose out of the development of Saddlebrook's resort and a portion of the
adjoining residential properties developed by the Company. The lawsuit
alleged damage to plaintiffs' adjoining property caused by surface water
effects from improvements to the properties. Damages of approximately $8
million were awarded to the plaintiffs and an injunction was entered
requiring, among other things, that Saddlebrook work with local regulatory
authorities to take corrective actions. In 1990 the trial court entered an
order vacating the judgment and awarding a new trial. In December 1994,
Saddlebrook's motion for summary judgment based on collateral estoppel was
granted on the ground that plaintiffs' claims were fully retired and
rejected in a related administrative proceeding. Plaintiffs' have appealed
the trial court's decision granting summary judgment. The Company believes
that the ultimate outcome of the aforementioned lawsuit will not have a
material adverse effect on its financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS
Continued expansion within the alarm and other security products segment
accounted for most of the overall sales growth of 17% for the first quarter
of 1996 over the same period in 1995. Domestic sales increased 13% while
international sales, representing 13% of total consolidated sales
principally by the alarm segment, increased 55% reflecting further market
penetration in the Company's European and other international operations.
Gross profit increased 15% which is slightly below the sales increase
reflecting the lower margins of the Company's distribution business relative
to manufacturing margins. Selling, general and administrative expenses
increased 14% in the first quarter of 1996, primarily due to increased costs
associated with the expanded sales volume.
Alarm product sales accounted for 82% of consolidated revenues in the first
quarter of 1996 (78% in 1995) and increased 24%. These results reflect
continuing gains in market share in key product areas and ongoing expansion
in the worldwide alarm systems market. The Company's distribution business
made significant gains by expanding its outlet network, internally and
through an acquisition in the latter part of 1995, and capitalizing on the
1995 bankruptcy of a major competitor. Increases at the Company's
9
manufacturing units reflect continued acceptance of numerous new product
offerings. Operating income for the segment increased 19% for the quarter
primarily because of the expanded sales volume offset by an increase in
depreciation expense from recent capital expenditures.
Publishing sales for the quarter declined 8% while operating income
increased 17%. Excluding the results of a conference and seminar business,
which was sold in June of 1995, first quarter sales for the segment
increased 5% and operating income increased 39% over the same period in
1995. The improved results reflect continuing efforts to build alternative
revenue streams while reducing operating costs and improving operating
efficiencies.
Depreciation and amortization expense increased in the first quarter of 1996
over 1995 as a result of capital additions, principally in the alarm systems
segment.
Other income (expense) for the first quarter of 1996 included a pretax gain
of $23,432 on the increase in the Company's Cylink investment, resulting
from Cylink's initial public offering, and a pre-tax gain of $13,162 on the
sale of 622,500 shares of USSB stock in connection with its initial public
offering. Excluding these gains, other income was less favorable in the
first quarter of 1996 principally due to higher interest expense associated
with a net increase in working capital items.
The effective tax rate rose slightly to 37.2% from 37.0% for the first
quarter of 1996 versus 1995.
ACCOUNTING CHANGE
In October 1995 SFAS No. 123, "Accounting for Stock Based Compensation", was
issued. The statement became effective for the 1996 fiscal year and
establishes a fair value based method of accounting for employee stock based
compensation plans and encourages adoption of that method. However,
companies may elect to continue to apply the method prescribed under
previously existing accounting rules, provided certain pro forma disclosures
are made. The Company made such election and will provide the necessary
disclosures in the December 31, 1996 year-end consolidated financial
statements.
FINANCIAL CONDITION
The Company's financial condition remained strong in the first quarter of
1996. Management anticipates that operations, borrowings and marketable
securities will continue to be the primary source of funds needed to meet
ongoing programs for capital expenditures, to finance acquisitions and
investments and to pay dividends.
In the first quarter of 1996, operating profits, before the gains on the
sale of USSB stock and the increase in Cylink carrying value and
depreciation and amortization, provided $17.4 million of net cash which was
10
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partially used to finance the net increase in working capital items. The
remaining $16.3 million of cash generated from operations, along with $12.4
million of net proceeds from the sale of USSB stock and other marketable
securities, were partially used to fund $7.0 million in capital
expenditures, the purchase of a foreign distributor for $2.7 million, $1.7
of dividends paid to stockholders, $1.5 million of net payments on
borrowings and $.5 million of additional investments in affordable housing
ventures. The remaining cash provided resulted in an increase in cash and
cash equivalents to $47.0 million at March 31, 1996 versus $31.4 million at
December 31, 1995.
The Company continues to investigate investment opportunities for growth in
related areas. Following our $.5 million investment in the first quarter of
1996, our remaining commitment in certain affordable housing ventures
through 1997 is $2.2 million at March 31, 1996.
The Company has real estate investments in various limited partnerships with
interests in commercial rental properties which may be sold or turned over
to lenders due to the present weak commercial real estate market. Such
events have no effect on net income although they do have a negative impact
on the Company's cash position because significant tax payments become due
when the properties are sold or returned to the lenders. The Company has
approximately $5 million accrued at March 31, 1996 to fully cover the
remaining tax payments that would be due if all the properties are sold or
returned to the lenders.
