-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GGG3+8e9NhudSW4OtrOmKPZGGO/TxqQ9rcKME6VjnQOaLf0LJ7BCF9hC3msK4SAW sB/BJIfKxshBeCSqRPcnmA== 0000093469-94-000006.txt : 19940809 0000093469-94-000006.hdr.sgml : 19940809 ACCESSION NUMBER: 0000093469-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PITTWAY CORP /DE/ CENTRAL INDEX KEY: 0000093469 STANDARD INDUSTRIAL CLASSIFICATION: 3669 IRS NUMBER: 135616408 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04821 FILM NUMBER: 94541891 BUSINESS ADDRESS: STREET 1: 200 S WACKER DR STE 700 CITY: CHICAGO STATE: IL ZIP: 60606-5802 BUSINESS PHONE: 3128311070 MAIL ADDRESS: STREET 1: 200 S WACKER DR STE 700 CITY: CHICAGO STATE: IL ZIP: 60606-5802 FORMER COMPANY: FORMER CONFORMED NAME: STANDARD SHARES INC DATE OF NAME CHANGE: 19900321 FORMER COMPANY: FORMER CONFORMED NAME: STANDARD POWER & LIGHT CORP DATE OF NAME CHANGE: 19660905 10-Q 1 JUNE 30, 1994 FORM 10-Q 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 June 30, 1994 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 (August 1, 1994). Common Stock 2,626,024 Class A Stock 11,314,700 1 PITTWAY CORPORATION AND SUBSIDIARIES FORM 10-Q QUARTER ENDED JUNE 30, 1994 INDEX Page PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statement of Income - Three Months and Six Months Ended June 30, 1994 and 1993 3 Consolidated Balance Sheet - June 30, 1994 and December 31, 1993 4 - 5 Consolidated Statement of Cash Flows - Six Months Ended June 30, 1994 and 1993 6 Notes to Consolidated Financial Statements 7 - 10 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 11 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 12 - 13 ITEM 4. Submission of Matters to a Vote of Security Holders 13 ITEM 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 2 PITTWAY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1994 AND 1993 (Dollars in Thousands, Except Per Share Data) (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 CONTINUING OPERATIONS: Net Sales............................ $189,220 $158,414 $365,763 $310,191 Operating Expenses: Cost of sales....................... 115,649 97,607 220,941 189,912 Selling, general and administrative. 57,147 49,119 111,720 96,750 Depreciation and amortization....... 5,068 4,224 9,851 8,340 177,864 150,950 342,512 295,002 Operating Income..................... 11,356 7,464 23,251 15,189 Other Income (Expense): Gain on sale of investment.......... 2,455 19,506 Income from marketable securities and other interest................ 1,147 504 1,959 884 Interest expense.................... (706) (1,021) (1,460) (1,554) Income from investments............. 744 562 1,282 1,144 Miscellaneous, net.................. 407 186 841 512 4,047 231 22,128 986 Income From Continuing Operations Before Income Taxes................. 15,403 7,695 45,379 16,175 Provision For Income Taxes........... 5,994 3,218 18,014 6,529 INCOME FROM CONTINUING OPERATIONS.... 9,409 4,477 27,365 9,646 Income From Discontinued Operations.. 1,267 10,726 Income Before Cumulative Effect of Changes in Accounting Principles... 9,409 5,744 27,365 20,372 Cumulative Effect of Changes In Accounting For Income Taxes and Postretirement Benefits............ 1,535 NET INCOME........................... $ 9,409 $ 5,744 $ 27,365 $ 21,907 Per Share of Common and Class A Stock: Income from continuing operations.. $ .67 $ .32 $ 1.96 $ .69 Income from discontinued operations .09 .77 Cumulative effect of changes in accounting principles............ .11 Net Income......................... $ .67 $ .41 $ 1.96 $ 1.57 Cash Dividends Declared Per Share: Common............................. $ .10 $ .10 $ .20 $ .25 Class A............................ $ .125 $ .125 $ .25 $ .30 Average Number of Shares Outstanding (in thousands)..................... 13,941 13,941 13,941 13,941
See accompanying notes. 3 PITTWAY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in Thousands) (UNAUDITED)
June 30, December 31, 1994 1993 ASSETS CURRENT ASSETS: Cash and equivalents.................... $ 1,018 $ 1,908 Marketable securities................... 43,972 31,407 Accounts and notes receivable, less allowance for doubtful accounts of $6,614 and $5,521..................... 126,796 115,947 Inventories............................. 116,381 100,065 Future income tax benefits.............. 14,908 15,232 Prepayments, deposits and other......... 9,188 7,974 312,263 272,533 PROPERTY, PLANT AND EQUIPMENT, at cost: Buildings............................... 26,323 25,530 Machinery and equipment................. 145,498 132,168 171,821 157,698 Less: Accumulated depreciation.......... (87,934) (81,375) 83,887 76,323 Land.................................... 2,403 2,403 86,290 78,726 INVESTMENTS: Real estate and other ventures.......... 53,524 51,153 Leveraged leases........................ 23,143 21,954 76,667 73,107 OTHER ASSETS: Goodwill, less accumulated amortization of $6,745 and $6,159.................. 39,764 40,357 Other intangibles, less accumulated amortization of $9,063 and $8,288..... 6,179 6,658 Notes receivable........................ 5,544 5,362 Miscellaneous........................... 5,116 5,234 56,603 57,611 $531,823 $481,977
