February 28, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Attention: Filing Desk
Gentlemen:
Re: Symbol Technologies, Inc.
Annual Report on Form 10-K
For Fiscal Year Ended
December 31, 1996
File No. 1-9802
On behalf of Symbol Technologies, Inc. (the "Company"), I
transmit for filing under the Securities Exchange Act of 1934 (the
"Act"), the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996. I have been advised by the Company
that the financial statements contained in the report do not
reflect any changes from the preceding year's financial statements
with respect to accounting principles or practices or in the method
of applying such principles or practices.
If you have any questions regarding the enclosed materials,
please call the undersigned by collect telephone at (516) 738-4765.
Very truly yours,
s/Leonard H. Goldner
Leonard H. Goldner
Senior Vice President
and General Counsel
LHG:mk<PAGE>
February 28, 1997
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
In connection with the undersigned's Annual Report on Form 10-
K for the year ended December 31, 1996 and pursuant to Item
601(b)(4)(iii) of Regulation S-K, the undersigned has not filed as
exhibit 10.14 an Industrial Revenue Bond financing agreement in
respect to its executive offices since the total amount of
securities authorized thereunder does not exceed 10% of the
Registrant's total consolidated assets. The Registrant, however,
agrees to furnish a copy of such documents to the Commission, if so
requested.
By: s/Thomas G. Amato
Senior Vice President - Finance
and Chief Financial Officer
TGA:mk<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 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 Identification No.)
incorporation or organization)
One Symbol Plaza
Holtsville, NY 11742-1300
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (516) 738-2400
Securities registered pursuant to
Section 12(b) of the Act:
Common Stock, par value $.01 New York Stock Exchange
(Title of each class) (Name of each Exchange on
which registered)
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
The aggregate market value of the voting stock held by persons other
than officers and directors (and their associates) of the registrant, as of
February 1, 1997 was approximately $1,168,202,600.
The number of shares outstanding of each of the registrant's classes
of common stock, as of December 31, 1996, was as follows:
Class Number of Shares
Common Stock, par value $.01 26,102,995
Documents Incorporated by Reference: The registrant's Proxy Statement to
be used in conjunction with the Annual Meeting of Shareholders to be held
on May 5, 1997 (the "Proxy Statement") is incorporated into Part III.
1<PAGE>
PART I
Item 1. Business
The Company
Symbol Technologies, Inc. ("Symbol" and, together with its
subsidiaries, the "Company"), a Delaware corporation, is the
successor by merger in 1987 to Symbol Technologies, Inc., a New
York corporation which was organized in 1973 and is the largest
manufacturer of bar code-driven data transaction systems. The
Company is the only corporation in its industry with in-house
technology for the design and manufacture of bar code scanning
products, hand-held computers and radio frequency (RF) data
communications systems. The Company is engaged in one industry
segment - the design, manufacture and marketing of bar code
reading equipment, hand-held computers and radio frequency data
communications systems which are used as strategic building
blocks in data transaction systems in retail, transportation and
logistics, parcel delivery and postal service, warehousing and
distribution, factory automation, health care and many other
applications.
Company Products and Services
General
The Company develops, manufactures, sells and services (i)
one-dimensional and two-dimensional bar code scanning products
that principally employ laser technology to read data encoded in
bar code symbols, (ii) data transaction systems incorporating
application specific hand-held computers, and (iii) wireless
local area network (WLAN) adapter cards and RF systems to
transmit data. The Company distributes the most complete line of
bar code reading equipment in the world. The Company's bar code
scanning equipment is compatible with a wide variety of data
collection systems, including computers, electronic cash
registers and portable data collection devices. Bar code
scanners are used to enhance accurate data entry and productivity
in retail, transportation and logistics, parcel delivery and
postal service, warehousing and distribution, factory automation
and many other applications.
The Company's data transaction systems consist of hand-
held computers, peripheral devices, software and programming
tools, and are designed to provide solutions to specific customer
needs in data transactions. They are used to collect data at
remote locations and to transmit information between these
locations and the user's central data processing facility. Data
can be entered by a touch screen or a device which reads bar
codes or may be keyed into memory on a numeric or alpha-numeric
keyboard. Data can be transmitted and received through direct
connection, regular telephone lines with acoustic couplers and
modems or by radio waves. A majority of the Company's hand-held
computers include an integrated bar code reader.
2<PAGE>
Bar Code Scanning Products
Sales of the Company's bar code scanning products have
accounted for approximately 40 percent of the Company's total
revenues for the years ended December 31, 1996, 1995 and 1994.
The Company's bar code scanning products consist of
devices designed to scan and decode bar code symbols and transmit
data. The Company sells various models of its bar code reading
systems, each of which consists of a laser scanner and interface
controller. In some models, the interface controller is
integrated into the handle of the scanner. The laser scanner
reads the symbol and transmits a digitized signal to the
interface controller. The interface controller contains a
microprocessor which decodes the information received and
interfaces with the user's computer.
The Company sells several different hand-held laser
scanners, the most important of which is the LS 4000 which was
introduced in 1996. The LS 4000 is a trigger-operated, visible
laser diode-based scanner featuring high-performance scanning and
an advanced ergonomic form factor making it ideal for price
scanning and inventory management in a wide variety of retail and
commercial segments.
The LS 2000 is a prior generation, trigger-operated,
visible laser diode-based scanner with the capability to handle
contact as well as non-contact scanning applications out to the
limit of visibility of the scanning beam. Introduced in 1989,
the LS 2000 is primarily sold to point-of-sale customers and for
use in conjunction with portable data collection devices. The
Company is in the process of replacing the LS 2000 with the LS
4000.
The LS 3000 Series introduced in 1993, consists of
trigger-operated, visible laser diode-based scanners used to read
all common linear bar code symbologies and densities up to a
distance of 20 feet. The LS 3000 is particularly well-suited for
industrial and military applications because of its rugged
housing. These devices consume less than one watt of power
during scanning. Specialty versions of the LS 3000 include long
range scanners capable of reading bar codes of virtually all
sizes at distances ranging from near contact to more than 35 feet
(LS 3000 ER) and low contrast reading capability scanners (LS
3000 HV) both using "spot and scan" two position triggers for
ease of aiming and visibility.
Introduced by the Company in 1995, the LS 3600 Series of
laser bar code scanners incorporate fuzzy logic technology and
beam management optical technology. Fuzzy logic allows these
scanners to accurately digitize and decode poor quality or
damaged bar codes. Beam management optical technology allows
operators to scan bar codes at varying distances.
3<PAGE>
The LS 1000 Series, introduced in 1996, is the Company's
smallest and lightest trigger operated, hand-held laser scanner.
The LS 1000 is a limited performance scanner ideal for light use
scanning environments where low cost is a critical factor.
In 1995, the Company introduced the LT 1800 LaserTouch
visible laser diode-based bar code scanner that combines the
performance and accuracy of laser-based bar code technology with
scanning for applications where near contact scanning and touch
ergonomics are sufficient.
In 1993, the Company introduced the first cableless hand-
held scanner, the LS 3070. The LS 3070 transmits data via narrow
band RF with a range of up to 50 feet from its base station. The
scanner is particularly useful in environments where tethered
scanning is inadequate.
In the first quarter of 1997, the Company introduced a
less expensive cableless, hand-held scanner, the LS 4071. The LS
4071 is a cordless version of the LS 4000 which utilizes a
Company designed RF communication protocol to provide the user
with a maximum working range of up to ten feet from its base
station. This allows for scanning of heavy or bulky items, which
cannot be easily moved for scanning. Designed to provide greater
productivity, flexibility and convenience, the LS 4071 is
intended for use in retail and light industrial applications.
In 1995, the Company introduced the LS 4800, a hand-held
laser scanner designed to read both PDF 417, a high-density,
high-capacity portable data file storing approximately one
kilobyte of data in a machine-readable code and all conventional
linear bar codes. PDF 417 is a two-dimensional bar code
symbology which incorporates error correction capability and has
one hundred times the information capacity of a traditional
linear bar code. Unlike linear bar codes, PDF 417 can contain an
entire data record reducing or eliminating the need for an
external system of linked data storage. PDF 417 may be read by
either a laser-based bar code reader or a one- or two-dimensional
charge coupled device (CCD) bar code reader. Most other two-
dimensional bar codes can only be read by a CCD bar code reader.
The LS 4800 integrates a miniature resonant 2D scan engine that
rasters, reading PDF 417 symbols horizontally and vertically at
560 scans per second. Due to its rapid scan rate and advanced
optics, the LS 4800 is adept at reading poor quality symbols.
The LS 4900, introduced in 1996 is a battery-powered version of
the LS 4800.
Introduced in 1994, the PDF 120 is a one piece touch-only
CCD based bar code reader with an integrated decoder. The PDF
120 is capable of reading PDF 417 as well as most one-dimensional
bar codes. Suitable for applications that require scanning
symbols of up to 1,000 characters, the PDF 120 connects to a
range of PCs and terminals via an RS-232 serial interface port.
4<PAGE>
The PDF 620, introduced in 1995, is a fixed-station card
reading device designed for accurate reading of PDF 417 and
standard bar codes for a variety of identification card
applications. Using CCD technology, the PDF 620 accepts ISO
standard sized cards and has a typical first-time read rate of
100%.
In addition to its hand-held scanners, the Company also
offers several families of "hands-free" scanners. Unlike the
Company's hand-held scanners, these scanners are usually
triggered by an object sensor to enable use in situations where
use of both hands is required.
The LS 5700 and the LS 5800 miniaturized slot scanners
were introduced by the Company in 1996. The LS 5700 was designed
to accommodate all vertical or "on counter" applications and
incorporates a full sleep mode function which allows the motor
and laser to turn off after an extended period of scanner
inactivity extending scanner longevity and reducing power
consumption. The LS 5800 operates in horizontal or "in counter"
applications and features rugged housing and a sealed exit window
that resists spills and dirt.
Introduced in 1996 and available in the first quarter of
1997, the MP 8000 is the Company's first multiplane, high-
throughput scanner, primarily designed for point-of-sale
applications in the food retail market. Versions of the MP 8000
also incorporate a scale for simultaneous weighing and scanning
of items. The MP 8000 produces a 56 line scan pattern from two
directions creating a 360o read zone that blankets the bar-coded
item in scan lines, allowing users to scan items significantly
faster with less fatigue.
In 1994, the Company introduced the LS 9100, a laser-diode
based projection scanner. The LS 9100 generates a large omni-
directional pattern of twenty interlocking laser lines that can
read bar codes at various angles for high productivity scanning.
In 1996, the Company introduced the PCK 9100, a compact
price checker system that allows shoppers to pass bar-coded items
by its scan window and view the latest product information on its
high-visibility LCD display. The PCK 9100 incorporates an LS
9100 omni-directional scanner which assures accuracy over a wide
range of scanning angles, making it easy for customers to obtain
price information.
Since 1988, the Company has been selling a series of scan
engines consisting of solid state laser diode-based laser
scanners. These compact, non-contact scanners can be integrated
internally with the user's own equipment or used independently as
fixed-mount scanners on conveyor lines or robotic arms.
The LS 1220, introduced in 1994, incorporates a Mylar scan
element for scanning conventional linear bar codes. The latest
5 <PAGE>
version, the LS 6800 Series, was introduced in 1996 and
incorporates a high speed raster scan engine that operates at 560
scans per second making it ideal for rapid reading of one-
dimensional and two-dimensional symbols.
In 1990, the Company began marketing bar code laser
scanner modules or scan engines which are integrated by
unaffiliated third parties into their portable computing devices.
In 1992, the Company introduced the SE 1000 Series scan engine.
The SE 1000 is a small, lightweight, high performing scan engine
designed for integration into portable and battery-powered
devices. Versions of the SE 1000 are available with an
integrated decoder and RS 232 interface.
The SE 1100 Series scan engine, introduced in 1994, offers
improved performance over the SE 1000 in a slightly larger size.
In 1996, the Company introduced the low-cost, high-
performance SE 1200 Series scan engine. The SE 1200, which
measures less than one cubic inch and weighs less than one ounce,
enables third-party manufacturers to integrate high-performance
laser scanning into a variety of devices including hand-held
computers, medical instruments, diagnostic equipment, lottery
terminals, vending machines and robotics. The SE 1200 has a
working range and ability to read poor quality bar codes equal to
that of hand-held scanners. In the first quarter of 1997, the
Company introduced a high density version of the SE 1200 capable
of reading miniaturized bar codes. The Company anticipates that
the SE 1200 will replace the SE 1000 and the SE 1100 in 1997.
The SE 2000 Series scan engine, introduced by the Company
in 1995, is a high-performance laser scan engine capable of
reading both one-dimensional and two-dimensional bar codes.
The SE 9100 Series scan engine, introduced in 1995, is a
high speed, omni-directional scan engine providing dense scan
line coverage from the face of the scanner up to a distance of
eight inches allowing quick "swipe" scanning as well as standard
presentation scanning.
In 1995, the Company introduced the WSS 1000, an
innovative hand-mounted bar code-based data transaction system
that allows mobile hands-free bar code scanning, data collection
and RF data communications. The WSS 1000 is a wearable computer
system for users who rely on the efficiency and accuracy of bar
code scanning but require the use of both hands to perform job
functions. The system, which consists of two components,
combines the RS1, a miniature scanner worn as a ring that allows
the user to simply touch a thumb and index finger contact switch
to scan a bar code and a compact, light weight, wrist mounted 16-
bit computer with display which permits wireless communication to
the host computer.
The Company also produces a series of low cost, interface
controllers. These devices permit the Company's scanner products
6<PAGE>
to easily interface with a wide range of standardized terminals,
personal computers, point-of-sale terminals, portable terminals
and dedicated computing hardware.
Product list prices for the Company's bar code scanning
equipment range between $645 to $4,995 depending on product
configuration. The Company offers discounts off list price for
quantity orders and sales are frequently made at prices below
list price.
Portable Data Collection Systems
The Company's portable data collection systems consist of
hand-held computers, peripheral devices, software and programming
tools. These systems collect data at remote locations and
transmit information between these locations and the user's
central data processing facility and are designed to provide data
collection solutions for a variety of applications. A majority
of the Company's hand-held computers also include an integrated
bar code reader. These systems accounted for approximately 50
percent of the Company's total revenues for the years ended
December 31, 1996, 1995 and 1994.
Portable Data Transaction Devices
The Company's portable data transaction devices are
microprocessor-based, lightweight and battery-operated hand-held
computers. Data may be captured by a device which reads bar
codes or may be keyed into memory via an integrated keyboard or a
touch screen. The data collected by the hand-held computer can
then be transmitted to a host computer by direct connection
through regular telephone lines with acoustic couplers and modems
(batch file transfer mode). Data may also be transmitted
instantly as it is collected by radio waves (real-time
transaction processing). Information from the Company's hand-
held computers may be communicated to a stand-alone receiver or
computer which formats the data for input into a host computer,
directly into a host computer by communications controllers
supplied by the Company or directly onto industry-standard
Ethernet local area networks (LANs) via Company manufactured
access points. Depending on the model, the Company's hand-held
computers may have up to 16 megabytes of Random Access Memory
(RAM) for data storage and multiple input and output capabilities
for the connection of printers, bar code readers and
communications devices. In addition, based upon customer
specifications, the hand-held computers may also have built-in
bar code readers and various built-in communications devices for
transmission and receipt of data.
The Company offers two spread spectrum-based, WLAN
products. In 1990, the Company introduced its Spectrum One
cellular radio frequency network for wireless data transactions.
Installation of the network at various customer sites began in
1991 and the network is now installed in over 13,000 sites in 12
countries. Spectrum 24, introduced in 1995, is a high-
7<PAGE>
performance, spread spectrum, frequency hopping network which
operates on a 2.4 Ghz frequency range and is designed for
worldwide operation. Based on spread spectrum RF technology,
Spectrum One and Spectrum 24 networks provide real-time wireless
data communications with a host computer for hundreds of portable
and fixed-station computers and radio-integrated scanners.
Unlike traditional narrow band RF-based networks, spread spectrum
installation requires no individual site license from the FCC.
The Spectrum One and Spectrum 24 systems work in tandem with a
broad range of the Company's RF capable hand-held computers.
Design engineering and support for both the Company and
third-party RF-based data communications systems is conducted in
the Company's San Jose, California facility. The focus of the
group is the design of wireless bar code data transaction systems
based on the Company's Spectrum One and Spectrum 24 WLANs and
support for the integration of those high-performance networks
into customers' data networks and enterprise-wide information
systems.
The LRT 3800, introduced in 1990, incorporates in a
single, hand-held unit, high-performance laser bar code scanning,
a 16-bit DOS-based computer and a radio modem for communication
via the Company's Spectrum WLANs. Based on visible laser diode
scanning technology, the battery-operated LRT 3800 is compact and
ergonomically designed and provides up to 1.2 megabytes of memory
capacity.
The LDT 3805, also introduced in 1990, is identical to the
LRT 3800 in physical appearance. Its scanning and computing
functions are similar but it has no RF communication capability.
It is optimized for collecting and storing data, later to be
downloaded to a host computer.
Both the LRT and LDT have the capability for data entry
via bar code scanning or by using the full-function keypad. The
pair are ideal for scan-intensive applications such as receiving,
shipping, inventory control, order and shelf-price verification
as well as other applications in both retail and warehousing.
Datawand hand-held computers were first introduced by the
Company in 1985. The Company's principal Datawand product, the
Datawand IIB, is a self-contained optical wand bar code reader
hand-held computer which is only 7-1/4 inches long and one inch
in diameter and weighs slightly more than two ounces. In 1989,
the Company introduced a new optical wand bar code reader, the
Datawand III, which contains 32 kilobytes of memory and a 16
character single line display.
In 1993, the Company announced the co-development with
Albert Heijn of The Netherlands, Europe's largest grocery market
chain, and TNO Product Centre, a leading Dutch engineering design
firm, of a shoppers portable self checkout system. The system,
which is integrated with the retailer's point of sale system,
utilizes the Company's LST 3803, a hand-held computer with an
integrated laser scanner which allows shoppers to scan and
8 <PAGE>
tabulate their purchases as they shop. In 1996, the Company
introduced an RF capable version of the portable self checkout
system.
In 1996, installation of Symbol's portable self checkout
systems has expanded both to new customers and more sites. There
are currently over 150 systems installed in nine countries on
four continents. Although retailers and customers have been very
pleased with the portable self checkout system and other food and
non-food retailers have expressed an interest in the self
checkout concept, due to the innovative nature of the concept,
there can be no assurance that self checkout will be implemented
on a wide scale either internationally or domestically.
The PDT family of general purpose hand-held computers
features advanced technology including Very Large Scale
Integrated (VLSI) circuits, which incorporate many standardized
integrated circuits into one computer chip allowing for size and
cost reductions. Also, the PDT family employs surface mounted
component technology for reduced size and increased performance
and dependability, as well as industry standard 8-, 16- and 32-
bit microprocessors. The PDT family includes a series of hand-
held computers which are available with different features and at
varying costs depending on customer requirements and preferences.
The PDT hand-held computers feature up to sixteen lines of liquid
crystal display, slim, lightweight design, multiple input and
output ports and up to 7.6 megabytes of internal memory. PDT
hand-held computers have various keyboard configurations,
including a user configurable keyboard. The PDT family was
originally introduced in 1985.
