SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995
Commission file number 1-9802
SYMBOL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2308681
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 Wilbur Place, Bohemia, N.Y. 11716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 516-563-2400
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the period
covered by this report.
Class Outstanding at March 31, 1995
Common Stock, 25,733,000 shares
par value $0.01 <PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
PAGE
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
Condensed Consolidated Balance Sheets at
March 31, 1995 and December 31, 1994 2
Condensed Consolidated Statements of Earnings
Three Months Ended March 31, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 4
Notes to Condensed Consolidated Financial
Statements 5
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 8
PART II. OTHER INFORMATION 9
SIGNATURES 10
<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except stock par value)
March 31, December 31,
ASSETS 1995 1994 (1)
(Unaudited)
CURRENT ASSETS:
Cash and temporary investments $ 34,330 $ 31,389
Accounts receivable, less allowance for doubtful
accounts of $6,846 and $7,269, respectively 107,654 96,827
Inventories, net 97,852 101,038
Deferred income taxes 24,644 23,300
Prepaid expenses and other current assets 14,399 13,568
TOTAL CURRENT ASSETS 278,879 266,122
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation and amortization of $55,189 and
$58,214, respectively 71,133 71,705
INTANGIBLE AND OTHER ASSETS, net of accumulated
amortization of $41,840 and $46,369,
respectively 136,787 136,386
$486,799 $474,213
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 57,255 $ 60,792
Current portion of long-term debt 5,285 5,285
Income taxes payable 9,091 1,382
Deferred revenues 7,171 6,840
TOTAL CURRENT LIABILITIES 78,802 74,299
LONG-TERM DEBT, less current maturities 57,094 59,884
OTHER LIABILITIES AND DEFERRED REVENUES 24,044 23,863
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1.00; authorized
10,000 shares, none issued or outstanding - -
Common stock, par value $0.01; authorized
40,000 shares; issued 26,771 shares and
26,719 shares, respectively 267 267
Retained earnings 120,341 109,589
Other stockholders' equity 206,251 206,311
326,859 316,167
$486,799 $474,213
See notes to condensed consolidated financial statements
(1) The consolidated balance sheet as of December 31, 1994 has been taken
from the audited financial statements at that date and condensed.
- -2-<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(All amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
1995 1994
NET REVENUE $131,258 $103,668
COST OF REVENUE 66,740 52,072
AMORTIZATION OF SOFTWARE DEVELOPMENT COSTS 2,233 2,131
GROSS PROFIT 62,285 49,465
OPERATING EXPENSES:
Engineering 10,272 8,766
Selling, general and administrative 32,707 27,577
Amortization of excess of cost over
fair value of net assets acquired 691 709
43,670 37,052
EARNINGS FROM OPERATIONS 18,615 12,413
INTEREST EXPENSE, net ( 755) (1,320)
EARNINGS BEFORE PROVISION FOR
INCOME TAXES 17,860 11,093
PROVISION FOR INCOME TAXES 7,108 4,437
NET EARNINGS $ 10,752 $ 6,656
EARNINGS PER SHARE:
Primary $0.40 $0.26
Fully-diluted $0.40 $0.26
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Primary 26,804 25,259
Fully-diluted 26,909 25,315
See notes to condensed consolidated financial statements
- -3-<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)
Three Months Ended March 31,
1995 1994
Cash flows from operating activities:
Net earnings $10,752 $ 6,656
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation and amortization of property,
plant and equipment 3,895 3,343
Other amortization 3,515 3,077
Provision for losses on accounts receivable 337 677
Changes in assets and liabilities:
Accounts receivable (10,796) (10,305)
Inventories 3,099 (3,594)
Prepaid expenses and other current assets (2,175) 484
Intangible and other assets (3,904) (2,795)
Accounts payable and accrued expenses 3,690 (5,450)
Accrued restructuring costs (157) (5,284)
Other liabilities and deferred revenues 514 2,005
Net cash provided by/used in operating
activities 8,770 (11,186)
Cash flows from investing activities:
Expenditures for property, plant and
equipment (3,377) (2,053)
Other investing activities, net 6 179
Net cash used in investing activities (3,371) (1,874)
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 2,580
Net proceeds of repayment and issuance of
notes payable (2,790) 6,884
Exercise of stock options and warrants 986 1,155
Purchase of treasury shares (995) -
Net cash used in/provided by financing
activities (2,799) 10,619
Effects of exchange rate changes on cash 341 151
Net increase (decrease) in cash and
temporary investments 2,941 (2,290)
Cash and temporary investments, beginning
of period 31,389 7,499
Cash and temporary investments, end of
period $34,330 $ 5,209
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 1,151 $ 983
Income taxes $ 1,918 $ 979
See notes to condensed consolidated financial statements
-4-<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands, except per share data)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all necessary adjustments
(consisting of normal recurring accruals) and present fairly the
Company's financial position as of March 31, 1995, and the results of
its operations and its cash flows for the three months ended March 31,
1995 and 1994, in conformity with generally accepted accounting
principles for interim financial information applied on a consistent
basis. The results of operations for the three months ended March 31,
1995, are not necessarily indicative of the results to be expected for
the full year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1994.
