March 1, 2000
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, 1999
File No. 1-9802
On behalf of Symbol Technologies, Inc. (the
"Company"), I transmit for filing under the Securities and
Exchange Act of 1934 (the "Act"), the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999. 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
(631) 738-4765.
Very truly yours,
s/Leonard H. Goldner
Leonard H. Goldner
Senior Vice President
and General Counsel
LHG:lac
February 29, 2000
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, 1999 and pursuant to
Item 601(b)(4)(iii) of Regulation S-K, the undersigned has not
filed as exhibit 10.6 an Industrial Revenue Bond financing
agreement in respect of its executive offices since the total
amount of securities authorized thereunder does not exceed 10
percent of the Registrant's total consolidated assets. The
Registrant, however, agrees to furnish a copy of such document to
the Commission if so requested.
Very truly yours,
SYMBOL TECHNOLOGIES, INC.
s/Kenneth V. Jaeggi
Kenneth V. Jaeggi
Senior Vice President-Finance
and Chief Financial Officer
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, 1999 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: (631) 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, 2000 was approximately $5,636,000,000.
The number of shares outstanding of each of the registrant's classes of
common stock, as of December 31, 1999, was as follows:
Class Number of Shares
Common Stock, par value $.01 88,672,101
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 8, 2000 (the "Proxy Statement") is incorporated into Part III.
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 commenced operations in 1975. The Company
has evolved from a supplier of bar code verification products to
a leading global provider of wireless networking and information
systems that allow people and organizations to access, capture
and transmit information at the point of activity over local area
networks (LAN), wide area networks (WAN) and the Internet. The
Company is the only corporation in its industry with in-house
technology for the design and manufacture of products in its
three core technologies: bar code reading devices, mobile
computing devices and network systems. The Company is engaged in
one reportable segment--the design, manufacture, marketing and
servicing of scanner integrated mobile and wireless information
management systems. These systems are used worldwide in diverse
markets such as retail, transportation and logistics, parcel
delivery and postal service, warehousing and distribution,
industrial, health care, hospitality, education, and government.
In January 2000, President Clinton announced that the
Company is the recipient of this year's National Medal of
Technology, the nation's highest honor for technological
innovation. The award was given to the Company "for creating the
global market for laser bar code scanning and for technical
innovation and practical application of mobile computing and
wireless local area network (LAN) technologies". The medal,
which recognizes exceptional U.S. scientific and engineering
innovations, has been awarded to only 11 corporations in its 20
year history. Past corporate recipients of the award are AT&T
Bell Laboratories, The DuPont Company, Merck & Co. Inc., Amgen
Inc., Corning, Inc., The Proctor & Gamble Company, 3M, Johnson &
Johnson, Biogen, Inc. and Bristol-Meyers Squibb Company.
Company Products and Services
General
The Company develops, manufactures, sells and services
scanner integrated mobile and wireless information management
systems that consist of mobile computing devices, wireless local
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area networks (WLAN), bar code reading devices, network appliance
devices, peripheral devices, software and programming tools and
are designed to provide solutions to customer specific needs in
information transactions. They are used in a variety of
applications from collecting information at remote locations and
transmitting information between these locations and the user's
central data processing facility to facilitating e-commerce
transactions by accessing and collecting price and product
information at the point of activity for storing or placing
orders via the Internet.
The Company's mobile computing devices are microprocessor-
based, lightweight and battery-operated hand-held computers.
Information may be captured by a device that reads bar codes or
may be manually entered via a keyboard, a touch screen or a pen
computer display/entry device. The information collected by the
mobile computing device can then be transmitted instantly to a
host computer across a WLAN or in some instances by modems (batch
file transfer mode). Approximately 90% of the Company's mobile
computing devices include an integrated bar code reader and
approximately 90% offer optional integrated WLAN and WAN
communication capability. Depending on the model, the Company's
mobile computing devices may have up to 16 megabytes of RAM for
information storage and multiple input and output capabilities
for the connection of printers, bar code readers and
communications devices.
The Company distributes the most complete line of bar code
reading equipment in the world. The Company's bar code reading
products consist of devices designed to capture and decode one-
and two-dimensional bar code symbols and store, process and
transmit information. The Company designs and manufactures
miniature scan engines, hand-held bar code readers, portable
presentation scanners and fixed station point of sale scanners
most of which employ laser technology to read information encoded
in bar code symbols. The Company's bar code reading equipment
is compatible with a wide variety of information collection and
retrieval systems, including computers, electronic cash
registers, portable information collection devices and the
Internet. Bar code readers are used to improve inventory
management, productivity and cycle time in retail, transportation
and logistics, parcel delivery and postal service, warehousing
and distribution, factory automation, e-commerce and many other
applications.
The Company provides wireless communication solutions that
connect its mobile computing devices and bar code reading
equipment to wireless LANs and WANs. Based on spread spectrum RF
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technology, the Company's WLAN products provide real-time
wireless data communication at data rates of up to 11 Mbps and in
combination with the Company's telephony devices, provide
wireless voice and data communication over TCP/IP data networks.
Unlike traditional narrow band RF-based networks, installation of
the Company's spread spectrum systems requires no individual site
license from the U.S. Federal Communications Commission (FCC).
Design engineering and support for both the Company and
third party wireless network systems is conducted in the
Company's San Jose, California facility. The focus of the group
is the design of wireless network transaction systems, 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.
Products
The PDT family of mobile computing devices features advanced
technology including Application Specific Integrated Circuits
(ASIC) and 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 mobile computing devices that are
available with different features and at varying costs depending
on customer requirements and preferences. PDT mobile computing
devices feature up to 20 lines of liquid crystal display, slim,
lightweight design, multiple input and output ports and up to 16
megabytes of internal memory. PDT mobile computing devices have
various keyboard configurations, including a user configurable
keyboard and WLAN communication capability. The PDT family was
originally introduced in 1985.
In 1993, the Company introduced the PDT 3100, a 16-bit DOS
compatible mobile computing device incorporating a laser scan
engine and featuring a swivel-head scanner design that adjusts
instantly for right- or left- handed scanning applications. In
1999, the PDT 3100 was the Company's largest selling mobile
computing device. In 1996, the Company introduced a limited
performance, lower cost version of the PDT 3100 and a version
with one- and two-dimensional scanning capability. In 1998, the
Company introduced the PDT 6100 Series of mobile computing
devices, a sleek, compact, ergonomically designed version of the
PDT 3100 featuring a choice of display options.
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The PDT 6800, introduced by the Company in 1998, is a
versatile mobile computing device combining ruggedized housing
for use in industrial settings with a small, light-weight,
ergonomic form factor suitable for scan intensive retail
applications. The PDT 6800 has a 35- or 46-key alphanumeric
keypad for easy information input and a 16-line back-lit display
for greater data content and readability.
Introduced by the Company in 1999, the PDT 7500 is a sealed,
industrial use mobile computing device designed to withstand
extreme conditions in transportation and logistics environments.
Weighing only 19oz., the PDT 7500 is light enough for extended
periods of use. Color-coded keys facilitate information entry and
a 1/8 VGA screen with a 20-line back-lit display provides easy
viewing of information even in dimly lit areas. The PDT 7500's
486-based AMD Elan microprocessor supports accelerated
information processing and an integrated laser scan engine
provides both one- and two-dimensional scanning capability.
The PDT 7200, introduced by the Company in 1999, is a gun-
shaped, touch-operated mobile computing device designed for
demanding information management environments. A top-mounted 1/4
VGA liquid crystal display touch screen features a virtual
keyboard for data input. The PDT 7200 has an integrated laser
scan engine for one- and two-dimensional bar code scanning
capability and a voice pager for enhanced communication. A
built-in infrared (IrDA) communications port allows the PDT 7200
to communicate with a host computer or peripheral device, such as
a printer. Designed for use in retail environments, the PDT 7200
is also available in a ruggedized version for use in industrial
environments.
In 1995, the Company introduced its first wearable scanning
system the WSS 1000, an innovative hand-mounted bar code-based
information transaction system that allows mobile hands-free bar
code scanning, information collection and LAN connectivity. The
WSS 1000 wearable computer system was designed 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 RS-1, 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. In
1997, the Company introduced the WS 1200, a back-of-the-hand
mounted scanner. Similar to the RS-1 wearable scanner, the WS
1200 is triggered by a thumb-actuated switch mounted on the
user's index finger, however the WS 1200 is capable of scanning
at longer distances than the RS-1 ring scanner.
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In 1998, the Company and Palm Computing, Inc., a subsidiary
of 3Com Corporation and developers of the Palm line of hand-held
computers, entered into an agreement under the terms of which the
Company manufacturers and distributes touch- and pen-input
personal productivity tools utilizing the Palm operating system
with an embedded bar code reading device. Introduced in 1998,
the SPT 1500, a pocket sized mobile computing device based upon
the Palm III architecture was the first of such products
introduced by the Company. In 1999, the Company introduced the
SPT 1700, a ruggedized version of the SPT 1500 with wireless LAN
communication capability. With an embedded laser scan engine,
the SPT 1700 provides users with the latest bar code scanning
technology for collecting information and the Palm operating
system allows programmers to easily build applications using
scan-embedded graphical development tools. Designed for use in
office workflow automation, route accounting, healthcare,
education, retail, industrial and warehouse settings, the SPT
1700 is suited for use in any application where mobile workers
need to collect and manage information at the point of activity.
The SPT 1700 has 2MB each of random access memory and flash
memory and is available in an optional 4MB configuration to
accommodate larger application demands.
Introduced by the Company in 1999, the SPT 2700 mobile
computing device is substantially similar to the SPT 1700;
however, it is based on the Microsoft Windows CEr operating
system. Designed to work specifically with mobile computers, the
Windows CE operating system allows SPT 2700 users to collect
information via a familiar Windows interface and allows
developers to create applications with standard 32-bit desktop
tools. The SPT 2700's ruggedized design, integrated laser scan
engine and Spectrum 24 WLAN connectivity allow users in harsh
environments such as warehouse management and diverse
applications, from medical service providers to school
administrators and teachers to access remote information at the
point of activity
In 1997, the Company introduced the VRC 4000, a vehicle
mounted or wall mounted touch screen computer. Designed for
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. In 1999, the Company introduced the VRC 6900, a
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ruggedized version of the VRC 4000 capable of withstanding
extreme temperatures and harsh industrial environments.
Introduced by the Company in 1996, the Symbol Mobile Gateway
(SMG) is an industrialized, PC-based host computer designed for
installation in truck cabs and cars. A wireless WAN radio modem
provides communication across major wide area network systems to
a users' enterprise-wide network and Spectrum 24 LAN capability
connects the SMG to the Company's mobile computing devices,
providing in-vehicle connectivity and communication capabilities
for motor freight, parcel delivery and private fleet operations.
The Company sells several different hand-held laser
scanners, the most important of which is the LS 4000I which was
introduced in 1998. The LS 4000I is a trigger operated, visible
laser diode-based scanner capable of reading 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 that 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 information storage. PDF 417 may be
read by either a laser-based bar code reader or a CCD imager.
Most other two-dimensional codes can only be read by a CCD
imager. The LS 4000I combines 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 applications.
The Company offers several less expensive, lower performing
hand-held scanners. The LS 2100 Series, introduced in 1998, is a
trigger operated, medium range scanner primarily sold in the
indirect channel as a point-of-sale scanner. The LS 1000 Series,
introduced in 1996, is a small, lightweight trigger operated
scanner for light use scanning applications and the LT 1800,
Laser Touchr visible laser diode-based scanner, introduced in
1995, is useful for applications where near contact scanning is
sufficient.
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.
-7-
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. In 2000, the Company anticipates replacing the LS
3000 with the P 300 and P 460 Series of hand-held scanners
In 1998, the Company introduced a new category of "smart
scanners", the P 460. The P 460 is a hand-held memory scanner
with up to 4 MB of total memory and an integrated keypad and LCD
display that provide enhanced input and output capabilities.
Designed for multiple uses primarily in the retail market, the P
460 is capable of operating interactively with a host as a corded
scanner for point-of-sale applications, while a wireless version,
the P 470, operates in batch mode under battery power for back-
office or in-store applications such as physical inventory, cycle
counts and gift registry.
The P 300 Series, introduced in 1999, is an extension of the
P 460 family of smart scanners. Ruggedized and ergonomically
designed, the P 300 is a hand-held scanner that meets stringent
industrial standards and can withstand harsh environments. An
integrated interface module provides scanner-to-host computer
communication and advanced data formatting allows users to easily
program the P 300 to match their host system's data input
formats. Versions of the P 300 can also read two-dimensional bar
codes and other versions transmit information wirelessly over the
Company's Spectrum 24 WLAN. The P 360, is a version of the P 300
featuring a top-mounted keypad and display for entering and
viewing data. The P 370 is a cordless version of the P 360.
In 1999, the Company introduced the Vision System 4000 (VS
4000) Series, the first in a series of CCD imaging devices. The
VS 4000 is a hand-held image scanner capable of reading bar code
symbologies presented in any orientation and digital image
capture. An embedded CCD imaging engine provides VGA resolution
images and user-selectable imaging options allow users to choose
image characteristics such as compression, quality, transfer time
and file size.
Introduced in 1998, the LS 6000 Series is a trigger operated,
high visibility laser diode-based scanner capable of omni-
directional and single line scanning. The LS 6000's ergonomic
design provides for comfortable use either as a hand-held scanner
or with an optional fixed mount stand as a presentation scanner;
this flexibility allows for increased throughput in high-volume,
point-of-sale retail applications.
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Introduced by the Company in 2000, the M 2000 Series is a
versatile countertop projection and hand-held scanner that allows
users to select from three different scan patterns depending upon
their scanning requirements. With an integrated laser scan
engine, the M 2000 is capable of scanning in a rotating omni-
directional scan pattern for reading linear bar codes in any
orientation, a smart raster scan pattern for reading two-
dimensional bar codes and a high density single line scan pattern
for reading poorly printed and damaged bar codes. Designed for
retail and light industrial use the M 2000's ergonomic built-in
stand provides for both hand-held scanning and hands-free counter
top or wall mount scanning.
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.
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.
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 a prolonged 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.
In 1998, the Company introduced the Symbol 7870 Series of
rugged scanners designed for use in food and non-food retail
markets. The Symbol 7870 is capable of reading torn, crumpled
and scratched bar codes on the first pass and comes in a bi-optic
scanner/scale version that reads bar codes from multiple sides at
the same time and a compact bi-optic scanner/scale version that
features a reduced platform base for installation in smaller
checkout areas or in applications in which the user is seated.
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In 1990, the Company began marketing bar code laser scan
engines that are integrated by unaffiliated third parties into
their portable computing devices.
The SE 1200, introduced by the Company in 1996, 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 and
vending machines. The SE 1200 has a working range and ability to
read poor quality bar codes equal to that of hand-held scanners.
In 1997, the Company introduced a high density version of the SE
1200 capable of reading miniaturized bar codes.
The SE 900, introduced by the Company in 1998, is the
smallest, lightest scan engine available today. Measuring only
0.2 cubic inch, the SE 900 is 20 percent the size and 15 percent
the weight of the SE 1200, allowing third party manufacturers to
integrate bar code scanning capabilities into smaller devices
without compromising the ergonomic design of the device.
In 1995, the Company introduced the SE 2000 Series scan
engine. The SE 2000 is a small, lightweight, high performing
scan engine capable of reading both one-dimensional and two-
dimensional bar codes.
The SE 2200, introduced by the Company in 1999, is a high-
performance, scan engine that incorporates the Company's patented
Taut Band scan element and a high visibility 650nm laser diode.
The SE 2200 can read two-dimensional and one-dimensional bar
codes. The Company anticipates that the SE 2200 will replace the
SE 2000.
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.
Introduced by the Company in 1999, the SE 3223 scan engine
extends the capability of the Taut Band scan element. Scanning
at speeds of up to 640 scans per second, the SE 3223 supports
three modes of operation; single scan line mode, smart raster
mode for reading two-dimensional symbols and a "cyclone" pattern
for omni-directional scanning of linear bar codes in any
orientation.
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In 1999, the Company introduced the SE 4200 series imaging
engine, a high-performing CCD image processor that is capable of
reading all major one-dimensional and two-dimensional bar code
symbologies as well as capable of digital image capture.
In 1993, the Company introduced a self shopping system for
food and non-food retailers. The system, which is integrated
with the retailer's point-of-sale system, utilizes the Company's
CST 2000 or the newly introduced CST 3000, mobile computing
device with an integrated laser scanner that allows shoppers to
scan and tabulate their purchases as they shop. The system has
been installed worldwide at selected mass merchandise, retail,
food and other retail operations.
In 1996, the Company introduced a version of the self
shopping system capable of communicating via the Company's WLAN
which has substantially replaced the batch version of the system.
In 1999, installation of the Company's portable self shopping
systems has expanded both to new customers and more sites. There
are currently systems installed or ordered in over 500 stores in
40 chains in 20 countries on 5 continents.
In addition to being utilized in the Company's self-shopping
system, the CST 3000 Series is a multi-purpose, trigger operated
wireless bar code scanner that also serves as a network scanning
appliance allowing users to communicate with an enterprise
intranet or the Internet via the Company's WLAN. The CST 3000
provides enhanced user interface with an eight-line, 21-character
text and graphics display and a Motorola Power PC microprocessor
for a variety of consumer and industrial application
requirements, including self-shopping.
Introduced in 1998, the CyberPen is the Company's first
consumer-oriented network appliance designed for use in the home
or office. CyberPen combines the functionality of a contact bar
code scanner with memory and an A.T. Crossr writing instrument.
To read a bar code, the user simply presses a button on the side
of the CyberPen and sweeps the wand tip across the symbol. After
reading the bar code, the user returns the CyberPen to its holder
that uploads the data to a personal computer for transmission via
the Internet. The small, lightweight, portable design makes
CyberPen particularly adaptable for home-office automation,
catalog/Internet shopping and home grocery applications.
The CS 2000, introduced by the Company in 1999, is a
miniature, laser-based memory scanner and Internet appliance
designed for use in the consumer electronic retail market. The
pocket size CS 2000 allows consumers to browse through retailers
printed catalogues, advertisements and documentation, scan a bar
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code for items of interest, and quickly and efficiently order or
obtain additional information on the item through the Internet.
In addition, the CS 2000 can be used by shoppers in retail
establishments and malls to scan bar codes on items of interest,
capturing the item's description and price then downloading the
information to an Internet web site for later retrieval.
In 1999, the Simon Property Group, the owner of 253 shopping
malls in the United States, established two pilot programs using
the Company's CS 2000 consumer scanner and the SPT 1700 mobile
computing device. Under one pilot program, the CS 2000 is used
by shoppers to scan bar codes on items to build a registry that
shoppers can post to a personalized web page. The list can be
organized and e-mailed to friends and family for gift-related
occasions. In the second pilot program, the SPT 1700 mobile
computing device allows mall shoppers to scan bar codes of items
from multiple stores, pay for everything at one location and have
the items picked-up from the stores and delivered as directed by
the customer. While the initial pilot programs have been well
received and the Simon Property Group has indicated its intention
to roll out these consumer scanning programs to additional
locations, there can be no assurance that the rollout of consumer
scanning programs on a large scale will be successful or that
shoppers in additional locations will utilize such services.
The Company offers two spread spectrum-based, WLAN families
of products. In 1990, the Company introduced its Spectrum Oner
direct sequence cellular RF network for wireless data
transactions. Spectrum 24r, introduced in 1995, is a high-
performance, frequency hopping network that operates at 2.4 Ghz
frequency. Based on spread spectrum RF technology, Spectrum One
and Spectrum 24 networks both provide real-time wireless data
communications with a host computer for hundreds of portable and
fixed-station computers and radio-integrated scanners. In 1998,
the Company introduced a 2Mb version of the Spectrum 24 network
and in 1999, the Company introduced a direct sequence, WLAN that
supports high throughput applications up to 11 Mbps. This high
data rate WLAN, based on the recently ratified IEEE 802.11b open
airwaves standard for 11 Mbps data transmission, now provides
users with high-speed wireless capabilities for rapid data
transfer from server to terminal, image transfer, Internet
communications, customer self-scanning services and streaming
video. Installation of the Company's wireless networks at various
customer sites began in 1991 and these networks are now installed
in over 50,000 sites worldwide. The Spectrum One and Spectrum 24
systems work in tandem with a broad range of the Company's
wireless mobile computing and telephony devices.
