First Alert, Inc. Business Information, Profile, and History

Company Perspectives:

To continue to further improve and broaden the entire home safety category--developing innovative products that continue to keep homes safe and sound.

History of First Alert, Inc.

For more than 25 years, First Alert, Inc., along with its subsidiaries, has been a leading worldwide manufacturer and marketer of a line of home safety products. The company is one of the largest manufacturers of smoke detectors in the United States, a market in which it is estimated that more than 90 percent of all homes have at least one smoke detector. The "First Alert" brand name is one of the most widely recognized consumer brands in the home safety industry. Capitalizing on that brand name and its leading market share in the smoke detector segment, the company has developed and marketed a broad range of residential safety products, including carbon monoxide detectors, child safety products, electronic and electromechanical timers, fire escape ladders, fire extinguishers, fire safes and chests, motion sensing lighting controls, night lights, radon gas detectors, and rechargeable flashlights and lanterns.

Smoke Detectors, 1967

Up until 1969 Americans did not sleep as soundly as they might have. Then, as now, most fire deaths occurred during sleeping hours, usually before the flames even reached the victims, according to the National Fire Protection Association (NFPA). There was no such thing as a readily available warning device to guard against such tragedies. But in 1969, BRK Electronics of Aurora, Illinois, began marketing a product that would change fire safety forever: the smoke detector.

For three decades, BRK and its smoke detectors and related home safety products have helped millions protect their homes and families from fires. Originally designed for commercial use, the BRK smoke detector was redesigned for residential use in 1967. Two years later BRK model #S5679H became the first self-contained, battery-powered unit to pass stringent Underwriters Laboratories (UL) tests. It quickly attracted the attention of fire fighters nationwide, who were among the first to put smoke detectors in their homes. Through an intense development program, the company began to produce a series of more advanced, less expensive detectors in battery-powered and AC-powered models. BRK also entered the new construction and mobile home smoke detector markets.

In 1970 Pittway Corporation purchased BRK Electronics from the original owners. As a division of Pittway (itself incorporated in 1925 as Standard Power & Light Corp.), BRK Electronics flourished. During the early 1970s, through ongoing research and development, the company produced a series of high-quality, affordable, battery- and AC-powered and system smoke alarms. BRK Electronics used these successes to enter the new construction and mobile home markets and increase its share of the commercial system smoke alarm market.

Sears, Roebuck and Co. began selling BRK smoke detectors in 1974 under the Sears brand. Sales were so successful that other companies, including General Electric, Norelco, Water Pik, Gillette, and Honeywell, soon followed. In 1976 BRK introduced the First Alert brand battery-operated residential smoke alarms and entered the home safety market. Consumers responded enthusiastically and sales of smoke detectors soared. By 1980 First Alert brand products had become the most recognized name in smoke detection. First Alert, together with BRK brand alarms, sold primarily to electrical contractors, combined to make BRK Electronics the leading manufacturer of residential alarms; in 1990 First Alert sold its 100 millionth smoke detector.

BRK Electronics did not rest on its laurels. Through the years, BRK and First Alert continued to reinvest in research and development. The result was a series of technological breakthroughs (such as the dual-chamber ionization unit and Light Test Direct battery plug contacts) as the division built a comprehensive line of home safety and security products, including rechargeable lanterns in 1982, rechargeable flashlights in 1985, disposable fire extinguishers in 1986, a line of home security lighting products in 1992, and a carbon monoxide alarm in 1993. Other developments that have led to improved fire safety products over the years included a combination photoelectronic/ionization smoke detector; an AC smoke detector with battery backup; a smoke detector with an Escape Light that provided emergency lighting when the alarm sounded; a kitchen smoke detector with a silencer button; the Exclusive Light Test smoke detector, which could be tested with a flashlight beam; an AC-powered smoke detector for the hearing impaired, featuring a 177 candela strobe in conjunction with an 85 decibel alarm; a fire escape ladder; fire security safes and portable fire safes; the breakthrough technology ten-year smoke detector, which operated for ten years without a battery change; and the revolutionary new SureGrip trigger fire extinguisher design.

As First Alert helped the industry grow, the company also led a marketing charge to raise fire safety awareness and promote the First Alert brand. Key to this effort were aggressive consumer fire safety education campaigns in which First Alert worked with other organizations, including McDonald's, the United States Fire Administration, the national SAFE KIDS campaign, and local fire departments to promote fire safety awareness and smoke detector use.

In 1992 a major change in company ownership occurred when the net assets of the BRK Electronics division of Pittway were purchased by a newly formed corporation, now known as BRK Brands, Inc., a wholly owned subsidiary of First Alert, Inc.

Carbon Monoxide Detectors, 1993

The company's broad range of products, brand name strength, and its longevity in the smoke detector market allowed it to easily enter the carbon monoxide (CO) detector manufacturing business in September 1993, when it introduced the first battery-operated CO detector. The detector featured a unique SensorPack Module using biomimetic technology to imitate the body's response to CO. Sales soared, but some critics of the company bashed First Alert for creating the market for CO detectors with "scare tactics," citing the company's "colorless, odorless 'silent killer' [which] threatens your family while you sleep" advertising campaign. However, following several highly publicized incidents involving accidental carbon monoxide poisonings (including tennis star Vitas Gerulaitus) and the enactment of an ordinance in Chicago effective October 1, 1994 requiring homes to have a CO detector installed, sales went up again.