The PDT 3100 hand-held computer, a 16-bit DOS-compatible
computer, was introduced in 1993. Versions of the PDT 3100 also
incorporate the Company's SE 1200 scan engine and feature a
unique swivel-head scanner design which adjusts instantly for
right- or left-hand scanning operation. The PDT 3100 is the
Company's largest selling hand-held computer. In 1994, the
Company introduced versions of the PDT 3100 incorporating the
Company's Spectrum One data communications network and direct or
acoustic modems for telephone line communications and in 1996,
the Company introduced versions of the PDT 3100 which incorporate
the Company's Spectrum 24 WLAN communications capability.
In 1996, the Company introduced two other versions of the
3100, the PDT 3000 and the PDT 3500. The PDT 3000 is a compact,
efficient, hand-held computer designed for use in the food and
drug retail and convenience store industries. Weighing less than
13 ounces, the PDT 3000 is a limited performance, lower cost
version of the PDT 3100. The PDT 3500, features a larger display
screen, a choice of Spectrum One or Spectrum 24 networking
options and an SE 2000 scan engine providing one- and two-
dimensional bar code scanning capability.
Introduced in 1996, the PDT 2100 hand-held integrated
computer is the Company's smallest and lightest high-performance
9<PAGE>
hand-held computer with laser scanning capability. Versions of
the PDT 2100 incorporate the Company's Spectrum LAN communication
capability. The PDT 2100 design, which resembles a TV remote
controller, facilitates easy intuitive use while the PC-standard
16-bit architecture and Microsoft MS-DOS operating system provide
superior data management capabilities.
In 1990, the Company introduced the PDT 3300, a 16-bit
DOS-compatible batch hand-held computer. The PDT 3300 provides
expanded program capacity and keyboard and display flexibility
coupled with an environmentally sealed unit for use in harsh
environments. The Company also offers versions of the PDT 3300
which operate with the Company's Spectrum One and Spectrum 24
networks.
In 1996, the Company introduced the PDT 1000, a pocket-
sized integrated laser scanning computer designed for batch
processing. The PDT 1000 is approximately one inch by two inches
by 6.5 inches and weighs only seven ounces. The rugged
construction, simple three-button keyboard and 96 kilobyte memory
make the PDT 1000 suitable for a wide variety of tracking and
asset management applications where bar code data capture and
storage are required.
The PPT family of portable pen computers integrates
several key technologies for improving information management.
These PC compatible hand-held computers incorporate pen and touch
input on an active matrix screen, a graphical user interface, an
SE 1100 or SE 1200 scan engine, and standard PCMCIA slots for
memory, modem, wireless or wide area network capability and other
peripherals.
The PPT 4100, introduced in 1994, is intended for use in
information-intensive applications in retail and other
environments where managers will benefit by accessing remote
databases to make real-time inventory and purchasing decisions to
significantly enhance customer service and improve productivity.
The PPT 4600, introduced in 1995, incorporates a 486
microprocessor which supports both DOS and Windows based
applications and an SE 2000 scan engine, making it the first
hand-held computer that has the capability to scan and decode PDF
417. Engineered to withstand rugged treatment and endure outdoor
conditions such as windblown rain or dust and extreme
temperatures, the PPT 4600 is intended for use in industrial and
mobile environments.
In 1996, the Company introduced versions of the PPT 4100
and PPT 4600 incorporating Spectrum 24 WLAN communication
capability and a fully integrated radio modem optimized for
wireless wide area communication.
Introduced in 1996, the PPT 4200 is a high-performance,
hand-held touch/pen computer. With options such as a magnetic
stripe reader, laser bar code scanner, hard drive, wireless radio
10<PAGE>
and voice capabilities, the PPT 4200 provides all the functions
and power of a standard notebook computer packed into a 5 inch by
9 inch hand-held computer, weighing less than three pounds. The
PPT 4200 supports industry-standard PC cards, operating systems
and popular pen development tools such as Pen Pal, and Visual
Basic providing operating and programming flexibility for retail
and industrial management applications.
In 1997, the Company introduced the VRC 4000, a ruggedized
vehicle mounted or wall mounted touch screen computer. Designed
for rugged, industrial use in warehouse and yard management
applications, the VRC 4000 is a PC compatible computer with 16
megabytes of memory and includes a full 10.3 inch VGA display
with an infrared touch screen interface. The VRC 4000 is capable
of communicating with a host computer or other hand-held devices
via the Company's Spectrum 24 wireless network.
Product list prices for the Company's portable data
collection equipment range between $395 to $8,250 depending on
product configuration. The Company offers discounts off list
price for quantity orders and sales are frequently made at prices
below list price.
Software and Programming Tools
The Company's portable hand-held computers utilize
software which consists of a number of specialized applications
and communications software programs, that run under Microsoft
MS-DOS and Windows operating systems. A series of application
development kits (ADKs) and software development kits (SDKs) are
available to allow the Company's programmers, VARs ("Value Added
Resellers") and end-user customers to develop applications that
fully utilize the integrated features of the Company's family of
portable hand-held computers. The ADKs and SDKs provide the
software drivers and libraries required to maximize product
performance. Used in conjunction with industry standard
development tools including Visual Basic and C++, software
developers can easily create and support applications to meet
specific customer requirements.
The Company has also developed several communication
applications designed to facilitate transmission and reception of
data between mobile computers and stand-alone receivers or host
computers. These applications include a suite of terminal
emulation products, host enablers and various protocols. The
Company has entered into alliances with independent suppliers of
software who assist the Company in development of software.
Customer Support
The Company has a customer support organization which
repairs and maintains the Company's products.
The Company's domestic customer support operations include
locations in Arkansas, California, Georgia, Illinois, Kentucky,
11 <PAGE>
Michigan, Minnesota, New Jersey, New York, North Carolina, Texas
and Virginia. The Company also has foreign customer support
offices in Australia, Austria, Belgium, Canada, China, Denmark,
France, Germany, Italy, Norway, Singapore, South Africa, Spain
and the United Kingdom. In Japan, customer support is provided
by Olympus Optical Co., Ltd. These centers enhance the Company's
ability to respond to its customers' requirements for fast,
efficient service.
The Company currently offers a variety of service
arrangements to meet customer needs. The Company's On-Site
service provides for maintenance and repairs at any customer
location. Depot Service includes maintenance and repairs at the
Company's field service offices. The Self-Service contracts
generally have a term of from one to five years. In addition,
the Company offers Time-And-Materials service on a non-contract,
as-needed basis.
The Company undertakes to correct defects in materials
and workmanship for a period of time after delivery of its
products. The period of time covered by these warranties varies
depending on the product involved as well as contractual
arrangements but is generally twelve months.
Maintenance and support revenues contributed less than 10
percent of the Company's total revenues for the years ended
December 31, 1996, 1995 and 1994.
Sales and Marketing
The Company presently markets its products domestically
and internationally through a variety of distribution channels,
including a direct sales force, original equipment manufacturers,
VARs and sales representatives and distributors. VARs distribute
the Company's products to customers while also selling to those
customers other products or services not provided by the Company.
The Company's sales organization includes domestic sales offices
located throughout the United States and foreign sales offices in
Australia, Austria, Belgium, Canada, China, Denmark, France,
Germany, Italy, Mexico, Norway, Singapore, South Africa, Spain
and the United Kingdom.
The Company currently has contractual relationships and
strategic alliances with unaffiliated partners. Through these
relationships, the Company is able to broaden its distribution
network and participate in industries other than those serviced
by the Company's direct sales force and distributors.
Customers generally order products for delivery within 45
days. Accordingly, shipments made during any particular quarter
generally represent orders received either during that quarter or
shortly before the beginning of that quarter and generally
consist of products manufactured in the quarter. The Company
maintains significant levels of inventory to facilitate meeting
delivery requirements of its customers. The Company, pursuant to
12 <PAGE>
contract or invoice, normally extends 30 day payment terms to its
customers. Actual payment terms vary from time to time but
generally do not exceed 90 days.
Since a substantial portion of the Company's sales of
scanner products are to retail organizations which tend not to
purchase equipment such as the Company's scanner products during
the Christmas selling season, the Company's business has, from
time to time, been seasonal in the fourth quarter. The Company
believes there may again be reduced demand for its scanner
products in the fourth quarter of the current fiscal year. The
Company attempts to offset the reduced demand of the retail
industry by selling its products to other market segments. While
this effort was successful in 1996, there can be no assurance
that the effort will succeed in 1997 and subsequent years.
The following table sets forth certain information as to
international sales of the Company:
Year Ended
December 31,
(in thousands)
1996 1995 1994
Area
Western Europe $222,611 $178,027 $141,090
Other $ 44,545 $ 40,402 $ 25,999
The Company undertakes hedging activities to the extent
of known cash flow in an attempt to minimize the impact of
foreign currency fluctuations.
Manufacturing
The products which are manufactured by the Company are
manufactured at its Bohemia, New York facilities.
While components and supplies are generally available from a
variety of sources, the Company presently depends on a single
source or a limited number of suppliers for several components of
its equipment, certain subassemblies and certain of its products.
Certain of the Company's products are manufactured in Japan and
Taiwan. Due to the general availability of components and
supplies, the Company does not believe that the loss of any
supplier or subassembly manufacturer would have a long-term
material adverse effect on its business although set-up costs and
delays could occur if the Company changes any single source
supplier. In the past, delays in delivery of components have not
had a material adverse effect on shipments of the Company's
products. Certain of the Company's products are manufactured by
third parties. Failure of such third parties to supply products
to the Company could have an adverse affect on the Company's
ability to deliver such products to its customers. However, the
Company has no reason to believe that these suppliers will be
unable to meet their supply or delivery obligations to the
Company over any extended period.
13<PAGE>
The Company employs certain advanced manufacturing processes
that require highly sophisticated and costly equipment and are
continuously being modified in an effort to improve efficiency,
reduce manufacturing costs and incorporate product improvements.
Research and Product Development
The Company believes that its future growth depends, in
large part, upon its ability to continue to apply its technology
to develop new products, improve existing products and expand
market applications for its products. The Company's research and
development projects include, among others: improvements to the
reliability, quality and readability of its laser scanners at
increased working distances and higher density codes (including,
but not limited to, two-dimensional codes); improvements in and
expansion of its series of interface controllers; continued
development of its solid state laser diode scanners; improvements
to packaging and miniaturization technology for bar code data
capture products, portable data collection devices and integrated
bar coded data capture products; development of high-performance
digital data radios, high-speed radio frequency data
communications networks and telecommunications protocols and
products; and the addition of application software to provide a
complete line of high-performance interface hardware.
The Company uses both its own associates and from time to
time unaffiliated consultants in its product engineering and
research and development programs. Dr. Jerome Swartz, Chairman
of the Board of Directors and Chief Executive Officer of the
Company, leads the Company's research, patent and new product
development programs. From time-to-time the Company has
participated with and/or partially funded research projects
in conjunction with a number of universities including the
State University of New York at Stony Brook, Polytechnic
University of New York and Tel Aviv University in Israel.
The Company expended (including overhead charges)
approximately $ 20,164,000, $19,879,000 and $16,678,000 for
research and development during the years ended December 31,
1996, 1995 and 1994, respectively.
Competition
The business in which the Company is engaged is highly
competitive and acutely influenced by advances in technology,
product improvements and new product introduction, and price
competition. To the Company's knowledge, many firms are engaged
in the manufacture and marketing of portable data collection
systems and bar code reading equipment utilizing laser
technology. In addition, the Company's bar code reading
equipment also competes with devices which utilize technologies
other than laser scanners such as CCDs and optical wands.
Furthermore, numerous companies, including present manufacturers
of scanners, lasers, optical instruments, microprocessors,
notebook computers, PDAs and data radios have the technical
14 <PAGE>
potential to compete with the Company. Many of these firms have
far greater financial, marketing and technical resources than the
Company. The Company competes principally on the basis of
performance and the quality of its products and services.
The Company believes that its principal competitors in the
bar code scanning equipment industry are INTERMEC Corporation,
Matsushita Electric Corporation, Metrologic Instruments, Inc.,
NipponDenso Co., Ltd., Opticon, Inc., PSC Inc. and Welch Allyn,
Inc. and that its principal competitors in the portable data
transaction systems industry are Fujitsu, Ltd., Hand Held
Products, Inc., INTERMEC Corporation, LXE Inc., NipponDenso Co.,
Norand Corporation, Mars Electronics and Telxon Corporation.
Some of the Company's competitors in the portable data
transaction systems industry also participate in the field
service market.
Patent and Trademark Matters
The Company files domestic and foreign patent applications
to support its technology position and new product development.
The Company owns over 250 U.S. Letters Patents covering various
aspects of the technology used in the Company's principal
products and has entered into cross-license agreements with other
companies. In addition, the Company owns numerous foreign
companion patents. The Company has also filed additional patent
applications in the U.S. Patent and Trademark Office as well as
in foreign patent offices. The Company will continue to file
patents, both U.S. and foreign, to cover its most recent research
developments in the scanning, data collection and RF data
communications fields. Key patents covering basic hand-held
laser scanning technology begin to expire in 2000 and key patents
covering scanner integrated hand-held computers begin to expire
in 2005.
The Company believes that its patent portfolio does provide
some competitive advantage in that such patents tend to limit the
number of unlicensed competitors and permit the Company to
manufacture products which may have features which provide better
performance and/or lower cost. Although management believes that
its patents provide some competitive advantage, the Company
depends more for its success upon its proprietary know-how,
innovative skills, technical competence and marketing abilities.
In addition, because of rapidly changing technology, the
Company's present intention is not to rely primarily on patents
or other intellectual property rights to protect or establish its
market position. Instead, the Company has established an active
program to protect its investment in technology by enforcing and
licensing certain of its intellectual property rights. The
Company has entered into royalty-bearing license agreements with,
among others, Hand Held Products, Inc., INTERMEC Corporation, LXE
Inc., Metrologic Instruments, Inc., Norand Corporation, Olympus
Optical Co., Ltd, Opticon Sensors Europe, B.V., PSC Inc.,
Spectra Physics, Inc. and Telxon Corporation.
15<PAGE>
On April 1, 1996, PSC Inc. ("PSC") commenced suit against
the Company purporting to assert claims against the Company for
alleged violations of the federal antitrust laws, unfair
competition and also seeking a declaratory judgment of non-
infringement and invalidity as to certain of the Company's
patents. The Company has consented to PSC's serving a Third
Amended Complaint, which purports to assert essentially the same
antitrust and unfair competition claims against the Company, and
also seeks a declaratory judgment of alleged non-infringement and
validity of nine of the Company's patents, and a declaratory
judgment that PSC has not breached its two license agreements
with the Company and that those agreements have been terminated.
The Company intends to amend its suit against PSC to assert
infringement of four Symbol patents, breach of contract, and
fraud. The Company is also seeking damages of over $1 million
plus interest in unpaid royalties for each quarter since the
second quarter of 1996. The Company had also sued Data General
Corporation ("Data General"), a manufacturer of portable
integrated scanning terminals incorporating a component
manufactured by PSC, for infringement of the same four patents
and five additional patents. The nine patents asserted against
Data General are the same nine Symbol patents as to which PSC is
seeking declaratory relief.
On October 9, 1996, the Court granted the Company's motion
to sever and stay PSC's antitrust, unfair competition and related
claims. On the same day, the Court denied Data General's motion
to stay the Company's claims against it.
The Company moved that an expedited hearing to be held at
the end of March, 1997 on three of the patents asserted against
PSC, and to stay all non-patent discovery. PSC opposed the
Company's motion and made a cross-motion that no hearing be held
until October, 1997 at the earliest and that all issues be tried
in the Spring of 1998 or thereafter. On October 9, 1996, the
Court set a one week trial for July 14, 1997 to construe the
claims in all nine patents asserted by Symbol against Data
General and PSC, and stayed discovery on all non-patent claims.
The Company believes that all claims purportedly asserted
against it by PSC are factually and legally baseless, and wholly
without merit. The Company intends to vigorously defend the
litigation.
Although the Company believes that its products and
technology do not infringe the proprietary rights of others,
there can be no assurance that third parties will not assert
infringement and other claims against the Company or that such
claims will not be successful. From time to time, the Company
has received and may receive in the future notices of claims of
infringement of other parties' rights. In such event, the
Company has and will continue to take reasonable steps to
evaluate the merits of such claims, take such action as it may
deem appropriate, which action may require that the Company enter
into licensing discussions, if available, and/or modify the
16<PAGE>
affected products and technology, or result in litigation against
parties seeking to enforce a claim which the Company reasonably
believes is without merit. In the event litigation is commenced,
such parties are likely to claim damages and/or seek to enjoin
commercial activities relating to the Company's products or
technology affected by such party's rights. In addition to
subjecting the Company to potential liability for damages, such
litigation may require the Company to obtain a license in order
to manufacture or market the affected products and technology.
To date, such activities have not had a material adverse affect
on the Company's business and the Company has either prevailed in
all litigation, obtained a license on commercially acceptable
terms or otherwise been able to modify any affected products or
technology. However, there can be no assurance that the Company
will continue to prevail in any such actions or that any license
required under any such patent would be made available on
commercially acceptable terms, if at all. There are a
significant number of U.S. and foreign patents and patent
applications in the Company's areas of interest, and the Company
believes that there has been and is likely to continue to be
significant litigation in the industry regarding patent and other
intellectual property rights.
The Company has also obtained certain domestic and
international trademark registrations for its products and
maintains certain details about its processes, products and
strategies as trade secrets.
The Company regards its software as proprietary and attempts
to protect it with copyrights, trade secret law and
international nondisclosure safeguards, as well as restrictions
on disclosure and transferability that are incorporated into its
software license agreements. The Company licenses its software
products to customers rather than transferring title. Despite
these restrictions, it may be possible for competitors or users
to copy aspects of the Company's products or to obtain
information which the Company regards as trade secrets. Computer
software generally has not been patented and existing copyright
laws afford only limited practical protection. In addition, the
laws of foreign countries generally do not protect the Company's
proprietary rights in its products to the same extent as do the
laws of the United States.
Government Regulations
The use of lasers and radio emissions are subject to
regulation in the United States and in other countries in which
the Company does business. In the United States, various Federal
agencies, including the Center for Devices and Radiological
Health of the Food and Drug Administration, the Federal
Communications Commission, the Occupational Safety and Health
Administration and various State agencies, have promulgated
regulations which concern the use of lasers and/or
radio/electromagnetic emissions standards. Member countries of
the European community have enacted or are in the process of
17 <PAGE>
adopting standards concerning electrical and laser safety and
electromagnetic compatibility and emissions standards.
The Company believes that all of its products are in
material compliance with current standards and regulations;
however, regulatory changes in the United States and other
countries may require modifications to certain of the Company's
products in order for the Company to continue to be able to
manufacture and market these products.