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform with the current year
presentation.
2. Primary and fully-diluted earnings per share are based on the weighted
average number of shares of common stock and common stock equivalents
(options and warrants) outstanding during the period, computed in
accordance with the treasury stock method.
3. Classification of inventories is:
March 31, 1995 December 31, 1994
(Unaudited)
Raw materials $44,399 $ 46,442
Work-in-process 7,775 8,485
Finished goods 45,678 46,111
$97,852 $101,038
4. When property, plant and equipment is retired or has been fully
depreciated and is no longer utilized, its cost and the related
accumulated depreciation are written off. Capitalized software
development costs fully amortized for two years or more are also
written off.
5. The Company is currently involved in matters of litigation arising
from the normal course of business. Management is of the opinion that
such litigation will have no material adverse effect on the Company's
consolidated financial position or results of operations.
In March 1993, the Company and certain of its officers received a
purported first Consolidated Amended Class Action Complaint in the
action entitled In re. Symbol Technologies Class Action Litigation
("First Complaint") in the Eastern District of New York which
essentially asserted the same alleged violations of Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder as had been contained in six separate purported class
action suits previously filed, and alleged a class period of March 17,
1992, through September 14, 1992. Defendants moved to dismiss the
First Complaint for failure to state a cause of action and for failure
to allege fraud with particularity. On September 14, 1993, the Court
granted defendants' motion and dismissed the First Complaint.
However, the Court granted plaintiffs leave to file a new complaint
within 30 days. On October 14, 1993, a Second Consolidated Amended
Class Action Complaint ("Second Complaint") was served. It alleges
essentially similar violations as had the prior complaints but alleges
a class period from June 8, 1992, to September 14, 1992. Defendants
moved to dismiss the Second Complaint and such motion is currently
pending before the Court. The Company believes that the litigation is
without merit and intends to defend it vigorously.
- -5-<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net revenue of $131,258,000 for the three months ended March 31,
1995 increased 26.6 percent over the comparable prior year period
primarily due to increased worldwide sales of terminal products
introduced over the last two years. Foreign exchange rate
fluctuations favorably impacted net revenue by 2.4 percent.
Geographically, North America revenue increased 21.2 percent and
International revenue increased 37.6 percent, respectively, over the
prior year. North America and International revenue continue to
represent approximately two-thirds and one-third of net revenue,
respectively.
Cost of revenue (as a percentage of revenue) of 50.8 percent for
the three months ended March 31, 1995 increased from 50.2 percent for
the three months ended March 31, 1994. This increase resulted
primarily from a change in the mix of the Company's products sold to a
higher percentage of lower margin terminal products. The increase was
offset, in part, by the impact on net revenue of favorable
fluctuations in foreign exchange rates discussed above.
Amortization of software development costs of $2,233,000 for the
three months ended March 31, 1995 remained relatively constant
compared with the three months ended March 31, 1994.
Engineering costs for the three months ended March 31, 1995
increased to $10,272,000 from $8,766,000 for the three months ended
March 31, 1994. While in absolute dollars engineering expenses
increased 17.2 percent from the prior year period, as a percentage of
revenue such expenses were reduced to 7.8 percent for the three months
ended March 31, 1995 from 8.5 percent for the prior year period due to
the 26.6 percent increase in revenue. The increase in absolute
dollars reflects expenses incurred in connection with the continuing
research and development of new products and the improvement of
existing products.
Selling, general and administrative expenses of $32,707,000 for
the three months ended March 31, 1995 increased from $27,577,000 for
the three months ended March 31, 1994. While in absolute dollars,
selling, general and administrative expenses increased 18.6 percent
from the prior year period, as a percentage of revenue such expenses
were reduced to 24.9 percent for the three months ended March 31,
1995, from 26.6 percent in 1994. The increase in absolute dollars
reflects expenses incurred to support a higher revenue base and due to
higher International expenses due to a weakened U.S. dollar.
Net interest expense decreased to $755,000 for the three months
ended March 31, 1995 from $1,320,000 for the three months ended March
31, 1994 due to increased interest income as a result of the increase
in cash and temporary investments and a reduction in interest expense
due to annual repayments of outstanding debt.
