Financial problems hit Sensormatic

A shareholder lawsuit and misreported earnings won't affect Penn's contract. Sensormatic Electronics Corporation -- the company installing the University's new safety technology system -- is currently involved in a shareholder lawsuit and recently admitted to misreporting quarterly revenues last year. But University officials chose Sensormatic because they have the best security systems on the market, according to Executive Vice President John Fry. "The products are considered absolutely without peer," Fry said. The University signed a contract with Sensormatic for a $3 million-plus integrated security system in October. Fry said the company's current problems will not affect its contract with the University. But if Sensormatic were to experience significant financial difficulties, the University may service the security products it has purchased through the individual companies that are part of Sensormatic, Fry explained. "We have a whole series of backup alternatives in terms of once we get the equipment," he said. "We know it can be serviced by other companies." Fry added that he is confident Sensormatic will be able to work through its financial problems. Sensormatic Senior Account Manager Dick Saunders, who is handling the University's contract, said Sensormatic is in good financial standings and added there is minimal risk to the University under the contract. Prior to hiring Sensormatic, the University retained a firm to analyze the company and its financial situation "extensively," Fry said. Investigations were conducted in the spring and again during the summer, according to Saunders. Last year, Sensormatic was investigated by the Securities Exchange Commission for suspect accounting practices that inflated quarterly revenues. A shareholder is now suing the company for fraud, claiming that Sensormatic did not inform shareholders about the board of directors' involvement with the revenue discrepancies. "The company has had some struggles because of a very fast pace of growth, but we're convinced that they're on the right course," Fry said. Sensormatic is a $1 billion corporation with more than 6,300 employees and 350,000 serviced sites around the world. According to Public Safety Security Director Chris Algard, Sensormatic employees have been on-site for the past five months. Sensormatic is currently working with the Public Safety officials and individual schools to develop appropriate security systems, Algard added. Sensormatic is considering the use of the advanced technology systems on the University's campus, Saunders added. The same technology was used at the 1996 Olympics in Atlanta. Among the potential technologies under consideration is a single-card security system, in which the PennCard could be used for entrance into buildings, financial purposes and dining services. Sensormatic has implemented single-card systems at Florida State University and Virginia Commonwealth University.

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