The Company's RF hand-held computers include various models
all of which intentionally transmit radio signals as part of
their normal operation. The Company's LRT 3800 laser radio hand-
held computer and certain versions of its hand-held computers and
its Spectrum One and Spectrum 24 cellular frequency networks
utilize spread spectrum radio technology. The Company has
obtained certification from the FCC for its products which
utilize this radio technology. Such certification is valid for
the life of the product unless and until the circuitry of the
product is altered in material respects, in which case a new
certification may be required. Users of these products in the
United States do not require any license from the FCC to use or
operate the product. Certain of the Company's products transmit
narrow band radio signals as part of their normal operation. The
Company has obtained certification from the FCC for its narrow
band radio products. However, these models must not only be
accepted by the FCC prior to marketing but users of these devices
must themselves also obtain a site license from the FCC to
operate them.
Associates
At December 31, 1996, the Company had approximately 2,900
full-time associates. Of these, approximately 2,300 were
employed domestically. The Company also employs temporary
production personnel. None of the Company's associates are
represented by a labor union. The Company considers its
relationship with its associates to be good.
Item 2. Properties
The following table states the location, primary use and
approximate size of all principal plants and facilities of the
Company and its subsidiaries and the duration of the Company's
tenancy with respect to each facility.
18<PAGE>
Location Principal Use Size Tenancy/Ownership
One Symbol Plaza World headquarters 174,000 square Owned (subject to
Holtsville, NY feet mortgage)
116 Wilbur Place Customer support 92,000 square Owned (subject to
Bohemia, NY and warehousing feet mortgage)
110 Wilbur Place Manufacturing 30,000 square Owned (subject to
Bohemia, NY feet mortgage)
12 & 13 Oaklands Pk. International head- 21,700 square Owned
Fishponds Road quarters, marketing feet
Wokingham, Berkshire and administration
England and U.K.
headquarters
110 Orville Drive Manufacturing 110,000 square Leased: expires
Bohemia, NY feet Aug. 31, 2001
1101 Lakeland Ave. Manufacturing 90,400 square Leased: expires
Bohemia, NY and distribution feet Aug. 31, 2001
2145 Hamilton Ave. Network systems, 51,500 square Leased: expires
San Jose, CA engineering, feet March 3, 1999
marketing
340 Fischer Ave. Service and sales 31,200 square Leased: expires
Costa Mesa, CA feet May 31, 2001
180 Orville Drive Warehousing and 22,612 square Leased: expires
Bohemia, NY facilities feet Aug. 31, 2001
management
Knaves House Administration 10,900 square Leased: expires
High Wycombe, feet June 24, 2003
Buckinghamshire
England
Knaves Beech Customer Service 6,185 square Leased: expires
Business Center feet Sept. 28, 2003
High Wycombe,
Buckinghamshire
England
Ilex House Customer service 5,400 square Leased: expires
Mulberry Business Pk. feet April 5, 2002
Fishponds Road
Wokingham, Berkshire
England
In addition to these principal locations, the Company and
its subsidiaries also lease other offices throughout the world,
ranging in size from approximately 150 to 24,000 square feet.
19<PAGE>
Item 3. Legal Proceedings
On January 13, 1997, the Court, in the action entitled In
re. Symbol Technologies, Inc. Class Action Litigation issued an
order granting the Company's motion for summary judgment and
dismissing all claims against the Company. Final Judgment of
dismissal was entered on January 24, 1997.
See, also, Patent and Trademark Matters for a discussion
of certain other litigation involving the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 4A. Executive Officers of the Registrant
The following table sets forth the names, ages and all
positions and offices held by the Company's executive officers:
Jerome Swartz.......... 56 Chairman of the Board of Directors
Chief Executive Officer and Director
Tomo Razmilovic........ 54 President, Chief Operating Officer
and Director
Fred Heiman............ 57 Executive Vice President and
Director
Thomas G. Amato........ 51 Senior Vice President-Finance and
Chief Financial Officer
Richard Bravman........ 42 Senior Vice President,
Sales/Marketing-Wireless
Systems Division
Brian T. Burke......... 50 Vice President, Controller and
Chief Accounting Officer
Allen C. Creveling..... 55 Senior Vice President-Human
Resources
Richard M. Feldt....... 45 Senior Vice President,
General Manager-Worldwide Operations
Leonard H. Goldner..... 49 Senior Vice President, General
Counsel and Secretary
Joseph Katz............ 44 Senior Vice President, Research and
Development
Boris Metlitsky........ 49 Senior Vice President, General
Manager-Scanner Products Division
Satya Sharma........... 56 Senior Vice President-Quality
20<PAGE>
Dr. Swartz co-founded and has been employed by the Company
from its inception in 1973. He has been the Chairman of the
Board of Directors and Chief Executive Officer of the Company for
more than the past ten years. Dr. Swartz was an industry
consultant for 12 years in the areas of optical and electronic
systems and instrumentation and has a total of some 140 technical
papers and issued and pending U.S. patents to his credit,
including the Company's basic patents in hand-held laser
scanning. He is also a trustee of the Polytechnic University of
New York and an adjunct full professor of Electrical Engineering
at the State University of New York at Stony Brook. He is also a
fellow of the Institute of Electrical and Electronic Engineering.
Mr. Razmilovic has been the President and Chief Operating
Officer of the Company since October 1995. He was previously
Senior Vice President-Worldwide Sales and Services. He first
joined the Company in September 1989. From January 1989 to
August 1989, he was President and Chief Executive Officer of
Cominvest Group, a Swedish multinational high technology company.
From August 1985 to December 1988, he was President of ICL
International, a major European computer manufacturer and he also
led its industry marketing and software development divisions.
Dr. Heiman joined the Company in July 1986. He had
previously been employed by Intel Corporation, a manufacturer of
semiconductor components, from May 1983 until July 1986, in a
number of positions, the most recent of which was as its Director
of Corporate Planning. Dr. Heiman is the inventor or co-inventor
of 20 issued U.S. patents, including the first MOS integrated
circuit chip, which became the basis of much of the modern
revolution in computer and electronics communications and the
first silicon storage tube used in display and scanning
applications.
Mr. Amato joined the Company in October 1990. Prior to
joining the Company he was Senior Vice President of Finance and
Administration and Chief Financial Officer for Amcast Industrial
Corp., a manufacturer of metal components, from 1985 to 1990.
Mr. Bravman has been employed by the Company for more than
the past fifteen years in various management positions.
Mr. Burke joined the Company in November 1987. From
October 1984 to October 1987, he was President, Chief Executive
Officer and Director of Super Web Press Service Corporation, a
manufacturer of printing presses.
Mr. Creveling joined the Company in February 1989. From
January 1988 to January 1989, he was Chief Financial Officer at
Keystone Camera Corp. From 1971 to 1987, he was employed by Mars
Electronics, a division of M&M/Mars, where he held the position
of Vice President Finance.
Mr. Feldt joined the Company in September 1995. From 1991
to August 1995, he was Vice President of Manufacturing at A.T.
21 <PAGE>
Cross, a leading manufacturer of writing instruments. From July,
1988 to December, 1990, Mr. Feldt served as a Director of the
Imaging and Publishing Systems Division of Eastman Kodak.
Mr. Goldner joined the Company in September 1990. From
September 1979 until August 1990, he was a partner of the New
York law firm of Shereff, Friedman, Hoffman & Goodman, which firm
was securities counsel to the Company.
Dr. Metlitsky joined the Company in March 1983 and has
served in various technical and managerial positions.
Dr. Katz joined the Company in January 1989 and has held
several positions in Research and Development. From May 1981
until January 1989, Dr. Katz held a number of positions at the
Jet Propulsion Laboratory of the California Institute of
Technology, the most recent of which was as Technical Group
Supervisor.
Dr. Sharma joined the Company in March 1995. Prior to
joining the Company, Dr. Sharma held various management positions
at AT&T. From April 1990 to March 1995 Dr. Sharma served as
Director of Quality of AT&T's Power Systems Division and from
January 1986 to April 1990 he was a Department Head at AT&T Bell
Labs.
22<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and
Related Security Holder Matters
The Company's Common Stock is listed on the New York Stock
Exchange. The following table sets forth, for each quarter
period of the last two years, the high and low sales prices as
reported by the New York Stock Exchange.
Year Ending: High Low
December 31, 1995 First Quarter 31 1/4 24 3/8
Second Quarter 40 1/2 28 5/8
Third Quarter 40 5/8 32 7/8
Fourth Quarter 40 29 3/8
December 31, 1996 First Quarter 40 1/4 31 7/8
Second Quarter 48 35 1/8
Third Quarter 46 7/8 38
Fourth Quarter 49 1/2 41 1/2
As of February 1, 1997 there were 1,153 holders of record
of the Company's Common Stock.
Historically, changes in the Company's results of
operations or projected results of operations have resulted in
significant changes in the market price of the Company's Common
Stock. As a result, the market price of the Company's Common
Stock has been highly volatile.
To date, the Company has not paid any cash dividends to
its shareholders. The Company's ability to pay cash dividends is
limited by certain of the Company's loan agreements, the most
restrictive of which would generally limit dividends payable in
any year to an amount not greater than 50 percent of the
Company's net income. On February 10, 1997, the Board of
Directors declared a semi-annual dividend of $.03 per share,
payable on April 1, 1997 to all shareholders of record on March
10, 1997. On the same date, the Board declared a 3 for 2 stock
split, to be effected as a 50% stock dividend payable on April 1,
1997 to all shareholders of record on March 10, 1997. References
to shares of the Company's Common Stock have not been adjusted to
reflect this stock split.
23<PAGE>
Item 6. Selected Financial Data
(in thousands, except per share data)
<TABLE>
Year Ended December 31,
Operating Results: 1996(1) 1995(2) 1994 1993 1992(3)
<C> <C> <C> <C> <C> <C>
Net Revenue $656,675 $555,163 $465,306 $359,980 $344,940
Earnings (Loss) Before Cumulative Effect
of Accounting Change $ 50,256 $46,486 $34,984 $12,445 ($15,506)
Net Earnings (Loss) $ 50,256 $46,486 $34,984 $12,445 ($16,250)
Earnings (Loss) Per Share:
Primary
Earnings (Loss) Before Cumulative Effect
of Accounting Change $1.86 $1.72 $1.34 $0.50 ($0.65)
Net Earnings (Loss) $1.86 $1.72 $1.34 $0.50 ($0.68)
Fully-diluted
Earnings (Loss) Before Cumulative Effect
of Accounting Change $1.85 $1.71 $1.33 $0.50 ($0.65)
Net Earnings (Loss) $1.85 $1.71 $1.33 $0.50 ($0.68)
Financial Position:
Total Assets $614,238 $544,268 $474,213 $419,615 $378,666
Working Capital $221,678 $209,852 $191,823 $141,739 $88,623
Long-Term Debt, less
Current Maturities $50,541 $60,829 $59,884 $62,077 $14,582
Stockholders' Equity $399,676 $352,854 $316,167 $258,746 $244,961
Weighted Average Number of Common
Shares Outstanding:
Primary 27,079 27,052 26,162 24,661 24,028
Fully-diluted 27,122 27,220 26,392 25,072 24,028
(1) Includes a pre-tax charge for costs associated with acquisition related matters of $12,341 or $0.28 per
share.
(2) Includes a pre-tax charge for costs associated with a management change of $2,500 or $0.06 per share.
(3) Includes cumulative effect of a change in accounting for income taxes of $744 or ($0.03) per share and
a pre-tax charge of $40,933 related to a workforce reduction and the consolidation and restructuring of the
Company's operations.
-24-<PAGE>
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER SECURITIES
LITIGATION REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS
From time to time, the Company or its representatives have
made or may make forward-looking statements, orally or in
writing. Such forward-looking statements may be included in, but
not limited to, press releases, oral statements made with the
approval of an authorized executive officer or in various filings
made by the Company with the Securities and Exchange Commission.
The words or phrases "will likely result", "are expected to",
"will continue", "is anticipated", "estimate", "project" or
similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). The Company
wishes to ensure that such statements are accompanied by
meaningful cautionary statements, so as to maximize to the
fullest extent possible the protections of the safe harbor
established in the Reform Act. Accordingly, such statements are
qualified in their entirety by reference to and are accompanied
by the following discussion of certain important factors that
could cause actual results to differ materially from such
forward-looking statements.
The risks included here are not exhaustive. Furthermore,
reference is also made to other sections of this report which
include additional factors which could adversely impact the
Company's business and financial performance. Moreover, the
Company operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is
not possible for management to predict all of such risk factors,
nor can it assess the impact of all of such risk factors on the
Company's business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statements. Accordingly, forward-looking statements should not
be relied upon as a prediction of actual results.
Shareholders should be aware that while the Company does,
from time to time, communicate with securities analysts, it is
against the Company's policy to disclose to such analysts any
material non-public information or other confidential commercial
information. Accordingly, shareholders should not assume that
the Company agrees with any statement or report issued by any
analyst irrespective of the content of such statement or report.
Furthermore, the Company has a policy against issuing financial
forecasts or projections or confirming the accuracy of forecasts
or projections issued by others. Accordingly, to the extent that
reports issued by securities analysts contain any projections,
forecasts or opinions, such reports are not the responsibility of
the Company.
Financial Performance. The Company's operating results may
fluctuate in the future as a result of a number of factors,
including but not limited, to a shift in the mix of the Company's
25<PAGE>
products and/or sales channels, the market acceptance of new and
enhanced versions of the Company's products, the timing of
acquisitions of other products and technology and any associated
charges to earnings as well as any cancellation or postponement
of orders. The volume and timing of orders received during a
quarter are difficult to forecast. In addition, from time to
time, customers have either canceled orders or rescheduled
shipments previously ordered from the Company. Additionally, the
Company has historically operated with a relatively small
backlog. While the Company does monitor backlog, it does not
consider it to be a reliable predictor of financial performance
for periods other than the then current quarter because customers
generally order products for delivery within 45 days.
Accordingly, shipments made during any particular quarter
generally represent orders received either during that quarter or
shortly before the beginning of that quarter. Shipments for
orders received in a fiscal quarter are generally from products
manufactured in that quarter. The Company maintains significant
levels of raw materials to facilitate meeting delivery
requirements of its customers. However, there can be no
assurance that during any given quarter, the Company has or can
procure the appropriate mix of raw materials in order to
accommodate any given order. In light of the levels of current
and anticipated backlog, the Company's financial performance in
any quarter is dependent to a significant degree upon obtaining
orders in that quarter which can be manufactured and delivered to
its customers in that quarter. Thus, financial performance for
any given quarter cannot be known or fully assessed until near
the end of that quarter. Furthermore, the Company's expense
levels are based, in part, on expectations of future revenues,
and the Company has been increasing and expects to continue to
increase its total operating expenses as it expands its
operations. As a result of the difficulty of forecasting revenue
and the Company's planned growth in spending, operating expenses
could be disproportionately high for any given quarter and the
Company's operating revenue for any given quarter and potentially
several quarters thereafter could be adversely affected.
Foreign Sales. Foreign sales have represented a substantial and
increasing portion of the Company's net revenues. In 1996,
foreign sales accounted for approximately 40 percent of net
revenue. Such sales are subject to the normal risks of foreign
operations, such as protective tariffs and other potential trade
barriers, export/import controls and transportation delays and
interruptions, reduced protection for intellectual property
rights in some countries, the impact of recessionary foreign
economies and long receivable collection periods. The majority
of the Company's equipment sales in Western Europe and Asia are
generally billed in foreign currencies and are subject to
currency exchange fluctuations. Since the Company's products are
principally manufactured in the United States, sales and results
of operations could be affected by fluctuations in the U.S.
dollar. Changes in the relative value of the U.S. dollar in
terms of foreign currencies in the past have had an impact on the
Company's sales and margins. It is impossible to predict whether
26<PAGE>
the United States or any other country will impose new quotas,
tariffs, taxes or other trade barriers upon the importation of
the Company's products or supplies or to gauge the effect that
such actions would have on the financial position or results of
operations.
Dependence upon Retail Industry. A significant portion of the
Company's revenues are derived from sales of products and
services to customers in the non-food retail industry. This
industry is currently experiencing a financial down turn and in
1995 and continuing in 1996, several of the Company's customers
consolidated operations and/or initiated bankruptcy or
reorganization proceedings. The Company is attempting to expand
its customer base to other industries, including but not limited
to the transportation and logistics industry. However, for the
current and foreseeable future, the Company's financial
performance remains dependent to a material extent upon revenues
derived from the non-food retail industry. Continued or
increased instability in this industry could have an adverse
affect on the Company's business and financial performance.
Competition. The business in which the Company is engaged is
highly competitive and acutely influenced by advances in
technology, product improvements and new product introduction,
and price competition. Failure to keep pace with product and
technological advances could adversely affect the Company's
competitive position and prospects for growth.
Price. Traditionally, the selling price of the Company's
products decreases over the life of the product. The Company
endeavors to reduce manufacturing costs of existing products and
to introduce new products, functions and other price/performance-
enhancing features in order to mitigate the effect of such
decreases. To the extent that such cost reductions, product
enhancements and new product introductions do not occur in a
timely manner or do not achieve market acceptance, the Company's
operating results could be materially, adversely affected.
Research and Development. There can be no assurance that the
Company's research and development activities will lead to the
successful introduction of new or improved products or that the
Company will not encounter delays or problems in connection
therewith. New products frequently take longer to develop, often
have fewer features than originally considered desirable and
achieve higher cost targets than initially estimated. Moreover,
there can be no assurance that there will not be delays in
commencing volume production of such products or that such
products will ultimately be commercially successful. In
addition, products under development are frequently announced
before introduction and such announcements may cause customers to
delay purchases of existing products in anticipation of new or
improved versions of those products.
New Product Introduction. Historically, the Company has been
dependent upon the introduction of new and improved product
27<PAGE>
offerings. This is particularly true for 1997, since the Company
has introduced a large number of new products during the past 18
months. The Company's financial performance in 1997 will be
heavily dependent upon the successful introduction of such
products. This success will be dependent upon, among other
factors, the ability of the Company to complete development and
launch of certain of such products within the year, customer
acceptance of and demand for these products and the ability of
the Company to efficiently manufacture such products and to meet
delivery schedules. Failure in any of these areas could have a
material adverse effect on the Company's financial results for
1997.
Intellectual Property. The Company seeks to protect its
proprietary information and technology through contractual
confidentiality provisions and the application for United States
and foreign patents, trademarks and copyrights. There can be no
assurance that such applications will result in the issuance of
patents, trademarks or copyrights or that third parties will not
seek to challenge, invalidate or circumvent such applications or
resulting patents, trademarks or copyrights. Additionally,
competitors may independently develop equivalent or superior,
non-infringing technologies. The Company's licensing revenue
could be adversely affected to the extent that such technologies
avoid infringement of the Company's licensed patents.
Furthermore, there can be no assurance that third parties
will not assert claims of infringement of intellectual property
rights against the Company and that such claims will not lead to
litigation and/or require the Company to significantly modify or
even discontinue sales of certain of its products.
Manufacturing. In the event use of the Company's manufacturing
facilities in Bohemia, New York were interrupted by natural
disaster or otherwise, the Company's operations would be
materially, adversely affected until alternative production and
service operations could be established. Certain of the
Company's products are manufactured in Japan and Taiwan. The
Company anticipates that an increased percentage of new products
will be manufactured by third parties, many of which are located
in foreign countries. The manufacture of these items is subject
to risks common to all foreign manufacturing activities such as
governmental regulation, currency fluctuations, transportation
delays and interruptions, political and economic disruptions and
the risk of imposition of tariffs or other trade barriers.