See accompanying notes. 4 PITTWAY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in Thousands) (UNAUDITED)
June 30, December 31, 1994 1993 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable........................... $ 34,454 $ 30,859 Long-term debt due within one year...... 5,946 5,649 Dividends payable....................... 1,758 1,757 Accounts payable........................ 47,213 44,489 Accrued expenses........................ 38,234 33,744 Income taxes payable.................... 16,268 4,911 Retirement and deferred compensation plans.................... 764 605 Unearned income......................... 4,999 5,320 149,636 127,334 LONG-TERM DEBT, less current maturities... 9,476 6,083 DEFERRED LIABILITIES: Income taxes............................ 51,258 51,883 Other................................... 5,120 4,613 56,378 56,496 STOCKHOLDERS' EQUITY: Preferred stock, none issued............ Common capital stock, $1 par value- Common stock.......................... 2,626 2,626 Class A stock......................... 11,315 11,315 Capital in excess of par value.......... 28,348 28,348 Retained earnings....................... 277,639 253,628 Cumulative marketable securities valuation adjustment.................. (705) Cumulative foreign currency translation adjustment............................ (2,890) (3,853) 316,333 292,064 $531,823 $481,977
See accompanying notes. 5 PITTWAY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993 (Dollars in Thousands) (UNAUDITED)
1994 1993 Cash Flows From Continuing Operating Activities: Income from continuing operations................ $ 27,365 $ 9,646 Adjustments for noncash items included in income from continuing operations: Depreciation and amortization.................. 9,851 8,340 Gain on sale of investment, net of taxes....... (11,776) Deferred income taxes.......................... (1,542) (1,180) Retirement and deferred compensation plans..... 683 (301) Income from investments adjusted for cash distributions received................... (1,103) (1,048) Provision for losses on accounts receivable.... 1,434 1,562 Change in assets and liabilities, excluding effects from foreign currency adjustments: Increase in accounts and notes receivable................................. (11,826) (13,060) Increase in inventories..................... (15,427) (9,189) Increase (decrease) in accounts payable and accrued expenses....................... 5,707 (1,478) Increase in income taxes payable............ 13,068 7,035 Other changes, net.......................... (1,680) (1,087) Net cash provided by (used in) continuing operations.......................... 14,754 (760) Cash Flows From Investing Activities: Capital expenditures............................. (15,905) (13,217) Proceeds from the sale of investment............. 16,776 Proceeds from the sale of marketable securities.. 19,261 28,871 Purchases of marketable securities............... (32,853) (26,672) Disposition of property and equipment............ 226 233 Additions to investments......................... (7,513) (6,679) Collections of notes receivable.................. 755 693 Net cash used in investing activities............ (19,253) (16,771) Cash Flows From Financing Activities: Net increase in notes payable.................... 3,372 24,674 Proceeds of long-term debt....................... 3,756 207 Repayments of long-term debt..................... (263) (187) Dividends paid................................... (3,353) (2,373) Net cash provided by financing activities........ 3,512 22,321 Effect of Exchange Rate Changes on Cash ........... 97 (70) Net Cash Used In Discontinued Operations........... (4,666) Increase (Decrease) in Cash and Equivalents........ (890) 54 Cash and Equivalents at Beginning of Period........ 1,908 3,638 Cash and Equivalents at End of Period.............. $ 1,018 $ 3,692 See accompanying notes. ============================================================================= Supplemental cash flow disclosure: 1994 1993 Interest paid.................................... $ 1,386 $ 1,458 Income taxes paid................................ 7,832 6,985
6 PITTWAY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands, Unaudited) Note 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of Pittway 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 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, 1993. Note 2. Changes in Accounting Principles On January 1, 1994 the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires the Company to record its investments in certain debt and equity securities available-for- sale at market value. Changes in market value for these securities are to be reported, net of tax, in a separate component of stockholders' equity until realized. Prior to the adoption of SFAS No. 115, these securities were valued at the lower of aggregate cost or market. SFAS No. 115 does not apply to investments accounted for using the equity method or for which readily determinable market values are not available. As a result of adopting SFAS No. 115, a $141 unrealized gain, net of tax, was recorded to stockholders' equity at January 1, 1994. The adoption of this statement had no impact on net income and prior year financial statements are not restated. On January 1, 1993 the Company adopted the provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions", and No. 109, "Accounting for Income Taxes". The cumulative effect of the changes in accounting principles on years prior to 1993 was a $1,965 benefit for income taxes and a $430 after-tax charge for postretirement benefits. 7 Note 3. Marketable Securities Information about the Company's available-for-sale securities at June 30, 1994 and December 31, 1993 is as follows:
Adjustable Rate Preferred Municipal Stocks Bonds Other June 30, 1994 - Aggregate cost $ 43,832 $ 1,144 $ 171 Net unrealized holding loss (1,173) (2) Aggregate fair value $ 42,659 $ 1,142 $ 171 December 31, 1993 - Aggregate cost $ 15,118 $ 16,174 Net unrealized holding gain 163 72 Aggregate fair value $ 15,281 $ 16,246
The contractual maturities for the municipal bonds (at fair value) are as follows: within one year ($629), after one year through five years ($413) and after ten years ($100). In connection with an initial public offering of First Alert, Inc. common stock in 1994, the Company sold its 16.67% ownership in First Alert, Inc. by selling 1,355,000 shares in March and the remaining 195,000 shares in April. The sale of the shares resulted in a pretax gain of $19,506. The $24,506 pre-tax proceeds from the two sales were received in April. Prior to the initial public offering, the Company's equity investment in First Alert, Inc. was recorded at a cost of $5 million. Realized gains and losses are based upon the specific identification method. Information about the Company's sales transactions of available-for-sale securities for the six months ended June 30 is as follows:
1994 1993 Cash proceeds $ 19,261 $ 28,964 Realized gains - First Alert $ 19,056 Other $ 182 $ 372 Realized losses $ 34 $ 97
8 Note 4. Inventories Inventories consist of the following:
June 30, December 31, 1994 1993 Raw materials $ 29,701 $ 23,313 Work in process 12,580 9,311 Finished goods - Manufactured by the Company 41,224 33,912 Manufactured by others 33,614 34,087 Total 117,119 100,623 Less LIFO reserve (738) (558) $116,381 $100,065
Note 5. 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 6. Discontinued Operations The Company distributed its investment in the Seaquist packaging group (now known as AptarGroup, Inc.) to stockholders in a tax-free spinoff on April 22, 1993. Net sales of the discontinued operations for the three months and six months ended June 30, 1993 were $22,263 and $117,473, respectively. Note 7. Legal Proceedings On May 10, 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 owned and currently under development 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 December 1990 the trial court entered an order vacating the judgment and awarding a new trial, which was affirmed on appeal in March 1992. On remand to the trial court, Saddlebrook's motion for summary judgment, on the ground that plaintiff's claims were fully retried and rejected in a related administrative proceeding, which administrative ruling has been appealed to the Florida Supreme Court, is pending. If that motion is not granted, retrial is currently set for April 1995. The Company and Saddlebrook have entered into 9 an agreement 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. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the second quarter and first six months of 1994, sales increased 19% and 18%, respectively, due to higher sales in both the alarm and publishing segments. Gross profit grew at a faster rate than sales, (21% for the quarter and 20% for the first six months), reflecting better coverage of fixed costs through higher volume. Selling, general and administrative expenses increased 16% over the second quarter and 15% over the first six months of 1993 due to increased costs associated with the expanded sales volume. Alarm product sales increased over 1993 due to continued market acceptance of the newer burglar and commercial fire alarm products. Although the overall alarm systems industry is growing moderately, the Company's manufacturing and distribution businesses are increasing their market share as a result of growing dealer and distribution support for new products introduced in the last few years. Operating income increased primarily because of the expanded sales volume partially offset by costs of new product introductions and selective price reductions on certain system components. Publishing sales levels increased from a year ago due to a modest increase in advertising pages coupled with a firming of page rates. Operating income increased principally due to increased advertising pages at higher rates, higher profits from ancillary operations of the business and improved operating efficiencies. Included in other income in 1994 is a $19.5 million pretax gain on the sale of First Alert, Inc. common stock, $17.0 million recorded in the first quarter and $2.5 million recorded in the second quarter. Excluding the gain on sale of investment, other income was more favorable in 1994 primarily due to higher income from marketable securities and more favorable foreign currency transaction effects. Net foreign currency transaction gains in 1994 and net losses in 1993 produced a favorable change of $598,000 for the quarter and $440,000 on a year to date basis. The decrease in interest expense was offset by reduced income from other sources. The effective tax rate decreased in 1994 as a result of lower effective state income tax rates and the reduced impact on the overall tax rate of losses from certain foreign operations for which no tax benefit was recognized. 