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In 1998, the Company introduced the NetVision wireless LAN
telephone system. Based upon voice-over IP technology, the
telephone which looks like a standard cellular telephone, allows
users to place or receive calls worldwide, without additional
charge, between other telephones or PC-based telephones located
at any site served by an internal TCP/IP network. To date sales
of the NetVision telephone have not been material. The NetVision
system connects to a user's TCP/IP system via the Company's
Spectrum 24 WLAN. In 1999, the Company introduced a new network
appliance in the NetVision line, the NetVision Data Phone. The
NetVision Data Phone integrates voice communication, a bar code
scanner, a data entry keypad, a Web browser, a serial port for
printing and a Spectrum 24 WLAN radio card into a single
lightweight device that allows users to bridge the gap between
voice and data networks and the Internet. The combination of
communication capabilities makes the NetVision Data Phone a
useful productivity tool for a wide range of industries including
retail, warehouse, healthcare and education.
Product list prices for the Company's products range between
$195 to $8,395, 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 products and systems utilize software which
consists of a number of specialized applications and
communications software programs, that run under a variety of
operating platforms including Microsoft MS-DOS, Caldera DR-DOS,
Palm OS, Microsoft Windows and Microsoft Windows CE. A series of
application development kits (ADKs) and software development kits
(SDKs) are available to allow the Company's programmers, value
added resellers (VARs) and end-user customers to develop
applications that fully utilize the integrated features of the
Company's family of mobile computing devices. The ADKs and SDKs
provide the software drivers and libraries required to maximize
product performance. Used in conjunction with industry standard
development tools, software developers can easily create and
support applications to meet specific customer requirements.
The Company also provides scalable network management
software that allows users at local and remote sites to
administer, configure and manage the Company's Spectrum One and
Spectrum 24 wireless network systems.
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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 that repairs
and maintains the Company's products.
The Company's domestic customer support operations include
locations in Arkansas, California, Indiana, Illinois, Kentucky,
Michigan, Minnesota, New York and Texas. The Company also has
foreign customer support offices in Australia, Austria, Canada,
China, Denmark, Finland, France, Germany, Italy, Japan, Mexico,
the Netherlands, Norway, Singapore, South Africa, Spain, Sweden
and the United Kingdom. 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 the customer's
location. Depot service includes maintenance and repairs at the
Company's service centers or through authorized service
providers. The Company's 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, 1999, 1998 and 1997.
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,
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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, Canada, China, Denmark, Finland, France,
Germany, Italy, Japan, Mexico, the Netherlands, Norway,
Singapore, South Africa, South Korea, Spain, Sweden 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
contract or invoice, normally extends 30 to 45 day payment terms
to its customers. Actual payment terms vary from time-to-time
but generally do not exceed 90 days.
The following table sets forth certain information as to
international sales of the Company:
Year Ended
December 31,__________
(in thousands)
1999 1998 1997
Area
EMEA
(Europe, Middle East, Africa) $343,507 $284,084 $276,126
Asia Pacific $ 64,577 $ 47,901 $ 40,038
Other $ 75,272 $ 67,687 $ 55,731
The Company undertakes hedging activities to the extent of
known cash flow in an attempt to minimize the impact of foreign
currency fluctuations.
-15-
Manufacturing
The products that are manufactured by the Company are
manufactured at its Bohemia, New York facilities. In the third
quarter of 2000, the Company plans to complete construction of a
second manufacturing facility in Reynosa, Mexico.
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.
In 1999, unexpected demand for communication products caused
worldwide shortages of certain electronic parts and allocation of
such parts by suppliers that had an adverse impact on the
Company's ability to deliver its products as well as the cost of
producing such products. Such shortages are likely to continue
for much of 2000 and may again have an adverse effect on the
Company's ability to deliver its products or to deliver its
products on time or to manufacture its products at anticipated
cost levels. While the Company has increased inventory levels
and entered into contracts with suppliers of parts that it
anticipates will be in short supply, there can be no assurance
that additional parts will not become the subject of such
shortages or that such suppliers will be able to deliver the
parts in fulfillment of their contracts.
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 in the short-term if the Company changes any single source
supplier.
Certain of the Company's products are manufactured by third
parties, a majority of which are outside the United States. In
particular, the Company has a long term strategic relationship
with Olympus Optical, Inc. of Japan ("Olympus") pursuant to which
Olympus and the Company jointly develop selected products which
are manufactured by Olympus exclusively for sale by the Company.
The Company is currently selling several such products and the
Company expects the number of products developed in collaboration
with Olympus to increase in the future. The Company has the
right to manufacture such products if Olympus is unable or
unwilling to do so, but the loss of Olympus as a manufacturer
could have, at least, a temporary material adverse impact on the
Company's ability to deliver such products to its customers. The
Company has no reason to believe that Olympus will not continue
to manufacture products under this arrangement.
-16-
The failure of any other third party to supply products to
the Company could have an adverse affect on the Company's ability
to deliver such products to its customers. In 1999, third party
suppliers of products to the Company were subject to the same
shortages of electronic parts and allocation of such parts.
Although the Company expects such parts shortage to continue in
2000, 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.
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, faster speeds and higher density
codes (including, but not limited to, two-dimensional codes);
continued development of its solid state laser diode-based
scanners; development of solid state imager-based engines for bar
code data capture and general purpose imaging applications;
development of RFID engines for data capture applications;
improvements to packaging and miniaturization technology for bar
code data capture products, portable data collection appliances
and integrated bar code and RFID 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
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State University of New York at Stony Brook, Polytechnic
University of New York, Massachusetts Institute of Technology,
University of California at San Diego and Tel Aviv University in
Israel.
The Company expended (including overhead charges)
approximately $38,426,000, $31,030,000 and $29,991,000 for
research and development during the years ended December 31,
1999, 1998 and 1997, 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 products in its three core
technologies, bar code reading equipment, wireless networks and
mobile computing devices. While some companies are engaged in
the manufacture and marketing of products in more than one of
these technologies, no other company is engaged in all three.
Numerous companies, including present manufacturers of scanners,
lasers, optical instruments, microprocessors, wireless networks,
notebook computers, PDAs and telephonic and other communication
devices have the technical 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 are
Aironet Wireless Communications, Inc., BreezeCom, Inc., Casio
Inc., Fujitsu, Ltd., Hewlett-Packard Company, Intermec
Technologies Corporation, Lucent Technologies, Inc., LXE Inc.,
Matsushita Electric Industrial Co., Ltd., Metrologic Instruments,
Inc., Motorola, Inc., NipponDenso Co., Nortel Networks, Opticon,
Inc., Proxim, Inc., PSC Inc., Telxon Corporation, Teklogix Inc.
and Welch Allyn, Inc. In addition, several large companies, such
as Motorola, Inc., Matsushita Electric Industrial Co., Ltd.,
Nokia Corporation and Fujitsu, Ltd. while active in the RF area,
are currently not manufacturing a WLAN, but have the capability
to be able to readily compete with the Company.
-18-
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 420 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 United States and foreign, to cover its most recent
research developments in the scanning, information collection and
network communications fields. Letters patent number 4,387,297,
one of the Company's basic patents covering hand-held laser
scanning technology will expire on June 6, 2000, and a companion
patent, number 4,593,186 will expire in June 2003. While it is
possible that products might be designed that would have
infringed the '297 patent but do not infringe the '186 patent,
the Company believes that such products would be sufficiently
inferior as compared to current hand-held products that they
would not gain meaningful customer acceptance in the market
place. Accordingly, the Company does not believe that the
introduction of such products would have a material adverse
effect on the Company or its competitive position. Furthermore,
the Company does not believe that the expiration of the '297
patent in 2000 will appreciably diminish the Company's royalty
income from license because all of the Company's license
agreements that grant rights under these patents include both
patents and the products that licensees are selling are covered
by both patents. The license agreements are structured so that
there is no reduction in royalty payments upon the expiration of
the '297 patent.
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 that may have features that 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
-19-
Company has entered into royalty-bearing license agreements with,
among others, Intermec Technologies Corporation, LXE Inc.,
Metrologic Instruments, Inc., PSC Inc. and Telxon Corporation.
On April 1, 1996, PSC, Inc. (PSC) commenced suit against the
company in Federal District court for the Western District of New
York, asserting 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. PSC served a Third
Amended Complaint, which asserted essentially the same antitrust
and unfair competition claims against the Company, and also
sought a declaratory judgment of alleged non-infringement and
invalidity of nine of the Company's patents, and a declaratory
judgment that PSC had not breached its two agreements with the
Company and that those agreements had been terminated. The
Company also sued Data General Corporation (Data General), a
manufacturer of portable integrated scanning terminals which
incorporate scan engines from PSC, for infringement of the same
four patents and five additional patents. The nine patents
asserted against Data General were the same nine of the Company's
patents as to which PSC was 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.
On April 3, 1998, the Court, with the consent of the
parties, lifted the stay previously in effect with respect to the
contract issues in the litigation.
On September 12, 1998, PSC filed a motion for partial
summary judgment alleging that the Company was guilty of patent
"misuse" since PSC is obligated under its 1991 Agreement with the
Company to pay royalties to the Company on sales of scan engines
to certain PSC customers who also pay royalties to the Company
when they incorporate these scan engines into their integrated
scanning terminals. In this motion, PSC claimed that this
practice should have barred the Company from collecting past
royalties which the Company alleged were owed by PSC under the
1991 Agreement. Since July 1996, PSC has not paid the Company
royalties under the 1991 Agreement and has instead been paying
royalties under agreements it obtained in connection with the
acquisition of Spectra-Physics.
-20-
On October 22, 1998, the Court issued a decision and order
granting PSC's motion, which decision was subsequently
reconfirmed by the Court on April 30, 1999.
On November 16, 1999, both parties filed motions for partial
summary judgment. The Company's motion contended that (a) its
two agreements with PSC had not been terminated; (b) PSC is
obligated to pay royalties to the Company pursuant to these
agreements in those circumstances in which the agreements overlap
with an agreement the Company had entered into with Spectra-
Physics Scanning Systems (the "Spectra Agreement") that had been
acquired by PSC in 1996, and; (c) the Company had purged the
misuse found by the Court. PSC's motion claimed that (a) its
agreements with the Company had been terminated; (b) if the
agreements had not been terminated, PSC was entitled to operate
under the more favorable terms of the Spectra Agreement, and; (c)
Symbol had not purged the misuse found by the Court.
On February 8, 2000, the Court granted the Company's motion
in its entirety and issued a decision that PSC's two license
agreements with the Company have not been terminated and that PSC
was obligated to pay the Company the higher royalty rates under
those agreements rather than the much lower royalty rates
contained in the Spectra Agreements. This decision results in an
immediate obligation by PSC to pay back royalties from October
23, 1998 in the estimated amount of approximately $7 million. In
addition, pursuant to the ruling, PSC is also obligated to pay
additional estimated royalties of approximately $5 million per
year on a going forward basis. The Court also held that the
Company had purged the patent misuse previously found by the
Court.
On February 23, 2000, PSC moved for reconsideration of that
portion of the Court's decision which held that PSC must pay
royalties to the Company under the higher rates contained in
PSC's license agreements with the Company. PSC moved in the
alternative for permission to appeal the decision immediately
to the United States Court of Appeals for the Federal Circuit.
The Company's papers in opposition have not yet been filed, but
the Court has already issued an order stating that the motion
will be "considered submitted without oral argument on March 16,
2000". The Company believes PSC's motion is completely without
merit.
On July 21, 1999, the Company and six other leading members
of the Automatic Identification and Data Capture industry jointly
initiated litigation against the Lemelson Medical, Educational, &
Research Foundation, Limited Partnership (the "Lemelson
Partnership"). The suit, which is entitled Symbol Technologies,
Inc. et. al. v. Lemelson Medical, Educational & Research
Foundation, Limited Partnerships, was commenced in the U.S.
District Court, District of Nevada in Reno, Nevada. In the
litigation, the Auto ID companies seek, among other remedies, a
declaration that certain patents, which have been asserted by the
Lemelson Partnership against end users of bar code equipment, are
invalid, unenforceable and not infringed. The other six Auto ID
companies who are plaintiffs in the lawsuit are Accu-Sort
Systems, Inc., Intermec Technologies Corporation, a wholly-owned
-21-
subsidiary of UNOVA, Inc., Metrologic Instruments, Inc., PSC
Inc., Teklogix Corporation, a wholly-owned U.S. subsidiary of
Teklogix International, Inc. and Zebra Technologies Corporation.
The Company has agreed to bear approximately half of the legal
and related expenses associated with the litigation, with the
remaining portion being borne by the other Auto ID companies.
Although no claim is now or has ever been asserted by the
Lemelson Partnership directly against the Company or, to our
knowledge any other Auto ID company, the Lemelson Partnership has
contacted many of the Auto ID companies' customers demanding a
one-time license fee for certain so-called "bar code" patents
transferred to the Lemelson Partnership by the late Jerome H.
Lemelson. The Company and the other Auto ID companies have
received many requests from their customers asking that they
undertake the defense of these claims using their knowledge of
the technology at issue. Certain of these customers have
requested indemnification against the Lemelson Partnership's
claims from the Company and the other Auto ID companies,
individually and/or collectively with other equipment suppliers.
The Company, and we understand, the other Auto ID companies
believe that generally they have no obligation to indemnify their
customers against these claims and that the patents being
asserted by the Lemelson Partnership against their customers with
respect to bar code equipment are invalid, unenforceable and not
infringed. However, the Company and the other Auto ID companies
believe that the Lemelson claims do concern the Auto ID industry
at large and that it is appropriate for them to act jointly to
protect their customers against what they believe to be baseless
claims being asserted by the Lemelson Partnership.
The Lemelson Partnership has not yet filed an Answer to the
Complaint in the lawsuit. Instead, the Lemelson Partnership has
filed a motion to dismiss the lawsuit, or in the alternative, to
stay proceedings or to transfer the case to the U.S. District
Court in Arizona where there are pending cases involving the
Lemelson Partnership and other companies in the semiconductor and
electronics industries. The Lemelson Partnership's motion is
primarily based on grounds that there is no legally justiciable
case or controversy between the Auto ID companies and the
Lemelson Partnership because (1) the Lemelson Partnership's
asserted method claims do not apply against the bar code
equipment itself; and (2) the Lemelson Partnership has never
asserted its patent claims against the Auto ID companies.
Contrary to the Lemelson Partnership's arguments, the Company and
-22-
the other Auto ID companies believe the federal district court in
Nevada has proper jurisdiction to adjudicate the case on its
merit.
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. The Company has received and has
currently pending such claims and in the future may receive
additional such 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 affected products and technology, or
result in litigation against parties seeking to enforce a claim
which the Company reasonably believes is without merit. The
Company in the past has been involved in such litigation and
additional litigation may be filed in the future. Such parties
have and 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
-23-
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 FCC, 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 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 mobile computing devices include various
models, all of which intentionally transmit radio signals as part
of their normal operation. Certain versions of the Company's
hand-held computers and its Spectrum One and Spectrum 24 cellular
networks utilize spread spectrum radio technology. The Company
has obtained certification from the FCC for its products that
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
-24-
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, 1999, the Company had approximately 3,900
full-time associates. Of these, approximately 3,000 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.
-25-
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.
Location Principal Use Size Tenancy/Ownership
One Symbol Plaza World Headquarters 299,000 square Owned (subject to
Holtsville, NY feet mortgage)
116 Wilbur Place Administration 92,000 square Owned
Bohemia, NY feet
110 Wilbur Place Manufacturing 30,000 square Owned
Bohemia, NY feet
12 & 13 Oaklands Pk. Customer Service 21,700 square Owned
Fishponds Road feet
Wokingham, Berkshire
England
Reynosa, Tamaulipas Vacant Land 15.4 acres Owned
Mexico*
110 Orville Drive Manufacturing 110,000 square Leased: expires
Bohemia, NY feet August 31, 2009
Valley Oak Network Systems 100,000 square Leased: expires
Technology Campus Engineering, feet August 12, 2009
San Jose, CA Marketing
1101 Lakeland Ave. Manufacturing, 90,400 square Leased: expires
Bohemia, NY Administration and feet August 31, 2009
Distribution
Berkshire Place International Head- 55,500 square Leased: expires
Winnersh Triangle quarters, Marketing feet December 31, 2012
Winnersh, Wokingham and Administration
Berkshire, England and U.K. Headquarters
340 Fischer Ave. Service and Sales 31,200 square Leased: expires
Costa Mesa, CA feet May 31, 2001
180 Orville Drive Warehousing and 22,600 square Leased: expires
Bohemia, NY Facilities feet August 31, 2001
Management
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* In 2000, the Company anticipates building an approximately
140,000 sq. ft. manufacturing facility.
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 31,000 square feet.
Item 3. Legal Proceedings
See 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.......... 59 Chairman of the Board of Directors,
Chief Executive Officer and Director
Tomo Razmilovic........ 57 President, Chief Operating Officer
and Director
Robert Blonk........... 53 Senior Vice President-Human
Resources
Richard Bravman........ 45 Senior Vice President,
General Manager-Sales and Marketing
RF Wireless Systems
Brian T. Burke......... 53 Senior Vice President, Controller
and Chief Accounting Officer
Leonard H. Goldner..... 52 Senior Vice President, General
Counsel and Secretary
Ron Goldman............ 39 Senior Vice President, General
Manager-Mobile Systems
Kenneth Jaeggi......... 54 Senior Vice President-Finance and
Chief Financial Officer
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Joseph Katz............ 47 Senior Vice President, Research and
Development
Boris Metlitsky........ 52 Senior Vice President, General
Manager-Scanning Systems
Satya Sharma........... 59 Senior Vice President-Quality and
Process Improvement and Mobile and
Wireless Systems Engineering
Dr. Swartz co-founded and has been employed by the Company
since it commenced operations in 1975. He has been the Chairman
of the Board of Directors and Chief Executive Officer of the
Company for more than the past fifteen years. Effective July 1,
2000, Dr. Swartz will no longer serve as Chief Executive Officer.
He will continue as executive Chairman of the Board of Directors
and Chief Scientist. 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 160 technical papers and
issued and allowed 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 and a
member elect to the National Academy of Engineering.
Mr. Razmilovic has been the President and Chief Operating
Officer of the Company since October 1995. Effective July 1,
2000, Mr. Razmilovic will also assume the postion of Chief
Executive Officer. 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.
Mr. Blonk joined the Company in August 1997. Prior to
joining the Company, he had been employed for thirty years by
Lucent Technologies, Inc. in a number of positions, the most
recent of which was as its Director of Technical Business
Operations.
Mr. Bravman has been employed by the Company for more than
the past twenty years in various management positions.
-28-
Mr. Burke joined the Company in October 1987. From October
1984 to September 1987, he was President, Chief Executive Officer
and Director of Super Web Press Service Corporation, a
manufacturer of printing presses.
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.
Mr. Goldman joined the Company in February 1992 and has
served in various legal, managerial and business development
positions.
Mr. Jaeggi joined the Company in May 1997. From May 1996 to
May 1997, he was a member of the Office of the Chairman and the
Operating Committee of Electromagnetic Sciences in Atlanta, GA.
From December 1992 until May 1996, Mr. Jaeggi served as Senior
Vice President, Chief Financial Officer and consultant of
Scientific-Atlanta, Inc., a leading producer of cable network and
satellite communications systems. From June 1988 to December
1992, he was President and Chief Executive Officer of Imagraph
Corporation, a developer and manufacturer of graphics and imaging
hardware and software for application specific workstations. Mr.
Jaeggi served as Vice President, Chief Financial Officer and
consultant to Data General Corporation from June 1980 until June
1988.