In the past, the Company has experienced manufacturing
problems that have caused delivery delays. There can be no
assurance that the Company will not experience production
difficulties and product delivery delays in the future as a
result of, among other matters, changing process technologies,
ramping production and installing new equipment at its
manufacturing facilities.
The Company has in the past, and may in the future,
encounter shortages of supplies and delays in deliveries of
28 <PAGE>
necessary components or products. While past shortages and
delays have not had a material adverse effect on the Company,
shortages and delays could have such effect in the future.
Certain components, subassemblies and products are sourced from a
single supplier or a limited number of suppliers. The loss of
any such supplier may cause the Company to incur additional set-
up costs and delays in manufacturing and delivery of products.
Third Party Products. Historically, the Company has manufactured
almost all of it product offerings. Beginning in 1996 and
anticipated to expand in 1997, the Company is offering for sale
an increased number of third party products. Although the
Company hopes that sales of such products will result in higher
operating income, the sales of third party products traditionally
generate lower margins which may not be fully offset by lower
expenses. In the event that any of these third party suppliers
become unable or unwilling to manufacture such products or fail
to meet the Company's volume and quality requirements and
delivery schedules, the Company's ability to market such products
could be negatively affected. In addition, many of these third
party products are manufactured outside of the United States and
supply of such products could be negatively affected by factors
normally attendant to the conduct of foreign trade, including
imposition of duties, taxes, fees or other trade restrictions
fluctuation in currency exchange rates and longer delivery times.
Government Regulations. The Company is also subject to the risks
associated with changes in United States and foreign regulatory
requirements. There can be no assurances that more stringent
regulatory requirements and/or safety and quality standards will
not be issued in the future with an adverse effect on the
business of the Company. In addition, sales of the Company's
products could be adversely affected if more stringent safety
standards are adopted by potential customers such as electronic
cash register manufacturers.
The Company's Spectrum One and Spectrum 24 spread spectrum
wireless communication products operate through the transmission
of radio signals. These products are subject to regulation by
the Federal Communications Commission in the United States and
corresponding authorities in other countries. Currently,
operation of such products in specified frequency bands does not
require licensing by such regulatory authorities. Regulatory
changes restricting the use of such bands or allocating available
frequencies could have a material adverse effect on the Company's
business and its results of operations.
Safety Risk. Recently, there has been some concern over the
potentially adverse effects of electromagnetic emissions
associated with cellular telephones. While the Company's RF
products do emit electromagnetic radiation, the Company believes
that due to the low power output of its products and the
logistics of their use, there is no health risk to end-users in
the normal operation of its products. There can be no assurance
that the Company's RF products will not become the subject of
29 <PAGE>
such concerns in the future. Such safety issues and the
associated publicity could have a material adverse effect on the
Company's business and its results of operations.
Acquisitions. The Company has in the past and may in the future
acquire businesses or product lines as a way of expanding its
product offerings and acquiring new technology. Failure of the
Company to identify future acquisition opportunities and/or to
integrate effectively businesses that it may acquire could have a
material adverse effect on the Company's growth.
30<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following table sets forth for the years indicated (i)
certain revenue and expense items expressed as a percentage of
net revenue and (ii) the percentage increase or decrease of such
items as compared to corresponding prior years.
31<PAGE>
Year to Year Changes
Year Ending December 31,
Percentage of Revenue 1996 1995
Year Ending December 31, vs. vs.
1996 1995 1994 1995 1994
Net Revenue 100.0% 100.0% 100.0% 18.3% 19.3%
Cost of Revenue 53.2 51.3 50.1 22.7 22.3
Amortization of Software
Development Costs 1.6 1.6 2.1 21.0 (11.4)
Gross Profit 45.2 47.1 47.8 13.4 17.6
Operating Expenses:
Engineering 7.1 7.6 7.9 10.8 15.1
Selling, General and
Administrative 22.8 24.8 25.7 8.7 15.0
Purchased Research and Development
and Merger Integration Costs 1.9 - - - -
Severance - 0.5 - - -
Amortization of Excess of
Cost Over Fair Value of
Net Assets Acquired 0.6 0.5 0.6 33.5 (0.7)
32.3 33.3 34.2 14.7 16.3
Earnings from Operations 12.8 13.8 13.6 10.2 20.8
Net Interest Expense (0.5) (0.3) (1.1) 120.2 (71.4)
Earnings Before Income Taxes 12.3 13.5 12.5 8.1 28.6
Provision for Income Taxes 4.7 5.1 5.0 8.1 22.2
Net Earnings 7.7% 8.4% 7.5% 8.1% 32.9%
- -32-<PAGE>
For the year ended December 31, 1996
Net revenue of $656,675,000 for the year ended December 31,
1996, increased 18.3 percent over 1995. The increase in net
revenue is primarily due to increased worldwide sales of both
scanner products and hand-held computer systems. Foreign exchange
fluctuations unfavorably impacted net revenue by approximately 0.7
percent for the year ended December 31, 1996 and favorably impacted
net revenue by 1.9 percent for the year ended December 31, 1995.
Geographically, North America revenue increased 15.7 percent
over the prior year and International revenue increased 22.3
percent over the prior year. North America and International
revenue continue to represent approximately three-fifths and two-
fifths of net revenue, respectively.
Cost of revenue (as a percentage of net revenue) of 53.2
percent for the year ended December 31, 1996, increased from 51.3
percent in 1995. This increase resulted primarily from a change in
the mix of the Company's products sold to a higher percentage of
lower margin products, an increase in revenue derived from the
indirect sales channel, and the impact of new product start-up
costs.
Amortization of software development costs totaling
$10,686,000 for the year ended December 31, 1996, increased from
$8,828,000 in the prior year due to new product releases.
Engineering costs increased to $46,752,000, for the year ended
December 31, 1996, from $42,205,000 for 1995. While in absolute
dollars engineering expenses increased 10.8 percent for the year
ended December 31, 1996, from the prior year, as a percentage of
revenue such expenses were reduced to 7.1 percent for the year
ended December 31, 1996, from 7.6 percent for the prior year due to
the proportionately higher 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 partially offset by increased
capitalized costs incurred for internally developed product
software where economic and technological feasibility has been
established.
Selling, general and administrative expenses increased to
$149,602,000 for the year ended December 31, 1996, from
$137,640,000 in 1995. While in absolute dollars selling, general
and administrative expenses increased 8.7 percent for the year
ended December 31, 1996, from the prior year, as a percentage of
revenue such expenses were reduced to 22.8 percent for the year
ended December 31, 1996, from 24.8 percent in 1995 due to the
increase in revenue and ongoing cost-containment programs. The
increase in absolute dollars reflects expenses incurred to support
a higher revenue base and expenses incurred by three recently
acquired subsidiaries.
33<PAGE>
During the year ended December 31, 1996, the Company
recognized a one-time pretax charge of $12,341,000 related to write
off of purchased research and development and accrued merger
integration costs as a result of the acquisition of LIS Holdings
Ltd., headquartered in the United Kingdom. Such acquisition
related charges are reported as a separate line item in the
consolidated statement of earnings and had an effect of $0.28 per
share net of tax for the year ended December 31, 1996.
Amortization of excess of cost over fair value of net assets
acquired of $3,679,000 for year ended December 31, 1996, increased
from $2,755,000 in 1995 due to the acquisitions of the new
subsidiaries.
Net interest expense increased to $3,129,000, for the year
ended December 31, 1996, from $1,421,000 in 1995 primarily due to
decreased interest income resulting from the decrease in cash and
temporary investments described below, an increase in interest
expense related to interim short term borrowings under existing
credit lines and decreased capitalized interest partially offset by
a reduction in interest expense due to annual repayments of
outstanding debt.
The Company's effective tax rate for 1996 remained constant at
38.0 percent.
At December 31, 1996, the Company had net deferred tax assets
of approximately $17,981,000, consisting of current deferred tax
assets of $26,125,000 and long-term deferred tax liabilities of
$8,144,000. The current deferred tax assets reflect a valuation
allowance of approximately $601,000 relating to New York State
investment tax credit carryforwards which may be recaptured. No
other valuation allowance is necessary due to the Company's history
of profitability and anticipated future profitability.
For the year ended December 31, 1995
Net revenue of $555,163,000 for the year ended December 31,
1995, increased 19.3 percent over 1994. The increase in net
revenue is primarily due to increased worldwide sales of both
scanner products and hand-held computer systems. Foreign exchange
fluctuations favorably impacted net revenue by 1.9 percent for the
year ended December 31, 1995.
Geographically, North America revenue increased 12.9 percent
over the prior year and International revenue increased 30.7
percent over the prior year. North America and International
revenue represent approximately three-fifths and two-fifths of net
revenue, respectively, for the year ended December 31, 1995, and
approximately two-thirds and one-third of net revenue,
respectively, for the comparable prior year period.
Cost of revenue (as a percentage of net revenue) of 51.3
percent for the year ended December 31, 1995, increased from 50.1
percent in 1994. This increase resulted primarily from a change in
the mix of the Company's products sold to a higher percentage of
lower margin products and an increase in revenue derived from the
34 <PAGE>
indirect sales channel. 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 totaling
$10,089,000 for the year ended December 31, 1995, including the
portion classified in cost of revenue, remained relatively constant
compared with the comparable prior year period.
Engineering costs increased to $42,205,000, for the year ended
December 31, 1995, from $36,682,000 for 1994. While in absolute
dollars engineering expenses increased 15.1 percent for the year
ended December 31, 1995, from the prior year, as a percentage of
revenue such expenses were reduced to 7.6 percent for the year
ended December 31, 1995, from 7.9 percent for the prior year due to
the 19.3 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 increased to
$137,640,000 for the year ended December 31, 1995, from
$119,733,000 in 1994. While in absolute dollars selling, general
and administrative expenses increased 15.0 percent for the year
ended December 31, 1995, from the prior year, as a percentage of
revenue such expenses were reduced to 24.8 percent for the year
ended December 31, 1995, from 25.7 percent in 1994 due to the
increase in revenue and ongoing cost-containment programs. The
increase in absolute dollars reflects expenses incurred to support
a higher revenue base and higher International expenses due to a
weakened U.S. dollar.
During the year ended December 31, 1995, the Company
recognized a one-time pretax charge of $2,500,000 ($0.06 per share)
of severance expense, in connection with the resignation of its
former president and chief operating officer.
Net interest expense decreased to $1,421,000, for the year
ended December 31, 1995, from $4,960,000 in 1994 primarily due to
increased interest income resulting from the increase in cash and
temporary investments, a reduction in interest expense due to
annual repayments of outstanding debt and interest capitalized in
connection with the renovation of the building purchased as
described below.
The effective tax rate for 1995 decreased to 38.0 percent from
40.0 percent in 1994 primarily due to an increase in exempt
earnings from foreign sales and a decrease in state taxes.
At December 31, 1995, the Company had net deferred tax assets
of approximately $16,212,000, consisting of current deferred tax
assets of $24,488,000 and long-term deferred tax liabilities of
$8,276,000. The current deferred tax assets reflect a valuation
allowance of approximately $812,000 relating to New York State
investment tax credit carryforwards which may be recaptured. No
35 <PAGE>
other valuation allowance is necessary due to the Company's history
of profitability and anticipated future profitability.
Liquidity and Capital Resources
The Company utilizes a number of measures of
liquidity including the following:
Year Ended December 31,
1996 1995 1994
Working Capital
(in thousands) $221,678 $209,852 $191,823
Current Ratio (Current
Assets to Current
Liabilities) 2.7:1 3.0:1 3.6:1
Long-Term Debt
to Capital 11.2% 14.7% 15.9%
(Long-term debt to long-
term debt plus equity)
Current assets increased by $35,799,000 from December 31,
1995, principally due to an increase in accounts receivable and
inventories to support higher operating levels, partially offset by
the decrease in cash. The decrease in cash was primarily due to
cash used in investing activities for acquisitions and capital
expenditures.
Current liabilities increased $23,973,000 from December 31,
1995, primarily due to increases in accounts payable and accrued
expenses, deferred revenue and the reclassification of the first
annual installment of the Company's 7.76 percent Series B Senior
Notes to current portion of long-term debt.
The aforementioned activity resulted in a working capital
increase of $11,826,000 for the fiscal year ended December 31,
1996. The Company's current ratio at December 31, 1996, decreased
to 2.7:1 from 3.0:1 at December 31, 1995.
The Company generated $33,855,000 cash flow from operations
but experienced an overall decrease in cash and temporary
investments of $29,360,000 for the year ended December 31, 1996.
The decrease resulted from the acquisitions of three subsidiaries,
capital expenditures and the purchase of 484,000 shares of common
stock for $19,157,000, partially offset by profitable operations
and equity proceeds of stock option exercises and the corresponding
tax benefits. The Company generated an increase of $32,261,000 in
cash and temporary investments during 1995, primarily as a result
of net earnings and equity proceeds of stock exercises and the
corresponding tax benefits, partially offset by capital
expenditures and the purchase of the Company's common stock.
Property, plant and equipment expenditures for the year ended
December 31, 1996, totaled $34,680,000 compared to $36,636,000 for
the year ended December 31, 1995. Such property, plant and
equipment expenditures for the period were financed by
36 <PAGE>
existing cash and temporary investments. The Company does not have
any other material commitments for capital expenditures.
At December 31, 1996, the Company had $50,541,000 in long-term
debt outstanding, excluding current maturities. In March 1993 the
Company issued $25,000,000 of its 7.76 percent Series A Notes due
February 15, 2003, and $25,000,000 of its 7.76 percent Series B
Senior Notes due February 15, 2003, to four insurance companies for
working capital and general corporate
purposes. The Series A Senior Notes are being repaid in equal
annual installments of $2,778,000 which began in February 1995.
The Series B Senior Notes are being repaid in equal annual
installments of $3,571,000 which began in February 1997. The
Senior Notes represent $38,097,000 of the total long-term debt
balance outstanding at December 31, 1996. The remaining
$12,444,000 is primarily related to the Industrial Development Bond
financing completed in October 1989, a low-interest loan from an
agency of the State of New York and debt assumed in connection with
the purchase of the Company's Worldwide Headquarters facility in
1995.
The Company's long-term debt to capital ratio decreased to
11.2 percent at December 31, 1996, from 14.7 percent at December
31, 1995, primarily due to increased equity from the results of
profitable operations and payment of the annual installment of the
Company's long-term obligations previously described.
The Company has loan agreements with three banks pursuant to
which the banks have agreed to provide lines of credit totalling
$60,000,000. As of December 31, 1996, the Company had no
outstanding borrowings under these lines. These agreements expire
between June 30, 1997, and December 31, 1997.
The Company believes that it has adequate liquidity to meet
its current and anticipated needs from the results of its
operations, working capital and existing credit facilities.
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
37<PAGE>
Item 8. Financial Statements and Supplementary Data
The following documents are filed on the pages listed
below, as part of Part II, Item 8 of this report.
Document Page
1. Financial Statements and Accountants' Report:
Independent Auditors' Report F-1
Consolidated Financial Statements:
Balance Sheets as of December 31, 1996 and 1995 F-2
Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 F-3
Statement of Stockholders' Equity for the F-4
Years Ended December 31, 1996, 1995 and 1994
Statements of Cash Flows for the Years Ended F-5
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements F-6
through
F-18
2. Financial Statement Schedules:
Schedule II S-1
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable
38
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors:
The section entitled "Nominees for Election"
contained in the Proxy Statement is hereby
incorporated by reference.
(b) Identification of Executive Officers:
See PART I of this Form 10-K.
Item 11. Executive Compensation
The section entitled "Management Remuneration and
Transactions" contained in the Proxy Statement is hereby
incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The sections entitled "Principal Shareholders" and
"Security Ownership of Management" contained in the Proxy Statement
are hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
The section entitled "Management Remuneration and
Transactions" contained in the Proxy Statement is hereby
incorporated by reference.
39
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) 1. FINANCIAL STATEMENTS:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31,
1996 and 1995
Consolidated Statements of Operations for the
Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1996, 1995 and
1994
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Schedules:
II Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of
conditions under which they are required or because the required
information is given in the consolidated financial statements or
notes thereto.
Individual financial statements of the Company are
omitted as the Company is primarily an operating company and the
subsidiaries included in the consolidated financial statements
filed are substantially wholly-owned and are not indebted to any
person other than the parent in amounts which exceed 5% of total
consolidated assets at the date of the latest balance sheet filed,
excepting indebtedness incurred in the ordinary course of business
which is not overdue and which matures within one year from the
date of its creation, whether evidenced by securities or not, and
indebtedness which is collateralized by the parent by guarantee,
pledge, assignment or otherwise.
40<PAGE>
3. Exhibits
Exhibit
3.1 Certificate of Incorporation of Symbol
Technologies, Inc. and amendments thereto.
3.3 By-laws of the Company as currently in
effect.
4.1 Form of Certificate for Shares of the
Common Stock of the Company.
(Incorporated by reference to Exhibit
4.1 of the Form 8-B Registration No. 0-9028,
filed with the Commission on November 23, 1987).
10.1 1991 Employee Stock Option Plan (Incorporated
by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1991 (the "1991 Form 10-K").)
10.2 1990 Non-Executive Stock Option Plan, as
amended. (Incorporated by reference to Exhibit 10.1
of the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 (the "1995 Form 10-K").)
10.3 1987 Consultant Stock Option Plan,
as amended. (Incorporated by reference to
Exhibit 10.3 of the 1991 Form 10-K.)
10.4 Employment Agreement by and between the
Company and Raymond Martino, dated as of
June 12, 1994. (Incorporated by reference
to Exhibit 10.3 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1994.)
10.5 Employment Agreement by and between
the Company and Jerome Swartz, dated
as of June 30, 1995. (Incorporated by
reference to Exhibit 10.4 to the 1995 Form 10-K.)
10.6 Employment Agreement by and between
the Company and Tomo Razmilovic, dated
as of October 16, 1995. (Incorporated by reference
to Exhibit 10.5 of the 1995 Form 10-K.)
10.7 Employment Agreement by and between
the Company and Frederic P. Heiman, dated
as of June 30, 1995. (Incorporated by reference to
Exhibit 10.6 of the 1995 Form 10-K.)
10.8 Employment Agreement by and between
the Company and Leonard H. Goldner, dated
as of November 1, 1995. (Incorporated by reference to
Exhibit 10.7 of the 1995 Form 10-K.)
41 <PAGE>
10.9 Form of 2000 Stock Purchase Warrant issued to
directors. (Incorporated by reference to Exhibit
10.11 to the 1991 Form 10-K.)
10.10 1994 Directors Stock Option Plan. (Incorporated
by reference to Exhibit 4.1 to Registration
Statement No. 33-78678 on Form S-8.)
10.11 Executive Retirement Plan, as amended.
(Incorporated by reference to Exhibit 10.14
to the Company's Annual Report on
Form 10-K for the year ended
December 31, 1989 (the "1989 Form 10-K").)
10.12 Symbol Technologies, Inc.
Stock Ownership and Option Retention Program.
(Incorporated by reference to Exhibit 10.13 of
the 1995 Form 10-K.)
10.13 Summary of Symbol Technologies, Inc.
Executive Bonus Plan. (Incorporated by reference
to Exhibit 10.14 of the 1995 Form 10-K.)