In February 1996, the Company sold 622,500 shares of its investment in
United States Satellite Broadcasting ("USSB") in connection with its initial
public offering and realized net cash proceeds of $15.8 million or $10.7
million after taxes. The Company's remaining 4,167,375 USSB shares are
recorded as a non-current investment in marketable securities. The Company
intends to hold its existing investment in preferred stocks, USSB and Cylink
although occasional sales of preferred and USSB stocks may be made
selectively as conditions warrant.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 10, 1989, the Circuit Court of the Sixth Judicial Circuit in and for
Pasco County, Florida, entered a judgment against Saddlebrook Resorts, Inc.
("Saddlebrook"), a former subsidiary of the Company, in a lawsuit which
arose out of the development of Saddlebrook's resort and a portion of the
adjoining residential properties developed by the Company. The lawsuit
(James H. Porter and Martha Porter, Trustees, et al. vs. Saddlebrook
Resorts, Inc. and The County of Pasco, Florida; Case No. CA83-1860),
alleges damage to plaintiffs' adjoining property caused by surface water
effects from improvements to the properties. Damages of approximately $8
million were awarded to the plaintiffs and an injunction was entered
requiring, among other things, that Saddlebrook work with local regulatory
11
<PAGE>
authorities to take corrective actions. Saddlebrook made two motions for a
new trial, based on separate grounds. One such motion was granted on
December 18, 1990. Such grant was appealed by the plaintiffs. The other
such motion was denied on February 28, 1991. Saddlebrook appealed such
denial. The appeals were consolidated, fully briefed and heard in February
1992. Saddlebrook received a favorable ruling on March 18, 1992,
dismissing the judgment and remanding the case to the Circuit Court for a
new trial. An agreed order has been entered by the Court preserving the
substance of the injunction pending final disposition of this matter. As
part of its plan to comply with the agreed order, Saddlebrook filed
applications with the regulatory agency to undertake various remediation
efforts. Plaintiffs, however, filed petitions for administrative review of
the applications, which administrative hearing was concluded in February
1992. On March 31, 1992, the hearing officer issued a recommended order
accepting Saddlebrook's expert's testimony. The agency's governing board
was scheduled to consider this recommended order on April 28, 1992,
however, shortly before the hearing, the plaintiffs voluntarily dismissed
their petitions and withdrew their challenges to the staff's proposal to
issue a permit.
At the April 28, 1992 hearing the governing board closed its file on the
matter and issued the permits. Saddlebrook appealed the board's refusal to
issue a final order. On July 9, 1993 a decision was rendered for
Saddlebrook remanding jurisdiction to the governing board for further
proceedings, including entry of a final order which was issued on October
25, 1993. The plaintiffs appealed the Appellate Court decision to the
Florida Supreme Court and appealed the issuance of the final order to the
Second District Court of Appeals. The Florida Supreme Court heard the
appeal on May 3, 1994 and denied plaintiffs' appeal. The other appeal was
voluntarily dismissed by the plaintiffs on June 17, 1994. On remand to the
trial court, Saddlebrook's motion for summary judgment, based on collateral
estoppel on the ground that plaintiffs' claims were fully retried and
rejected in a related administrative proceeding was granted on December 7,
1994. Plaintiffs filed for a rehearing which was denied. Plaintiffs have
appealed the trial court's decision granting summary judgment.
Until October 14, 1989, Saddlebrook disputed responsibility for ultimate
liability and costs (including costs of corrective action). On that date,
the Company and Saddlebrook entered into an agreement with regard to such
matters. The agreement, as amended and restated on July 16, 1993, provides
for the Company and Saddlebrook to split equally the costs of the defense
of the litigation and the costs of certain related litigation and
proceedings, the costs of the ultimate judgment, if any, and the costs of
any mandated remedial work. Subject to certain conditions, the agreement
permits Saddlebrook to obtain subordinated loans from the Company to enable
Saddlebrook to pay its one-half of the costs of the latter two items. No
loans have been made to date.
The Company believes that the ultimate outcome of the aforementioned
lawsuit will not have a material adverse effect on its financial
statements.
12
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was held on May 9, 1996 and the
following actions were taken:
(a) Management's slate of nominees for directors was unopposed and elected
in its entirety. The results of the voting were as follows:
Director For Withheld Broker Non-Votes
Common Stock-
S. Barrows 3,664,804 11,031 99,271
F. Conforti 3,664,579 11,256 99,271
L. Guthart 3,664,804 11,031 99,271
I. Harris 3,664,804 11,031 99,271
K. Harris 3,664,804 11,031 99,271
N. Harris 3,664,804 11,031 99,271
W. Harris 3,664,804 11,031 99,271
J. Kahn. Jr. 3,664,804 11,031 99,271
L. Mullin 3,664,804 11,031 99,271
Class A Stock-
E. Barnett 14,735,298 89,870 617,400
E. Coolidge III 14,735,748 89,420 617,400
A. Downs 14,731,998 93,170 617,400
(b) The resolution to amend the Company's Restated Certificate of
Incorporation to increase the number of authorized shares was approved.