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. Metlitsky joined the Company in March 1983 and has
served in various technical and managerial positions.
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.
-29-
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 and the dividend payments
declared by the Board of Directors and paid by the Company.
Year Ending: High* Low* Dividend
December 31, 1998 First Quarter 23 1/12 16 7/12
Second Quarter 26 7/24 22 1/32 $.02
Third Quarter 34 7/24 24 1/12
Fourth Quarter 42 5/8 26 1/8 $.02
December 31, 1999 First Quarter 43 1/4 28 1/16
Second Quarter 38 1/8 26 $.02
Third Quarter 41 3/8 32 5/8
Fourth Quarter 65 29 5/8 $.015
*Adjusted to reflect a three-for-two stock split, effective
April 3, 1998 and a three-for-two stock split effective June 1,
1999.
As of February 1, 2000 there were 1,196 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.
Payment of future dividends is subject to approval by the
Company's Board of Directors. Recurrent declaration of dividends
will be dependent on the Company's future earnings, capital
requirements and financial condition.
On February 9, 1998, May 12, 1999 and February 14, 2000 the
Board of Directors of the Company declared a three-for-two stock
split, payable as a 50 percent dividend, on April 3, 1998, June
14, 1999 and April 5, 2000, respectively, to all shareholders of
record on March 17, 1998, June 1, 1999 and March 13, 2000,
respectively.
-30-
<TABLE>
Item 6. Selected Financial Data
(in thousands, except per share data)
<CAPTION>
Year Ended December 31,__________________
Operating Results: _ 1999_ 1998(1) 1997 1996(2) 1995(3)
<S> <C> <C> <C> <C> <C>
Net Revenue $1,139,290 $977,901 $774,345 $656,675 $555,163
Net Earnings $116,364 $92,964 $70,232 $50,256 $46,486
Earnings Per Share:
Basic $1.32 $1.05 $0.79 $0.57 $0.53
Diluted $1.23 $0.99 $0.77 $0.55 $0.51
Financial Position:
Total Assets $1,047,944 $838,399 $679,190 $614,238 $544,268
Working Capital $351,613 $295,317 $241,846 $221,678 $209,852
Long-Term Debt, less
Current Maturities $99,623 $64,596 $40,301 $50,541 $60,829
Stockholders' Equity $640,460 $530,928 $453,742 $399,676 $352,854
Weighted Average Number of Common
Shares Outstanding:
Basic 88,325 88,194 88,557 87,296 87,054
Diluted 94,381 93,654 91,854 91,392 91,301
<FN>
(1) Includes a pre-tax charge for costs associated with a terminated acquisition of $3,597 or
$0.03 diluted earnings per share.
(2) Includes a pre-tax charge for costs associated with acquisition related matters of $12,341 or
$0.09 diluted earnings per share.
(3) Includes a pre-tax charge for costs associated with a management change of $2,500 or $0.02
diluted earnings per share.
</FN>
</TABLE>
-31-
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER SECURITIES
LITIGATION REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS
Sometimes, the Company makes forward-looking statements,
orally or in writing. These statements may be in press releases,
oral statements or in filings made by the Company with the
Securities and Exchange Commission, including this one. The
words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project" or similar
expressions identify "forward-looking statements" that are
covered by the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). The Company wants to be sure that any
forward-looking statements are accompanied by meaningful
cautionary statements, so that the Company is protected by the
safe harbor established in the Reform Act. Therefore, any
forward-looking statements made by the Company are qualified by
the following discussion of factors that could cause actual
results to be different from forward-looking statements. The
Company has no obligation to update forward-looking statements.
The risks presented here may not be all of the risks the
Company may face. These are the factors that the Company
believes could cause actual results to be different from expected
and historical results. Other sections of this report include
additional factors that could have a negative effect on the
Company's business and financial performance. The industry that
the Company competes in is very competitive and changes rapidly.
Sometimes new risks emerge and management may not be able to
predict all of them, or be able to predict how they may cause
actual results to be different from those contained in any
forward-looking statements. You should not rely upon forward-
looking statements as a prediction of future results.
Sometimes the Company communicates with securities analysts.
It is against the Company's policy to disclose to analysts any
material non-public information or other confidential commercial
information. You should not assume that the Company agrees with
any statement or report issued by any analyst regardless of the
content of the statement or report. The Company has a policy
against issuing financial forecasts or projections or confirming
the accuracy of forecasts or projections issued by others. If
reports issued by securities analysts contain projections,
forecasts or opinions, those reports are not the responsibility
of the Company.
-32-
Financial Performance. The Company's operating results may vary
in the future as a result of a number of factors, including:
- Changes in technology
- New competition
- Economic conditions
- Customer demand
- A shift in the mix of the Company's products
- A shift in sales channels
- The market acceptance of new or enhanced versions of the
Company's products
- The timing of introduction of other products and
technologies
- Any associated charges to earnings
- Any cancellation or postponement of orders
The volume and timing of orders the Company receives during
a fiscal quarter are difficult to forecast. Sometimes customers
have canceled orders or rescheduled shipments ordered from the
Company. The Company has operated with a relatively small
backlog. The Company monitors backlog. Because most customers
order products for delivery within 45 days, the Company does not
believe that backlog provides a good indication of financial
performance except for the then current fiscal quarter. Shipments
made during a fiscal quarter are usually in response to orders
received either during that quarter or shortly before the
beginning of that quarter. Shipments for orders received in a
fiscal quarter are usually from products manufactured in that
quarter. The Company maintains significant levels of raw
materials so it can meet delivery requirements of its customers.
The Company may not be able to procure the appropriate mix of raw
materials to accommodate all orders in a quarter. Because of the
levels of current and anticipated backlog, the Company's
financial performance in any quarter is dependent upon obtaining
orders in that quarter which can be manufactured and delivered to
its customers in that quarter. Financial performance for any
quarter is not known until near the end of that quarter. The
Company's expense levels are partly based on the level of future
revenues the Company expects. The Company's total operating
expenses have increased as it expands its operations. Because of
the difficulty of forecasting revenue and the Company's planned
growth in spending, operating expenses could be unusually high
for any quarter causing the Company's operating profit to be
negatively affected for that quarter.
-33-
Product Mix. The Company anticipates that in 2000:
- - it will sell more products with lower margins than it did
in the past; and
- - lower margin products will make up a larger portion of
sales than they have in the past.
If the Company does not increase sales and/or lower
operating expenses to compensate for lower overall margins,
operating profit will be negatively affected.
Foreign Sales. A large portion of the Company's net revenues
have been from foreign sales. In 1999, foreign sales accounted
for approximately 42.4 percent of net revenue. These sales are
subject to the normal risks of foreign operations, such as:
- Currency fluctuations
- Protective tariffs
- Trade barriers and export/import controls
- Transportation delays and interruptions
- Reduced protection for intellectual property rights in
some countries
- The impact of recessionary foreign economies
- Long receivable collection periods
Most of the Company's equipment sales in Western Europe and
Asia are 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 value of the U.S. dollar compared to
foreign currencies have in the past had an impact on the
Company's sales and margins. In 1999, results of operations
continued to be negatively affected by the appreciation of the
value of the U.S. dollar in relation to key foreign currencies.
The Company believes that its 1999 financial performance was
satisfactory despite the negative currency impact. The Company
may not continue to perform adequately if the value of the U.S.
dollar in relation to key foreign currencies continues to
increase. The Company cannot predict whether 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 new barriers would have on
its financial position or results of operations.
Manufacturing. If use of the Company's manufacturing facilities
in Bohemia, New York were interrupted by natural disaster or
-34-
otherwise, the Company's operations would be negatively affected
until the Company could establish alternative production and
service operations. Some of the Company's products are
manufactured by third parties inside and outside the United
States. The Company anticipates that an increased percentage of
new products will be manufactured by third parties, including
Olympus. Many of these third parties are located in foreign
countries. In addition, the Company is currently building a
second manufacturing facility in Mexico as described below. 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
- The risk of imposition of tariffs or other trade
barriers
The Company has experienced manufacturing problems that have
caused delivery delays. The Company may experience production
difficulties and product delivery delays in the future as a
result of:
- changing process technologies
- ramping production
- installing new equipment at its manufacturing facilities
- shortage of key components
Because demand for the Company's products has increased, the
Company is building a secondary manufacturing facility in Mexico.
Manufacturing of products in two locations will subject the
Company to normal risks of managing two separate manufacturing
facilities in two separate countries, including:
- administration of customs requirements
- coordination of procurement
- cross-border distribution
The facility is scheduled to be completed in the third
quarter of 2000. If construction of the new manufacturing
facility is delayed or not completed, the Company may have to
obtain alternative manufacturing resources. The Company may not
be successful in locating and qualifying alternative
manufacturing resources in time to meet product demand
requirements. The alternative manufacturing resource may not be
able to successfully manufacture the Company's products. If the
-35-
company does not complete construction of the new manufacturing
facility on time or, in the alternative, does not employ an
alternative manufacturing resource capable of manufacturing the
Company's products, the Company may not be unable to manufacture
enough products to meet customers demands, or manufacture
products at projected cost levels and operating results would be
negatively effected.
Sometimes, the Company experiences significant price
increases and limited availability of components that are
available from multiple sources. At times, the Company has been
unable to meet product orders because parts were not available.
While past shortages and delays have not had a negative effect on
the Company's revenues, shortages and delays could have a
negative effect on the Company's future operating results. On
occasion, the Company acquires component inventory in
anticipation of supply shortages. If component availability is
restored and as a result component prices decline, operating
results could be negatively affected.
Some components, subassemblies and products are purchased
from a single supplier or a limited number of suppliers. The
loss of any of these suppliers may cause the Company to incur
additional set-up costs and delays in manufacturing and delivery
of products.
The Company purchases a large number of parts, components
and third party products from Japan. The strengthening of the
value of the yen in relation to the U.S. dollar in the last half
of 1999 has caused these parts, components and products to be
more costly. If the value of the yen continues to strengthen
relative to the dollar in 2000, the Company's financial
performance could be negatively affected.
Competition. The Company is in a highly competitive industry
that is influenced by:
- advances in technology
- product improvements
- new product introduction
- marketing and distribution capabilities
- price competition
If the Company does not keep pace with product and
technological advances, the Company's competitive position and
prospects for growth could be negatively affected. In 1998 and
continuing in 1999, several of the Company's key competitors had
poor financial performance.
-36-
There is likely to be continued pricing pressure in 2000 as these
competitors attempt to reverse losses in their market share,
which may negatively affect the Company's revenues and/or gross
margins.
New Competitors. The products that the Company and its
competitors manufacture and market are becoming more complex. As
the technological and functional capabilities of future products
increase these products will begin to compete with products being
offered by larger, traditional computer, network and
communications industry participants who have substantially
greater financial, technical, marketing and manufacturing
resources than the Company. The Company may not be able to
compete successfully against these new competitors and
competitive pressures may negatively affect its business or
operating results.
Price. The selling price of the Company's products usually
decreases over the life of the product. To lessen the effect of
price decreases, the Company attempts to reduce manufacturing
costs of existing products and to introduce new products,
functions and other price/performance-enhancing features. If
cost reductions, product enhancements and new product
introductions do not occur in a timely manner or are not accepted
in the marketplace, the Company's operating results could be
negatively affected.
Research and Development. The Company is active in research and
development of new products and technologies. The Company's
research and development efforts may not lead to the successful
introduction of new or improved products. The Company may
encounter delays or problems in connection with its research and
development efforts. New products often take longer to develop,
have fewer features than originally considered desirable and
achieve higher cost targets than initially estimated. There may
be delays in starting volume production of new products and new
products may not be commercially successful. Products under
development are often announced before introduction and these
announcements may cause customers to delay purchases of existing
products until the new or improved versions of those products are
available. Delays or deficiencies in development manufacturing,
delivery of or demand for new products or of higher cost targets
could have a negative affect on the Company's business, operating
results or financial condition.
-37-
System Sales. Historically, the Company has sold individual bar
code scanning devices and scanner integrated mobile computing
devices to customers. Increasingly, the Company's sales efforts
have focused on sales of complete data transaction systems.
System sales are more costly and require a longer selling cycle,
longer payment terms and more complex integration and
installation services.
Intellectual Property. The Company protects its proprietary
information and technology through contractual confidentiality
provisions and by applying for United States and foreign patents,
trademarks and copyrights. These applications may not result in
the issuance of patents, trademarks or copyrights. Third parties
may seek to challenge, invalidate or circumvent these
applications or resulting patents, trademarks or copyrights.
Competitors may independently develop equivalent or superior,
non-infringing technologies. The Company's licensing revenue
could be negatively affected if competing technologies avoid
infringement of the Company's licensed patents.
Third parties have and may again assert claims of
infringement of intellectual property rights against the Company.
These claims have in the past and may in the future lead to
litigation or require the Company to significantly modify or
discontinue sales of some of its products.
Third Party Products. Historically, the Company has manufactured
almost all of it products. Beginning in 1996, the Company began
to offer an increased number of third party products. The
Company hopes that sales of third party products will result in
higher operating income. Sales of third party products usually
generate lower margins which may not be fully offset by lower
expenses. If third party product suppliers become unable or
unwilling to manufacture products for the Company or do not meet
the Company's volume and quality requirements and delivery
schedules, the Company's ability to market these products could
be negatively affected. Many of the components and parts for
these third party products are purchased outside the United
States. Many of these third party products are manufactured
outside of the United States. Supply of these 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
- longer delivery times
-38-
Government Regulations. The Company is subject to the risks
associated with changes in United States and foreign regulatory
requirements. More stringent regulatory requirements or safety
and quality standards may be issued in the future and may have a
negative effect on the business of the Company. Sales of the
Company's products could be negatively affected if more stringent
safety standards are adopted by its 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 FCC in the United States and corresponding authorities in
other countries. Currently, operation of these products in
specified frequency bands does not require licensing by
regulatory authorities. Regulatory changes restricting the use
of frequency bands or allocating available frequencies could have
a negative effect on the Company's business and its results of
operations.
Safety Risk. Recently, there has been some concern over the
potentially negative effects of electromagnetic emissions from
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. The Company's RF products may become the subjects
of safety concerns in the future. Safety issues and the
associated publicity could have a negative 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. If the Company
does not identify future acquisition opportunities and/or
integrate businesses that it may acquire effectively, the
Company's growth may be negatively affected.
Reliance on Resellers, Distributors and OEMs. The Company sells
a majority of its products through resellers, distributors and
original equipment manufacturers (OEMs). Reliance upon third
party distribution sources subjects the Company to risks of
business failure by these individual resellers, distributors and
OEMs, and credit, inventory and business concentration risks.
-39-
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 the corresponding prior year.
-40-
<TABLE>
<CAPTION>
Year to Year Changes___
Year Ending December 31,
Percentage of Revenue 1999 1998
Year Ending December 31, vs. vs.
1999 1998 1997 1998 1997_
<S> <C> <C> <C> <C> <C>
Net Revenue 100.0% 100.0% 100.0% 16.5% 26.3%
Cost of Revenue 55.8 56.0 54.5 16.2 29.8
Amortization of Software
Development Costs 1.6 1.5 1.6 26.6 _20.9
Gross Profit 42.5 42.5 44.0 16.5 22.2
Operating Expenses:
Engineering 7.2 7.3 7.4 15.3 24.8
Selling, General and
Administrative 19.4 19.9 21.4 13.3 17.6
Amortization of Excess of
Cost Over Fair Value of
Net Assets Acquired 0.4 0.5 0.6 5.8 (1.0)
Charges Related to Terminated
Acquisition - 0.4 - - -
27.0 28.0 29.4 12.2 20.6
Earnings from Operations 15.5 14.5 14.6 24.9 25.4
Gain on Sale of Business - 0.1 - - -
Net Interest Expense (0.5) (0.4) (0.4) 96.9 5.3
Earnings Before Income Taxes 15.0 14.2 14.2 23.3 26.4
Provision for Income Taxes 4.8 4.7 5.1 19.6 15.9
Net Earnings 10.2% 9.5% 9.1% 25.2% 32.4%
</TABLE>
-41-
For the year ended December 31, 1999
Net revenue of $1,139,290,000 for the year ended December 31,
1999, increased 16.5 percent over 1998. The increase in net
revenue is due to increased equipment sales, partially offset by
the decrease in revenue associated with the Company's contract
with the United States Postal Service which was substantially
completed during the quarter ended March 31, 1999. Foreign
exchange fluctuations unfavorably impacted the growth in net
revenue by approximately 0.6 percentage points for the year ended
December 31, 1999 and unfavorably impacted the growth in net
revenue by 1.5 percentage points for the year ended December 31,
1998.
Geographically, The Americas revenue increased 13.2 percent
over the comparable prior year period, EMEA revenue increased 20.9
percent over the comparable prior year period and Asia Pacific
revenue increased 34.8 over the comparable prior year period. The
Americas, EMEA, and Asia Pacific revenue represent approximately
64.2 percent, 30.1 percent, and 5.7 percent, respectively, of net
revenue in 1999.
Cost of revenue (as a percentage of net revenue) of 55.8
percent for the year ended December 31, 1999, slightly decreased
from 56.0 percent in 1998 due to the completion of the Company's
contract with the United States Postal Service which represented a
lower margin order relative to historical orders, partially offset
by new product startup costs. The Company anticipates a potential
increase in the cost of revenue (as a percent of net revenue) in
2000, due to an anticipated shift in product mix in the fastest
growing proportion of the Company's business to lower margin
products versus the historical mix of products. This shift in the
product mix coupled with the continued unfavorable impact of
foreign exchange rate fluctuations on net revenue if the U.S.
dollar continues to strengthen may cause cost of revenue (as a
percentage of net revenue) to increase.
Amortization of software development costs of $18,472,000 for
the year ended December 31, 1999, increased from $14,592,000 in
the prior year due to new product releases.
Engineering costs increased to $81,944,000 for the year
ended December 31, 1999, from $71,090,000 for 1998. In absolute
dollars engineering expenses increased 15.3 percent for the year
-42-
ended December 31, 1999, from the prior year. As a percentage of
revenue such expenses decreased to 7.2 percent for the year ended
December 31, 1999, from 7.3 percent for the prior year. The
increase in absolute dollars is due to additional 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
$220,753,000 for the year ended December 31, 1999, from
$194,775,000 in 1998. While in absolute dollars selling, general
and administrative expenses increased 13.3 percent for the year
ended December 31, 1999, from the prior year, as a percentage of
revenue such expenses decreased to 19.4 percent for the year ended
December 31, 1999, from 19.9 percent in 1998. The increase in
absolute dollars reflects expenses incurred to support a higher
revenue base and expenses incurred by three subsidiaries acquired
subsequent to June 30, 1998.
Amortization of excess of cost over fair value of net assets
acquired of $5,092,000 for the year ended December 31, 1999,
increased from $4,812,000 in 1998 due to the acquisition of three
subsidiaries after June 30, 1998 which resulted in an increase in
the gross value of excess of cost over fair value of net assets
acquired.
Net interest expense increased to $5,821,000, for the year
ended December 31, 1999, from $3,450,000 in 1998 primarily due to
increased borrowings under the Company's revolving credit facility
partially offset by a reduction in interest expense due to annual
mandatory repayments of indebtedness.
The Company's effective tax rate for 1999 of 32.0 percent
decreased from 33.0 percent in the prior year period primarily due
to an increase in the federal tax credits and exempt earnings of
the foreign sales corporation.
At December 31, 1999, the Company had net deferred tax assets
of approximately $7,735,000 consisting of current deferred tax
assets of $44,794,000 and long-term deferred tax liabilities of
$37,059,000. No valuation allowance is necessary due to the
Company's history of profitability and anticipated future
profitability.