In 1994 the CO detectors accounted for 35 percent of the company's total sales, which jumped 250 percent to $248 million. Also in 1994, First Alert, Inc., the holding company of BRK Brands, Inc., became a public company when shares of its common stock were sold to the public and began trading on the NASDAQ in March. Much of the money earned in the IPO, which offered 6.6 million shares of common stock for $19 per share, was used to pay off indebtedness. Following its spinoff from Pittway in 1992, BRK Brands, Inc. introduced several new products in addition to the carbon monoxide alarm, including a fire escape ladder, a line of fire security safes, and child safety and independent living products. First Alert declared a 2-for-1 split of common stock in November 1994.

In June 1995, James Amtmann, a 25-year veteran of Stanley Works Inc. in New Britain, Connecticut, joined the company as president and chief operating officer, a position that had remained open for the previous two years.

Two months later, market leader First Alert continued to grow with the introduction of two new CO detectors. A new self-powered carbon monoxide detector with a reformulated biomimetic sensor and a new plug-in detector utilizing tin dioxide semiconductor technology were introduced to offer consumers a choice in protection. The company also began lobbying for a home safety aisle in stores to help promote the protection of homes and families. That year, total revenue dropped less than one percent to $246.3 million, with net income dropping 35.1 percent to $11.4 million, while competitor Nova Systems Ltd. dropped out of the CO detector market.

Although First Alert manufactured more than half of the 5.2 million total carbon monoxide units shipped in 1995 in the industry, sales became sluggish even for the market leader, due in part to the seasonal nature of CO detector sales. Amidst financial problems, Amtmann resigned "to pursue other interests" in March 1996, being replaced briefly by Chairman and CEO Malcolm Candlish during the new executive search, and then, in September 1996, by Joseph Messner as president and CEO. In addition, a major shareholder, The Thomas H. Lee Co., was looking to divest itself of its holdings. By April, the company still faced approximately 30 competitors in the CO detector market--such as AIM Safety of Austin, Texas&mdash compared to just about six in the larger smoke-alarm marketplace. Vice-President and CFO Gary Lederer also resigned in July 1996 to jump over to First Alert's previous parent company, Pittway. He was succeeded by Michael Rohl, formerly First Alert's controller.

In August 1996 First Alert introduced yet another new plug-in CO detector, which featured a digital readout display to visually indicate levels of CO sensed by the detector. The growth potential of the new category of life-saving detectors was tremendous, and increased public awareness of this silent killer continued to fuel sales for a market that was still in its infancy. Also that month, the company launched a line of products targeting home safety for infants and small children. The 16-SKU product line included such items as an appliance lock, a balcony guard, bed rails, cabinet latches, a cord windup, electrical outlet covers, an expandable child bath seat, night lights, a nursery monitor, a roller shade, safety gates, a toilet lock, and a VCR lock, all of which began retailing between $1.99 and $49.99, competing in an $80 million annual market. Before releasing the products, the company surveyed mothers and worked in conjunction with C. Everett Koop's National Safe Kids Campaign. The three different kinds of fire security safes for home and office use featured rounded corners for added safety, adjustable shelves and drawers, easy-to-read combination locks, a single-hinge door, and double security combination key and lock, and were UL listed.

In April 1998 the company was acquired by Sunbeam Corporation, who purchased First Alert's stock for $5.25 per share. The durable consumer goods giant picked up First Alert in a $2.5 billion acquisition that included Coleman Co. (the Wichita, Kansas-based manufacturer of outdoor recreation and hardware products) and Signature Brands USA Inc. (a Glenwillow, Ohio-based manufacturer of housewares, including the "Mr. Coffee" line). Coleman, however, unloaded its Coleman Safety & Security Prods. Inc. to U.K.-based Siebe PLC for $105 million, leaving a competitor to First Alert outside the fold.

That October, First Alert became one of the first CO alarm manufacturers to comply with Underwriters Laboratories' new testing standards for AC-powered, plug-in residential CO alarm standards, which are effective for products manufactured after October 1, 1998. The company's digital CO alarm also received UL approval.

At the end of the 20th century, the manufacturer continued to be a leader in many markets, distributing its products in more than 30 countries. First Alert was the leading brand of smoke alarms and carbon monoxide alarms in the United States, and the company's products continued to have strong consumer recognition as a result of three solid brand names: First Alert, Family Gard, and BRK Electronics. The company continued to improve and broaden its entire home safety product line, developing innovative products that would continue to keep homes safe and sound into the 21st century.

Principal Subsidiaries: BRK Brands, Inc.; BRK Brands Europe Ltd.; Electronica BRK de Mexico S.A. de C.V.; BRK Brands Pty. Ltd.; BRK Brands Canada.