The results of the voting were as follows:
For Against Abstentions Broker Non-Votes
5,060,142 88,013 10,197 161,011
(c) The 1996 Director Stock Option Plan was approved. The results of the
voting were as follows:
For Against Abstentions Broker Non-Votes
4,957,722 178,773 21,857 161,011
(d) The potential financial performance criteria established by the
Compensation Committee for certain annual bonuses for the Company's chief
executive officer was approved. The results of the voting were as follows:
For Against Abstentions Broker Non-Votes
5,109,498 35,332 13,522 161,011
13
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Number Description
3.1 Restated Certificate of Incorporation, as amended
3.2 Certificate of Amendment of Restated Certificate of
Incorporation dated December 28, 1989
3.3 Certificate of Amendment to Restated Certificate of
Incorporation dated May 9, 1996
27 Financial Data Schedule
(submitted only in electronic format)
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PITTWAY CORPORATION
(Registrant)
By /s/ Paul R. Gauvreau
Paul R. Gauvreau
Financial Vice President
and Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
Date: May 10, 1996
14
EXHIBIT 3.1
PITTWAY CORPORATION
MARCH 31, 1996
FORM 10-K
RESTATED
CERTIFICATE OF INCORPORATION AS AMENDED
OF
STANDARD SHARES, INC.
_________________
Standard Shares, Inc. (the 'Corporation') was originally incorporated as
Standard Power and Light Corporation. The Corporation's original Certificate
of Incorporation was filed with the Secretary of State of Delaware on June 20,
1925. This Restated Certificate of Incorporation was proposed to the
stockholders of the Corporation by the Board of Directors on May 8, 1984 and
duly adopted in accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of Delaware by an affirmative vote of the holders of
two-thirds of all outstanding stock entitled to vote at the annual meeting of
stockholders of the Corporation held in Chicago, Illinois on June 22, 1984.
FIRST: The name of this Corporation is STANDARD SHARES, INC.
SECOND: Its principal office in the State of Delaware is located at No.
100 West 10th Street, in the City of Wilmington, County of New Castle. The
name and address of its resident agent is THE CORPORATION TRUST COMPANY, No.
100 West 10th Street, Wilmington, Delaware.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware and to act as a statutory agent for other
corporations.
FOURTH: 1. The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is eight million
(8,000,000) shares of which two million (2,000,000) shares shall be designated
Preferred Stock with no par value and six million (6,000,000) shares shall be
designated Common Stock of the par value of One Dollar ($1.00) per share.
The designations and powers, preferences and rights, and the
qualifications, limitations or restrictions of the Preferred Stock and the
Common Stock of the Corporation are set forth in the following provisions:
1
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(I) Preferred Stock
Shares of Preferred Stock may be issued from time to time in one or
more series. All shares of any one series of Preferred Stock shall be
identical in all respects except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon
shall be cumulative. Subject to the Certificate of Incorporation,
authority is expressly granted to the Board of Directors to authorize the
issuance of one or more series of Preferred Stock, and to fix by
resolution or resolutions providing for the issuance of each such series
the voting powers, designations, preferences, and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions of such series, to the full extent now or
hereafter permitted by law, including but not limited to the following:
(1) The distinctive designations of such series and the number of
shares which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors
in creating such series) or decreased (but not below the number of
shares thereof then outstanding) from time to time by action of the
Board of Directors;
(2) The dividend rights of such series (including, without
limitation, the right, if any, of the holders of shares of such series
to participate with the holders of the outstanding shares of Common
Stock in any distribution of dividends in excess of the preferential
dividend fixed for shares of such series and the terms and conditions
of such participation), the extent, if any, to which such dividends
shall be cumulative, the conditions upon which and/or the dates when
such dividends shall be payable and the date from which dividends on
cumulative series shall accrue and be cumulative;
(3) Whether such series shall be redeemable and, if so, the terms
and conditions of such redemption, including the time or times when
and the price or prices at which shares of such series shall be
redeemed, which price or prices may vary at different redemption dates
or otherwise as permitted by law;
(4) The rights of such series in the event of the voluntary or
involuntary liquidation, merger, consolidation, dissolution, winding
up or distribution or sale of the assets of the Corporation;
(5) The terms and conditions, if any, upon which the shares of
such series shall be convertible into or exchangeable for shares of
any other series, class or classes, or any other securities, including
without limitation provisions for the adjustment of the conversion
rate in such events as the Board of Directors may determine; and
(6) The voting powers, if any, of the holders of shares of such
series which may, without limiting the generality of the foregoing,
include (i) the right to more or less than one vote per share on any
or all matters voted upon by the stockholders, or (ii) the right,
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voting as a series by itself or with other series of Preferred Stock
or all series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a default in the
payment of dividends on any one or more series of Preferred Stock or
under such other circumstances or on such particular matters as the
Board of Directors may determine.
(II) Common Stock
(1) Subject to provisions of law and the preferences of the
Preferred Stock and of any other stock ranking prior to the Common
Stock as to dividends, and after the Corporation shall have complied
with all requirements, if any, with respect to the setting aside of
sums as sinking funds or redemption or purchase accounts, the holders
of shares of Common Stock shall be entitled to receive dividends at
such times and in such amounts as may be determined by the Board of
Directors.