-43-
For the year ended December 31, 1998
Net revenue of $977,901,000 for the year ended December 31,
1998, increased 26.3 percent over 1997. The increase in net
revenue is due in part to the Company's contract related to the
United States Postal Service as well as increased worldwide
equipment sales. During 1998, sales to Lockheed Martin
Corporation, in connection with the United States Postal Service
contract amounted to approximately 11 percent of total net
revenue. Foreign exchange fluctuations unfavorably impacted the
growth in net revenue by approximately 1.5 percentage points for
the year ended December 31, 1998 and unfavorably impacted the
growth in net revenue by 2.1 percentage points for the year ended
December 31, 1997.
Geographically, The Americas revenue increased 40.9 percent
over the comparable prior year period due in part to the Company's
contract related to the United States Postal Service and the
overall strong economy in the United States, EMEA revenue
increased 2.9 percent over the comparable prior year period and
Asia Pacific revenue increased 19.6 over the comparable prior year
period. The Americas, EMEA, and Asia Pacific revenue represent
approximately 66.1 percent, 29.0 percent, and 4.9 percent,
respectively, of net revenue in 1998.
Cost of revenue (as a percentage of net revenue) of 56.0
percent for the year ended December 31, 1998, increased from 54.5
percent in 1997. This increase is principally due to the
unfavorable impact of foreign exchange rate fluctuations on net
revenue and due to the Company's roll out of its contract related
to the United States Postal Service which represented a lower
margin order relative to historical orders.
Amortization of software development costs of $14,592,000 for
the year ended December 31, 1998, increased from $12,068,000 in
the prior year due to new product releases.
Engineering costs increased to $71,090,000, for the year
ended December 31, 1998, from $56,961,000 for 1997. In absolute
dollars engineering expenses increased 24.8 percent for the year
ended December 31, 1998, from the prior year. As a percentage of
revenue such expenses decreased to 7.3 percent for the year ended
December 31, 1998, from 7.4 percent for the prior year.
-44-
The increase in absolute dollars is due to additional 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
$194,775,000 for the year ended December 31, 1998, from
$165,647,000 in 1997. While in absolute dollars selling, general
and administrative expenses increased 17.6 percent for the year
ended December 31, 1998, from the prior year, as a percentage of
revenue such expenses decreased to 19.9 percent for the year ended
December 31, 1998, from 21.4 percent in 1997. The increase in
absolute dollars reflects expenses incurred to support a higher
revenue base and expenses incurred by four subsidiaries acquired
in 1997 and 1998.
Amortization of excess of cost over fair value of net assets
acquired of $4,812,000 for year ended December 31, 1998, decreased
from $4,859,000 in 1997 due to foreign exchange fluctuations
coupled with the sale of stock and certain assets of Symbol LIS
Limited described below, partially offset by the acquisition of
four subsidiaries in 1998 and 1997 which resulted in an increase
in the gross value of excess of cost over fair value of net assets
acquired.
During 1998 the Company incurred $3,597,000 of various pre-
tax expenses, principally professional fees, associated with a
publicly announced attempt to acquire another company. In the
fourth quarter of 1998, the Company formally terminated its
efforts to complete this acquisition.
During 1998 the gain from the sale of business resulted from
the sale of the stock and certain assets of Symbol LIS Limited, a
wholly owned subsidiary, engaged in the business of providing
systems and technology with respect to logistics and warehouse
management systems operations to a third party.
Net interest expense increased to $3,450,000, for the year
ended December 31, 1998, from $3,276,000 in 1997 primarily due to
increased borrowings under lines of credit.
-45-
The Company's effective tax rate for 1998 of 33.0 percent
decreased from 36.0 percent in the prior year period primarily due
to an increase in federal tax credits and the exempt earnings of
the foreign sales corporations.
At December 31, 1998, the Company had net deferred tax assets
of approximately $6,340,000, consisting of current deferred tax
assets of $34,428,000 and long-term deferred tax liabilities of
$28,088,000. The current deferred tax assets reflect a valuation
allowance of approximately $696,000 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.
<TABLE>
Liquidity and Capital Resources
<CAPTION>
The Company utilizes a number of measures of liquidity
including the following:
Year Ended December 31,___
1999 1998 1997__
<S> <C> <C> <C>
Working Capital
(in thousands) $351,613 $295,317 $241,846
Current Ratio (Current
Assets to Current
Liabilities) 2.5:1 2.6:1 2.5:1
Long-Term Debt
to Capital 13.5% 10.8% 8.1%
(Long-term debt to long-
term debt plus equity)
</TABLE>
Current assets increased by $104,597,000 from December 31,
1998, principally due to an increase in accounts receivable as a
result of the increase in net revenue, and inventories due to
increased operating levels.
Current liabilities increased $48,301,000 from December 31,
1998, primarily due to increases in accounts payable and accrued
expenses.
The aforementioned activity resulted in a working capital
increase of $56,296,000 for the fiscal year ended December 31,
1999. The Company's current ratio at December 31, 1999, of 2.5:1
decreased from 2.6:1 at December 31, 1998.
-46-
The Company generated positive cash flow from operations of
$155,010,000 and experienced an overall increase in cash of
$13,844,000 for the year ended December 31, 1999. The positive
cash flow provided by operations, borrowings under lines of
credit, and cash flow generated from and tax benefits associated
with the exercise of stock options were partially offset by cash
used in investing activities and various financing activities,
principally the purchase of 1,592,000 shares of the Company's
common stock, dividends paid, acquisition of subsidiaries and
other acquisition related payments and expenditures for property,
plant and equipment. For the year ended December 31, 1998 the
Company generated $87,954,000 cash flow from operations but
experienced an overall decrease in cash of $43,686,000. The
positive cash flow provided by operations, borrowings under lines
of credit, and cash flow generated from and tax benefits
associated with the exercise of stock options were offset by cash
used in investing activities and various financing activities,
principally the purchase of 1,145,000 shares of the Company's
common stock, dividends paid, acquisition of subsidiaries and
other acquisition related payments and expenditures for property,
plant and equipment.
Property, plant and equipment expenditures for the year
ended December 31, 1999 totaled $70,041,000 compared to
$89,334,000 for the year ended December 31, 1998. During the
fourth quarter of 1999 the Company entered into a construction
commitment to expand capacity by constructing a 140,000 square
foot manufacturing and distribution facility in Reynosa, Mexico.
The addition of this facility is part of the Company's global
logistics strategy of supply chain management through vertical
manufacturing integration. The project cost, including land and
building, is estimated at approximately $10,000,000 and is
anticipated to be completed in the third quarter of 2000. In the
first quarter of 1999 the Company substantially completed
construction related to expansion of its existing Worldwide
Headquarters facility located in Holtsville, New York. The
Company continues to make capital investments in major systems
and networks conversions but does not have any other material
commitments for capital expenditures.
-47-
At December 31, 1999, the Company had $99,623,000 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 two 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 February 1997. The Senior
Notes represent $19,048,000 of the total long-term debt balance
outstanding at December 31, 1999. In September 1999, the Company
expanded the size of its revolving credit facility with a
syndicate of U.S. and International banks (the "Credit
Agreement") from $200 million to $350 million. The terms of the
Credit Agreement extend to 2004. Use of the borrowings is
unrestricted and the borrowings are unsecured. At December 31,
1999, the Company had $57,000,000 borrowings outstanding under
the Credit Agreement which have been classified as long-term
obligations. In November 1999, the Company issued a promissory
note to a commercial bank for 2.1 billion Japanese yen. The note
matures in November 2000 but allows for an extension of the
maturity date subject to certain conditions. If the Company does
not extend the maturity date, it intends to liquidate the note by
borrowing additional funds under the Credit Agreement. The
promissory note, which is recorded at fair value, represents
$20,372,000 of the total long-term debt balance outstanding at
December 31, 1999. The remaining $3,203,000 of long-term debt
outstanding is primarily related to the New York State agency
loan, a low-interest loan with interest payable monthly and
principal repayment in two installments in 2001.
The Company's long-term debt to capital ratio increased to
13.5 percent at December 31, 1999, from 10.8 percent at December
31, 1998, primarily due to increased borrowings under the Credit
Agreement and issuance of the promissory note.
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.
-48-
Recent pronouncements of the Financial Accounting Standards
Board ("FASB") which are not required to be adopted at this date
include Statement of Financial Accounting Standards No. 133
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133") which was subsequently amended by Statement of
Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of SFAS No. 133". SFAS 133, as amended by SFAS
137, is effective for fiscal quarters of all fiscal years
beginning after June 15, 2000. Based upon current data the
adoption of SFAS 133 is not expected to have a material impact on
the Company's consolidated financial statements.
January 2000 Update
Through the first month of the year 2000, the Company's
operations around the world are fully functioning and have not
experienced any significant issues associated with the Year 2000
problem (as described below). The Company has not experienced
any significant Year 2000-related issues worldwide that would
affect its ability to manufacture, ship, sell or service its
products. The Company will continue to monitor its operations.
The Company's total cost of its Year 2000 activities through
1999 were approximately $2,800,000 which includes approximately
$2,300,000 of capitalized fixed assets.
Year 2000 Readiness Overview
The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Computer systems may recognize a date using
"00" as the year 1900 rather than the year 2000. This could
result in product and/or system failures or other computer errors
causing disruption of the Company's operations.
The Company's Year 2000 initiatives focused on the following
areas of risk: a) the failure or disruption of systems used by
the Company to run its business operations and facilities, b) the
failure or disruption of systems used by the Company's suppliers
and vendors, c) warranty or other claims by customers due to
failure or malfunctioning of the Company's products.
The Company established a steering committee including
senior executives to address Year 2000 issues which report
periodically to the Board of Directors. The Company's plan to
address Year 2000 issues resulted in the formation of three main
teams: (a) internal systems team, (b) external vendors/suppliers
team, and (c) product readiness team.
-49-
The Company assessed the extent to which the Company's
interface systems and sources of supply were vulnerable to third
party hardware and software suppliers' failure to remediate their
Year 2000 issues.
The Company determined that it would not have to modify or
replace significant portions of its product offerings so that
such products would function properly with respect to dates in
the Year 2000.
Euro Conversion
As part of the European Economic and Monetary Union
(EMU), a single currency (the "Euro") will replace the national
currencies of most of the European countries in which the Company
conducts business. The conversion rates between the Euro and the
participating nations' currencies have been fixed irrevocably as
of January 1, 1999, with the participating national currencies
being removed from circulation between January 1, and June 30,
2002 and replaced by Euro notes and coinage. During the
"transition period" from January 1, 1999 through December 31,
2001, public and private entities as well as individuals may pay
for goods and services using either checks, drafts, or wire
transfers denominated in Euro or the participating country's
national currency.
Under the regulations governing the transition to a
single currency, there is a "no compulsion, no prohibition" rule
which states that no one is obliged to utilize the Euro until the
notes and coinage have been introduced on January 1, 2002. In
keeping with this rule, the Company is Euro "compliant" (able to
receive Euro denominated payments and able to invoice in Euro as
requested by vendors and suppliers, respectively) as of January
1, 1999 in the affected countries. Full conversion of all
affected country operations to Euro is expected to be completed
by the time national currencies are removed from circulation.
Phased conversion to the Euro is currently underway and the
effects on revenues, costs and various business strategies are
being assessed. The cost of software and business process
conversion is not expected to be material.
-50-
Market Risk Sensitivity
The Company is exposed to various market risks, including
changes in foreign currency exchange rates and interest rates.
Market risk is the potential loss arising from adverse changes in
market rates and prices, such as foreign currency exchange and
interest rates. The Company has a formal policy that prohibits
the use of currency derivatives or other financial instruments
for trading or speculative purposes. The policy permits the use
of financial instruments to manage and reduce the impact of
changes in foreign currency exchange rates that may arise in the
normal course of the Company's business. Currently, the Company
does not use interest rate derivatives. The counterparties in
derivative transactions are major financial institutions with
ratings of A or better, as determined by one of the major credit
rating services.
The Company enters into forward foreign exchange contracts
and foreign currency loans principally to hedge the currency
fluctuations in transactions denominated in foreign currencies,
thereby limiting the Company's risk that would otherwise result
from changes in exchange rates. During 1999, the principal
transactions hedged were short-term intercompany purchases. The
periods of the forward foreign exchange contracts and foreign
currency loans correspond to the periods of the hedged
transactions. Gains and losses on forward foreign exchange
contracts and foreign currency loans and the offsetting losses
and gains on hedged transactions are reflected in the Company's
statement of earnings.
A large percentage of the Company's sales are transacted in
local currencies. As a result, the Company's international
operating results are subject to foreign exchange rate
fluctuations. A 5.0 percent strengthening or weakening of the
U.S. dollar against every applicable currency could have had a
$22.5 million impact on the revenues of the Company. The Company
does not use foreign exchange contracts to hedge expected
revenues.
However, the Company sources a portion of its raw materials
in local currencies. A 5.0 percent strengthening or weakening of
the U.S. dollar against every applicable local content currency
would act as a partial offset to the impact on revenues.
-51-
The Company, which manufactures nearly all of its products
in the United States, generally invoices its international
subsidiaries in their local currency for finished and semi-
finished goods. As a result, the Company's annual U.S. dollar
cash flow is subject to foreign exchange rate fluctuations.
A 5.0 percent strengthening or weakening of the U.S. dollar
against every applicable currency could have had a $10.4 million
impact on the value of the realized cash remittances from its
subsidiaries. The Company routinely uses foreign exchange
contracts to hedge cash flows that are either firm commitments or
those which may be forecasted to occur.
In an effort to offset potential year end Y2K liquidity
problems, the Company borrowed $20 million equivalent in Japanese
yen to fund yen denominated firm purchase commitments or those
that were expected to occur. Substantially all of the remaining
Company debt is U.S. dollar denominated. At year-end, about 71.0
percent of this indebtedness to third parties was floating rate-
based. Although the Company has exposure to rising and falling
rates, a 1.0 percent rise in rates on the year-end floating rate-
based borrowings would have had a $774,000 adverse impact on pre-
tax earnings. During 1999, the Company did not use interest rate
derivatives to protect its exposure to interest rate market
movements.
-52-
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, 1999 and 1998 F-2
Statements of Earnings for the Years Ended
December 31, 1999, 1998 and 1997 F-3
Statements of Stockholders' Equity for the F-4
Years Ended December 31, 1999, 1998 and 1997
Statements of Cash Flows for the Years Ended F-5
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements F-6
through
F-28
2. Financial Statement Schedules:
Schedule II S-1
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable
-53-
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.
-54-
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,
1999 and 1998
Consolidated Statements of Earnings for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1999, 1998 and
1997
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1999, 1998 and 1997
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 percent 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.
-55-
3. Exhibits
Exhibit
3.1 Certificate of Incorporation of Symbol
Technologies, Inc. as amended.
3.3 By-laws of the Company as currently in
effect. (Incorporated by reference to
Exhibit 3.3 to the Company's Annual Report on
Form 10-K for the year ended December 31,
1998 (the "1998 Form 10-K").)
4.1 Form of Certificate for Shares of the Common
Stock of the Company. (Incorporated by
reference to Exhibit 4.1 to the 1998 Form 10-K.)
10.1 Form of 2008 Stock Purchase Warrant issued
to certain directors. (Incorporated by
reference to Exhibit 10.1 to the Company's
Annual Report on Form 10K for the year ended
December 31,1997.)
10.2 1994 Directors' Stock Option Plan.
(Incorporated by reference to Exhibit 4.1 to
Registration Statement No. 33-78678 on Form
S-8.)
10.3 1997 Employee Stock Purchase Plan.
(Incorporated by reference to Exhibit 4.2 to
Registration Statement No. 333-26593 on Form
S-8.)
10.4 1997 Employee Stock Option Plan.
(Incorporated by reference to Exhibit 16.5
to the 1998 Form 10-K.)
10.5 1991 Employee Stock Option Plan
(Incorporated by reference to Exhibit 10.1 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.)
10.6 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").)
-56-
10.7 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.)
10.8 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.)
10.9 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.)
10.10 Employment Agreement by and between the
Company and Raymond Martino, dated as of
February 15,2000.
10.11 Executive Retirement Plan, as amended.
(Incorporated by reference to Exhibit 10.14
to 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.
10.14 Form of Note Agreements dated as of February
15, 1993 relating to the Company's 7.76
percent 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.)
10.15 Credit Agreement dated as of December 21,
1998 among Symbol Technologies, Inc., the
lending institutions identified in the credit
agreement and Bank of America National Trust
and Savings Association as agent and as
letter of credit issuing bank. (Incorporated
by reference to Exhibit 10.19 to the 1998
Form 10-K.)
-57-
10.16 Amendment dated September 30, 1999 to Credit
Agreement among Symbol Technologies, Inc.,
the lending institutions identified in the
credit agreement and Bank of America National
Trust and Savings Association as agent and as
letter of credit issuing bank.
22. Subsidiaries.
23. Consent of Deloitte & Touche LLP
(b) Reports on Form 8-K
Not Applicable
-58-
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 29, 2000
-59-
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 29, 2000
Jerome Swartz Board and Director
(Principal Executive
Officer)
/s/Tomo Razmilovic Director February 29, 2000
Tomo Razmilovic
/s/Raymond R. Martino Director February 29, 2000
Raymond R. Martino
/s/Harvey P. Mallement Director February 29, 2000
Harvey P. Mallement
/s/Saul P. Steinberg Director February 29, 2000
Saul P. Steinberg
/s/Lowell C. Freiberg Director February 29, 2000
Lowell C. Freiberg
/s/George Bugliarello Director February 29, 2000
George Bugliarello
/s/Charles B. Wang Director February 29, 2000
Charles B. Wang
/s/Leo A. Guthart Director February 29, 2000
Leo A. Guthart
/s/Kenneth V. Jaeggi Senior Vice President February 29, 2000
Kenneth V. Jaeggi Finance (Chief
Financial Officer)
/s/Brian T. Burke Senior Vice President February 29, 2000
Brian T. Burke and Controller (Chief
Accounting Officer)
-60-
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, 1999, 1998 AND 1997
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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 (1-16) F-6 through F-28
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.
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, 1999 and 1998, and the related consolidated statements of
earnings, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1999. 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, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years
in the period ended December 31, 1999 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
New York, New York
February 11, 2000
F-1
<TABLE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except stock par value)
<CAPTION>
December 31, December 31,
ASSETS 1999 1998____
<S> <C> <C>
CURRENT ASSETS:
Cash, including temporary investments of
$4,797 and $3,018 respectively $ 30,128 $ 16,284
Accounts receivable, less allowance for doubtful
accounts of $11,924 and $10,031, respectively 252,140 205,416
Inventories 216,709 196,986
Deferred income taxes 44,794 34,428
Other current assets 40,430 26,490
TOTAL CURRENT ASSETS 584,201 479,604
PROPERTY, PLANT AND EQUIPMENT, net 206,116 174,867
INTANGIBLE ASSETS, net 130,566 115,954
SOFTWARE DEVELOPMENT COSTS, net 64,883 43,571
OTHER ASSETS 62,178 24,403
$1,047,944 $838,399
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 188,178 $149,938
Current portion of long-term debt 10,046 10,594
Income taxes payable 15,559 9,858
Deferred revenue 18,805 13,897
TOTAL CURRENT LIABILITIES 232,588 184,287
LONG-TERM DEBT, less current maturities 99,623 64,596
DEFERRED REVENUE 12,833 10,683
OTHER LIABILITIES 62,440 47,905
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
300,000 shares; issued 101,788 shares and
66,439 shares, respectively 1,018 664
Additional paid-in capital 362,849 315,884
Other comprehensive income (2,352) (5,797)
Retained earnings 479,806 365,950
841,321 676,701
Less:
Treasury stock at cost, 13,116 shares and
7,683 shares, respectively (200,861) (145,773)
640,460 530,928
$1,047,944 $838,399
</TABLE>
See notes to consolidated financial statements
F-2
<TABLE>
SYMBOL TECHNOLOGIES, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(All amounts in thousands, except per share data)
<CAPTION>
Year ended December 31,_______
1999 1998 1997__
<S> <C> <C> <C>
NET REVENUE $1,139,290 $977,901 $774,345
COST OF REVENUE 636,084 547,328 421,796
AMORTIZATION OF SOFTWARE
DEVELOPMENT COSTS 18,472 14,592 12,068
GROSS PROFIT 484,734 415,981 340,481
OPERATING EXPENSES:
Engineering 81,944 71,090 56,961
Selling, general and
administrative 220,753 194,775 165,647
Amortization of excess of
cost over fair value of
net assets acquired 5,092 4,812 4,859
Charges related to
terminated acquisition - 3,597 -
307,789 274,274 227,467
EARNINGS FROM OPERATIONS 176,945 141,707 113,014
OTHER (EXPENSE)/INCOME:
Gain on sale of business - 494 -
Interest income 2,315 2,373 2,225
Interest expense (8,136) (5,823) (5,501)
(5,821) (2,956) (3,276)
EARNINGS BEFORE INCOME TAXES 171,124 138,751 109,738
PROVISION FOR INCOME TAXES 54,760 45,787 39,506
NET EARNINGS $ 116,364 $ 92,964 $ 70,232
EARNINGS PER SHARE:
Basic $1.32 $1.05 $0.79
Diluted $1.23 $0.99 $0.77
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Basic 88,325 88,194 88,557
Diluted 94,381 93,654 91,854
______
PRO FORMA EARNINGS PER SHARE: (1)
Basic $0.88 $0.70 $0.53
Diluted $0.82 $0.66 $0.51
PRO FORMA WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING:
Basic 132,488 132,291 132,836
Diluted 141,572 140,481 137,781
<FN>
(1) Represents the pro forma impact of a three for two split of
the Company's common stock approved by the Board of Directors
on February 14, 2000 to be effected as a 50 percent stock
dividend on April 5, 2000.