10.14 Lease Agreement and Amended and
Restated Lease Agreement dated as of
October 1, 1989 between Suffolk County
Industrial Development Agency and
Symbol Technologies, Inc.
(Incorporated by reference to Exhibit
10.15 to the 1989 Form 10-K.)
10.15 Sublease dated June 28, 1995 between
Grumman Data Systems Corporation and
Symbol Technologies, Inc. (Incorporated by
reference to Exhbit 10.16 to the 1995 Form 10-K.)
10.16 Form of Note Agreements dated as of
February 15, 1993 relating to the Company's
7.76% Series A and Series B Senior Notes due
February 15, 2003 (Incorporated by reference to
Exhibit 10.14 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992.)
22. Subsidiaries.
23. Consent of Deloitte & Touche LLP
(b) Reports on Form 8-K
Not Applicable
42<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
By: s/ Jerome Swartz
Jerome Swartz
Chairman of the Board
Dated: February 28, 1997
43<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
s/ Jerome Swartz Chairman of the February 28, 1997
Jerome Swartz Board and Director
(Principal Executive
Officer)
s/ Tomo Razmilovic Director February 28, 1997
Tomo Razmilovic
s/ Raymond R. Martino Director February 28, 1997
Raymond R. Martino
s/ Harvey P. Mallement Director February 28, 1997
Harvey P. Mallement
s/ Frederic P. Heiman Director February 28, 1997
Frederic P. Heiman
s/ Saul P. Steinberg Director February 28, 1997
Saul P. Steinberg
s/ Lowell C. Freiberg Director February 28, 1997
Lowell C. Freiberg
s/ George Bugliarello Director February 28, 1997
George Bugliarello
s/ Charles Wang Director February 28, 1997
Charles Wang
s/ Thomas G. Amato Senior Vice President February 28, 1997
Thomas G. Amato Finance (Chief
Financial Officer)
s/ Brian T. Burke Vice President and February 28, 1997
Brian T. Burke Controller (Chief
Accounting Officer)
44<PAGE>
SYMBOL TECHNOLOGIES, INC.
AND SUBSIDIARIES
------
CONSOLIDATED FINANCIAL STATEMENTS
COMPRISING ITEM 8 AND SCHEDULE II LISTED IN THE
INDEX AT ITEM 14(a)2 OF ANNUAL REPORT ON FORM 10-K
TO SECURITIES AND EXCHANGE COMMISSION FOR THE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
I N D E X
PAGE
Independent auditors' report F-1
Consolidated financial statements:
Balance sheets F-2
Statements of earnings F-3
Statements of stockholders' equity F-4
Statements of cash flows F-5
Notes to consolidated financial statements (1-15) F-6 through F-18
Additional financial information pursuant to the
requirements of Form 10-K:
Schedule:
II - Valuation and qualifying accounts S-1
Schedules not listed above have been omitted because they are either not
applicable or the required information has been provided elsewhere in the
consolidated financial statements or notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Symbol Technologies, Inc.
Holtsville, New York
We have audited the accompanying consolidated balance sheets of Symbol
Technologies, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years in the period ended December 31,
1996. Our audits also included the financial statement schedule listed in
the index at Item 14(a)2. These financial statements and financial
statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements
and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Symbol Technologies, Inc.
and subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly in all material respects the information
set forth therein.
/s/ DELOITTE & TOUCHE LLP
Jericho, New York
February 12, 1997
F-1<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except stock par value)
December 31, December 31,
ASSETS 1996 1995
CURRENT ASSETS:
Cash, including temporary investments of
$16,715 and $62,887, respectively $ 34,290 $ 63,650
Accounts receivable, less allowance for doubtful
accounts of $10,123 and $7,816, respectively 146,273 118,175
Inventories, net 133,637 95,267
Deferred income taxes 26,125 24,488
Prepaid expenses and other current assets 12,029 14,975
TOTAL CURRENT ASSETS 352,354 316,555
PROPERTY, PLANT AND EQUIPMENT, net 101,331 88,264
INTANGIBLE ASSETS, net 113,187 96,338
SOFTWARE DEVELOPMENT COSTS, net 23,974 21,054
OTHER ASSETS 23,392 22,057
$614,238 $544,268
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 99,241 $ 81,948
Current portion of long-term debt 10,384 6,910
Income taxes payable 9,141 11,909
Deferred revenue 11,910 5,936
TOTAL CURRENT LIABILITIES 130,676 106,703
LONG-TERM DEBT, less current maturities 50,541 60,829
DEFERRED REVENUE 3,146 5,664
OTHER LIABILITIES 19,158 18,218
COMMON EQUITY PUT OPTIONS 11,041 -
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
100,000 shares; issued 28,195 shares
and 27,229 shares, respectively 282 272
Additional paid-in capital 258,792 245,728
Cumulative translation adjustments (5,650) (8,299)
Retained earnings 206,331 156,075
459,755 393,776
Less:
Treasury stock at cost, 2,092 shares and
1,608 shares, respectively (60,079) (40,922)
399,676 352,854
$614,238 $544,268
See notes to consolidated financial statements
F-2<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(All amounts in thousands, except per share data)
Year ended December 31,
1996 1995 1994
NET REVENUE 656,675 $555,163 $465,306
COST OF REVENUE 349,428 284,836 232,889
AMORTIZATION OF SOFTWARE
DEVELOPMENT COSTS 10,686 8,828 9,963
GROSS PROFIT 296,561 261,499 222,454
OPERATING EXPENSES:
Engineering 46,752 42,205 36,682
Selling, general and
administrative 149,602 137,640 119,733
Purchased research and
development and merger
integration costs 12,341 - -
Severance - 2,500 -
Amortization of excess of
cost over fair value of
net assets acquired 3,679 2,755 2,773
212,374 185,100 159,188
EARNINGS FROM OPERATIONS 84,187 76,399 63,266
OTHER (EXPENSE)/INCOME:
Interest income 1,756 3,143 352
Interest expense (4,885) (4,564) (5,312)
(3,129) (1,421) (4,960)
EARNINGS BEFORE INCOME
TAXES 81,058 74,978 58,306
PROVISION FOR INCOME
TAXES 30,802 28,492 23,322
NET EARNINGS $ 50,256 $ 46,486 $ 34,984
EARNINGS PER SHARE:
Primary $1.86 $1.72 $1.34
Fully-diluted $1.85 $1.71 $1.33
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Primary 27,079 27,052 26,162
Fully-diluted 27,122 27,220 26,392
See notes to consolidated financial statements
F-3<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(All amounts in thousands, except stock par value)
Common Stock
$0.01 Par Value
Additional Cumulative Total
Shares Paid-in Translation Retained Treasury Stockholders'
Issued Amount Capital Adjustments Earnings Stock Equity
BALANCE, JANUARY 1, 1994 24,716 $247 $201,885 ($5,317) $74,605 ($12,674) $258,746
Exercise of stock options 1,993 20 32,803 - - - 32,823
Exercise of warrants 10 - 110 - - - 110
Purchase of treasury shares - - - - - (7,626) (7,626)
Translation adjustments - - - (2,870) - - (2,870)
Net earnings - - - - 34,984 - 34,984
BALANCE, DECEMBER 31, 1994 26,719 267 234,798 (8,187) 109,589 (20,300) 316,167
Exercise of stock options 510 5 10,930 - - - 10,935
Purchase of treasury shares - - - - - (20,622) (20,622)
Translation adjustments - - - (112) - - (112)
Net earnings - - - - 46,486 - 46,486
BALANCE, DECEMBER 31, 1995 27,229 272 245,728 (8,299) 156,075 (40,922) 352,854
Exercise of stock options 919 10 22,701 - - - 22,711
Exercise of warrants 47 - 458 - - - 458
Proceeds from sale of common
equity put options - - 946 - - - 946
Reclassification of common
equity put options obligation - - (11,041) - - - (11,041)
Purchase of treasury shares - - - - - (19,157) (19,157)
Translation adjustments - - - 2,649 - - 2,649
Net earnings - - - - 50,256 - 50,256
BALANCE, DECEMBER 31, 1996 28,195 $282 $258,792 ($5,650) $206,331 ($60,079) $399,676
See notes to consolidated financial statements
F-4<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
Year ended December 31,
1996 1995 1994
Cash flows from operating activities:
Net earnings $ 50,256 $ 46,486 $ 34,984
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization of
property, plant and equipment 23,247 18,911 14,063
Other amortization 16,276 15,347 13,756
Provision for losses on accounts
receivable 2,270 3,458 2,336
Charge for purchased research and
development 10,741 - -
Deferred income taxes (2,835) 1,958 5,854
Changes in assets and liabilities:
Accounts receivable (24,481) (25,131) (10,614)
Sale of lease receivables 17,308 - -
Inventories (33,880) 5,672 (18,914)
Prepaid expenses and other current
assets 605 (4,553) (2,954)
Software development costs (13,606) (11,324) (11,245)
Intangible assets (7,054) (3,654) (2,289)
Other assets (14,150) (3,432) (463)
Accounts payable and accrued expenses 10,981 21,033 4,589
Income taxes payable (3,319) 10,527 (1,901)
Accrued restructuring costs - - (10,386)
Other liabilities and deferred revenue 1,496 (885) 4,977
Net cash provided by
operating activities 33,855 74,413 21,793
Cash flows from investing activities:
Note receivable 500 (3,500) -
Proceeds from sale of property, plant
and equipment - 4,615 -
Expenditures for property, plant
and equipment (34,680) (36,636) (24,790)
Acquisition of subsidiaries, net of
cash acquired (26,962) - -
Other investing activities, net - - 720
Net cash used in investing
activities (61,142) (35,521) (24,070)
Cash flows from financing activities:
Proceeds from issuance of notes payable
and long-term debt 48,400 8,558 3,000
Principal repayments of notes payable
and long-term debt (55,214) (5,988) (2,494)
Exercise of stock options and
warrants 23,169 10,935 32,933
Proceeds from common equity put options 946 - -
Purchase of treasury shares (19,157) (20,622) (7,626)
Net cash (used in) provided by financing
activities (1,856) (7,117) 25,813
Effects of exchange rate changes on cash (217) 486 354
Net (decrease)/increase in cash and temporary
investments (29,360) 32,261 23,890
Cash and temporary investments,
beginning of year 63,650 31,389 7,499
Cash and temporary investments, end
of year $ 34,290 $ 63,650 $ 31,389
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 4,987 $ 4,914 $ 5,177
Income taxes $ 19,685 $ 12,614 $ 7,513
See notes to consolidated financial statements
F-5<PAGE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Consolidation
The consolidated financial statements include the accounts of Symbol
Technologies, Inc. and its subsidiaries (the "Company"), substantially all of
which are wholly-owned. Significant intercompany transactions and balances
have been eliminated in consolidation.
b. Temporary Investments
Temporary investments include highly liquid investments with original
maturities of three months or less and consist of money market funds and time
deposits at December 31, 1996 and 1995. Temporary investments are stated at
cost, which approximates market value. These investments are not subject to
significant market risk.
c. Inventories
Inventories are stated at the lower of cost (determined on a first-in, first-
out basis) or market.
d. Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation and
amortization is provided on a straight-line basis over the following
estimated useful lives:
Buildings and improvements 15 to 40 years
Machinery and equipment 2 to 5 years
Furniture, fixtures and office equipment 5 to 10 years
Leasehold improvements (limited to terms
of the leases) 2 to 10 years
Construction in progress (which includes capitalized interest) is amortized
over the estimated lives of the related assets when they are placed into
service. The Company capitalized interest costs of $258,000 and $646,000 for
the years ended December 31, 1996 and 1995, respectively. No interest was
capitalized for the year ended December 31, 1994.
e. Intangible Assets
The excess of cost over fair value of net assets acquired is generally being
amortized on the straight-line method over 40 years.
Patents and trademarks, including costs incurred in connection with the
protection of patents, are amortized over their estimated useful lives, not
exceeding 20 years, using the straight-line method.
f. Software Development Costs
The Company capitalizes costs incurred for internally developed product
software where economic and technological feasibility has been established
and for qualifying purchased product software. Capitalized software costs
are amortized on a straight-line basis over the estimated useful product
lives (normally three years). Software development costs which have been
fully amortized for two years or more are written off.
g. Research and Development Expenses
The Company expenses all research and development costs as incurred. The
Company incurred research and development expenses of approximately
$20,164,000, $19,879,000 and $16,678,000, for the years ended December 31,
1996, 1995 and 1994, respectively, which are classified in engineering
expenses.
F-6<PAGE>
h. Revenue Recognition
Revenue from sales of the Company's products is recognized upon shipment. In
conjunction with these sales, field service maintenance agreements are sold
for certain products. When such revenue is recorded prior to providing
repair and maintenance service, it is deferred and recognized over the term
of the related agreements.
i. Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS
109") which requires recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the
Company's financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the differences between
the financial accounting and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse.
Investment, research and development and other tax credits are accounted for
by the flow-through method.
The cumulative amount of undistributed earnings of foreign subsidiaries at
December 31, 1996, approximates $28,734,000. The Company does not provide
deferred taxes on undistributed earnings of foreign subsidiaries since the
Company anticipates no significant incremental U.S. income taxes on the
repatriation of these earnings as tax rates in foreign jurisdictions
generally approximate or exceed the U.S. Federal rate.
j. Earnings Per Share
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.
k. Foreign Currency Translation and Transactions
Assets and liabilities of foreign subsidiaries are translated at year-end
exchange rates. Results of operations are translated using the average
exchange rates prevailing throughout the year. Gains and losses from foreign
currency transactions are included in net earnings for the year and are not
material. Exchange rate changes arising from translation are included in the
cumulative translation adjustments component of stockholders' equity.
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company enters
into foreign currency forward exchange contracts to hedge a portion of its
intercompany accounts receivable transactions. The effect of this practice
is to minimize the impact of foreign exchange rate movements on the Company's
operating results. The Company's hedging activities do not subject the
Company to exchange rate risk because gains and losses on these contracts
offset losses and gains on the related intercompany receivables being hedged.
As of December 31, 1996, the Company had no forward exchange contracts
outstanding. The forward exchange contracts generally have maturities that
do not exceed 12 months and require the Company to exchange foreign
currencies for U.S. dollars at maturity, at rates agreed to at inception of
the contracts.
l. Pervasiveness of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7<PAGE>
2. ACQUISITIONS
In January and March 1996 the Company established wholly owned subsidiaries in
Africa and Denmark through the acquisition of Barcodes (Pty) Ltd., and the Bar
Code Data Capture Division of BCP Hardware A/S, respectively. The initial costs
of the acquisitions amounted to $4,080,000 and $3,000,000, respectively. These
acquisitions have been accounted for as purchases and, accordingly the cost of
each acquisition has been allocated to net assets acquired based upon fair
values. The excess of cost over net assets acquired of approximately $3,700,000
and $2,700,000, respectively, relating to these acquisitions is being amortized
over twenty and ten years, respectively. Additional acquisition payments are
contingent upon the attainment of certain annual net revenue levels, as defined
in the respective agreements, by each of these acquired subsidiaries during the
next three years and four years, respectively.
Results of operations of these subsidiaries have been included in consolidated
operations as of their respective effective acquisition dates. Pro forma results
of operations, assuming these acquisitions had been completed at the beginning
of 1996 and 1995, would not differ materially from the reported results.
In August, 1996, the Company acquired LIS Holdings Ltd., ("LIS") headquartered
in the United Kingdom. LIS is one of Europe's largest providers of technology-
based logistics management systems providing technology solutions based on its
own software products in concert with bar code, wireless networking and
ruggedized terminals. Terms of the acquisition included an initial payment of
$20,844,000 and subsequent additional payments, that range from zero to a total
of $7,800,000 and are contingent upon the attainment of certain annual net
revenue levels, as defined, during the next three years. This acquisition has
been accounted for as a purchase. The purchase price (including acquisition
costs) has been allocated to net assets acquired based upon fair values. After
allocating the purchase price to net tangible assets, purchased software, which
had reached technological feasibility, was valued using a cash flow model, under
which future cash flows were discounted utilizing an assessment of the life
expectancy of the purchased software. This purchased software of $1,000,000 has
been capitalized and is being amortized over three years. Purchased research and
development, which had not reached technological feasibility and has no
alternative future use was valued using the same methodology. This purchased
research and development amounted to $10,741,000 and has been charged to
operations at the acquisition date. In addition, the Company has charged current
operations with accrued merger integration costs of $1,600,000, representing
costs to be incurred associated primarily with combining the Company's existing
operations in the United Kingdom with newly acquired facilities of LIS. The
excess of cost over net assets acquired of approximately $8,800,000, relating to
the acquisition, is being amortized over seven years.
The following unaudited pro forma combined results of operations of the Company
and LIS are presented on the basis that the acquisition had taken place at the
beginning of each of 1996 and 1995, and exclude the effect of the one-time pre-
tax charges totaling $12,341,000 previously discussed:
Year Ended December 31,
1996 1995
(in thousands)
Revenue $667,509 $572,204
Net Earnings $ 57,342 $ 45,529
Fully-Diluted Earnings per share $ 2.11 $ 1.67
Fully-Diluted weighted average
shares outstanding 27,122 27,220
In the opinion of management, the unaudited pro forma combined results of
operations are not necessarily indicative of the actual results that would have
occurred had LIS been under the ownership and operation of the Company during the
periods presented.
F-8<PAGE>
3. INVENTORIES
December 31, December 31,
1996 1995
(in thousands)
Raw materials $ 54,534 $47,701
Work-in-process 18,425 9,181
Finished goods 60,678 38,385
$133,637 $95,267
4. PROPERTY, PLANT AND EQUIPMENT
December 31, December 31,
1996 1995
(in thousands)
Land $ 8,636 $ 8,326
Buildings and improvements 32,172 12,648
Machinery and equipment 67,243 54,208
Furniture, fixtures and office
equipment 47,084 36,743
Leasehold improvements 6,640 8,634
Construction in progress - 18,421
161,775 138,980
Less: Accumulated depreciation and
amortization 60,444 50,716
$101,331 $ 88,264
During the year ended December 31, 1995, the Company sold land and a building
located in Costa Mesa, California, for $1,000,000 cash and a $3,500,000
promissory note bearing interest at 8.0 percent. Principal payments of
$1,000,000 have been received with the remaining balance of unpaid principal and
interest due in April 1999. In addition, the Company purchased a 48-acre site
in Holtsville, New York, including a 174,000-square-foot office building for
$4,200,000 cash and the assumption of debt related to the facility, which had a
value of $8,556,000 based upon borrowing rates available to the Company at the
date the transaction occurred.