The Company's effective tax rate of 39.8 percent for the three
months ended March 31, 1995 decreased from 40.0 percent for the three
months ended March 31, 1994 due to the effect of changes in permanent
differences between the financial accounting and tax bases of assets
and liabilities.
- -6-<PAGE>
Liquidity and Capital Resources
The Company utilizes a number of measures of liquidity including
the following:
March 31, December 31,
1995 1994
Working Capital (in thousands) $200,077 $191,823
Current Ratio (Current Assets
to Current Liabilities) 3.5:1 3.6:1
Long-Term Debt to Capital 14.9% 15.9%
(Long-term debt to long-term
debt plus equity)
Current assets increased by $12,757,000 from December 31, 1994
principally due to an increase in accounts receivable to support higher
operating levels, inventory reduction and cash due to the increase in
net revenue.
Current liabilities increased $4,503,000 from December 31, 1994
primarily due to an increase in income taxes payable from the increase
in results of profitable operations, offset, in part, by a decrease in
accounts payable and accrued expenses.
The aforementioned activity resulted in a working capital increase
of $8,254,000 for the three months ended March 31, 1995. The Company's
current ratio at March 31, 1995 decreased to 3.5:1 from 3.6:1 at
December 31, 1994 primarily from the increase in income taxes payable
described above.
Property, plant and equipment expenditures for the three months
ended March 31, 1995 totalled $3,377,000 compared to $2,053,000 for the
three months ended March 31, 1994. Such expenditures were financed by
existing cash and temporary investments. The Company has entered into
an agreement to purchase from Northrup Grumman Corporation a 48-acre
site in Holtsville, New York, including a 174,000 square foot office
building for $4,200,000 in cash and assume $7,200,000 in debt on a loan
made to Grumman by the New York State Industrial Development Authority
and the Town of Brookhaven. Following the building's estimated
$6,000,000 renovation, completion of which is expected in April, 1996,
the facility will become the Company's headquarters and will house the
Company's administrative, engineering, sales and marketing functions.
Long-term development plans allow for future construction of the
Company's manufacturing and distribution facilities on the site. The
transaction is contingent upon, among other matters, satisfactory
completion of environmental, engineering, title and zoning studies. It
is expected that the transaction will be completed by June 30, 1995.
The purchase of this site supplants the Company's previously announced
plan to acquire a forty-acre parcel of land in Islip, New York, upon
which a headquarters facility was to be constructed. The Company does
not have any other material commitments for capital expenditures.
The Company's long-term debt to capital ratio decreased to 14.9% at
March 31, 1995 from 15.9% at December 31, 1994 primarily due to
increased equity from results of operations and payment of the first
annual installment of the Company's 7.76% Series A Senior Notes.
The Company has loan agreements with three banks pursuant to which
the banks have agreed to provide lines of credit totalling $30,000,000.
As of March 31, 1995, the Company had no outstanding borrowings under
these lines. These agreements expire between June 30, 1995 and December
31, 1995.
- -7-<PAGE>
The Company generated positive cash flow for the three months ended
March 31, 1995 primarily due to cash provided by operating activities,
offset, in part, by expenditures for property, plant and equipment and
the repayment of notes payable.
The Company believes that it has adequate liquidity to meet its
current and anticipated needs from working capital, results of its
operations, and existing credit facilities.
- -8-<PAGE>
Part II - Other Information
- -None-
-9-<PAGE>
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.
SYMBOL TECHNOLOGIES, INC.
Dated: May 5, 1995 By: /s/ Jerome Swartz
Jerome Swartz, Chairman and
Chief Executive Officer
Dated: May 5, 1995 By: /s/ Thomas G. Amato
Thomas G. Amato
Senior Vice President -
Chief Financial Officer
- -10-
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 34,330,000
<SECURITIES> 0
<RECEIVABLES> 114,500,000
<ALLOWANCES> (6,846,000)
<INVENTORY> 97,852,000
<CURRENT-ASSETS> 278,879,000
<PP&E> 126,322,000
<DEPRECIATION> (55,189,000)
<TOTAL-ASSETS> 486,799,000
<CURRENT-LIABILITIES> 78,802,000
<BONDS> 57,094,000
<COMMON> 267,000
0
0
<OTHER-SE> 326,592,000
<TOTAL-LIABILITY-AND-EQUITY> 486,799,000
<SALES> 131,258,000
<TOTAL-REVENUES> 131,258,000
<CGS> 66,740,000
<TOTAL-COSTS> 68,973,000
<OTHER-EXPENSES> 43,670,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (755,000)
<INCOME-PRETAX> 17,860,000
<INCOME-TAX> 7,108,000
<INCOME-CONTINUING> 10,752,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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