</FN>
</TABLE>
See notes to consolidated financial statements
F-3
<TABLE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(All amounts in thousands, except stock par value)
<CAPTION>
Common Stock
$0.01 Par Value Accumulated
Additional Other Total
Shares Paid-in Retained Treasury Comprehensive Comprehensive Stockholders'
Issued Amount Capital Earnings Stock Income Income Equity____
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 28,195 $282 $258,792 $206,331 ($60,079) ($5,650) $399,676
Comprehensive income:
Net earnings - - - 70,232 - 70,232 - 70,232
Translation adjustments - - - - - (2,142) (2,142) (2,142)
Total comprehensive income 68,090 -
Exercise of stock options 1,218 12 24,062 - - - 24,074
Exercise of warrants 9 - 69 - - - 69
Proceeds from sale of common
equity put options - - 285 - - - 285
Reclassification of common
equity put options obligation - - 6,367 - - - 6,367
Purchase of treasury shares - - - - (43,232) - (43,232)
Stock split 14,097 141 (141) - - -
Dividends paid - - - (1,587) - - (1,587)
BALANCE, DECEMBER 31, 1997 43,519 435 289,434 274,976 (103,311) (7,792) 453,742
Comprehensive income:
Net earnings - - - 92,964 - 92,964 - 92,964
Translation adjustments - - - 1,995 1,995 1,995
Total comprehensive income 94,959
Exercise of stock options 1,118 11 21,533 - - - 21,544
Exercise of warrants 43 - 461 - - - 461
Reclassification of common
equity put options obligation - - 4,674 - - - 4,674
Purchase of treasury shares - - - - (42,462) - (42,462)
Stock split 21,759 218 (218) - - -
Dividends paid - - - (1,990) - - (1,990)
BALANCE, DECEMBER 31, 1998 66,439 664 315,884 365,950 (145,773) (5,797) 530,928
Comprehensive income:
Net earnings - - - 116,364 - 116,364 - 116,364
Translation adjustments - - - - - (3,704) (3,704) (3,704)
Unrealized gains on
marketable securities - - - - - 7,149 7,149 7,149
Total comprehensive income 119,809
Exercise of stock options 2,089 21 46,880 - - - 46,901
Exercise of warrants 51 1 417 - 84 - 502
Purchase of treasury shares - - - - (55,172) - (55,172)
Stock split 33,209 332 (332) - - - -
Dividends paid - - - (2,508) - - (2,508)
BALANCE, DECEMBER 31, 1999 101,788 $1,018 $362,849 $479,806 ($200,861) ($2,352) $640,460
</TABLE>
See notes to consolidated financial statements
F-4
<TABLE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
<CAPTION>
Year ended December 31,____
1999 1998 1997__
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $116,364 $ 92,964 $ 70,232
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization of
property, plant and equipment 38,863 32,797 25,738
Other amortization 27,321 22,359 19,539
Provision for losses on accounts
receivable 3,288 2,921 2,253
Gain from sale of business - (494) -
Deferred income taxes (3,627) 5,417 6,243
Changes in assets and liabilities net of
effect of acquisitions and divestitures:
Accounts receivable (50,541) (43,006) (12,455)
Inventories (19,481) (64,948) 9,594
Other current assets (13,925) (2,446) (11,583)
Accounts payable and accrued expenses 36,244 22,021 15,113
Income taxes payable 5,650 7,217 4,380
Other liabilities and deferred revenue 14,854 13,152 (4,805)
Net cash provided by
operating activities 155,010 87,954 124,249
Cash flows from investing activities:
Note receivable - - 2,500
Purchases for property, plant
and equipment (70,041) (89,334) (42,679)
Investments in intangible and
other assets (77,238) (44,455) (16,077)
Proceeds from sale of business, net - 11,911 -
Acquisition of subsidiaries (15,066) (13,686) ( 8,026)
Purchase of available for sale securities (1,000) - -
Net cash used in investing activities (163,345) (135,564) (64,282)
Cash flows from financing activities:
Net proceeds from issuance and repayments
of notes payable and long-term debt 34,479 24,505 (10,240)
Exercise of stock options and warrants 47,319 22,005 24,143
Proceeds from common equity put options - - 285
Dividends paid (2,508) (1,990) (1,587)
Purchase of treasury shares (55,088) (42,462) (43,232)
Net cash provided by/(used in)
financing activities 24,202 2,058 (30,631)
Effects of exchange rate changes on cash (2,023) 1,866 (3,656)
Net increase/(decrease) in cash and
temporary investments 13,844 (43,686) 25,680
Cash and temporary investments,
beginning of year 16,284 59,970 34,290
Cash and temporary investments, end
of year $ 30,128 $ 16,284 $ 59,970
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 4,905 $ 3,496 $ 4,613
Income taxes $ 14,714 $ 21,281 $ 15,423
</TABLE>
See notes to consolidated financial statements
F-5
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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" or
"Symbol"), 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 primarily
of money market funds and time deposits at December 31, 1999 and
1998. 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 3 to 7 years
Furniture, fixtures and office equipment 5 to 10 years
Computer hardware and software 3 to 7 years
Leasehold improvements (limited to terms
of the leases) 2 to 10 years
The Company capitalized interest costs of $350,000 for the year
ended December 31, 1998. No interest was capitalized for the
years ended December 31, 1999 or 1997.
e. Intangible Assets
The excess of cost over fair value of net assets acquired is being
amortized on a straight-line basis over periods ranging from 7 to
40 years.
F-6
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. Marketable Securities
All marketable securities are classified as available-for-sale
under FASB Statement No. 115, with unrealized gains, net of tax,
shown as other comprehensive income within stockholders' equity.
As of December 31, 1999 the fair value of available-for-sale
securities held by the Company was $17,763,000 which is included
in other long-term assets. The Company did not hold any
marketable securities as of December 31, 1998 and 1997
respectively.
h. Long-Lived Assets
The Company reviews its long-lived assets, including property,
plant and equipment, identifiable intangibles and software
development costs for impairment whenever events or changes in
circumstances indicate that the carrying amounts of the assets may
not be fully recoverable. To determine recoverability of its
long-lived assets, the Company evaluates the probability that
future undiscounted net cash flows, without interest charges, will
be less than the carrying amount of the assets. Impairment is
measured at fair value and had no effect on the Company's
consolidated financial statements for the years ended December 31,
1999, 1998 and 1997.
i. Research and Development Expenses
The Company expenses all research and development costs as
incurred. The Company incurred research and development expenses
of approximately $38,426,000, $31,030,000 and $29,991,000, for the
years ended December 31, 1999, 1998 and 1997, respectively, which
are classified in engineering expenses.
F-7
j. 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.
k. Income Taxes
Deferred income tax assets and liabilities were recognized 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, 1999, approximates $39,294,000. 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.
l. Earnings Per Share
Basic earnings per share are based on the weighted average number
of shares of common stock outstanding during the period. 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.
During the years December 31, 1999, 1998, and 1997, respectively
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. In these financial statements, all earnings per share
amounts and the weighted average number of common shares
outstanding have been retroactively restated to reflect each of
the respective stock splits. In addition, the number of common
shares issued has been adjusted to reflect the stock split and an
amount equal to the par value of the additional shares issued has
been transferred from additional paid in capital to common stock.
F-8
m. 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, 1999, the Company had $9,049,000 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. These
contracts are denominated in Japanese yen and have been marked to
market as of December 31, 1999 with the resultant gains and losses
included in net earnings.
n. 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.
o. Reclassifications
Certain reclassifications have been made to prior consolidated
financial statements to conform with current presentations.
F-9
2. ACQUISITIONS AND DIVESTITURES
During the past three years the Company has established wholly
owned subsidiaries through the acquisition of various of its
International distributors and developers of various of the
Company's products. These acquisitions have been accounted for
as purchases and, accordingly, the related acquisition costs have
been allocated to net assets acquired based upon fair values.
The excess of cost over net assets acquired related to these
acquisitions is being amortized over periods not exceeding twenty
years. The following table summarizes the terms of these
acquisitions:
<TABLE>
Initial Excess of
Purchase Cost over net
Year Ended Price assets acquired
<S> <C> <C>
1999 $11,392,000 $11,795,000
1998 $ 6,100,000 $ 3,650,000
1997 $ 7,700,000 $ 2,320,000
</TABLE>
Additional acquisition payments are contingent upon the
attainment of certain annual net revenue levels as defined in the
respective agreements during periods not exceeding five years
from the date of acquisition. The Company made additional
acquisition payments of $1,844,000 and $1,478,000, respectively
during the years ended December 31, 1999 and 1998 related to
these acquisitions which have been recorded as excess of cost
over net assets acquired.
Result 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 1999,
1998 and 1997, would not differ materially from the reported
results.
During 1998 the Company incurred various pre-tax costs associated
with a publicly announced attempt to acquire another company. In
the fourth quarter of 1998 the Company formally terminated its
efforts to complete this acquisition. These one time pre-tax
costs of $3,597,000 include legal, accounting, investment banking
and public relations fees which have been separately classified in
the Company's statement of earnings for the year ended December
31, 1998.
F-10
In August, 1996, the Company acquired LIS Holdings Ltd., ("LIS")
headquartered in the United Kingdom. LIS was 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.
Effective May 31, 1998, the Company sold all of the stock and
certain assets of Symbol LIS Limited, a wholly owned subsidiary,
engaged in the business of providing systems and technology with
respect to logistics and warehouse management systems operations
to a third party. Proceeds from the sale of $15,000,000 were
offset by the value of net assets sold, various disposition
expenses and the write-off of the proportional share of excess of
cost over net assets acquired, relating to the original
acquisition of LIS Holdings Ltd., in 1996. This resulted in a
gain from the sale of business of $494,000 which is classified as
non-operating income in the consolidated statement of earnings.
<TABLE>
3. INVENTORIES
December 31, December 31,
1999 1998___
(in thousands)
<S> <C> <C>
Raw materials $102,637 $ 77,435
Work-in-process 15,120 30,306
Finished goods 98,952 89,245
$216,709 $196,986
</TABLE>
<TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
December 31, December 31,
1999 1998___
(in thousands)
<S> <C> <C>
Land $ 10,680 $ 8,788
Buildings and improvements 51,892 33,392
Machinery and equipment 106,246 83,078
Furniture, fixtures and office
equipment 39,472 34,749
Computer hardware and software 101,559 74,604
Leasehold improvements 13,197 11,071
Construction in progress - 13,617
323,046 259,299
Less: Accumulated depreciation and
amortization 116,930 84,432
$206,116 $174,867
</TABLE>
F-11
During the fourth quarter of 1999 the Company entered into a
construction commitment to expand capacity by constructing a
140,000 square foot manufacturing and distribution facility in
Reynosa, Mexico. The project cost, including land and building,
is estimated at approximately $10,000,000 and is anticipated to
be completed in the third quarter of 2000.
In the first quarter of 1999 the Company substantially completed
construction related to expansion of its existing Worldwide
Headquarters facility, located in Holtsville, New York. The
Company continues to make capital investments in major systems
and networks conversions but does not have any other material
commitments for capital expenditures.
<TABLE>
5. INTANGIBLE ASSETS
<CAPTION>
December 31, December 31,
1999 1998____
(in thousands)
<S> <C> <C>
Excess of cost over fair value
of net assets acquired $140,978 $126,375
Patents, trademarks, purchased
technologies and non-compete
covenants 41,336 32,811
Executive retirement plan
unrecognized prior service
costs 630 722
182,944 159,908
Less: Accumulated amortization 52,378 43,954
$130,566 $115,954
</TABLE>
<TABLE>
6. SOFTWARE DEVELOPMENT COSTS
<CAPTION>
Year Ended December 31,____
1999 1998 1997_
(in thousands)
<S> <C> <C> <C>
Beginning of year $43,571 $26,649 $23,974
Amounts capitalized 39,783 31,514 14,743
83,354 58,163 38,717
Less: Amortization 18,471 14,592 12,068
End of year $64,883 $43,571 $26,649
</TABLE>
F-12
<TABLE>
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<CAPTION>
December 31, December 31,
1999 1998____
(in thousands)
<S> <C> <C>
Accounts payable $104,127 $ 65,025
Accrued payroll, bonuses, fringe
benefits and payroll taxes 46,887 34,598
Other accrued expenses 37,164 50,315
$188,178 $149,938
</TABLE>
<TABLE>
8. LONG-TERM DEBT
<CAPTION>
December 31, December 31,
1999 1998_____
(in thousands)
<S> <C> <C>
Revolving Credit Facility (a) $ 57,000 $35,000
Senior Notes (b) 25,397 31,746
Promissory Note (c) 20,372 -
Industrial Development Bonds (d) - 2,369
Assumed Revenue Bond Financing (e) 968 2,824
State Loan (f) 3,000 3,000
Other 2,932 251
109,669 75,190
Less: Current maturities 10,046 10,594
$ 99,623 $64,596
<FN>
(a) In September 1999 the Company expanded the size of its
unsecured revolving credit facility with a syndicate of U.S.
and International banks from $200 million to $350 million.
As of December 31, 1999 the Company had outstanding
borrowings of $57,000,000 under this facility. These
borrowings bear interest at either LIBOR plus 75 basis points
or the base rate of the syndication agent bank, which
approximated 6.7 percent at December 31, 1999. Since the
proceeds under the Credit Agreement are committed until 2004,
the Company has classified these borrowings as long-term
obligations. As of December 31, 1998 the Company had
outstanding borrowings of $35,000,000 under this facility.
The Company also had $60,000,000 in uncommitted U.S. dollar
and foreign currency lines of credit with several global
banks that continue until such time as either party wishes to
terminate the agreement. At December 31, 1999, the Company
had no borrowings outstanding under this facility.
F-13
(b) 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 two 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 which began 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.
(c) In November 1999 the Company entered into an agreement with a
commercial bank in the form of a note payable to borrow 2.1
billion Japanese yen bearing interest at LIBOR plus 1.0
percent maturing on November 1, 2000. The agreement allows
for an extension of the maturity date subject to certain
conditions. Should the Company not extend the maturity date,
it intends to liquidate the note by borrowing additional
funds under the revolving credit facility, accordingly, the
Company has classified this borrowing as a long-term
obligation.
(d) Borrowings under the Industrial Development Bond financing
accrued interest at the rate of 8.95 percent, payable
quarterly, and the final installment was paid in October
1999. The Company's owned facilities located in Bohemia, New
York, were pledged as collateral for this debt. The
financing agreements contained 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.
(e) 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.
F-14
(f) 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 two installments 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 borrowings
under the Credit Agreement, Senior Notes, Promissory note, and
Industrial Development Bonds approximate their carrying values.
The fair value of the State Loan as of December 31, 1999, is
approximately $2,705,000.
Long-term debt maturities are:
Year ending December 31, (in thousands)
2000 10,046
2001 9,377
2002 6,377
2003 6,377
2004 77,401
Thereafter 91
$109,669
</FN>
</TABLE>
<TABLE>
9. INCOME TAXES
<CAPTION>
The provision for income taxes consists of:
Year Ended December 31,_______
1999 1998 1997__
(in thousands)
<S> <C> <C> <C>
Current:
Federal $42,875 $28,757 $23,371
State and local 7,545 5,434 4,300
Foreign 7,967 6,179 5,592
58,387 40,370 33,263
Deferred:
Federal (1,392) 5,483 5,531
State and local (395) (396) 880
Foreign (1,840) 330 (168)
(3,627) 5,417 6,243
Total Provision
for Income Taxes $54,760 $45,787 $39,506
</TABLE>
F-15
<TABLE>
A reconciliation between the statutory U.S. Federal income tax
rate and the Company's effective tax rate is:
<CAPTION>
Year Ended December 31,______
1999 1998 1997__
<S> <C> <C> <C>
Statutory U.S. Federal
rate 35.0% 35.0% 35.0%
State taxes, net of
Federal tax effect 2.7 2.4 3.1
Tax credits (6.8) (3.0) (0.6)
Amortization of excess of
cost over fair value of
net assets acquired 0.6 0.7 1.0
Exempt income of foreign
sales corporation (3.9) (3.5) (3.0)
Income of foreign
subsidiaries taxed at
(lower)higher tax rates 0.9 0.5 (0.1)
Other, net 3.5 0.9 0.6
32.0% 33.0% 36.0%
</TABLE>
At December 31, 1999, 1998 and 1997, other liabilities include
deferred income taxes of $37,059,000, $28,088,000 and $11,749,000
respectively. The deferred tax assets and liabilities at
December 31, 1999, 1998 and 1997, respectively, are comprised of:
F-16
<TABLE>
Year Ended December 31,
1999 1998 1997____
Deferred Tax Deferred Tax Deferred Tax
Assets/ Assets/ Assets/
(Liabilities) (Liabilities) (Liabilities)
(in thousands)
<S> <C> <C> <C>
Receivables ($2,700) ($6,192) ($5,470)
Inventory 19,751 13,777 10,988
Net investment in
sales-type leases (6,471) (4,240) (3,148)
Accrued compensation
and associate benefits 5,296 5,692 4,944
Other accrued liabilities 8,803 14,196 6,403
Accrued restructuring
and severance costs 214 397 1,006
Deferred revenue - current 5,755 2,139 2,855
Deferred revenue - long term 14,835 4,209 950
Deferred patent and product
development costs (33,618) (23,669) (15,708)
Purchased technology &
other intangibles 3,932 3,938 5,175
Property, plant and
equipment (18,254) (13,184) (5,255)
Investments (4,614) 158 158
Cumulative translation
adjustments 6,131 3,750 5,104
Tax credit carryforwards 3,651 2,883 2,185
Other, net 5,024 3,182 3,561
7,735 7,036 13,748
Less: Valuation allowance - 696 589
Net Deferred Tax Asset $7,735 $ 6,340 $13,159
</TABLE>
The valuation allowance decreased by $696,000 during 1999,
increased by $107,000 during 1998 and decreased by $12,000 during
1997. The valuation allowance at December 31, 1998 and December
31, 1997 related to state investment tax credit carryforwards
which were likely to be recaptured. No valuation allowance is
necessary at December 31, 1999 because the state investment tax
credit carryforwards are not likely to be recaptured, and because
of the Company's history of profitability and anticipated future
profitability.