(2) Except as otherwise provided by law and in the Certificate of
Incorporation or except as determined pursuant to authority of the
Board of Directors as provided in this Article Fourth, all voting
rights shall be vested exclusively in the holders of the outstanding
shares of Common Stock and each such holder shall be entitled to one
vote per share for all purposes for each share of Common Stock held
of record by him.
(3) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, after payment or provi-
sion for payment of the debts and other liabilities of the
Corporation and the preferential amounts to which the holders of
shares of any stock ranking prior to the Common Stock in distribution
of assets shall be entitled upon liquidation, dissolution, or winding
up of the Corporation, the holders of shares of Common Stock shall be
entitled to share in the remaining assets of the Corporation according
to their respective interests.
2. Except as otherwise provided by law, the presence, in person or by
proxy, of the holders of a majority of the shares of the stock of the
Corporation issued, outstanding and entitled to vote thereat shall be requisite
and shall constitute a quorum at any meeting of the stockholders. If at any
meeting of stockholders there shall be less than a quorum so present, the
stockholders present in person or by proxy and entitled to vote thereat,
without further notice, may adjourn the meeting from time to time until a
quorum shall be present, but no business shall be transacted at any such
adjourned meeting except such as might have been lawfully transacted had the
meeting not been adjourned.
3. The holders of certificates representing shares of common stock and
common stock, Series B, of this Corporation heretofore authorized, issued and
outstanding (old common stock and old common stock, Series B, respectively)
shall have no rights under the old certificates of this Corporation except
the right to receive, in lieu of such certificates, certificates for shares of
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common stock, at the rate of one share of such common stock for each share of
old common stock, and for each share of old common stock, Series B, and pending
such receipt, the holders of old common stock and old common stock, Series B,
shall have the rights to which they would be entitled upon receipt of such
common stock of the Corporation.
4. Without the affirmative vote, or consent in writing, of the holders
of at least two-thirds (2/3) of the full number of shares of common stock
issued and outstanding, the Corporation shall not have power:
(a) To liquidate, dissolve or wind up its affairs;
(b) To merge or consolidate with any other corporation,
association, trust, partnership or entity; or
(c) To sell, exchange, assign, convey, transfer or in any other
way dispose of all or substantially all of its property and assets,
including its good will and its corporate franchises, in one
transaction or in a series of related transactions.
Notwithstanding the foregoing, no vote or consent of the stockholders of
the Corporation shall be necessary to authorize a merger if (1) the Corporation
is a constituent corporation which survives the merger, (2) the agreement of
merger does not change the name or authorized shares of any class or otherwise
amend the certificate of incorporation of the Corporation, and (3) the
authorized unissued shares or the treasury shares of any class of the
Corporation to be issued or delivered under the plan of merger do not exceed 15
per cent of the shares of the Corporation of the same class outstanding
immediately prior to the effective date of the merger.
Without the affirmative vote, or consent in writing, of the holders of at
least two-thirds (2/3) of the full number of shares of common stock issued and
outstanding, the Corporation shall not have the power to amend this Section 4
of this Article Fourth.
FIFTH: This Corporation is to have perpetual existence.
SIXTH: The following provisions are made for the management of the
business and for the conduct of the affairs of the Corporation, including
provisions creating, defining, limiting and regulating the powers of the
Corporation, the directors and the stockholders, to wit:
1. Any contract or other transaction between the Corporation and one or
more of its directors, or between the Corporation and any firm of which one or
more of its directors are members or employees, or in which they are
interested, or between the Corporation and any corporation or association of
which one or more of its directors are shareholders, members, directors,
officers, or employees, or in which they are interested, shall be valid for
all purposes, notwithstanding the presence of such director or directors at the
meeting of the Board of Directors of the Corporation which acts upon, or in
reference to, such contract or transaction, if the fact of such interest shall
be disclosed or known to the Board of Directors and the Board of Directors
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shall, nevertheless, authorize, approve and ratify such contract or transaction
by a vote of a majority of the directors present, such interested director or
directors to be counted in determining whether a quorum is present, but not to
be counted in calculating the majority necessary to carry such vote; and no
director or directors having such adverse interest shall be liable to the
Corporation or to any stockholder or creditor thereof, or to any other person,
for any loss incurred by it under or by reason of such contract or transaction;
nor shall any such director or directors be accountable for any gains or
profits realized thereon; always provided, however, that such contract or
transaction shall at the time at which it was entered into have been a
reasonable one to have been entered into and shall have been upon terms that at
the time were fair, and any such contract or transaction shall be prima facie
presumed to have been a fair and reasonable one to have been entered into and
upon terms that at the time were fair. This Section 1 of this Article Sixth
shall not be construed to invalidate any contract or other transaction which
would otherwise be valid under the common or statutory law applicable thereto.
2. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including any action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding to the
fullest extent permitted by law. The indemnification provided by this Section
shall not be deemed exclusive of any other rights to which any person may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue, as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors, administrators and personal
representatives of such a person.
3. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths (3/4) in value of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, agree to any compromise or arrangement,
and to any reorganization of this Corporation as a consequence of such
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compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
4. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, ( ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, ( iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is
amended, after approval by the stockholders of this provision, to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, but subject in all respects to the provisions of the foregoing
Articles Fourth and Sixth, the Board of Directors is expressly authorized:
1. To make, amend, alter, change, add to or repeal the By-Laws for the
Corporation, without any action on the part of the stockholders; provided that
no By-Law which is subject to the provision that the same may not be amended,
altered, changed, added to or repealed without action on the part of the
stockholders or some portion or percentage thereof, or action by some portion
or percentage of the Board of Directors, may be amended, altered, changed,
added to or repealed without such designated action on the part of such
stockholders or by the Board of Directors. The By-Laws made by the directors
may be amended, altered, changed, added to or repealed by the stockholders,
subject to the foregoing provisions.
2. By the affirmative vote therefor of the majority of the full Board of
Directors, to designate one or more committees, which, to the extent provided
in said resolution or in the By-Laws of the Corporation, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it.
Signed and attested to on the 22nd day of June, 1984.
ATTEST: _______________________________
President
___________________________
6
EXHIBIT 3.2
PITTWAY CORPORATION
MARCH 31, 1996
FORM 10-Q
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
STANDARD SHARES, INC.
_________________
Adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware
_________________
WE, ___________________________, President, and _________________________,
Secretary, of Standard Shares, Inc., a corporation existing under the laws of
the State of Delaware (the "Corporation"), do hereby certify as follows:
FIRST: That the Restated Certificate of Incorporation of said Corporation
is amended as follows:
By striking out the whole of Article FIRST thereof as it now
exists and inserting in lieu and instead thereof a new Article
FIRST, reading as follows:
"FIRST: The name of this Corporation is PITTWAY CORPORATION."
SECOND: That the Restated Certificate of Incorporation of said
Corporation is further amended as follows:
By striking out the whole of Article FOURTH thereof as it now exists
and inserting in lieu and instead thereof a new Article FOURTH, reading
as follows:
"FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is Fifty-Six
Million (56,000,000) shares, of which Two Million (2,000,000) shares
shall be designated Preferred Stock with no par value, Twenty-Four
Million (24,000,000) shares shall be designated Class A Stock of the
par value of $1.00 per share, and Thirty Million (30,000,000) shares
shall be designated Common Stock of the par value of $1.00 per share.
The Class A Stock and Common Stock are collectively hereinafter
referred to as "Common Capital Stock."
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The designations and powers, preferences and rights and the
qualifications, limitations or restrictions of the Preferred Stock,
Class A Stock and Common Stock are set forth in the following
provisions.
(I) Preferred Stock.
Shares of Preferred Stock may be issued from time to time in one or
more series. Subject to the limitations prescribed by the General
Corporation Law of Delaware and any limitations prescribed by the
Certificate of Incorporation, authority is expressly granted to the
Board of Directors to authorize the issuance of one or more series of
Preferred Stock, and to fix by resolution or resolutions providing for
the issuance of each such series the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, to the
full extent now or hereafter permitted by law, provided, however, that
the holders of the shares of Preferred Stock or of any series of
Preferred Stock may not vote with the holders of the shares of Class A
Stock for the election of the Directors whom the holders of Class A
Stock voting as a class are entitled to elect pursuant to subparagraph
(A) of paragraph 4 of Part II of this Article FOURTH.
(II) Common Capital Stock.
There shall be no differences in the voting powers, preferences, or
other rights, or qualifications, limitations or restrictions thereof,
of shares of Class A Stock from those of shares of Common Stock except
as specifically hereinafter set forth in this Part II. Without
limiting the generality of the foregoing, so long as any shares of
Class A Stock are outstanding, in the event the Corporation engages in
any merger or consolidation in which holders of Common Capital Stock
receive any consideration, provision shall be made so that the holders
of each class of Common Capital Stock receive the same consideration
per share; provided, however, that if such merger or consolidation is a
reincorporation in another jurisdiction, or is a merger of the
Corporation with and into a wholly-owned subsidiary of the Corporation,
the shares issued to the holders of the respective classes of Common
Capital Stock may reflect the differences between such classes set
forth in the Certificate of Incorporation or differences substantially
equivalent thereto.
(1) So long as any shares of Class A Stock are outstanding: (a) if
any dividend or other distribution is declared on the Common Capital
Stock which is payable in shares of (or in securities convertible into
or exchangeable or exercisable for shares of), or in subscriptions or
other rights to acquire shares of (or to acquire securities convertible
into or exchangeable or exercisable for shares of), any class of Common
Capital Stock, such dividend or distribution shall be declared in such
manner as to be payable to the holders of Class A Stock in shares of
(or in securities convertible into or exchangeable or exercisable for
shares of), or in subscriptions or other rights to acquire shares of
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(or to acquire securities convertible into or exchangeable or
exercisable for shares of), Class A Stock and as to be payable to the
holders of Common Stock at the same rate in shares of (or in securities
convertible into or exchangeable or exercisable for shares of), or in
subscriptions or other rights to acquire shares of (or to acquire
securities convertible into or exchangeable or exercisable for shares
of), Common Stock; and (b) if shares of the Common Capital Stock are
combined or subdivided, such combination or subdivision shall be
effected in such manner as to result in per share decreases or
increases of Class A Stock and Common Stock which are identical.