5. INTANGIBLE ASSETS
December 31, December 31,
1996 1995
(in thousands)
Excess of cost over fair value of
net assets acquired $118,147 $102,903
Patents, trademarks and purchased
technologies 25,479 18,492
Executive retirement plan
unrecognized prior service
costs 948 1,060
144,574 122,455
Less: Accumulated amortization 31,387 26,117
$113,187 $ 96,338
F-9<PAGE>
6. SOFTWARE DEVELOPMENT COSTS
Year Ended December 31,
1996 1995 1994
(in thousands)
Beginning of year $21,054 $18,558 $17,276
Amounts capitalized 13,606 11,324 11,245
34,660 29,882 28,521
Less: Amortization 10,686 8,828 9,963
End of year $23,974 $21,054 $18,558
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
December 31, December 31,
1996 1995
(in thousands)
Accounts payable $45,251 $32,110
Accrued payroll, bonuses, fringe
benefits, severance and
payroll taxes 29,174 28,491
Other accrued expenses 24,816 21,347
$99,241 $81,948
8. LONG-TERM DEBT
December 31, December 31,
1996 1995
(in thousands)
Senior Notes (a) $44,446 $47,222
Industrial Development Bonds (b) 7,106 9,475
Assumed Revenue Bond Financing (c) 6,335 7,903
State Loan (d) 3,000 3,000
Other 38 139
60,925 67,739
Less: Current maturities 10,384 6,910
$50,541 $60,829
(a) In March 1993 the Company issued $25,000,000 of its 7.76 percent Series A
Senior Notes due February 15, 2003, and $25,000,000 of its 7.76 percent
Series B Senior Notes due February 15, 2003, to four insurance companies.
The Series A Senior Notes are being repaid in equal annual installments of
$2,778,000 which began in February 1995. The Series B Senior Notes are
being repaid in equal annual installments of $3,571,000 that began in
February 1997. Interest is payable quarterly for these Notes. The
financing agreements contain certain covenants regarding the maintenance
of a minimum level of tangible net worth, as well as certain financial
ratios, as defined, and certain restrictions including limitations on
indebtedness.
F-10<PAGE>
(b) Borrowings under the Industrial Development Bond financing accrue interest
at the rate of 8.95 percent, payable quarterly, and the loan is being
repaid in equal annual installments of $2,368,000 which began in October
1992. The Company's owned facilities located in Bohemia, New York, are
pledged as collateral for this debt. The financing agreements contain
certain covenants regarding the maintenance of a minimum level of tangible
net worth and working capital, as well as certain financial ratios, as
defined, and limitations on investments, dividends and indebtedness.
(c) In June 1995 the Company assumed a $7,282,000 New York Industrial
Development bond which is collateralized by its facilities located in
Holtsville, New York. The bond bears interest at 12.3 percent and
principal and interest are being repaid in ten equal semi-annual
installments of $997,000 which began in October 1995. Based upon
borrowing rates of 6.7 percent available to the Company at the time the
transaction occurred, a bond premium of $1,274,000 has been recorded in
long-term debt and is being amortized over the life of the bond.
(d) In 1994, the Company received a $3,000,000 loan from an agency of New York
State. The loan bears interest at 1.0 percent, payable monthly, and the
principal is to be repaid in one installment in 2001. The interest rate
is subject to a covenant requiring a minimum level of full-time permanent
employees.
Based on the borrowing rates currently available to the Company for bank loans
with similar terms, the fair values of Senior Notes and Industrial Development
Bonds approximates their carrying values. The fair value of the State Loan as
of December 31, 1996, is approximately $2,300,000.
Long-term debt maturities are:
Year ending December 31, (in thousands)
1997 $10,384
1998 10,476
1999 10,577
2000 7,411
2001 9,353
Thereafter 12,724
$60,925
9. INCOME TAXES
The provision for income taxes consists of:
Year Ended December 31,
1996 1995 1994
(in thousands)
Current:
Federal $19,460 $15,254 $11,067
State and local 4,036 3,136 3,168
Foreign 10,141 8,144 3,233
33,637 26,534 17,468
Deferred:
Federal 16 1,788 4,714
State and local (697) 237 1,246
Foreign (2,154) (67) (106)
(2,835) 1,958 5,854
Total Provision
for Income Taxes $30,802 $28,492 $23,322
F-11<PAGE>
A reconciliation between the statutory U.S. Federal income tax rate and the
Company's effective tax rate is:
Year Ended December 31,
1996 1995 1994
Statutory U.S. Federal
rate 35.0% 35.0% 35.0%
State taxes, net of
Federal tax effect 2.7 2.9 4.9
Tax credits (2.6) (1.6) (4.6)
Amortization of excess of
cost over fair value of
net assets acquired 1.2 1.3 1.5
Exempt income of foreign
sales corporation (3.2) (1.9) (1.1)
Income of foreign subsidiaries
taxed at higher tax rates 2.0 1.8 1.1
Other, net 2.9 0.5 3.2
38.0% 38.0% 40.0%
At December 31, 1996, 1995 and 1994, other liabilities include deferred income taxes
of $8,144,000, $8,276,000 and $9,690,000 respectively. The deferred tax assets and
liabilities at December 31, 1996, 1995 and 1994, respectively, are comprised of:
Year Ended December 31,
1996 1995 1994
Deferred Tax Deferred Tax Deferred Tax
Assets/(Liabilities) Assets/(Liabilities) Assets/(Liabilities)
(in thousands)
Receivables $ 3,176 $ 4,441 $ 4,977
Inventory 6,751 6,113 6,249
Net investment in
sales-type leases (3,360) (3,053) (2,245)
Accrued compensation
and associate benefits 4,051 3,876 3,739
Other accrued liabilities 4,509 5,128 3,382
Accrued restructuring
and severance costs 10 957 61
Deferred revenue - current 2,778 1,890 2,296
Deferred revenue - long term 1,689 2,348 1,511
Deferred patent and product
development costs (15,465) (13,809) (10,427)
Purchased technology &
other intangibles 4,814 - -
Property, plant and
equipment (440) (1,127) (1,492)
Investments 557 878 1,338
Cumulative translation
adjustments 3,732 5,505 945
Tax credit carryforwards 2,438 2,895 3,410
Other, net 3,342 982 680
18,582 17,024 14,424
Less: Valuation allowance 601 812 814
Net Deferred Tax Asset $17,981 $16,212 $13,610
The valuation allowance decreased by $211,000 and $2,000 during 1996 and 1995,
respectively, and increased by $151,000 during 1994. The valuation allowance
relates to state investment tax credit carryforwards which are likely to be
recaptured. No other valuation allowances for deferred tax assets are
necessary due to the Company's history of profitability and anticipated future
profitability.
F-12<PAGE>
10. COMMITMENTS AND CONTINGENCIES
a. Lease Agreements
Future minimum annual rental payments required under noncancellable operating leases
are:
Year ending December 31, (in thousands)
1997 $ 6,391
1998 5,988
1999 4,347
2000 3,319
2001 2,119
Thereafter 1,252
$23,416
Rent expense under substantially all operating leases was $6,728,000, $6,173,000 and
$5,673,000, for the years ended December 31, 1996, 1995 and 1994, respectively.
b. Credit Facilities
The Company has loan agreements with three banks pursuant to which the banks have
agreed to provide lines of credit totalling $60,000,000. As of December 31, 1996, and
1995, the Company had no borrowings outstanding under these lines. Such borrowings
would bear interest at the respective bank's cost of funds rate, which approximated 6.0
percent at December 31, 1996. These agreements expire between June 30, 1997, and
December 31, 1997.
c. Employment Contracts
The Company has executed employment contracts with certain senior executives that vary
in length, for which the Company has a minimum commitment aggregating approximately
$6,241,000 at December 31, 1996.
d. Sale of Lease Receivables
The Company offers lease financing of its products to its customers. During 1996, the
Company sold certain lease receivables relating to sales-type leases for approximately
$17,308,000, which represents the present value of uncollected receivable balances sold
as of the date of sale. Due to the fact that the sale of these lease receivables was
with recourse, the Company retains the same credit risk as if the receivables had not
been sold. An allowance for doubtful accounts is maintained at a level which the
Company believes is sufficient to cover potential losses on receivables sold. The
balance of uncollected receivables as of December 31, 1996 sold approximated
$13,520,000. The sale was recorded as a reduction of prepaid and other current assets,
and other assets.
e. Legal Matters
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 not have
a material adverse effect on the Company's consolidated financial position or results
of operations.
On January 13, 1997, the Court, in the action entitled In re. Symbol Technologies, Inc.
Class Action Litigation issued an order granting the Company's motion for summary
judgment and dismissing all claims against the Company. Final judgment of dismissal
was entered on January 24, 1997.
On April 1, 1996, PSC, Inc. ("PSC") commenced suit against the Company purporting to
assert claims against the Company for alleged violations of the federal antitrust laws,
unfair competition and also seeking a declaratory judgment of non-infringement and
invalidity as to certain of the Company's patents. The Company has consented to PSC's
serving a Third Amended Complaint, which purports to assert essentially the same
antitrust and unfair competition claims against the Company, and also seeks a
declaratory judgment of alleged non-infringement of nine of the Company's patents, and
a declaratory judgment that PSC has not breached its two license agreements with the
Company and that those agreements have been terminated. The Company intends to amend
its suit against PSC to assert infringement of four Symbol patents, breach of contract,
and fraud. The Company is also seeking damages of over $1 million plus interest in
unpaid royalties for each quarter since the second quarter of 1996. The Company had
also sued Data General Corporation ("Data General"), a manufacturer of portable
integrated scanning terminals incorporating a component manufactured by PSC, for
infringement of the same four patents and five additional patents. The nine patents
asserted against Data General are the same nine Symbol patents as to which PSC is
seeking declaratory relief.
On October 9, 1996, the Court granted the Company's motion to sever and stay PSC's
antitrust, unfair competition and related claims. On the same day, the Court denied
Data General's motion to stay the Company's claims against it. The Company moved that
an expedited hearing to be held at the end of March, 1997 on three of the four patents
asserted against PSC, and to stay all non-patent discovery. PSC opposed the Company's
motion and made a cross-motion that no hearing be held until October, 1997 at the
earliest and that all issues be tried in the Spring of 1998 or thereafter. On October
9, 1996, the Court set a one week trial for July 14, 1997 to construe the claims in all
nine patents asserted by Symbol against Data General and PSC, and stayed discovery on
all non-patent claims.
The Company believes that all claims purportedly asserted against it by PSC are
factually and legally baseless, and wholly without merit. The Company intends to
vigorously defend the litigation.
F-13<PAGE>
11. STOCKHOLDERS' EQUITY
a. Common Equity Put Options
During 1996 the Company issued common equity put options on 297,000 shares of its
common stock which are exercisable for periods that range from six months to one
year from the date of issuance and give independent parties the right to sell such
shares to the Company at strike prices that range from $36.632 per share to $40.055
per share. The balance of the common equity put option account is the amount the
Company would be obligated to pay if all the put options were exercised. Proceeds
of $946,000 from the issuance of the put options were credited to additional paid
in capital.
b. Stock Option Plans
There are a total of 4,648,000 shares of Common Stock reserved for issuance under
the Company's stock option plans at December 31, 1996. All stock options granted
to date vest over a four to five year period, expire after seven to ten years and
have exercise prices equal to the market value of the Company's common stock at the
date of grant.
A summary of changes in the stock option plans is:
Shares Under Option
Number of Weighted
Option Price Shares Avg. Exercise
per Share (in thousands) Price
Shares under option
at December 31, 1994 3,580 $14.70
Granted $26.25 to $39.38 1,242 $30.68
Exercised $ 8.00 to $24.25 (510) $13.20
Cancelled $ 9.00 to $38.00 (301) $20.66
Shares under option
at December 31, 1995 4,011 $19.31
Granted $37.50 to $47.50 843 $41.69
Exercised $ 6.50 to $29.88 (919) $13.16
Cancelled $ 9.00 to $47.00 (130) $25.96
Shares under option
at December 31, 1996 3,805 $25.50
Shares exercisable
at December 31, 1996 $ 5.50 to $29.88 1,367 $13.64
The following table summarizes information concerning currently outstanding and
exercisable options:
Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Life Exercise Exercisable Exercise
Prices (In thousands) (years) Price (In thousands) Price
$ 5.50 - $ 8.13 217 .5 $ 7.93 217 $ 7.93
$ 9.00 - $12.50 878 5.5 $12.05 730 $11.96
$13.63 - $20.38 493 5.5 $17.97 324 $18.01
$20.88 - $29.88 853 7.5 $26.45 96 $24.46
$33.63 - $47.50 1,364 8.5 $39.09 - $ -
3,805 1,367
At December 31, 1996, an aggregate of 843,000 shares remain available for grant
under the stock option plans. The tax benefits arising from stock option
exercises during the years ended December 31, 1996, 1995 and 1994, in the amount
of $10,761,000, $4,184,000, and $14,066,000, respectively, were recorded in
stockholders' equity as additional paid-in capital.
The Company applies APB opinion No. 25 and related interpretations in accounting
for its plans. Accordingly, no compensation cost has been recognized for the
fixed portion of its plans.
F-14<PAGE>
If compensation cost for the Company's fixed stock options (including outside
directors' options and stock purchase warrants discussed below) had been
determined consistent with Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation to Employees" ("SFAS No. 123"), the
Company's net income and earnings per share would have been the pro forma amounts
indicated below:
Year Ended December 31,
1996 1995
(in thousands)
Net Income:
As Reported $50,256 $46,486
Pro Forma $48,401 $45,804
Fully-diluted Earnings Per Share:
As Reported $1.85 $1.71
Pro Forma $1.78 $1.68
The weighted average fair value of options granted during 1996 and 1995 was
$14.03 and $10.32 per option, respectively. In determining the fair value of
options and outside directors' options and stock purchase warrants granted in
1996 and 1995 for pro forma purposes the Company used the Black-Scholes option
pricing model and assumed the following: a risk free interest rate of 5.5
percent; an expected option life of 4.5 years; an expected volatility of 29
percent; and dividend yield of 0.14 percent per year. As required by SFAS No.
123, the impact of outstanding non-vested stock options granted prior to 1995 has
been excluded from the pro-forma calculation; accordingly, the 1995 and 1996 pro-
forma adjustments are not indicative of future period pro-forma adjustments when
the calculation will apply to all applicable stock options.
c. Outside Directors' Options and Stock Purchase Warrants
Any option issued to outside directors vest over a two year period and expire
after ten years. All options and warrants have exercise prices equal to the
market value of the Company's common stock at the date of grant. In addition,
prior to 1994 the Company issued warrants to outside directors' which have a term
of seven years and were all vested prior to 1994. The following table indicates
the number of common shares issuable upon exercise and the exercise price per
share of all outstanding outside Directors' options and stock purchase warrants
as of December 31, 1996:
Exercisable Number of Shares Exercise Price Shares Vested
to Issuable Upon Exercise per Share at December 31,1996
1997 6,000 $11.00 6,000
2000 22,000 $ 8.13 to $15.50 22,000
2004 20,000 $25.25 to $27.75 20,000
2005 10,000 $33.63 5,000
2006 13,000 $47.00 -
71,000 53,000
The weighted average exercise price was $25.10 and $19.11 for the number of
shares issuable upon exercise and shares vested at December 31, 1996,
respectively. The weighted average fair value of outside directors options and
stock purchase warrants granted during 1996 and 1995 was $15.79 and $11.30 per
share, respectively.
d. Treasury Stock
Treasury stock is comprised of 707,000 shares of Common Stock purchased for a
total cost of $20,150,000 from certain officers related to the exercise of stock
options and 1,385,000 shares purchased in open market transactions for a total
cost of $39,929,000 pursuant to the stock repurchase programs authorized by the
Board of Directors on May 8, 1995, and May 4, 1992.
12. ASSOCIATE BENEFIT PLANS
a. Profit Sharing Retirement Plan
The Company maintains a 401(k) profit sharing retirement plan for all U.S.
associates meeting certain service requirements. The Company contributes
monthly, 50.0 percent of associates' contributions up to a maximum of 6.0 percent
F-15<PAGE>
of annual compensation. Plan expense for the years ended December 31, 1996, 1995
and 1994 was $3,469,000, $2,959,000 and $2,559,000, respectively.
b. Health Benefits
The Company pays substantially all costs incurred in connection with providing
associate health benefits through a program administered by an insurance company.
Such costs amounted to $9,701,000, $10,700,000, and $8,536,000, for the years
ended December 31, 1996, 1995 and 1994, respectively.
c. Executive Retirement Plan
The Company maintains an Executive Retirement Plan (the "Plan") in which certain
highly compensated associates are eligible to participate. Participants are
selected by a committee of the Board of Directors. Benefits vest after five
years of service and are based on a percentage of average compensation for the
three years immediately preceding termination of the participant's full-time
employment. As of December 31, 1996, 13 officers were participants in the Plan.
The Company's obligations under the Plan are not funded apart from the Company's
general assets. The Company's funding policy is to set aside assets for the Plan
based on the annual net periodic pension expense. The funded assets are
classified in other assets.
Plan costs are:
Year Ended December 31,
1996 1995 1994
(in thousands)
Service cost - benefits earned during
the period $ 656 $ 650 $ 543
Interest cost on projected benefit
obligation 665 588 624
Amortization of unfunded prior service
costs and unrecognized loss 113 121 130
Net periodic pension expense $1,434 $1,359 $1,297
The Plan's funded status is as follows:
December 31, December 31,
1996 1995
(in thousands)
Accumulated benefit obligation $5,972 $4,904
Projected benefit obligation ($8,342) ($7,446)
Unrecognized net loss 542 838
Unrecognized prior service costs 948 1,060
Accrued pension costs ($6,852) ($5,548)
The Plan had $5,972,000, and $4,735,000 of vested benefit obligations at December
31, 1996, and 1995, respectively which are included in other liabilities. The
projected benefit obligation at December 31, 1996, 1995 and 1994 was determined
using an assumed weighted average discount rate of 7.5 percent, 8.0 percent and
8.0 percent, respectively, and an assumed increase in the long-term rate of
compensation of 5.0 percent.
The Company also maintains a retirement pension plan related to the acquisition
of LIS. Net periodic pension expense related to the LIS plan was approximately
$200,000 for the year ended December 31, 1996.
13. OPERATIONS BY GEOGRAPHIC AREA
The Company is engaged in one industry, specifically, the design, manufacture and
marketing of bar code reading equipment, portable data collection systems and
radio frequency data communications products. Operations in this business
segment are summarized below by geographic area. The Company's operations in
Western Europe generally consist of selling and performing field service
maintenance on products designed and manufactured primarily in the United States.
F-16<PAGE>
North Western
America Europe Other Eliminations Consolidated
(in thousands)
Year ended
December 31, 1996:
Sales to unaffiliated
customers $389,519 $222,611 $44,545 $ - $656,675
Transfers between
geographic areas 140,126 - - (140,126) -
Total net revenue $529,645 $222,611 $44,545 ($140,126) $656,675
Earnings before
provision for income
taxes $ 84,447 $ 1,939(1)$ (366) $ (4,962) $ 81,058
Identifiable assets $379,114 $108,871 $15,916 $ - $503,901
Corporate assets 110,337
Total assets $614,238
(1) Includes a pre-tax charge of $10,741,000 related to acquisition costs
associated with purchased research and development.