F-17
10. COMMITMENTS AND CONTINGENCIES
a. Lease Agreements
Future minimum annual rental payments required under non-
cancelable operating leases are:
Year ending December 31, (in thousands)
2000 10,865
2001 9,505
2002 7,902
2003 6,669
2004 6,393
Thereafter 33,002
$74,336
Rent expense under substantially all operating leases was
$11,143,000, $9,938,000 and $7,446,000, for the years ended
December 31, 1999, 1998 and 1997, respectively.
b. 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 $3,369,000 at
December 31, 1999.
c. 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 February 8, 2000, the United States District Court in
Rochester, New York issued a decision in the suit between PSC and
the Company commenced in 1996. PSC sought to have the Court
declare that two license agreements between PSC and the Company
were terminated and that PSC was only obligated to pay royalties
to the Company on sales of its hand-held laser scanners in
accordance with the much lower rates contained in an agreement
which PSC had acquired from Spectra-Physics in 1996.
The Court held that PSC's two license agreements with the Company
have not been terminated and that PSC was obligated to pay the
Company the higher royalty rates under these agreements rather
than the much lower rates contained in the Spectra Agreements.
F-18
This decision results in an immediate obligation by PSC to
pay the Company back royalties from October 23, 1998 in the
estimated amount of approximately $7 million. In addition,
pursuant to the ruling, PSC is also obligated to pay additional
estimated royalties of approximately $5 million per year on a
going forward basis. The Court also held that the Company had
purged the patent misuse, which the Court had earlier found.
On July 21, 1999, the Company and six other leading members
of the Automatic Identification and Data Capture industry jointly
initiated a litigation against the Lemelson Medical, Educational,
& Research Foundation, Limited Partnership (the "Lemelson
Partnership"). The suit, which is entitled Symbol Technologies,
Inc. et. al. v. Lemelson Medical, Educational & Research
Foundation, Limited Partnerships, was commenced in the U.S.
District Court, District of Nevada in Reno, Nevada.
In the litigation, the Auto ID companies seek, among other
remedies, a declaration that certain patents, which have been
asserted by the Lemelson Partnership against end users of bar
code equipment, are invalid, unenforceable and not infringed.
The Company has agreed to bear approximately half of the legal
and related expenses associated with the litigation, with the
remaining portion being borne by the other Auto ID companies.
Although no claim is now or has ever been asserted by the
Lemelson Partnership directly against the Company or, to our
knowledge any other Auto ID company, the Lemelson Partnership has
contacted many of the Auto ID companies' customers demanding a
one-time license fee for certain so-called "bar code" patents
transferred to the Lemelson Partnership by the late Jerome H.
Lemelson. The Company and the other Auto ID companies have
received many requests from their customers asking that they
undertake the defense of these claims using their knowledge of
the technology at issue. Certain of these customers have
requested indemnification against the Lemelson Partnership's
claims from the Company and the other Auto ID companies,
individually and/or collectively with other equipment suppliers.
The Company, and we understand, the other Auto ID companies
believe that generally they have no obligation to indemnify their
customers against these claims and that the patents being
asserted by the Lemelson Partnership against their customers with
respect to bar code equipment are invalid, unenforceable and not
infringed. However, the Company and the other Auto ID companies
believe that the Lemelson claims do concern the Auto ID industry
at large and that it is appropriate for them to act jointly to
protect their customers against what they believe to be baseless
claims being asserted by the Lemelson Partnership.
F-19
The Lemelson Partnership has not yet filed an Answer to the
Complaint in the lawsuit. Instead, the Lemelson Partnership has
filed a motion to dismiss the lawsuit, or in the alternative, to
stay proceedings or to transfer the case to the U.S. District
Court in Arizona where there are pending cases involving the
Lemelson Partnership and other companies in the semiconductor and
electronics industries.
11. STOCKHOLDERS' EQUITY
a. Stock Option Plans
There are a total of 21,545,143 shares of Common Stock reserved
for issuance under the Company's stock option plans at December
31, 1999. Stock options granted to date generally vest over a
four to five year period, expire after ten years and have exercise
prices equal to the market value of the Company's common stock at
the date of grant.
<TABLE>
A summary of changes in the stock option plans is:
<CAPTION>
Shares Under Option_____________
Number of Weighted Avg.
Option Price Shares Exercise
per Share (in thousands) Price____
<S> <C> <C> <C>
Shares under option
at January 1, 1997 12,839 $ 7.56
Granted $14.31 to $18.39 5,052 $15.24
Exercised $ 1.63 to $11.67 (2,740) $ 4.17
Cancelled $ 2.67 to $15.56 (567) $10.52
Shares under option
at December 31, 1997 $ 2.68 to $18.39 14,584 $10.74
Granted $16.58 to $35.83 3,431 $20.64
Exercised $ 3.26 to $14.07 (1,678) $ 6.51
Cancelled $ 3.56 to $33.00 (372) $14.79
Shares under option
at December 31, 1998 $ 2.68 to $35.83 15,965 $13.22
Granted $31.56 to $56.75 3,089 $38.96
Exercised $ 3.26 to $18.39 (2,089) $ 9.58
Cancelled $ 5.52 to $38.67 (217) $20.38
Shares under option
at December 31, 1999 $ 2.68 to $56.75 16,748 $18.33
Shares exercisable
at December 31, 1999 $ 2.68 to $18.39 7,644 $11.11
</TABLE>
F-20
<TABLE>
The following table summarizes information concerning currently
outstanding and exercisable options:
<CAPTION>
Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Life Exercise Exercisable Exercise
Prices (in thousands) (years) Price (in thousands) Price__
<S> <C> <C> <C> <C> <C>
$ 2.68 - $ 3.99 940 2.9 $ 3.68 940 $ 3.68
$ 4.00 - $ 6.00 534 3.0 $ 5.39 534 $ 5.39
$ 6.01 - $ 9.00 1,451 4.8 $ 7.92 1,296 $ 7.92
$ 9.01 - $13.50 3,073 6.2 $11.61 2,077 $11.49
$13.51 - $20.25 6,904 7.4 $16.00 2,797 $15.90
$20.26 - $30.37 119 8.3 $24.79 - -
$30.38 - $45.56 3,536 9.0 $36.52 - -
$53.75 - $56.75 191 9.9 $56.75 - -
16,748 7,644
</TABLE>
At December 31, 1999, an aggregate of 4,797,000 shares remain
available for grant under the stock option plans. The tax
benefits arising from stock option exercises during the years
ended December 31, 1999, 1998 and 1997, in the amount of
$27,327,000, $13,144,000, and $13,057,000, 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.
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:
<TABLE>
Year Ended December 31,____
1999 1998 1997__
(in thousands)
<S> <C> <C> <C>
Net Income:
As Reported $116,364 $92,964 $70,232
Pro Forma $103,996 $85,529 $65,557
Basic Earnings Per Share:
As Reported $1.32 $1.05 $0.79
Pro Forma $1.18 $0.97 $0.74
Diluted Earnings Per Share:
As Reported $1.23 $0.99 $0.77
Pro Forma $1.10 $0.91 $0.71
</TABLE>
F-21
The weighted average fair value of options granted during 1999,
1998 and 1997 was $13.73, $6.85 and $5.13 per option,
respectively. In determining the fair value of options and outside
directors' options and stock purchase warrants granted in 1999,
1998 and 1997 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, 5.0 percent and 5.5 percent; an
expected option life of 4.0 years, 4.0 years and 4.5 years; an
expected volatility of 35 percent, 33 percent and 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.
b. Outside Directors' Options and Stock Purchase Warrants
All options and stock purchase warrants issued to outside
directors vest over a two to four year period, expire after ten
years and have exercise prices equal to the market value of the
Company's common stock at the date of grant. 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, 1999:
<TABLE>
Number of
Shares Exercise Shares
Exercisable Issuable Price Vested at
to Upon Exercise per Share December 31,1999
<S> <C> <C> <C>
2004 59,000 $ 7.48 to $ 8.22 59,000
2005 25,000 $ 9.96 25,000
2006 34,000 $13.93 34,000
2007 22,000 $14.67 22,000
2008 124,000 $16.58 to $22.13 32,000
2009 104,000 $35.54 to $56.75 -
368,000 172,000
</TABLE>
The weighted average exercise price for the number of shares
issuable upon exercise were $20.55, $13.39, and $8.63,
respectively, for the years ended December 31, 1999, 1998, and
1997. The weighted average exercise price of shares vested were
$12.06, $10.13, and $7.19, respectively, for the years ended
December 31, 1999, 1998, and 1997. The weighted average fair
value of outside directors options and stock purchase warrants
granted during 1999, 1998 and 1997 was $12.63, $5.84, and $4.93,
per share, respectively.
c. Employee Stock Purchase Plan
During 1997, the Company adopted an employee stock purchase plan
which was approved by the Company's stockholders at the annual
meeting of shareholders. Participants may purchase shares of stock
for an amount equal to 85% of the lesser of the closing price of a
share of stock on the first trading day of the period or the last
trading day of the period.
F-2
The Company's only expense for this plan is for its
administration. The stock sold to plan participants shall be
authorized but unissued common stock, treasury shares or shares
purchased in the open market. The aggregate number of shares
which may be issued pursuant to the plan is 843,750. As of
December 31, 1999, 341,131 shares were issued to participants and
subsequent to December 31, 1999, 84,128 shares were issued to
participants by the Company all of which were purchased in the
open market by the Company. The weighted average fair value of
shares sold in 1999 was $11.74.
d. Treasury Stock
Treasury stock is comprised of 4,505,000 shares of Common Stock
purchased for a total cost of $72,299,000 from certain officers in
connection with the exercise of stock options and 8,611,000 shares
purchased in open market transactions for a total cost of
$128,562,000 pursuant to the various stock repurchase programs
authorized by the Board of Directors.
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 of annual compensation. Plan expense for
the years ended December 31, 1999, 1998 and 1997 was $6,182,000,
$5,339,000 and $4,591,000, respectively.
b. Health Benefits
The Company pays substantially all costs incurred in connection
with providing associate health benefits through programs
administered by various insurance companies. Such costs amounted
to $14,161,000, $12,935,000, and $10,275,000, for the years ended
December 31, 1999, 1998 and 1997, 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, 1999, 12 officers were
participants in the Plan. The Company's obligations under the Plan
are not funded apart from the Company's general assets.
F-23
<TABLE>
Change in benefit obligation:
<CAPTION>
Year Ended December 31,__
1999 1998 1997__
(in thousands)
<S> <C> <C> <C>
Benefit obligation at beginning
of year $9,817 $8,234 $6,852
Service cost 1,063 806 659
Interest cost 792 711 665
Amortization of unrecognized prior
service costs 92 112 112
Amendments - - -
Actuarial loss 110 8 -
Recognition of SERP Swap Benefit (1,439) - -
Benefits paid (54) (54) (54)
Benefit obligation at end of year $10,381 $9,817 $8,234
Funded status (13,730) (13,199) (9,596)
Unrecognized actuarial loss 2,719 2,660 527
Unrecognized prior service cost 630 722 835
Net amount recognized ($10,381) ($9,817) ($8,234)
Amounts recognized in the balance
sheet consist of:
Accrued benefit liability (10,381) (9,817) (8,234)
Net amount recognized ($10,381) ($9,817) ($8,234)
</TABLE>
<TABLE>
Components of net periodic benefit cost:
<CAPTION>
Year Ended December 31,__
1999 1998
(in thousands)
<S> <C> <C>
Service cost $1,063 $806
Interest cost 792 711
Amortization of unrecognized
prior service cost 92 112
Recognized net actuarial loss 110 8
Net periodic benefit cost $2,057 $1,637
</TABLE>
The Plan had $10,846,000, and $9,810,000 of vested benefit
obligations at December 31, 1999, and 1998, respectively, which
are included in other liabilities. The projected benefit
obligation at December 31, 1999, 1998 and 1997 was determined
using an assumed weighted average discount rate of 7.5 percent,
6.5 percent and 7.0 percent, respectively, and an assumed increase
in the long-term rate of compensation of 5.0 percent.
F-24
The Company has also purchased an annuity contract for former
executives who have been terminated. The annuity contract was
valued at approximately $2,700,000 at December 31, 1999 and is
included in other assets.
13. RECONCILIATION OF BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per common share are computed based on the
weighted-average number of common shares outstanding during each
period. Diluted earnings per common share are computed based on
the weighted-average number of common shares, after giving effect
to diluted common stock equivalents outstanding during each
period. The following table provides a reconciliation between
basic and diluted earnings per share:
<TABLE>
For The Year Ended___________________________
December 31, 1999 December 31, 1998 December 31, 1997___
(in thousands, except per share amounts)
Per Per Per
Income Shares Share Income Shares Share Income Shares Share
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available
to common
stockholders $116,364 88,325 $1.32 $92,964 88,194 $1.05 $70,232 88,557 $0.79
Effect of Dilutive
Securities
Options/Warrants - 6,056 ($0.09) - 5,460 ($0.06) - 3,297 ($0.02)
Diluted EPS
Income available to
common stockholders
plus assumed
exercises $116,364 94,381 $1.23 $92,964 93,654 $0.99 $70,232 91,854 $0.77
</TABLE>
14. INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS
The Company manages its business on a geographic basis. The
Company's reportable segments have been aggregated into three
geographic reportable business segments, The Americas (which
includes North and South America), EMEA (which includes Europe,
Middle East and Africa) and Asia Pacific (which includes Japan,
the Far East and Australia).
F-25
Summarized financial information concerning the Company's
reportable segments is shown in the following table. Sales are
allocated to each of the reportable segments based upon the
location of the use of the products and services. The "Corporate"
column includes corporate related expenses (primarily various
indirect manufacturing operations costs, engineering and general
and administrative expenses) not allocated to reportable segments.
This has the effect of increasing reportable operating profit for
The Americas, EMEA and Asia Pacific. Indentifiable 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.
F-26
<TABLE>
The Asia/
Americas EMEA Pacific Corporate Consolidated
(in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1999:
Sales to unaffiliated
customers $731,206 $343,507 $64,577 $ - $1,139,290
Transfers between
geographic areas 241,175 - - (241,175) -
Total net revenue $972,381 $343,507 $64,577 ($241,175) $1,139,290
Interest income $1,704 $568 $43 - $2,315
Interest expense $8,010 $126 - - $8,136
Depreciation and
Amortization expense $59,878 $5,993 $313 - $66,184
Earnings before
provision for income
taxes $273,968 $93,198 $23,419 ($219,461) $171,124
Income tax expense $49,783 $2,822 $2,155 - $54,760
Identifiable assets $771,305 $143,717 $23,832 $109,090 $1,047,944
Year ended December 31, 1998:
Sales to unaffiliated
customers $645,916 $284,084 $47,901 $ - $977,901
Transfers between
geographic areas 185,935 - - (185,935) -
Total net revenue $831,851 $284,084 $47,901 ($185,935) $977,901
Interest income $1,118 $1,005 $250 - $2,373
Interest expense $5,188 $536 $99 - $5,823
Depreciation and
Amortization expense $49,154 $5,732 $270 - $55,156
Earnings before
provision for income
taxes $176,358 $73,540 $16,965 ($128,112) $138,751
Income tax expense $41,123 $3,741 $923 - $45,787
Identifiable assets $588,131 $135,251 $17,719 $97,298 $838,399
Year ended December 31, 1997:
Sales to unaffiliated
customers $458,181 $276,126 $40,038 $ - $774,345
Transfers between
geographic areas 167,996 - - (167,996) -
Total net revenue $626,177 $276,126 $40,038 ($167,996) $774,345
Interest income $1,262 $895 $68 - $2,225
Interest expense $5,274 $227 - - $5,501
Depreciation and
Amortization expense $39,898 $5,153 $226 - $45,277
Earnings before
provision for income
taxes $141,451 $69,373 $15,745 ($116,831) $109,738
Income tax expense $34,951 $4,170 $385 - $39,506
Identifiable assets $409,888 $128,090 $14,377 $126,835 $679,190
</TABLE>
F-27
The Company has customers in the retail industry which accounted
for approximately $45,419,000 and $55,586,000 in accounts
receivable at December 31, 1999 and 1998, respectively. The
carrying amounts of accounts receivable approximate fair value
because of the short maturity of these instruments.
15. SELECTED QUARTERLY FINANCIAL DATA (unaudited)
<TABLE>
The following tables set forth unaudited quarterly financial
information for the years ended December 31, 1999, and 1998:
<CAPTION>
Quarter Ended___________________
March 31 June 30 September 30 December 31
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Year Ended
December 31, 1999:
Net revenue $259,690 $274,103 $293,030 $312,467
Gross profit 110,654 116,907 125,107 132,066
Net earnings 24,342 27,783 30,780 33,459
Basic earnings per share: $0.27 $0.32 $0.35 $0.38
Diluted earnings per share: $0.26 $0.30 $0.33 $0.35
Year Ended
December 31, 1998:
Net revenue $213,310 $238,981 $256,806 $268,804
Gross profit 92,956 100,118 108,629 114,278
Net earnings 19,630 23,506 25,096 24,732
Basic earnings per share: $0.22 $0.27 $0.28 $0.28(1)
Diluted earnings per share: $0.21 $0.25 $0.27 $0.26(1)
<FN>
(1) Includes a pre-tax charge of $3,597,000 ($0.03 per share
after tax) related to terminated acquisition costs.
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.
</FN>
</TABLE>
16. SUBSEQUENT EVENT
On February 14, 2000 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 $.015 semi-annual cash dividend both
of which are payable on April 5, 2000 to shareholders of record on
March 13, 2000. Per share amounts contained herein have not been
adjusted to reflect this split.
F-28
SCHEDULE II
<TABLE>
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
(All amounts in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions_______
(1) (2)
Balance at Charged to Charged Balance
beginning cost and to other at end
Description of year expenses accounts Deductions of year
Allowance for doubtful
accounts:
<S> <C> <C> <C> <C> <C>
December 31, 1999 $10,031 $3,288 $ - (a) $1,395 (b) $11,924
December 31, 1998 $10,995 $2,921 $ - (a) $3,885 (b) $10,031
December 31, 1997 $10,123 $2,253 $ 90 (a) $1,471 (b) $10,995
<FN>
(a) Primarily collection of accounts previously written off.
(b) Uncollectible accounts written off.
</FN>
</TABLE>
S-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
ANNUAL REPORT
ON
FORM 10-K
FOR FISCAL YEAR ENDED
DECEMBER 31, 1999
__________________________________
SYMBOL TECHNOLOGIES, INC.
EXHIBITS
-1-
3. Exhibits
Exhibit
3.1 Certificate of Incorporation of Symbol Technologies,
Inc. as amended.
3.3 By-laws of the Company as currently in effect.
(Incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1998 (the "1998 Form 10-K").)
4.1 Form of Certificate for Shares of the Common Stock of the
Company. (Incorporated by reference to Exhibit 4.1 to
the 1998 Form 10-K.)
10.1 Form of 2008 Stock Purchase Warrant issued to certain
directors. (Incorporated by reference to Exhibit
10.1 to the Company's Annual Report on Form 10K for
the year ended December 31,1997.)
10.2 1994 Directors Stock Option Plan. (Incorporated by
reference to Exhibit 4.1 to Registration Statement No.
33-78678 on Form S-8.)
10.3 1997 Employee Stock Purchase Plan. (Incorporated by
reference to Exhibit 4.2 to Registration Statement No.
333-26593 on Form S-8.)
10.4 1997 Employee Stock Option Plan.
(Incorporated by reference to Exhibit 16.5
to the 1998 Form 10-K.)
10.5 1991 Employee Stock Option Plan (Incorporated by
reference to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1991.)
10.6 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").)
-2-
10.7 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.)
10.8 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.)
10.9 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.)
10.10 Employment Agreement by and between the Company and
Raymond Martino, dated as of February 15,2000.
10.11 Executive Retirement Plan, as amended. (Incorporated
by reference to Exhibit 10.14 to 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.
10.14 Form of Note Agreements dated as of February 15, 1993
relating to the Company's 7.76 percent 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.)
10.15 Credit Agreement dated as of December 21, 1998
among Symbol Technologies, Inc., the lending
institutions identified in the credit agreement and
Bank of America National Trust and Savings
Association as agent and as letter of credit issuing
bank. (Incorporated by reference to Exhibit 10.19
to the 1998 Form 10-K.)