(2) So long as any shares of Class A Stock are outstanding, if any
dividend or other distribution payable in cash (other than a dividend
or distribution in connection with the liquidation or dissolution of
the Corporation) is declared on the Common Capital Stock, such dividend
or distribution shall be declared in such manner that the amount
thereof per share of Class A Stock shall equal the amount thereof per
share of Common Stock plus two and one-half (2.5) cents (provided that
the aggregate excess of the dividends per share of Class A Stock
declared during any calendar year over the dividends per share of
Common Stock declared during such calendar year shall not exceed ten
(10) cents); provided, however, that if a Valuation Deficiency (as
hereinafter defined) shall occur, the additional amount per share of
Class A Stock shall be increased from two and one-half (2.5) cents to
twelve and one-half (12.5) cents for each dividend thereafter declared
on the Common Capital Stock during any of the ten full calendar
quarters immediately following the occurrence of the Valuation
Deficiency. A "Valuation Deficiency" shall be deemed to have occurred
if the average closing price of the Class A Stock for the American
Stock Exchange Composite Transactions during the period (the "Reference
Period") commencing on the day following the three month anniversary
of the Effective Time (as hereinafter defined) and ending on the six
month anniversary of the Effective Time shall be less than 90% of the
average closing price of the Common Stock for such Composite
Transactions during the Reference Period, except that no Valuation
Deficiency shall be deemed to have occurred if such average closing
price of the Class A Stock is at least equal to $30.15 (adjusted for
any percentage change in the Standard & Poor's 500 Stocks Index during
the period from March 15,1989 through the end of the Reference Period).
In the event of any combination or subdivision (including by way of a
stock dividend) of the Common Capital Stock, the monetary amounts set
forth in this paragraph 2 shall be equitably adjusted by the Board of
Directors. The "Effective Time" shall mean the Effective Time as
defined in the Amended and Restated Merger Agreement and Plan of
Reorganization dated as of October 11, 1989 between the Corporation and
Pittway Corporation, a Pennsylvania corporation (the "Merger
Agreement").
(3) Subject to the requirements of the business of the Corporation
and to the fiduciary obligations of the Board of Directors: (a) a
dividend of at least fifteen (15) cents per share of Common Stock (and
thus a dividend of at least seventeen and one-half (17.5) cents per
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share of Class A Stock) shall be declared during each of the eight full
calendar quarters immediately following the Effective Time; and (b) in
the event a Valuation Deficiency occurs, a dividend on the Common
Capital Stock shall be declared during each of the ten full calendar
quarters immediately following such occurrence.
(4) Except as otherwise provided by the General Corporation Law of
Delaware or in the Certificate of Incorporation, or except as
determined by the Board of Directors pursuant to the authority of the
Board of Directors as provided in Part I of this Article FOURTH, all
voting rights shall be vested exclusively in the holders of the
outstanding shares of Common Capital Stock, and the holders of the
outstanding shares of Common Capital Stock shall be entitled to one (1)
vote per share on all matters voted upon by the stockholders of the
Corporation, except that:
(A) Prior to the Change of Control Date, as defined in
subparagraph (B) below, beginning with the first Annual or Special
Meeting of Stockholders occurring after the Effective Time, the
holders of the outstanding shares of Class A Stock voting as a class
shall be entitled to elect such number of Directors, but not less
than two, as shall equal 25% of the then total number of Directors
constituting the full Board of Directors, for purposes of which such
total number shall be deemed not to include the number of Directors,
if any, which the holders of Preferred Stock or of any series of
Preferred Stock voting as a class are then entitled to elect (such
number of Directors to be elected by such Class A Stock to be
rounded to the nearest larger whole number if such percentage does
not equal a whole number); and the holders of the Common Stock
voting as a class shall be entitled to elect the then remaining
number of Directors; provided, however, that all Directors elected
at any time when the outstanding shares of Common Stock amount to
fewer than 12 1/2% of the outstanding shares of the Common Capital
Stock, even though the Change of Control Date has not occurred,
shall be elected by the vote of all Common Capital Stock voting as
one class with one (1) vote per share and without distinction
between the votes of Class A Stock and Common Stock. In the event
any vacancy occurs in the Directors who shall have been, or are to
be, elected by the holders of the Class A Stock or the Common Stock,
as the case may be, such vacancy or vacancies may be filled, until
the next meeting of the holders of the shares of such class, by the
vote of a majority of the Directors who are then in office and who
were elected by such class or, if only one such Director is then in
office, by such Director. If any such vacancy is not so filled (or
if the holders of the class which elected the Director or Directors
who voted to fill such vacancy desire to remove or replace the
Director elected to fill such vacancy), a special meeting of the
holders of the shares of such class for the purpose of filling such
vacancy (or removing or replacing the Director elected to fill such
vacancy) may be called by the Chairman of the Board or President of
the Corporation and shall be called by the Chairman of the Board or
President of the Corporation within 30 days of receipt of written
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request therefor by the holders of record of at least 25% of the
outstanding shares of such class. The date on which any such
special meeting so called shall be held shall be as soon as
reasonably practicable following such call. Notwithstanding the
provisions of this subparagraph (A), no special meeting of
stockholders shall be required to be held during the 120-day period
preceding the date fixed for the Annual Meeting of Stockholders. At
any Special or Annual Meeting for the election of Directors by the
holders of shares of Class A Stock or Common Stock, the presence, in
person or by proxy, of the holders of more than 50% of the then
outstanding shares of such class shall be required to constitute a
quorum for the election of Directors by such class; in the absence
of such a quorum, a majority of the holders of shares of the class
present, in person or by proxy, shall have the power, without notice
other than announcement of the adjournment at the meeting, to
adjourn the meeting for the purpose of such election from time to
time, until a quorum shall be present. For purposes of the
provisions of this subparagraph (A), outstanding shares shall
exclude shares of Common Capital Stock owned by the Corporation or
by any other corporation a majority of the shares of which entitled
to vote in the election of directors is owned, directly or
indirectly, by the Corporation.