Year ended
December 31, 1995:
Sales to unaffiliated
customers $336,734 $178,027 $40,402 $ - $555,163
Transfers between
geographic areas 93,028 - - (93,028) -
Total net revenue$429,762 $178,027 $40,402 ($93,028) $555,163
Earnings before
provision for income
taxes $ 55,505 $ 15,049 $ 592 $ 3,832 $ 74,978
Identifiable assets $327,018 $ 73,953 $ 5,593 $ - $406,564
Corporate assets 137,704
Total assets $544,268
Year ended
December 31, 1994:
Sales to unaffiliated
customers $298,217 $141,090 $25,999 $ - $465,306
Transfers between
geographic areas 97,981 - - (97,981) -
Total net revenue$396,198 $141,090 $25,999 ($97,981) $465,306
Earnings before
provision for income
taxes $ 46,502 $ 4,783 $ 836 $ 6,185 $ 58,306
Identifiable assets $296,530 $ 62,839 $ 3,217 $ - $362,586
Corporate assets 111,627
Total assets $474,213
F-17<PAGE>
In determining earnings before provision for income taxes for each geographic
area, sales and purchases between areas have been accounted for on the basis
of internal transfer prices set by the Company. Certain U.S. operating
expenses are allocated between geographic areas based upon the percentage of
geographic area revenue to total revenue. This allocation has the effect of
reducing reported European and other operating profit.
Identifiable assets are those tangible and intangible assets used in
operations in each geographic area. Corporate assets are principally
temporary investments and the excess of cost over fair value of net assets
acquired.
The Company's export sales, primarily to Europe, approximated $267,156,000,
$218,429,000 and $167,089,000 for the years ended December 31, 1996, 1995 and
1994, respectively.
The Company has customers in the retail industry which accounted for
approximately $26,275,000 and $30,524,000 in accounts receivable at December
31, 1996 and 1995, respectively. The carrying amounts of accounts receivable
approximate fair value because of the short maturity of these instruments.
14. SELECTED QUARTERLY FINANCIAL DATA (unaudited)
The following tables set forth unaudited quarterly financial information for
the years ended December 31, 1996, and 1995:
Quarter Ended
March 31 June 30 September 30 December 31
(in thousands, except per share amounts)
Year Ended
December 31, 1996:
Net revenue $149,082 $159,328 $170,963 $177,302
Gross profit 68,263 72,218 76,762 79,318
Net earnings 13,089 14,290 7,503 15,374
Primary earnings
per share: $0.49 $0.53 $0.28 (1) $0.57
Fully diluted earnings
per share: $0.49 $0.53 $0.28 (1) $0.56
(1) Includes a pre-tax charge of $12,341,000 ($0.28 per share after tax)
related to acquisition costs associated with purchased research and
development ($10,741,000) and merger integration costs ($1,600,000).
Year Ended
December 31, 1995:
Net revenue $131,258 $137,629 $142,811 $143,465
Gross profit 62,285 65,224 67,135 66,855
Net earnings 10,752 11,781 11,468 12,485
Primary earnings
per share: $0.40 $0.43 $0.42 (2) $0.47
Fully diluted earnings
per share: $0.40 $0.43 $0.42 (2) $0.46
(2) Includes a pre-tax charge of $2,500,000 ($0.06 per share after tax)
related to severance and a $575,000 (or $0.02 per share) year to date
adjustment to reduce the estimated effective tax rate.
The quarterly earnings per share information is computed separately for each
period. Therefore, the sum of such quarterly per share amounts may differ
from the total for the year.
15. SUBSEQUENT EVENT
On February 10, 1997 the Board of Directors approved a three for two split of
the Company's common stock to be effected as a 50 percent stock dividend and
a $0.03 semi-annual cash dividend both of which are payable on April 1, 1997
to shareholders of record on March 10, 1997. Per share amounts contained
herein have not been adjusted to reflect this split.
F-18<PAGE>
SCHEDULE II
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(All amounts in thousands)
COLUMN A COLUMN B COLUMN C COLUMN DCOLUMN E
Additions
(1) (2)
Balance at Charged to Charged Balance
beginning cost and to other at end
Description of year expenses accounts Deductionsof year
Allowance for doubtful
accounts:
December 31, 1996 $7,816 $2,270 $890 (a) $ 853 (b)$10,123
December 31, 1995 $7,269 $3,458 $569 (a) $3,480 (b)$ 7,816
December 31, 1994 $5,112 $2,336 $ - $ 179 (b)$ 7,269
(a) Primarily collection of accounts previously written off.
(b) Uncollectible accounts written off.
S-1
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
ANNUAL REPORT
ON
FORM 10-K
FOR FISCAL YEAR ENDED
DECEMBER 31, 1996
_________________________________
SYMBOL TECHNOLOGIES, INC.
EXHIBITS
-1-<PAGE>
3. Exhibits
Exhibit
3.1 Certificate of Incorporation of Symbol
Technologies, Inc. and amendments thereto. 4
3.3 By-laws of the Company as currently in
effect. 21
4.1 Form of Certificate for Shares of the
Common Stock of the Company.
(Incorporated by reference to Exhibit
4.1 of the Form 8-B Registration No. 0-9028,
filed with the Commission on November 23, 1987).
10.1 1991 Employee Stock Option Plan (Incorporated
by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1991 (the "1991 Form 10-K").)
10.2 1990 Non-Executive Stock Option Plan, as
amended. (Incorporated by reference to Exhibit 10.1
of the Companys Annual Report on Form 10-K for the
year ended December 31, 1995 (the "1995 Form 10-K").)
10.3 1987 Consultant Stock Option Plan,
as amended. (Incorporated by reference to
Exhibit 10.3 of the 1991 Form 10-K.)
10.4 Employment Agreement by and between the
Company and Raymond Martino, dated as of
June 12, 1994. (Incorporated by reference
to Exhibit 10.3 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1994.)
10.5 Employment Agreement by and between
the Company and Jerome Swartz, dated
as of June 30, 1995. (Incorporated by
reference to Exhibit 10.4 to the 1995 Form 10-K.)
10.6 Employment Agreement by and between
the Company and Tomo Razmilovic, dated
as of October 16, 1995. (Incorporated by reference
to Exhibit 10.5 of the 1995 Form 10-K.)
10.7 Employment Agreement by and between
the Company and Frederic P. Heiman, dated
as of June 30, 1995. (Incorporated by reference to
Exhibit 10.6 of the 1995 Form 10-K.)
10.8 Employment Agreement by and between
the Company and Leonard H. Goldner, dated
as of November 1, 1995. (Incorporated by reference to
Exhibit 10.7 of the 1995 Form 10-K.)
2 <PAGE>
10.9 Form of 2000 Stock Purchase Warrant issued to
directors. (Incorporated by reference to Exhibit
10.11 to the 1991 Form 10-K.)
10.10 1994 Directors Stock Option Plan. (Incorporated
by reference to Exhibit 4.1 to Registration
Statement No. 33-78678 on Form S-8.)
10.11 Executive Retirement Plan, as amended.
(Incorporated by reference to Exhibit 10.14
to the Company's Annual Report on
Form 10-K for the year ended
December 31, 1989 (the "1989 Form 10-K").)
10.12 Symbol Technologies, Inc.
Stock Ownership and Option Retention Program.
(Incorporated by reference to Exhibit 10.13 of
the 1995 Form 10-K.)
10.13 Summary of Symbol Technologies, Inc.
Executive Bonus Plan. (Incorporated by reference
to Exhibit 10.14 of the 1995 Form 10-K.)
10.14 Lease Agreement and Amended and
Restated Lease Agreement dated as of
October 1, 1989 between Suffolk County
Industrial Development Agency and
Symbol Technologies, Inc.
(Incorporated by reference to Exhibit
10.15 to the 1989 Form 10-K.)
10.15 Sublease dated June 28, 1995 between
Grumman Data Systems Corporation and
Symbol Technologies, Inc. (Incorporated by
reference to Exhbit 10.16 to the 1995 Form 10-K.)
10.16 Form of Note Agreements dated as of
February 15, 1993 relating to the Company's
7.76% Series A and Series B Senior Notes due
February 15, 2003 (Incorporated by reference to
Exhibit 10.14 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1992.)
22. Subsidiaries. 21
23. Consent of Deloitte & Touche LLP 24
(b) Reports on Form 8-K
Not Applicable
3<PAGE>
EXHIBIT 3.1
4<PAGE>
Amended as of February 12, 1996
CERTIFICATE OF INCORPORATION
OF
SYMBOL TECHNOLOGIES, INC.
FIRST: The name of the corporation is Symbol
Technologies, Inc. (the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 229 South State Street,
in the City of Dover, County of Kent. The name of its registered
agent at that address is The Prentice-Hall Corporation System,
Inc.
THIRD: The purpose of the Corporation is to engage in
any lawful act or activity for which a corporation may now or
hereafter be organized under the General Corporation Law of the
State of Delaware, as from time to time amended (the "GCL").
FOURTH: (a) The total number of shares of stock which
the Corporation shall have the authority to issue is one hundred
and ten million (110,000,000), consisting of one hundred million
(100,000,000) shares of common stock, par value $.01 per share
(the "Common Stock") and ten million (10,000,000) shares of
preferred stock, par value $1.00 per share (the "Preferred
Stock").
(b) The Preferred Stock may be issued from time to time
in one or more series. The Board of Directors is hereby
authorized to fix or alter the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or
prices, the liquidation preferences of any wholly unissued series
of Preferred Stock, the number of shares constituting any such
series and the designation thereof, and any other relative
rights, preferences or limitations of the shares of such class or
series, or any of them; and to increase or decrease the number of
shares of any series subsequent to the issue of shares of that
series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be
so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
(c) Except as otherwise provided by statute, or in the
resolution or resolutions of the Board of Directors of the
Corporation authorizing the issuance of a class or a series of
Preferred Stock and fixing and determining the voting rights of
the shares of any such class or series, the only class of capital
stock of the Corporation entitled to voting rights for any
purpose shall be the Common Stock, the holders of which shall
have one vote for each share held by them of record.
5<PAGE>
FIFTH: (a) The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors,
the number of which, subject to any right of the holders of any
series of Preferred Stock then outstanding to elect additional
directors under specified circumstances, shall be fixed from time
to time by the Board of Directors pursuant to the By-laws of the
Corporation.
(b) Subject to the rights of holders of any series of
Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or
other cause shall be filled by a majority vote of the directors
then in the office. Any director elected in accordance with the
preceding sentence of this paragraph (b) of this Article FIFTH
shall hold office until the next meeting of stockholders at which
the election of directors is in the regular course of business
and until such director's successor has been elected and
qualified. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director.
SIXTH: No director of the Corporation shall 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 or
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 GCL, or (iv) for any transaction from which the director
derived an improper personal benefit.
SEVENTH: In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is expressly
authorized to adopt, repeal, alter, amend or rescind the By-laws
of the Corporation. In addition, the By-laws of the Corporation
may be adopted, repealed, altered, amended, or rescinded by the
affirmative vote of a majority of the outstanding shares of stock
of the Corporation entitled to vote thereon.
EIGHTH: From time to time any of the provisions of this
Certificate of Incorporation may be amended, altered or repealed,
and other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and all rights at
any time conferred upon the stockholders of the Corporation by
this Certificate of Incorporation are granted subject to the
provisions of this Article EIGHTH.
NINTH: The incorporator is Leonard H. Goldner, whose
business address is c/o Shereff, Friedman, Hoffman & Goodman, 919
Third Avenue, New York, New York 10022.
6<PAGE>
I, the undersigned, for the purpose of forming a
corporation under the laws of the State of Delaware, do make,
file and record this Certificate and do certify that the facts
herein stated are true, and I have accordingly hereunto set my
hand this 18th day of August, 1987.
s/Leonard H. Goldner
Leonard H. Goldner
Secretary
7<PAGE>
EXHIBIT 3.3
18<PAGE>
Amended as of April 29, 1996
By-laws
OF
SYMBOL TECHNOLOGIES, INC.
________________________
ARTICLE I
OFFICES
Section 1.1. Registered Office. The registered
office of the Corporation within the State of Delaware shall be
located at the principal place of business in said State of such
corporation or individual acting as the Corporation's registered
agent in Delaware.
Section 1.2. Other Offices. The Corporation may also
have offices and places of business at such other places both
within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of
stockholders shall be held at the principal office of the
Corporation, or at such other place within or without the State
of Delaware as shall be stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2.2. Annual Meeting. The Annual Meeting of
Stockholders shall be held at such time on such day as shall be
fixed by and in the discretion of the Board of Directors. At the
annual meeting, the stockholders entitled to vote for the
election of directors shall elect, by a plurality vote, a Board
of Directors and transact such other business as may properly
come before the meeting.
Section 2.3. Special Meetings. Special meetings of
stockholders, for any purpose or purposes, may be called by the
Chief Executive Officer and shall be called promptly by the
Chairman of the Board, if there be a Chairman of the Board, the
President or the Secretary at the written request of a majority
of the entire Board of Directors or the holders of record of at
least fifty percent (50%) of the issued and outstanding shares of
the Corporation entitled to vote for the election of directors.
Any such request shall state the purpose or purposes of the
proposed meeting. At any special meeting of stockholders, only
such business may be transacted as is related to the purpose or
purposes set forth in the notice or waiver of notice thereof.
Section 2.4. Notice of Meeting. Written notice of
every meeting of stockholders, stating the place, date and hour
8 <PAGE>
thereof and, in the case of a special meeting of stockholders,
the purpose or purposes thereof and the person or persons by whom
or at whose direction such meeting has been called and such
notice is being issued shall be given not less than ten (10) nor
more than sixty (60) days before the date of the meeting, either
personally or by mail, such notice shall be deemed given when
deposited in the United States mail, with postage prepaid,
directed to the stockholder at his address as it appears on the
record of the shareholders or if he shall have filed with the
Secretary of the Corporation a written request that notices to
him be mailed to some other address, then directed to him at such
other address. Nothing herein contained shall preclude any
stockholder from waiving notice as provided in Section 4 hereeof.
Section 2.5. Quorum. The holders of a majority of
the issued and outstanding shares of stock of the Corporation
entitled to vote thereat, represented in person or by proxy,
shall be necessary to and shall constitute a quorum for the
transaction of business at any meeting of stockholders. If,
however, such quorum shall not be present or represented at any
meeting of stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present or represented. At any such adjourned meeting at which a
quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally noticed. Notwithstanding the foregoing, if after any
such adjournment the Board of Directors shall fix a new record
date for the adjourned meeting, or if the adjournment is for more
than thirty (30) days, a notice of such adjourned meeting shall
be given as provided in Section 2.4 of these By-laws, but such
notice may be waived as provided in Section 4 hereof.
Section 2.6. Voting. At each meeting of
stockholders, each holder of record of shares of stock entitled
to vote shall be entitled to vote in person or by proxy, and each
such holder shall be entitled to one vote for every share
standing in his name on the books of the Corporation as of the
record date fixed by the Board of Directors or prescribed by law
and, if a quorum is present, a majority of the shares of such
stock present or represented at any meeting of stockholders shall
be the vote of the stockholders with respect to any item of
business, unless otherwise provided by any applicable provision
of law, by these By-laws or by the Certificate of Incorporation.
The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cost at such meeting shall
be cast by written ballot.
Section 2.7. Proxies. Every stockholder entitled to
vote at a meeting may authorize another person or persons to act
for him by proxy. Each proxy shall be in writing executed by the
stockholder giving the proxy or by his duly authorized attorney.
No proxy shall be valid after the expiration of three (3) years
from its date, unless a longer period is provided for in such
proxy. Unless and until voted, every proxy shall be revocable at
9<PAGE>
the pleasure of the person who executed it, or his legal
representatives or assigns except in those cases where an
irrevocable proxy permitted by law has been given.
Section 2.8. Written Consent. Any action required or
permitted to be taken by the stockholders of the Corporation at
any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
Section 2.9. List of Stockholders. The officer of
the Corporation having charge of the stock ledger shall make, at
least ten (10) days before each meeting of stockholders, a
complete list of the stockholder entitled to vote at such meeting
or any adjournment thereof, arranged in alphabetical order and
showing the address of and the number and class and series, if
any, of shares held by each. Such list, for a period of ten (10)
days prior to such meeting, shall be kept at the principal place
of business of the Corporation or at the office of the transfer
agent or registrar of the Corporation and such other places as
required by statute and shall be subject to inspection by any
stockholder for any purpose germane to the meeting at any time
during usual business hours. Such list shall also be produced
and kept open at the time and place of the meeting and may be
inspected by any stockholder who is present.
Section 2.10. Stock Ledger. The stock ledger of the
Corporation shall be the only evidence as to who are the
stockholder entitled to examine the stock ledger, the list
required by Section 2.9 or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
Section 3.1. Number of Directors. The number of
directors of the Corporation which shall constitute the entire
Board of Directors shall be fixed from time to time by a vote of
a majority of the entire Board and shall be not less than one (1)
nor more than fifteen (15).
Section 3.2. Election of Directors; Terms. Except as
otherwise provided in the By-laws, only persons who are nominated
in accordance with the procedures in this Section shall be
eligible for election as directors of the Corporation.
Nominations of persons for election to the Board of Directors may
be made at any annual meeting of stockholders by or at the
direction of the Board of Directors, or by any stockholder of
record entitled to vote at the meeting if written notice of the
stockholder's intent to nominate such person or persons is
delivered to, or mailed, postage prepaid, and received by, the
Secretary of the Corporation at the principal executive offices
of the Corporation no later than December 32 of the year
10<PAGE>
preceding the date of the meeting. Each such notice given by a
stockholder must set forth any information relating to the
nominee that would be required to be disclosed in a proxy
statement or other filing required to be made under state or
federal securities laws. The directors shall be elected at the
annual meeting of stockholders and until his successor shall have
been elected and qualified. Directors need not be stockholders
of the Corporation.
Section 3.3. Resignations. Any director of the
Corporation may resign at any time by giving written notice to
the Board or to the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or,
if the time be not specified, it shall take effect immediately
upon its receipt, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
section 3.4. Removal. At a special meeting of
stockholders called for this purpose in the manner herein
provided, the Board of Directors, or any individual director, may
be removed from office, with or without cause, and a new director
or directors elected by a vote of stockholders holding a majority
of the outstanding shares entitled to vote at an election of
directors.
Section 3.5. Newly Created Directorships and
Vacancies. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or
other cause shall be filled by a majority vote of the directors
then in office. Any director elected in accordance with the
preceding sentence of this Section 3.5 shall hold office until
the next meting of stockholders at which the election of
directors is in the regular course of business and until such
director's successor has been elected and qualified. No decrease
in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
Section 3.6. Powers and Duties. Subject to the
applicable provisions of law, these By laws or the Certificate of
Incorporation, but in furtherance and not in limitation of any
rights therein conferred, the Board of Directors shall have the
control and management of the business and affairs of the
Corporation and shall exercise all such powers of the Corporation
and do all such lawful acts and things as may be exercised by the
Corporation.
Section 3.7. Place of Meetings. All meetings of the
Board of Directors may be held either within or without the State
of Delaware.
Section 3.8. Annual Meeting. If the first meeting of
each newly elected Board of Directors shall be held immediately
after the annual stockholder's meeting and in the same place,
11<PAGE>
notice thereof shall not be necessary in order to constitute the
meeting, provided a quorum shall be present. In the event that
such meeting is not held at such date, time and place, the
meeting may be held on any other date, time and place as shall be
specified in a notice thereof given as hereinafter provided in
Section 3.11 or as shall be specified in any waiver of notice
thereof.
Section 3.9. Regular Meetings. Regular meetings of
the Board of Directors may be held upon notice or without notice,
and at such time and at such place as shall from time to time be
determined by the Board.