-3-
10.16 Amendment dated September 30, 1999 to Credit
Agreement among Symbol Technologies, Inc., the lending
institutions identified in the credit agreement and
Bank of America National Trust and Savings Association
as agent and as letter of credit issuing bank.
22. Subsidiaries.
23. Consent of Deloitte & Touche LLP
(b) Reports on Form 8-K
Not Applicable
-4-
Exhibit 3.1
-5-
Amended as of May 10, 1999
CERTIFICATE 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 three hundred and ten
million (310,000,000), consisting of three hundred million (300,000,000)
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.
-6-
(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.
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 Bylaws 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 Bylaws of the Corporation. In
addition, the Bylaws 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.
-7-
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.
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
-8-
Exhibit 10.10
-9-
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of the 15th day of
February, 2000 by and between SYMBOL TECHNOLOGIES, INC., a Delaware
corporation (the "Corporation"), and RAYMOND R. MARTINO (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and the Corporation are parties to an
Employment Agreement, dated as of June 12, 1994, (the "Prior Employment
Agreement"), setting forth the terms and conditions of the Executive's
employment by the Corporation; and
WHEREAS, the Prior Employment Agreement has by its terms expired;
and
WHEREAS, the Corporation desires to continue to employ the
Executive; and
WHEREAS, the Executive desires to continue to be employed by the
Corporation in the manner and on the terms and conditions hereinafter set
forth.
-10-
NOW, THEREFORE, in consideration of the premises and of the
mutual and dependent agreements and covenants herein set forth, the
parties hereto agree as follows:
1. Employment
The Corporation hereby agrees to employ the Executive and the
Executive hereby agrees to render services to the Corporation and its
subsidiaries, divisions and affiliates for the period and on the terms and
conditions set forth in this Agreement. During the term hereof, the
Executive shall be employed in a part-time consultative and executive
capacity as he was under the prior Employment Agreement, and shall render
such services as, from time-to-time, may be required of the Executive by
the Chairman of the Board or the President as set forth in Section 3 of
this Agreement.
2. Term
The Executive's employment under this Agreement shall be
effective retroactively to January 1, 2000 through and including February
15, 2005. The Executive shall be compensated for his services hereunder
pursuant to Section 4 of this Agreement.
-11-
3. Duties
(a) So long as the Executive's employment under this Agreement
shall continue pursuant to Section 2 above, the Executive shall, subject to
periods of illness, vacation and other excused absences, devote his entire
business time, attention, and energies to the affairs of the Corporation
and its subsidiaries, divisions and affiliates, use his best efforts to
promote its and their best interests and perform such executive duties as
may be assigned to him by the Chairman of the Board or the President of the
Corporation; provided, however, that such executive duties shall be
consistent with and shall generally be similar to the services which were
customarily performed by the Executive under the Prior Employment
Agreement. Those services shall include, but not be limited to, serving as
advisor to the Chairman and the President; assisting in key sales,
marketing activities and licensing arrangements; consultation with respect
to patent and litigation strategy, acquisitions etc.
(b) So long as the Executive's employment under this Agreement
shall continue pursuant to Section 2 above, the Executive shall, if elected
or appointed, serve as an executive officer and/or director of the
Corporation and of any subsidiary, division or affiliate of the Corporation
and shall hold, without any compensation other than that provided for in
this Agreement, the executive offices in the Corporation and in any such
subsidiary, division or affiliate to which he may, at any time or from
time-to-time, be elected or appointed.
-12-
If the Executive is elected or appointed to serve on the Corporation's
Board of Directors during the term hereof, the Executive shall not be
entitled to receive any fees (other than reimbursement of covered expenses)
that are provided by the Corporation to its outside Directors, as it is
contemplated that the compensation provided to Executive, pursuant to
Section 4 hereof, is designed to compensate Executive for all services he
may render to the Corporation.
4. Compensation
(a) The Corporation hereby agrees to pay to the Executive, and
the Executive hereby agrees to accept, as compensation for services
rendered under this Agreement, a base salary at the rate of one hundred
thousand dollars ($100,000) per annum for the period from January 1, 2000
through and including February 15, 2005, payable at such intervals as the
Corporation customarily pays the salaries of its executive officers.
(b) In addition to the foregoing, it is hereby agreed that
commencing January 1, 2000 and continuing for the term of this Agreement,
the Corporation shall provide and Executive shall be entitled to receive
employee fringe benefits provided by the Corporation to the Executive under
the Prior Employment Agreement relating to life and disability insurance.
-13-
In addition, the Executive shall continue to be eligible to participate in
the Corporation's group health insurance plan and 401(k) plan.
5. Automobile
During the term of this Agreement, the Corporation shall make
available to the Executive the use of an automobile, with a lease allotment
of up to $1,250 per month.
6. Expenses; Options
(a) The Corporation shall pay or reimburse the Executive for all
reasonable travel and other expenses incurred or paid by him in connection
with the performance of his employment duties under this Agreement, upon
presentation to the Corporation of expense statements or vouchers and such
other supporting documentation as it may, from time-to-time, reasonably
require; provided however that the maximum amount available for such
expenses may, at any time or from time-to-time, be fixed in advance by the
Board of Directors of the Corporation.
(b) All outstanding options to purchase shares of Common Stock
of the Corporation now held by the Executive or hereafter awarded to the
Executive during the term of this Agreement shall vest regardless of any
conditions precedent to the vesting of such options (such as the passage of
time) if and when there is a "change in control of the Corporation" as
hereafter defined.
-14-
As used in this Agreement, a "change in control of the Corporation" shall
mean a change in control of a nature that would be required to be reported
in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended, (the "Exchange
Act"); provided, that, without limitation, such a change in control shall
be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation
or any "person" who on the date hereof is a director or officer of the
Company, is or becomes the "beneficial owner", (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Company's then outstanding securities and the Corporation's Board of
Directors, after having been advised that such ownership level has been
reached, does not, within fifteen (15) business days, adopt a resolution
approving the acquisition of that level of securities ownership by such
person; or (ii) during any period of two consecutive years during the term
of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not
a director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office
who were directors at the beginning of the period.
-15-
(c) Notwithstanding the then-current state of the Corporation's
By-Laws, the Executive shall be entitled at all times to the benefit of the
maximum indemnification and advancement of expenses available from time-to-
time under the laws of the State of Delaware.
7. Inventions
(a) The Executive agrees to and hereby does assign to the
Corporation or any subsidiary, affiliate or division of the Corporation
designated by the Corporation, all his right, title and interest throughout
the world in and to all ideas, methods, developments, products, inventions,
processes, improvements, modifications, techniques, designs and/or concepts
relating directly or indirectly to the business of the Corporation, its
subsidiaries, affiliates or divisions, whether patentable or unpatentable,
which the Executive may conceive and/or develop during his employment by
the Corporation (whether pursuant to this Agreement or otherwise) or which
the Executive may conceive and/or develop during a period of thirty (30)
months following the termination of his employment (whether pursuant to
this Agreement or otherwise) if such conception and/or development during
-16-
such thirty (30) month period is a direct result of the Executive's
activities while employed by the Corporation, whether or not conceived
and/or developed at the request of the Corporation or any subsidiary,
affiliate or division (the "Inventions"); provided, however, that if the
Corporation or such subsidiary, affiliate or division determine that it
will not use any such Invention or that it will license or transfer any
such Invention to an unaffiliated third party, then it will negotiate in
good faith with the Executive, if the Executive so requests, with respect
to a transfer or license of such Invention to the Executive.
(b) The Executive further agrees to promptly communicate and
disclose to the Corporation any and all such Inventions as well as any
other knowledge or information which he may possess or obtain relating to
any such Inventions.
(c) In furtherance of the foregoing, the Executive agrees that
at the request of the Corporation, and at its expense, he will make or
cooperate in the making of applications for letters patent of the United
States or elsewhere and will execute such other agreements, documents or
instruments which the Corporation may reasonably consider necessary to
transfer to and vest in the Corporation or any subsidiary, affiliate or
division, all right, title and interest in any such Inventions, and
-17-
all applications for any letters patent issued in respect of any of the
foregoing.
(d) The Executive shall assist, upon request, in locating
writings and other physical evidence of the making of the Inventions and
provide unrecorded information relating to them and give testimony in any
proceeding in which any of the Inventions or any application or patent
directed thereto may be involved, provided that reasonable compensation
shall be paid the Executive for such services and the Executive shall be
reimbursed for any expenses incurred by him in connection therewith, except
that during such period of time as the Executive is employed by the
Corporation, the Corporation shall not be obligated to compensate the
Executive at a higher rate for the giving of testimony than the rate
established by law for the compensation of witnesses in the court or
tribunal where the testimony is given or in the district where the
testimony is taken. The Corporation shall give the Executive reasonable
notice should it require such services, and, to the extent reasonably
feasible, the Corporation shall use its best efforts to request such
assistance at times and places as will least interfere with any other
employment of the Executive.
(e) At the expense of the Corporation, the Executive shall
assign to the Corporation all his interest in copyrightable material which
he produces, composes, or writes, individually or in collaboration with
-18-
others, which arises out of work performed by him on behalf of the
Corporation, and shall sign all papers and do all other acts necessary to
assist the Corporation to obtain copyrights on such material in any and all
jurisdictions.
8. Confidential Information
The Executive hereby acknowledges that, in the course of his
employment by the Corporation he has had and will have access to secret and
confidential information, which relates to or affects all aspects of the
business and affairs of the Corporation and its subsidiaries, affiliates
and divisions, and which are not available to the general public
("Confidential Information"). Without limiting the generality of the
foregoing, Confidential Information shall include information relating to
inventions (including, without limitation, Inventions), developments,
specifications, technical and engineering data, information concerning the
filing or pendency of patent applications, business ideas, trade secrets,
products under development, production methods and processes, sources of
supply, marketing plans, and the names of customers or prospective
customers or of persons who have or shall have traded or dealt with the
Corporation. Accordingly, the Executive agrees that he will not, at any
time, without the express written consent of the Corporation, directly or
indirectly, disclose or furnish, or negligently permit to be disclosed or
-19-
furnished, any Confidential Information to any person, firm, corporation or
other entity except in performance of his duties hereunder.
9. Confidential Materials
The Executive hereby acknowledges and agrees that any and all
models, prototypes, notes, memoranda, notebooks, drawings, records, plans,
documents or other material in physical form which contain or embody
Confidential Information and/or information relating to Inventions and/or
information relating to the business and affairs of the Corporation, its
subsidiaries, affiliates and divisions and/or the substance thereof,
whether created or prepared by the Executive or by others "Confidential
Materials", which are in the Executive's possession or under his control,
are the sole property of the Corporation. Accordingly, the Executive
hereby agrees that, upon the termination of his employment with the
Corporation, whether pursuant to this Agreement or otherwise, or at the
Corporation's earlier request, the Executive shall return to the
Corporation all Confidential Materials and all copies thereof in his
possession or under his control and shall not retain any copies of
Confidential Materials.
10. Non-competition
(a) The Executive agrees that he shall not, so long as he shall
be employed by the Corporation in any capacity (whether
-20-
pursuant to this Agreement or otherwise), without the express written
consent of the Corporation, directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control
or be employed by or connected in any manner including as a consultant,
with any business which is or may be in competition, directly or
indirectly, with the business of the Corporation or any subsidiary,
affiliate or division of the Corporation.
(b) The Executive agrees that for a period of thirty (30)
months, commencing on the effective date of the termination of his
employment, whether such termination is pursuant to the terms of this
Agreement or otherwise, he shall not, without the express written consent
of the Corporation, directly or indirectly, own, manage, operate, control,
or participate in the ownership, management, operation or control, or be
employed by or connected in any manner including as a consultant, with any
business, firm or corporation which is engaged in any business activity
competitive with the business of the Corporation and its subsidiaries,
affiliates and divisions as such business is conducted during the period of
his employment by the Corporation (whether pursuant to this Agreement or
otherwise and at the termination thereof).
(c) Anything to the contrary herein notwithstanding, the
provisions of this section shall not be deemed violated by the
-21-
purchase and/or ownership by the Executive of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or
any securities convertible into such securities) having a market value of
less than $100,000 or representing (together with any securities which
would be acquired upon the exercise of any such options, warrants or rights
or upon the conversion of any other security convertible into such
securities) 1% or less of the outstanding shares of any such class of
equity securities of any issuer whose securities are listed on a national
securities exchange or traded on NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that the
Executive shall not be otherwise connected with or active in the business
of the issuers described in this subsection 10(c).
11. Remedy for Breach
The Executive hereby acknowledges that in the event of any breach
or threatened breach by him of any of the provisions of sections 7, 8, 9 or
10 of this Agreement, the Corporation would have no adequate remedy at law
and could suffer substantial and irreparable damage. Accordingly, the
Executive hereby agrees that, in such event, the Corporation shall be
entitled, without the necessity of proving damages, and notwithstanding any
election by the Corporation to claim damages, to obtain a temporary and/or
-22-
permanent injunction to restrain any such breach or threatened breach or to
obtain specific performance of any of such provisions, all without
prejudice to any and all other remedies which the Corporation may have at
law or in equity.
12. Termination
(a) This Agreement and the employment of the Executive by the
Corporation shall terminate upon the earliest of the dates specified below:
(i) the close of business on the date as of which the term
of the Executive's employment hereunder has terminated as provided in
Section 2 hereof; provided, however, that such term is not extended by any
other agreement between the Executive and the Corporation; or
(ii) the close of business on the date of death of the
Executive; or
(iii) the close of business on the effective date of
the voluntary termination by the Executive of his employment with the
Corporation; or
(iv) the close of business on the day following the date
on which the Corporation shall have given to the Executive written notice
of the election of its Board of Directors to terminate his employment for
"cause" (as defined in subsection (b) of this Section 12).
-23-
(b) For purposes of this Agreement, the term "cause" shall
mean a determination by vote of a majority of the members of the Board
of Directors of the Corporation then holding office (other than the
Executive if he shall then be a director) that one of the following
conditions exists or one of the following events has occurred;
(i) conviction of the Executive for a felony offense; or
(ii) the refusal by the Executive to perform such service
as may reasonably be delegated or assigned to him, consistent with his
position, by the Chairman or the President of the Corporation; continued
neglect by the Executive of his duties hereunder; or willful misconduct or
gross negligence on his part in connection with the performance of such
duties.
13. No Conflicting Agreements
In order to induce the Corporation to enter into this Agreement
and to employ the Executive on the terms and conditions set forth herein,
the Executive hereby represents and warrants that he is not a party to or
bound by any agreement, arrangement or understanding, written or otherwise,
which prohibits or in any manner restricts his ability to enter into and
fulfill his obligations under this Agreement, to be employed by and serve
as an executive of the Corporation. This Agreement supersedes the Prior
Employment Agreement in all respects.
-24-
14. Miscellaneous
(a) This Agreement shall become effective as of the date hereof
and, from and after that time, shall extend to and be binding upon the
Executive, his personal representative or representatives and testate or
intestate distributees, and upon the Corporation, its successors and
assigns; and the term "Corporation", as used herein, shall include
successors and assigns.
(b) Nothing contained in this Agreement shall be deemed to
involve the creation by the Corporation of a trust for the benefit of, or
the establishment by the Corporation of any other form of fiduciary
relationship with the Executive, his beneficiaries or any of their
respective legal representatives or distributees. To the extent that any
person shall acquire the right to receive any payments from the Corporation
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.
(c) Any notice required or permitted by this Agreement shall be
given by registered or certified mail, return receipt requested, addressed
to the Corporation at its then principal office or to the Executive at his
residence address, or to either party at such other address or addresses as
it or he may from time-to-time specify for the purpose in a notice
similarly given to the other party.
-25-
(d) This Agreement shall be construed and enforced in accordance
with the laws of the State of New York. In this connection, Executive
hereby consents to the jurisdiction of the courts of the State of New York
to resolve any disputes arising out of the interpretation or administration
of this Agreement.
(e) This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and there are no agreements,
representations or warranties not herein set forth. No modification of
this Agreement shall be valid unless in writing and signed by the
Corporation and the Executive. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a waiver or
any subsequent breach of the same or any other term or condition.
(f) If any provision of this Agreement shall be held invalid,
such invalidity shall not affect any other provisions of this Agreement not
held so invalid, and all other such provisions shall remain in full force
and effect to the full extent consistent with the law.
-26-
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
SYMBOL TECHNOLOGIES, INC.
By: /s/Raymond R. Martino
By: /s/Jerome Swartz
ATTEST:
/s/Leonard H. Goldner
-27-
Exhibit 10.13
-28-
Summary of Symbol Technologies, Inc.
Executive Bonus Plan
The purpose of the 1999 Executive Bonus Plan is to tie the level of
annual executive incentive compensation to the financial performance of
the Corporation. All executive officers of the Corporation participate in
the Executive Bonus Plan. The Committee has full authority to construe,
interpret and administer the Executive Bonus Plan, as well as to determine
the extent, if any, to which operating performance standards have been
met. The Committee also has authority to modify (prior to the beginning
of the calendar year for which the targets will be applicable) the
specific targets for the performance goals under the Executive Bonus Plan.
Under the Executive Bonus Plan, the Committee will each year
establish corporate financial performance objectives, expressed in terms
of earnings per share diluted. For purposes of the plan, earnings per
share shall be calculated without regard to any changes in accounting
standards or principles and any unusual infrequent items that in
accordance with Generally Accepted Accounting Principles are disclosed
separately in the Corporation's financial statements because they are
material. Three levels of performance will be identified: threshold
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performance, at which the minimum award will be earned and below which no
award will be earned; target performance, at which the target award will
be earned and; maximum performance, at which the maximum award (twice a
participant's target bonus) will be earned and above which no additional
award will be earned. For example, for 2000, threshold performance has
been established at results equal to 85% of the Corporation's 2000
Business Plan; target performance has been established at results equal to
100% of the 2000 Business Plan; and maximum performance has been
established at results equal to or greater than 115% of the 2000 Business
Plan.
Each participant in the Executive Bonus Plan has been assigned a
target bonus representing a percentage of the participant's base salary.
For example, the target bonuses for 2000 for Messrs. Swartz, Razmilovic,
Goldner and Jaeggi are 100%, 100%, 50% and 50%, respectively, which is
consistent with past practice and in conformity with their individual
employment agreements. The target bonuses for all other participants in
the proposed Executive Bonus Plan are established by Messrs. Swartz and
Razmilovic based on the individual's performance and relative level of
responsibility. They range from 35% to 50% of base salary.
-30-
Exhibit 10.16
-31-
1999 AMENDED AND RESTATED CREDIT AGREEMENT
This 1999 Amended and Restated Credit Agreement (this "Amendment
and Restatement") is entered into as of September 30, 1999 among Symbol
Technologies, Inc., a Delaware corporation (the "Company"), the several
financial institutions from time-to-time party to the Credit Agreement, as
amended and restated by this Amendment and Restatement (collectively, the
"Banks"; individually, a "Bank"), and Bank of America, N.A., formerly
known as Bank of America National Trust and Savings Association, as agent
for the Banks (in such capacity, the "Agent") and as letter of credit
issuing bank.
WHEREAS, the Company, the financial institutions party thereto
(the "Original Banks"), and the Agent entered into a Credit Agreement
dated as of December 21, 1998 (the "Credit Agreement");
WHEREAS, as of the date hereof, there are outstanding Offshore
Rate Committed Loans in an aggregate amount of $42,000,000 (the
"Outstanding Committed Loans") made by the Original Banks, and having an
Interest Period expiring on February 24, 2000 (the "Interest Period
Expiration Date");
WHEREAS, the Company has requested that the combined Commitments
under the Credit Agreement be increased from $200,000,000 to $350,000,000,
which increase will be effectuated by increasing the Commitments of
certain Banks party to the Credit Agreement, as evidenced by such Bank's
execution hereof;
WHEREAS, the parties hereto desire to amend the Credit Agreement
as set forth in this Amendment and Restatement and to restate the Credit
Agreement in its entirety to read as set forth in the Credit Agreement
with the amendments specified below;
NOW, THEREFORE, the parties hereto agree that the Credit
Agreement shall be amended as set forth below and restated in its entirety
to read as set forth in the Credit Agreement with the amendments specified
below, as follows:
1. Definitions; References.
(a) Unless otherwise specifically defined herein, each term
used herein which is defined in the Credit Agreement shall have the
meaning assigned to such term in the Credit Agreement.