(B) Prior to the Change of Control Date, except as provided in
subparagraph (A) above as to election of Directors or as hereinafter
provided in this subparagraph (B) or as may be required by the
General Corporation Law of Delaware, the holders of shares of
Common Stock shall be entitled to one (1) vote per share on all
matters voted upon by the stockholders of the Corporation for each
share of Common Stock held of record by each such holder and the
holders of shares of Class A Stock shall be entitled to one-tenth
(1/l0) of one (1) vote per share on all matters voted upon by the
stockholders of the Corporation for each share of Class A Stock held
of record by each such holder.
The "Change of Control Date" shall be the first date after the
Effective Time on which the shares of Harris Group Stock (as
hereinafter defined) are entitled to cast fewer than 1,496,110 votes
(counting the Class A Stock as entitled to cast one-tenth (1/l0) of
one (1) vote per share for this purpose); provided, however, that no
Change of Control Date shall occur as a result of a transaction
following which the shares of Harris Group Stock are entitled to
cast fewer than 1,496,110 votes but more than 1,458,707 votes
(counting the Class A Stock as entitled to cast one-tenth (1/l0) of
one (1) vote per share for these purposes) unless, within 90 days
following such transaction, the shares of Harris Group Stock are not
restored to a level entitled to cast at least 1,496,110 votes (in
which event, the Change of Control Date shall be the date of such
90th day); provided, further, that no Change of Control Date shall
occur as a result of a transaction (a "Successor Group Transaction")
in which the beneficial ownership of Harris Group Stock entitled to
cast at least 1,496,110 votes shall be transferred as an entirety to
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a person or "group" (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as such Section is in effect and
interpreted at the Effective Time) (such person or group being
referred to as a "Successor Group") unless such Successor Group
Transaction shall occur on or before, or pursuant to an agreement
entered into on or before, the first anniversary of the date on
which the Effective Time occurs and unless the Successor Group
involved as a purchaser in such Successor Group Transaction shall
not, by the three month anniversary of the date of such Successor
Group Transaction, have offered to purchase for at least Equivalent
Value (as hereinafter defined) all outstanding shares of Common
Capital Stock other than those involved in such Successor Group
Transaction (in which event, the Change of Control Date shall be the
date of such three month anniversary). In the event of a Successor
Group Transaction other than a Successor Group Transaction giving
rise to the Change of Control Date, references in the definitions of
"Harris Group Stock" and of "Equivalent Value" to the Harris Group
shall thereafter refer to the Successor Group involved as a
purchaser in such Successor Group Transaction, and Harris Group
Stock shall include shares purchased in such Successor Group
Transaction. In the event of any combination or subdivision
(including by way of a stock dividend) of the Common Capital Stock,
the numbers of votes set forth in the second preceding sentence
shall be equitably adjusted by the Board of Directors. The "Harris
Group" means Messrs. Irving B. Harris, Neison Harris, King Harris,
William W. Harris and Sidney Barrows and their respective spouses,
descendants and spouses of descendants , trustees of trusts
established for the benefit of such persons, and executors of
estates of such persons. "Spouses" includes widows and widowers
until first remarried. "Harris Group Stock" means, at any point in
time, shares of Common Capital Stock which, at such time, any member
of the Harris Group, either alone or in combination with any other
member or members of the Harris Group, directly or indirectly
beneficially owns (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as such Rule is in effect and
interpreted at the Effective Time), without taking into account any
shares of Common Stock acquired by any member of the Harris Group
subsequent to May 31, 1989 in excess of shares of Common Stock
disposed of by members of the Harris Group subsequent to such date.
"Equivalent Value" means the same type and amount per share of
consideration paid to members of the Harris Group in the Successor
Group Transaction and, in determining such amount per share of
consideration, the aggregate amount paid to members of the Harris
Group in the Successor Group Transaction for all shares of Common
Capital Stock shall be divided by the total number of such shares.
(C) On the Change of Control Date, the authorized shares of
Class A Stock, both issued and unissued, shall automatically be
changed into Common Stock on a share for share basis and shall be
redesignated shares of Common Stock without any further action.