Section 3.10. Special Meetings. Special meetings of
the Board of Directors may be called by the Chairman of the
Board, if there be a Chairman of the Board, or by the President
or if he is absent, unable or refuses to act, by the Secretary
and shall be called promptly upon the written request of any two
directors specifying the special purpose thereof, on not less
than two (2) days notice to each directors. Such requests shall
state the date, time and place of the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
Section 3.11. Notice of Meeting. Notice of each
special meeting of the Board (and of each regular meeting for
which notice shall be required) shall be given by the Chairman of
the Board, if there be a Chairman of the Board, the President or
the Secretary and shall state the place, date and time of the
meeting. Notice of each such meeting shall be given orally or
shall be mailed to each director at his residence or usual place
of business. If notice of less than one week is given, it shall
be oral, whether by telephone or in person, or sent by special
delivery or express mail, telecopy, telex, cable, telegraph or
any other electronic means of communication. If mailed, the
notice shall be deemed given when deposited in the United States
mail, postage prepaid. Notice of any adjourned meeting,
including the place, date and time of the new meeting, shall be
given to all directors not present at the time of the
adjournment, as well as to the other directors unless the place,
date and time of the new meeting is announced at the adjourned
meeting. Nothing herein contained shall preclude the directors
from waiving notice as provided in Section 4 hereof.
Section 3.12. Quorum and Voting. At all meetings of
the Board of Directors a majority of the entire Board shall be
necessary to and shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, unless
otherwise provided by any applicable provision of law, by these
By-laws, or by the Certificate of Incorporation. The act of a
majority of the directors present at the time of the vote, if a
quorum is present at such time, shall be the act of the Board of
Directors, unless otherwise provided by any applicable provision
of law, by these By-laws or by the Certificate of Incorporation.
If a quorum shall not be present at any meeting of the Board of
12<PAGE>
Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 3.13. Compensation. The Board of Directors,
by the affirmative vote of a majority of the directors then in
office and irrespective of any personal interest of any of its
members, shall have authority to establish reasonable
compensation of all directors for services to the Corporation as
directors, officers or otherwise. The Board of Directors may
also provide that the directors may be reimbursed for their
expenses, if any, or attendance at any meeting of the Board or
any committee thereof.
Section 3.14. Books and Records. The directors may
keep the books for the Corporation, except such as are required
by law to be kept within the state, outside of the State of
Delaware, at such place or places as they may from time to time
determine.
Section 3.15. Action Without a Meeting. Any action
required or permitted to be taken by the Board, or by a committee
of the Board, may be taken without a meeting if all members of
the Board or committee, as the case may be, consent in writing to
the adoption of a resolution authorizing the action. Any such
resolution and the written consents thereto by the members of the
Board or committee shall be filed with the minutes of the
proceedings of the Board or committee.
Section 3.16. Telephonic Meetings. Any one or more
members of the Board, or any committee of the Board, may
participate in a meeting of the Board or committee by means of a
conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at
the same time. Participation by such means shall constitute
presence in person at a meeting.
Section 3.17. Committee of the Board. The Board may,
by resolution adopted by a majority of the entire Board,
designate from among its members an executive and other
committees, each consisting of one (1) or more directors. The
Board may designate one or more directors as alternate members of
any such committee. Such alternate members may replace any
absent member or members at any meeting of any such committee.
In the absence or disqualification of a member if a committee,
and in the absence of a designation by the Board of Directors of
an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or
disqualified member. The Board may also designate one or more
directors as an additional member or members of any such
committee solely for purposes of a specific meeting or series of
meetings of any such committee. Each committee (including the
members thereof) shall serve at the pleasure of the Board and
shall keep minutes of its meetings and report the same to the
13 <PAGE>
Board. Vacancies in the membership of the committee shall be
filled by the Board at a regular meeting or at a special meeting
for that purpose. A majority of the entire committee shall be
necessary to and shall constitute a quorum for the transaction of
business at any meeting of the committee, unless otherwise
provided by any applicable provision of law, these By-laws or the
Certificate of Incorporation. The act of a majority of the
members of the committee present at the time of the vote, if a
quorum is present at such time, shall be the act of the
committee, unless otherwise provided by any applicable provision
of law, these By-laws or the Certificate of Incorporation.
Section 3.18. Authority of Committees; Duties of
Directors. Except as otherwise provided by law, each such
committee shall have and may exercise all the authority of the
Board with respect to all matters, to the extent provided in the
resolution of the Board establishing such committee or in any
subsequent resolution of the Board.
ARTICLE IV
WAIVER
Section 4. Waiver Whenever a notice is required to
be given by any provision of law, by these By-laws, or by the
Certificate of Incorporation, a waiver thereof in writing, or by
telecopy or any other means of communication permissible by law,
whether before or after the time stated therein, shall be deemed
equivalent to such notice. In addition, any stockholder
attending a meeting of stockholders in person or by proxy without
protesting prior to the conclusion of the meeting the lack of
notice thereof to him, and any director attending a meeting of
the Board of Directors without protesting prior to the meeting or
at its commencement such lack of notice, shall be conclusively
deemed to have waived notice of such meeting.
ARTICLE V
OFFICERS
Section 5.1. Officers. The officers of the
Corporation shall be a Chairman of the Board, one or more Vice
Presidents and a Secretary. The Corporation may also have, at
the discretion of the Board, one or more Assistant Secretaries,
one or more Assistant Vice Presidents, one or more Assistant
Treasurers, a Controller and one or more Assistant Controllers,
and such other officers as the Board of Directors shall at
anytime or from time to time deem necessary or advisable to
designate as officers or as may be appointed in accordance with
the provisions of Section 5.3 of this Article V. Any person may
hold two or more of such officers. All officers, as between
themselves and the Corporation, shall have such authority and
perform such duties in the management of the business and affairs
of the Corporation as may be provided in these By-laws, or to the
extent not so provided, as may be prescribed by the Board of
Directors or the Chief Executive Officer as provided in Section
5.3 of this Article V.
14<PAGE>
Section 5.2. Election. The officers of the
Corporation, except such officers as may be appointed in
accordance with the provisions of Section 5.3 or Section 5.5 of
this Article, shall have been elected annually at the annual
meeting of the Board of Directors following the annual meeting of
stockholders and, as vacancies occur, from time to time by the
Board of Directors. Each officer shall hold his office until he
shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall have been elected and qualified.
The officers of the Corporation need not be stockholders of the
Corporation nor, except for the Chairman of the Board, need such
officers be directors of the Corporation.
Section 5.3. Subordinate Officers. The Board may
appoint, or may authorize the Chief Executive Officer to appoint,
such other officers as the business of the Corporation may
require, each of whom shall have authority and perform such
duties as are provided in these By-laws or as the Board or the
Chief Executive Officer may from time to time specify and each
shall hold office until he shall resign or shall have been
removed or otherwise disqualified to serve.
Section 5.4. Removal and Resignation. Any officer may
be removed, either with or without cause, by a majority of the
directors at the time in office, at any regular or special
meeting of the Board, or, except in the case of an officer chosen
by the Board, by any officer upon whom such power of removal may
be conferred by the Board. Any office may resign at any time by
giving written notice to the Board, the Chairman of the Board,
the President or the Secretary of the Corporation. Any such
resignation shall take effect at the date of the receipt of such
notice or at any later time specified therein; and unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5.5. Vacancies. A vacancy in any office
because of death, resignation, removal, disqualification or any
other cause shall be filled in the manner prescribed in the By-
laws for the regular appointments to such office.
Section 5.6. Compensation. The salaries and other
compensation of all officers and agencies of the Corporation
shall be fixed by or in the manner prescribed by the Board of
Directors.
Section 5.7. Chairman of the Board. The Chairman of
the Board shall preside at all meetings of the Board of
Directors. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation, if designated as such by
the Board of Directors.
Section 5.8. President. The President shall be the
Chief Executive Officer and/or the Chief Operating Officer of the
Corporation, as determined by the Board of Directors. In the
absence of the Chairman of the Board, if the President is a
director of the Corporation, the President shall preside at
15<PAGE>
meetings of the Board of Directors. The President shall have
general and active management of the business and affairs of the
Corporation and be responsible for its day-to-day operations,
subject to the control of the Board of Directors and the Chief
Executive Officer, if the President does not hold that position,
and shall see to it that all orders and resolutions of the Board
of Directors are carried into effect.
Section 5.9. Vice Presidents. Each Vice President
(including any Executive Vice President or Senior Vice President)
shall have such powers and limiting titles and shall perform such
duties as may from time to time be assigned to him by the Board
of Directors and/or the Chief Executive Officer.
Section 5.10. Secretary. The Secretary shall attend
all meetings of the stockholders and all meetings of the Board of
Directors and shall record all proceedings taken at such meeting
in a book to be kept for the purpose; he or an Assistant
Secretary shall see that all notices of meetings of stockholders
and special meetings of the Board of Directors are duly given in
accordance with the provisions of these By-laws or as required by
law; and he shall be custodian of the records and of the
corporate seal or seals of the Corporation; he or an Assistant
Secretary shall have authority to affix the corporate seal or
seals to all documents, the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so
affixed it may be attested by his signature or the signature of
such Assistant Secretary; and in general, he shall perform all
duties incident to the office of the Secretary of the corporation
and such other duties as the Board of Directors may from time to
time prescribe. The Board of Directors may give general
authority to any other officer to affix the seal of the
Corporation and to attest the affixing by his signature.
ARTICLE VI
PROVISIONS RELATING TO STOCK CERTIFICATES AND STOCKHOLDERS
Section 6.1. Form and Signature. The shares of the
Corporation shall be represented by certificates signed by the
President or any Vice President or the Chairman of the Board, if
there be a Chairman, or any Vice Chairman of the Board, if any,
and by the Secretary or any Assistant Secretary, if any, or the
Treasurer to any Assistant Treasurer, if any, and shall bear the
seal of the Corporation or a facsimile thereof. Each certificate
representing shares shall state upon its face (a) that the
Corporation is formed under the laws of the State of Delaware,
(b) the name of the person or persons to whom it is issued, (c)
the number of shares which such certificate represents and (d)
the par value, if any, of each share represented by such
certificate.
Section 6.2. Registered Stockholders. The
Corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares of stock
to receive dividends or other distributions, and to vote as such
owner, and to hold liable for calls and assessments a person
16 <PAGE>
registered on its books as the owner of shares of stock, and
shall not be bound to recognize any equitable or legal claim to
or interest in such share or shares on the part of any other
person.
Section 6.3. Transfer of Stock. Upon surrender to the
Corporation or the appropriate transfer agent, if any, of the
Corporation, of a certificate representing shares of stock of the
Corporation, duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and, in the
event that the certificate refers to any agreement restricting
transfer of the shares which it represents, proper evidence of
compliance with such agreement, a new certificate shall be issued
to the person entitled thereto, and the old certificate cancelled
and the transaction recorded upon the books of the Corporation.
Section 6.4. Lost Certificates, etc. The Corporation
may issue a new certificate for shares in place of any
certificate theretofore issued by it, alleged to have been lost,
mutilated, stolen or destroyed, and the Board may require the
owner of such lost, mutilated, stolen or destroyed certificate,
or his legal representatives, to make an affidavit of that fact
and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against
the Corporation on account of the alleged loss, mutilation, theft
or destruction of any such certificate or the issuance of any
such new certificate.
Section 6.5. Record Date. For the purpose of
determining the stockholders entitled to notice of, or to vote
at, any meeting of stockholders or any adjournment thereof, or to
express written consent to, or dissent from, any corporate action
without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for
the purpose of any other lawful action, the Board may fix, in
advance, a record date. Such date shall not be more than sixty
(60) nor less than ten (10) days before the date of any such
meeting, nor more than sixty (60) days prior to any other action.
Section 6.6. Regulations. Except as otherwise
provided by law, the Board may make such additional rules and
regulations, not inconsistent with these By-laws, as it may deem
expedient, concerning the issue, transfer and registration of
certificates for the securities of the Corporation. The Board
may appoint, or authorize any officer or officers to appoint, one
or more transfer agents and one or more registrars and may
require all certificates for shares of capital stock to bear the
signature or signatures of any of them.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends and Distributions. Dividends
and other distributions upon or with respect to outstanding
17 <PAGE>
shares of stock of the Corporation may be declared by the Board
of Directors at any regular or special meeting, and may be paid
in cash, bonds, property, or in shares of stock of the
Corporation. The Board shall have full power and discretion,
subject to the provisions of the Certificate of Incorporation or
the terms of any other corporate document or instrument binding
upon the Corporation to determine what, if any, dividends or
distributions shall be declared and paid or made.
Section 7.2. Checks, etc.. All checks or demands for
money and notes or other instruments evidencing indebtedness or
obligations of the Corporation shall be signed by such officer or
officers or other person or persons as may from time to time be
designated by the Board of Directors.
Section 7.3. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its
incorporation and the words "Corporate Seal Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or otherwise reproduced.
Section 7.4. Fiscal Year. The fiscal year of the
Corporation shall be determined by the Board of Directors.
Section 7.5. General and Special Bank Accounts. The
Board may authorize from time to time the opening and keeping of
general and special bank accounts with such banks, trust
companies or other depositories as the Board may designate or as
may be designated by any officer or officers of the Corporation
to whom such power of designation may be delegated by the Board
from time to time. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent
with the provisions of these By-laws, as it may deem expedient.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Section 8.1. Indemnification by the Corporation. 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 but not limited to
any action or suit by or in the right of the Corporation to
procure a judgment in its favor) by reason of the fact that he is
or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, office,
employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise in any capacity, 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; provided,
however, that no indemnification shall be made to or on behalf of
any person if such indemnification would be prohibited under
applicable law. The foregoing indemnification shall be in
addition to any other rights to which those indemnified may be
entitled under any law, agreement, vote or stockholders, or
otherwise.
18<PAGE>
Section 8.1. Contract Right; Advances. The right to
indemnification conferred in this Article VIII shall be a
contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any proceeding
referred to in Section 8.1 in advance of its final disposition;
provided, however, that the payment of such expenses incurred by
a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance
of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Article VIII or
otherwise.
Section 8.23. Indemnification of Other Persons. The
Corporation may, by action of the Board of Directors, indemnify
any other person to whom the Corporation is permitted to provide
indemnification or the advancement of expenses under applicable
directors and officers; provided, however, that no
indemnification shall be made to or on behalf of any such other
person if such indemnification would be prohibited under
applicable law.
Section 8.4. Right to Bring Suit. If a claim for
indemnification under Section 8.1 of this Article VIII is not
paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to also be paid
the expense of prosecuting such claim. Neither the failure of
the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances, nor an actual
determination by the Corporation(including its Board of
Directors, independent legal counsel or its stockholders) that
the claimant is not entitled to indemnification or to
reimbursement or advancement of expenses, shall be a defense to
the action or create a presumption that the claimant is not so
entitled.
Section 8.5. Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, truest or other
enterprise against any such expense, liability or loss under the
Delaware General Corporation law.
ARTICLE I
ADOPTION AND AMENDMENTS
Section 9. Amendments. These By-laws may be
repealed, altered or amended or new By-laws adopted by the
19<PAGE>
stockholders. The Board of Directors shall have the authority,
if such authority is conferred upon the Board of Directors by the
Certificate of Incorporation,, to repeal, alter or amend these
By-laws or adopt new By-laws (including, without limitation, the
amendment of any By-laws setting forth the number of directors
who shall constitute the whole Board of Directors) subject to the
power of the stockholders to change or repeal such By-laws.
20<PAGE>
EXHIIT 23
21<PAGE>
SYMBOL TECHNOLOGIES, INC.
100% Owned by Symbol Technologies, Inc.
Symbol Technologies International, Inc.
One Symbol Plaza
Holtsville, NY 11742-1300
State of Incorporation: New York
Symbol Technologies International, Inc.
One Symbol Plaza
Holtville, NY 11742-1300
State of Incorporation: Delaware
SymboLease, Inc.
One Symbol Plaza
Holtsville, NY 11742-1300
State of Incorporation: Delaware
Symbol Technologies Africa, Inc.
387 Devereux Avenue
Winchester Hills, Ext. 1
Johannesburg 2091
South Africa
State of Incorporation: Delaware
Symbol Technologies Asia, Inc.
230 Victoria Street
04-05 Bugis Junction Office Tower
Singapore 0718
State of Incorporation: Delaware
SymboLease Canada, Inc.
2540 Matheson Boulevard East
Mississauga, Ontario, Canada L4W 4Z2
State of Incorporation: Delaware
Symbol Technologies Mexico, Limited
Bld.M. Avila
Camacho #88
39 Pisco Col.
Lomas de Chapultepec
Mexico City, Mexico 11000DF
Country of Incorporation: Mexico
Symbol Technologies Texas, Inc.
One Symbol Plaza
Holtsville, NY 11742-1300
State of Incorporation: Texas
Subsidiaries of Symbol Technologies International, Inc.
(Delaware)
Symbol Australia Pty. Ltd.
432 St. Kilda Road
Melbourne, Victoria 3004
Australia
Country of Incorporation: Australia
22<PAGE>
Symbol Technologies GmbH
2 Haus - 5 Stock
Prinz-Eugenstrasse 70
1040 Wein
Austria
Country of Incorporation: Austria
Symbol Technologies Canada, Inc.
2540 Matheson Blvd. East
Mississauga, Ontario, Canada L4W 4Z2
Country of Incorporation: Canada
Symbol Technologies A/S
Carlsbergvej 32
3400 Hillrod, Denmark
Country of Incorporation: Denmark
Symbol Technologies S.A.
Centre d'Affaire d'Anthony
3 Rue du la Renaissance
92184 Antony Cedex, France
Country of Incorporation: France
Symbol Technologies GmbH
Waldstrasse 68
6057 Dietzenbach
Germany
Country of Incorporation: Germany
Symbol Technologies, S.R.L.
Via Cristoforo Colombo, 49
20090 Trezzano
S/L Naviglio, Milan, Italia
Country of Incorporation: Italy
Symbol Technologies, S.A. *
Calle Princesa 32
Edificion Piovera Azul
28042 Madrid
Spain
Country of Incorporation: Spain
Symbol Technologies Limited
12 Oaklands Park
Fishponds Road
Wokingham
Berkshire, England RG11 2FD
Country of Incorporation: United Kingdom
Symbol-LIS
Knaves House
Knaves Beech Business Centre
Loudwater
High Wycome
Bucks, England HP10 9QR
* Majority owned by Symbol Technologies International, Inc.
23<PAGE>
EXHIBIT 23
24<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 2-81405, No. 2-94868, No. 2-94876, No. 33-3771,
No. 33-13009, No. 33-18748, No. 33-25509, No. 33-25484, No.
33-25567, No. 33-35821, No. 33-43580, No. 33-48025, No. 35-48026,
No. 33-78622, No. 33-78678, No.33-59333 and No. 333-01769 on Form
S-8 and No. 33-18745, No. 33-25432, No. 33-43581, No. 33-43584
and No. 33-45016 on Form S-3 of Symbol Technologies, Inc. of our
report dated February 12, 1997, appearing in this Annual Report
on Form 10-K of Symbol Technologies, Inc. for the year ended
December 31, 1995.
Deloitte and Touche LLP
Jericho, New York
March 3, 1997
25
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