-32-
For avoidance of doubt, any notes delivered in connection with the
execution of this Amendment and Restatement shall be deemed to be "Notes"
under the Credit Agreement.
(b) Each reference to "hereof", "hereunder", "herein" and
"hereby" and each other similar reference and each reference to "this
Agreement" or the "Credit Agreement" and each other similar reference
contained in the Credit Agreement and in the other Loan Documents to the
Credit Agreement shall from and after the date hereof refer to the Credit
Agreement as amended and restated by this Amendment and Restatement.
2. Amendments to Credit Agreement.
(a) Section 2.07 ("Increase in Commitments") of the Credit
Agreement shall be deleted in its entirety and replaced by "Intentionally
Omitted" and the following sections of the Credit Agreement shall be
amended to conform with such deletion: (i) Section 2.01 shall be amended
by deleting the phrase "increased under Section 2.07,"; (ii) Section 2.08
shall be amended by deleting in the second sentence thereof the phrase
"Except to the extent provided in Section 2.07, once" and replacing it
with "Once"; (iii) Section 4.04 shall be amended by deleting the phrase
"or by reason of a deemed assignment of a portion of a Committed Loan
pursuant to Section 2.07" in the first parenthetical of subsection (d)
thereof; and (iv) Section 11.01 shall be amended in the second proviso
thereof by deleting the phrase "(x) the aggregate amount of the
Commitments, except as contemplated by and subject to the provisions of
Section 2.07 or (y) the aggregate amount set forth in Section 2.07 by
which the Company has the option to increase the Commitments" and
replacing it with "the aggregate amount of the Commitments".
(b) Schedule 2.01 of the Credit Agreement is replaced in its
entirety by Schedule 2.01 of this Amendment and Restatement.
3. Representations and Warranties. The Company hereby represents
and warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the Company of
this Amendment and Restatement have been duly authorized by all necessary
corporate and other action and do not and will not require any
registration with, consent or approval of, notice to or action by, any
Person (including any Governmental Authority) in order to be effective and
enforceable.
-33-
The Credit Agreement as amended and restated by this Amendment and
Restatement constitutes the legal, valid and binding obligations of the
Company, enforceable against it in accordance with its respective terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
(c) All representations and warranties of the Company contained
in Article VI of the Credit Agreement and of the Guarantors in the
Guaranty are true and correct as if made on and as of the date hereof
(except to the extent such representations and warranties expressly refer
to an earlier date, in which case they are true and correct as of such
earlier date).
4. Effective Date. The effectiveness of this Amendment and
Restatement is subject to the condition that the Agent shall have received
on or before the date first above written, in form and substance
satisfactory to each Bank, all of the following:
(a) This Amendment and Restatement, and, if requested by any
Bank, a Committed Loan Note and a Bid Loan Note, executed by each party
thereto (which, in the case of a Bank party to the Credit Agreement and
holding Notes, may be requested due to a change in the amount of its
Commitment and which shall be deemed an amendment and replacement of, and
not a novation of, such existing Notes).
(b) A Guarantor Acknowledgement and Consent substantially in
the form of Exhibit A hereto, executed by each Guarantor.
(c) A certificate of the Secretary or Assistant Secretary of
the Company and each Guarantor certifying that the resolutions of the
board of directors of the Company and each such Guarantor delivered on the
Closing Date under the Credit Agreement remain in full force and effect
and have not been modified or rescinded.
-34-
(d) Such other approvals, opinions, documents or materials as
the Agent or any Bank may reasonably request.
5. Effective Date Adjustments; Outstanding Committed Loans;
Notes; Other Administrative Matters.
(a) On the Effective Date, the amount of each Bank's risk
participation in all outstanding Letters of Credit shall automatically be
deemed to be increased or decreased, as applicable, to reflect any changes
in such Bank's Pro Rata Share after giving effect to the increase in the
aggregate Commitments effective on such date.
(b) Until the Interest Period Expiration Date, the Outstanding
Committed Loans shall be held by the Original Banks in accordance with
their "Pro Rata Shares", as defined in the Credit Agreement, without
giving effect to this Amendment and Restatement (such shares, which are
set forth on Schedule 5(b) hereto for convenience of reference, the
"Original Pro Rata Shares"), it being understood that any additional
Committed Borrowings made on and after the Effective Date shall be made by
the Banks in accordance with their Pro Rata Shares after giving effect
hereto. Unless sooner prepaid in accordance with the terms and conditions
of the Credit Agreement, the Company shall prepay the Outstanding
Committed Loans on the Interest Period Expiration Date, and
notwithstanding Section 2.04 of the Credit Agreement, shall have no right
to convert or continue the Outstanding Committed Loans as of the Interest
Period Expiration Date. While outstanding, all references in the Credit
Agreement to "Pro Rata Shares" or similar references when made in
reference to the Outstanding Committed Loans shall be deemed to refer to
the Original Pro Rata Shares, each Bank acknowledging that, except to the
extent, if any, of its Original Pro Rata Share thereof under the Credit
Agreement, such Bank has no right or interest in the Outstanding Committed
Loans, interest thereon, or any other payment made with respect thereto.
(c) Promptly after the Effective Date, any Bank which is
already holding a Note pursuant to the Credit Agreement and has requested
a new Note pursuant to Section 4(a) hereof (to reflect the change in the
amount of its Commitment) shall return such previously-held Note marked
"Superseded and Replaced" to the Agent, which shall promptly return it to
the Company.
-35-
6. Miscellaneous.
(a) This Amendment and Restatement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns. No third party beneficiaries are intended in connection with
this Amendment and Restatement. This Amendment and Restatement is a Loan
Document.
(b) This Amendment and Restatement shall be governed
by and construed in accordance with the law of the State of New York;
provided that the Agent and the Banks shall retain all rights arising
under Federal law.
(c) This Amendment and Restatement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument. Each of the parties hereto understands and agrees that this
document (and any other document required herein) may be delivered by any
party thereto either in the form of an executed original or an executed
original sent by facsimile transmission to be followed promptly by mailing
of a hard copy original, and that receipt by the Agent of a facsimile
transmitted document purportedly bearing the signature of a Person shall
bind such Person, respectively, with the same force and effect as the
delivery of a hard copy original. Any failure by the Agent to receive the
hard copy executed original of such document shall not diminish the
binding effect of receipt of the facsimile transmitted executed original
of such document of the party whose hard copy page was not received by the
Agent, and the Agent is hereby authorized to make sufficient photocopies
thereof to assemble complete counterparty documents.
(d) This Amendment and Restatement contains the entire and
exclusive agreement of the parties hereto with reference to the matters
discussed herein and therein. This Amendment and Restatement supersedes
all prior drafts and communications with respect thereto.
(e) If any term or provision of this Amendment and Restatement
shall be deemed prohibited by or invalid under any applicable law, such
provision shall be invalidated without affecting the remaining provisions
of this Amendment and Restatement or the Credit Agreement, respectively.
-36-
(f) The Company covenants promptly to pay to or reimburse the
Agent for all reasonable Attorney Costs incurred by the Agent in
connection with the development, preparation, negotiation, execution and
delivery of this Amendment and Restatement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Restatement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first above
written.
SYMBOL TECHNOLOGIES, INC.
By: /s/Kenneth Jaeggi
Name: Kenneth Jaeggi
Title: Senior Vice President
BANK OF AMERICA, N.A.,
as Agent, as Issuing Bank and as a Bank
By: /s/Brian K. Chin
Name: Brian K. Chin
Title: Vice President
-37-
THE CHASE MANHATTAN BANK,
as Documentation Agent and as a Bank
By: /s/Emelia K. Teige
Name: Emelia K. Teige
Title: Vice President
BANCA COMMERCIALE ITALIANA,
NEW YORK BRANCH
By: /s/Charles Dougherty
Name: Charles Dougherty
Title: Vice President
By: /s/T. Gallonetto
Name: T. Gallonetto
Title: Assistant Vice President
BANK HAPOALIM BM
By: /s/Laura Anne Raffe
Name: Laura Anne Raffe
Title: First Vice President and Corporate Manager
By: /s/Shaun Breidbart
Name: Shaun Breidbart
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/J. Brown
Name: J. Brown
Title: Vice President
BANQUE NATIONALE DE PARIS
By: /s/P. Nicholas Rogers
Name: P. Nicholas Rogers
Title: Senior Vice President
By: /s/Jean Plassard
Name: Jean Plassard
Title: Senior Vice President
-38-
COMERICA BANK
By: /s/David W. Shirey
Name: David W. Shirey
Title: Assistant Vice President
COMMERZBANK AG, NEW YORK BRANCH
By: /s/Andrew P Lusk
Name: Andrew P. Lusk
Title: Assistant Treasurer
By: /s/Sean M. Harrigan
Name: Sean M. Harrigan
Title: Senior Vice President
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK AG,
CAYMAN ISLAND BRANCH
By: /s/Stephen Jantora
Name: Stephen Jantora
Title: Vice President
By: /s/Richard Wilbert
Name: Richard Wilbert
Title: Vice President
FLEET BANK N.A.
By: /s/Christopher Mendelsohn
Name: Christopher Mendelsohn
Title: Vice President
Mellon Financial Services as attorney in fact for
MELLON BANK, N.A.
By: /s/Jeffrey B. Carstens
Name: Jeffrey B. Carstens
Title: Vice President
-39-
THE BANK OF NEW YORK
By: /s/Russell A. Burr
Name: Russell A. Burr
Title: Senior Vice President
THE BANK OF NOVA SCOTIA
By: /s/J. Alan Edwards
Name: J. Alan Edwards
Title: Authorized Signatory
WACHOVIA BANK, N.A.
By: /s/David K. Alexander
Name: David K. Alexander
Title: Senior Vice President
-40-
<TABLE>
SCHEDULE 2.01
COMMITMENTS AND PRO RATA SHARES
<CAPTION>
Bank Commitment Pro Rata Share
<S> <C> <C>
Bank of America, N.A. $ 47,500,000 13.57142857%
The Chase Manhattan Bank 40,000,000 11.42857143
Fleet Bank N.A. 35,000,000 10.00000000
Mellon Bank, N.A. 35,000,000 10.00000000
Comerica Bank 25,000,000 7.14285714
The Bank of New York 25,000,000 7.14285714
Banque Nationale de Paris 25,000,000 7.14285714
Wachovia Bank, N.A. 25,000,000 7.14285714
DG Bank Deutsche
Genossenschaftsbank AG,
Cayman Island Branch 20,000,000 5.71428571
Banca Commerciale Italiana,
New York Branch 17,500,000 5.00000000
Bank of Tokyo-Mitsubishi Trust
Company 17,500,000 5.00000000
Commerzbank AG, New York
Branch 17,500,000 5.00000000
Bank Hapoalim BM 10,000,000 2.85714286
The Bank of Nova Scotia 10,000,000 2.85714286
TOTAL $350,000,000 100.000000000%
</TABLE>
-41-
<TABLE>
SCHEDULE 5(b)
ORIGINAL COMMITMENTS
AND ORIGINAL PRO RATA SHARES
<CAPTION>
Bank Original Commitment Original Pro Rata Share
<S> <C> <C>
Bank of America, N.A. $ 26,000,000 13.000000000%
The Chase Manhattan Bank 22,000,000 11.000000000
Fleet Bank N.A. 20,000,000 10.000000000
Mellon Bank, N.A. 20,000,000 10.000000000
Comerica Bank 13,000,000 6.500000000
The Bank of New York 13,000,000 6.500000000
Banque Nationale de Paris 13,000,000 6.500000000
Wachovia Bank, N.A. 13,000,000 6.500000000
Banca Commerciale Italiana,
New York Branch 10,000,000 5.000000000
Bank Hapoalim BM 10,000,000 5.000000000
Bank of Tokyo-Mitsubishi Trust
Company 10,000,000 5.000000000
Commerzbank AG, New York
Branch 10,000,000 5.000000000
DG Bank Deutsche
Genossenschaftsbank AG,
Cayman Island Branch 10,000,000 5.000000000
The Bank of Nova Scotia 10,000,000 5.000000000
TOTAL $200,000,000 100.000000000%
</TABLE>
-42-
EXHIBIT A
GUARANTOR ACKNOWLEDGMENT AND CONSENT
Each of the undersigned Guarantors hereby (i) acknowledges and
consents to the terms of and the execution, delivery and performance of
the foregoing Amended and Restated Credit Agreement (the "Amendment and
Restatement") (without implying the need for any such acknowledgement or
consent), and (ii) represents and warrants to the Agent and the Banks
that, both before and after giving effect to the Amendment and
Restatement, the Guaranty dated as of December 21, 1998 (the "Guaranty")
given by the Guarantors in favor of Bank of America, N.A. (formerly known
as Bank of America National Trust and Savings Association), as agent for
certain financial institutions (the "Banks") and as letter of credit
Issuing Bank, and such Banks, remains in full force and effect as an
enforceable obligation of such Guarantor, except as enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforceability of creditors' rights generally or by equitable
principles relating to enforceability, and that it is in compliance with
all of its covenants contained therein, and (iii) acknowledges and agrees
(without implying the need therefore) that all references in the Guaranty
to the "Credit Agreement" shall be deemed to refer to the Credit Agreement
as amended and restated by the Amendment and Restatement. Each Guarantor
further represents that the execution, delivery and performance by such
Guarantor of this Acknowledgement and Consent have been duly authorized by
all necessary corporate, partnership and other action and do not and will
not require any registration with, consent or approval of, notice to or
action by, any Person (including any Governmental Authority) in order to
be effective and enforceable. Each Guarantor remakes as of the Effective
Date (as defined in the Amendment) all of the representations and
warranties made by it pursuant to the Guaranty, except to the extent that
such representations and warranties expressly refer to an earlier date, in
which case it remakes such representations and warranties as of such
earlier date. Capitalized terms used herein and not otherwise defined
have the respective meanings defined in the Amendment and Restatement.
-43-
IN WITNESS WHEREOF, each of the undersigned Guarantors have executed
this Acknowledgement and Consent by its duly authorized officers as of
this 30th day of September, 1999.
GUARANTORS
Symbol Technologies Africa, Inc.
Symbol Technologies International, Inc.
[Delaware]
SymboLease Canada, Inc.
Symbol Technologies Asia, Inc.
Symbol Technologies International, Inc.
[New York]
Symbol Technologies Finance, Inc.
Symbol Technologies Delaware, Inc.
Symbol Product Development Corporation
Symbol Technologies Florida, Inc.
By: /s/Tomo Razmilovic
Name: Tomo Razmilovic
Title: President
SymboLease, Inc.
By: /s/Brian Burke
Name: Brian Burke
Title: President
-44-
Exhibit 22
-45-
SYMBOL TECHNOLOGIES, INC
100% owned by Symbol Technologies, Inc.:
Symbol Technologies International, Inc.
One Symbol Plaza
Holtsville, New York 11742
State of Incorporation: New York
Symbol Technologies International, Inc.
One Symbol Plaza
Holtsville, New York 11742
State of Incorporation: Delaware
Symbolease Inc.
One Symbol Plaza
Holtsville, New York 11742
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 Blvd. East
Mississauga, Ontario
Canada L4W 4Z2
State of Incorporation: Delaware
FOREIGN CORPORATIONS
Symbol Technologies UK Limited
One Symbol Place
Winnersh Triangle,
Berkshire, UK RG41 5TP
Country of Incorporation: United Kingdom
Olympus Symbol, Inc.
San-Ei Building, 4F, 1-22-2, Nishi - Shinjuku
Shinjuku-Ku, Tokyo-160, Japan
Country of Incorporation: Japan
-46-
Symbol Technologies Mexico, Limited
Blvd. Manuel Avila, Camacho # 88, Piso 3, Col. Lomas de Chapultapec
C.P. 11000 Mexico, D.F. Mexico
Country of Incorporation: Mexico
Symbol DE Mexico, S. DE R.L. DE C.V.
Avila Camacho 1325 Altos
Medardo Gonzalez
P. Oritz Rubio y P. Elias Calles
Reynosa, Tamaulipas, Mexico C.P. 88550
Country of Incorporation: Mexico
Inmobiliaria Symbol De Mexico, S. DE R.L. DE C.V.
Avila Camacho 1325 Altos
Medardo Gonzalez
P. Ortiz Rubio y P. Elias Calles
Reynosa, Tamauilipas, Mexico C.P. 88550
Country of Incorporation: Mexico
Symbol Technologies Netherlands, Inc.
Kerkplein 2, 7051 CX, Postbus 24 7050 AA
Varsseveld, Netherlands
Country of Incorporation: The Netherlands
Subsidiaries of Symbol Technologies International, Inc. (Delaware)
Symbol Technologies Africa, Inc.
Block BZ Rutherford Estate
1 Scott Street
Waverly 209
Republic of South Africa
State of Incorporation: Delaware
Symbol Technologies Pty. Ltd.
9TH Floor
432 Street, Kilda Road
Melbourne, VIC 3004
Australia
Country of Incorporation: Australia
Symbol Technologies GmbH
2 Haus - 5 Stock
Prinz-Eugenstrasse 70
1040 Wein
Austria
Country of Incorporation: Austria
-47-
Symbol Technologies Canada, Inc.
2540 Matheson Blvd. East
Mississauga, Ontario, Canada L4W 4Z2
Country of Incorporation: Canada
Symbol Technologies A/S
Gydevang 2,
DK-3450 Allerod
Denmark
Country of Incorporation: Denmark
Symbol Technologies S.A.
Centre d'Affaire d'Anthony
3 Rue de 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
O.Y. Symbol Technologies AB
Huoneisto A6
Kaupintie 8
FIN-00440 Helsinki,
Finland
Country of Incorporation: Finland
Symbol Technologies AB
Albygatan 109 D Box 1354
SE-171 26 Solna
Stockholm, Sweden
Country of Incorporation: Sweden
Symbol Technologies S.A.
Edificioi la Piovera Azul
C. Peonias, No.2 - Sexta Planta
28042 Madrid
Spain
Country of Incorporation: Spain
-48-
Subsidiaries of Symbol Technologies UK Limited
Symbol Technologies Limited
One Symbol Place
Winnersh Triangle,
Berkshire, UK RG41 5TP
Country of Incorporation: United Kingdom
-49-
Exhibit 23
-50-
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
No. 333-78599, No. 333-48159, No. 333-26593, No. 333-01769, 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 11, 2000, appearing in this Annual Report on Form
10-K of Symbol Technologies, Inc. for the year ended December 31, 1999.
s/Deloitte & Touche LLP
New York, New York
February 25, 2000
-51-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 30,128,000
<SECURITIES> 0
<RECEIVABLES> 264,064,000
<ALLOWANCES> (11,924,000)
<INVENTORY> 216,709,000
<CURRENT-ASSETS> 584,201,000
<PP&E> 323,046,000
<DEPRECIATION> (116,930,000)
<TOTAL-ASSETS> 1,047,944,000
<CURRENT-LIABILITIES> 232,588,000
<BONDS> 99,623,000
0
0
<COMMON> 1,018,000
<OTHER-SE> 639,442,000
<TOTAL-LIABILITY-AND-EQUITY> 1,047,944,000
<SALES> 1,139,290,000
<TOTAL-REVENUES> 1,139,290,000
<CGS> 636,084,000
<TOTAL-COSTS> 654,556,000
<OTHER-EXPENSES> 307,789,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (5,821,000)
<INCOME-PRETAX> 171,124,000
<INCOME-TAX> 54,760,000
<INCOME-CONTINUING> 116,364,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,364,000
<EPS-BASIC> 1.32
<EPS-DILUTED> 1.23
</TABLE>