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(D) Without the affirmative vote or consent in writing of the
holders of shares of Common Capital Stock entitled to cast at least
two-third (2/3) of the votes (counting the Class A Stock as entitled
to cast one-tenth (1/l0) of one (1) vote per share for this purpose
prior to the Change of Control Date) which the outstanding shares of
Common Capital Stock are entitled to cast at the time, the
Corporation shall not have the power:
(i) To liquidate, dissolve or wind up its affairs;
(ii) To merge or consolidate with or into any other
corporation, association, trust, partnership or entity; or
(iii) To sell, exchange, assign, convey, transfer or in any
other way dispose of all or substantially all of its property and
assets, including its good will and its corporate franchises, in
one transaction or in a series of related transactions.
Notwithstanding the foregoing, no vote or consent of the
stockholders of the Corporation shall be necessary to authorize a
merger if (1) the Corporation is a constituent corporation which
survives the merger, (2) the agreement of merger does not change the
name or authorized shares of any class or otherwise amend the
Certificate of Incorporation, and (3) the authorized unissued shares
or the treasury shares of common or capital Stock to be issued or
delivered under the plan of merger do not exceed 15% of the shares
of Common Capital Stock outstanding immediately prior to the
effective date of the merger.
(E) Without the affirmative vote or consent in writing of the
holders of shares of Common Capital Stock entitled to cast at least
two-thirds (2/3) of the votes (counting the Class A Stock as
entitled to cast one-tenth (1/l0) of one (1) vote per share for this
purpose prior to the Change of Control Date) which the outstanding
shares of Common Capital Stock are entitled to cast at the time, the
Corporation shall not have the power to amend Part I or Part 11 of
this Article FOURTH."
THIRD: That the Restated Certificate of Incorporation of said
Corporation is further amended as follows:
By inserting as a new Article EIGHTH the following:
"EIGHTH: The number of Directors constituting the full Board of
Directors shall be such number, not less than eight, fixed by, or in the
manner provided in, the By-Laws. Without the affirmative vote or consent
in writing of the holders of shares of Common Capital Stock entitled to
cast at least two-thirds (2/3) of the votes (counting the Class A Stock
as entitled to cast one-tenth (1/10) of one (1) vote per share for this
purpose prior to the Change of Control Date) which the outstanding shares
of Common Capital Stock are entitled to cast at the time, the Corporation
shall not have the power to amend this Article EIGHTH."
7
<PAGE>
FOURTH: That such amendments have been duly adopted in accordance with
the provisions of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of two-thirds (2/3) of the outstanding shares
entitled to vote thereon at a meeting of stockholders.
IN WITNESS WHEREOF, we have signed this Certificate this 28th day of December,
1989.
_____________________________
Vice President
_____________________________
Secretary
8
EXHIBIT 3.3
PITTWAY CORPORATION
MARCH 31, 1996
FORM 10-Q
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
********
In accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware
********
Pittway Corporation, a corporation duly organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, on
March 12, 1996, at a meeting duly called and constituted, adopted
the following resolutions proposing an amendment to the Company's
Restated Certificate of Incorporation to increase the shares of
capital stock which the Corporation has authority to issue and
directing that such amendment be submitted to the stockholders for
consideration at said corporation's 1996 annual meeting:
RESOLVED, that in the opinion of the Board of
Directors it is advisable that the Restated Certificate of
Incorporation, as amended, of Pittway Corporation be
further amended as follows:
The first sentence of Article FOURTH shall be
amended in its entirety to read as follows:
The total number of shares of all classes
of capital stock which the Corporation shall have
authority to issue is Eighty Million (80,000,000) shares,
of which Two Million (2,000,000) shares shall be
designated Preferred Stock with no par value, Thirty-Six
Million (36,000,000) shares shall be designated Class A
Stock of the par value of $1.00 per share, and Forty-Two
Million (42,000,000) shares shall be designated Common
Stock of the par value of $1.00 per share.
FURTHER RESOLVED, that such amendment be
submitted to the stockholders of Pittway Corporation for
consideration at Pittway Corporation's 1996 annual meeting
of stockholders.
<PAGE>
SECOND: That at the annual meeting of stockholders of said
corporation held May 9, 1996, the aforesaid amendment was approved
by vote of a majority of each of: (i) the votes which the
outstanding Common Stock and Class A Stock were entitled to cast at
such annual meeting, (ii) the outstanding Common Stock, voting as a
class, and (iii) the outstanding Class A Stock, voting as a class.
THIRD: That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Pittway Corporation has caused this
certificate to be signed by King Harris, its President, this 9th day
of May, 1996.
Pittway Corporation
By_____________________
King Harris, President
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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<RECEIVABLES> 192,304
<ALLOWANCES> 9,039
<INVENTORY> 162,836
<CURRENT-ASSETS> 448,043
<PP&E> 227,677
<DEPRECIATION> 114,842
<TOTAL-ASSETS> 855,375
<CURRENT-LIABILITIES> 187,747
<BONDS> 86,037
<COMMON> 20,912
0
0
<OTHER-SE> 447,196
<TOTAL-LIABILITY-AND-EQUITY> 855,375
<SALES> 257,477
<TOTAL-REVENUES> 257,477
<CGS> 157,637
<TOTAL-COSTS> 157,637
<OTHER-EXPENSES> 6,810
<LOSS-PROVISION> 1,168
<INTEREST-EXPENSE> 1,990
<INCOME-PRETAX> 53,045
<INCOME-TAX> 19,757
<INCOME-CONTINUING> 33,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,288
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.59
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