10 These favorable effects were partially offset by an increase in the U.S. Federal income tax rate in August 1993 from 34% to 35%. One-time accounting changes applicable to 1993 continuing operations included a $2.0 million benefit from the adoption of SFAS No. 109, "Accounting for Income Taxes", and an after-tax charge of $.4 million from the adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions". Earnings from discontinued operations in 1993 amounted to $1.3 million for the quarter and $10.7 million year to date. The six months amount includes a $3.1 million benefit from the adoption of SFAS No. 109 in the first quarter of 1993. FINANCIAL CONDITION The Company's financial condition remained strong through the second quarter of 1994. Management anticipates that operations and borrowings 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. As a result of selling its investment in First Alert, Inc. the Company received $24.5 million in April 1994. It is expected that these proceeds will be used to finance the growth in operations, invest in real estate and other ventures and pay approximately $9.7 million in current income taxes associated with the sale. Through the first six months of 1994, the primary sources of cash provided by continuing operations were profits before depreciation, amortization, deferred income taxes and the net gain on sale of investment. Such cash generated was partially used to finance the net increase in working capital items. The $15 million available cash generated from operations, along with a $7 million increase in debt and $3 million net receipts from securities transactions, were used to pay $3 million in dividends, $15.9 million in capital expenditures and $7 million in additions to investments. Indebtedness of approximately $3 million was recorded in the first quarter of 1994 to record a sale/leaseback transaction on certain production equipment. For 1993, the cash dividends normally paid in January were paid in December 1992. The Company is continually investigating opportunities for growth in related areas and is presently committed to invest approximately $10 million in certain ventures through 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. The Company's deferred income tax liability accounts fully cover the tax payments that would be due if properties were sold or returned to the lenders and such events would have no effect on income. However, any such tax payments would negatively impact the Company's cash position. The likelihood, extent and timing of such payments is not readily determinable, but the maximum total amount at June 30, 1994 is approximately $15 million. 11 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 owned and currently under development 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 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 have 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 the participants await its decision. The other appeal was voluntarily dismissed by the plaintiffs on June 17, 1994. Saddlebrook moved for summary judgment on December 22, 1993 on the ground that plaintiffs' claims were fully litigated and decided in administrative action. The trial court ordered that, in the event plaintiffs' appeal to the Florida Supreme Court is resolved by October 1994, Saddlebrook's motion for summary judgment will be heard in December 1994 and, in the event that such motion is denied, retrial will begin in April 1995. 12 Until October 14, 1989, the Company and 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. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of stockholders was held on May 19, 1994 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 Abstentions Broker Non-votes Common Stock- S. Barrows 2,341,293 1,824 25,515 209,140 F. Conforti 2,341,593 1,524 25,515 209,140 L. Guthart 2,341,564 1,553 25,515 209,140 I. Harris 2,341,293 1,824 25,515 209,140 K. Harris 2,341,593 1,524 25,515 209,140 N. Harris 2,341,593 1,524 25,515 209,140 W. Harris 2,341,593 1,524 25,515 209,140 J. Kahn, Jr. 2,341,593 1,524 25,515 209,140 Class A Stock- E. Barnett 7,403,235 5,738 151,811 3,203,000 E. Coolidge III 7,398,384 5,429 151,811 3,203,000 A. Downs 7,398,431 5,382 151,811 3,203,000
(b) The Pittway Corporation 1990 Stock Awards Plan was amended. The results of the voting were: 2,897,122 votes FOR, 146,803 votes AGAINST and 33,290 ABSTENTIONS. There were 576,492 Broker Non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No exhibits are included with this report. (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. 13 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: August 5, 1994 14 -----END PRIVACY-ENHANCED MESSAGE-----