<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-11402
-----------
TELXON CORPORATION
- - --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 74-1666060
- - ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3330 West Market Street, Akron, Ohio 44333
- - --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (216) 867-3700
------------------
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 .
--- ---
At June 30, 1994, there were 15,432,138 outstanding shares of the registrant's
Common Stock, $.01 par value per share ("Common Stock").
Page 1 of 26 Pages
Exhibit Index Appears on Page 19
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<TABLE>
TELXON CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<CAPTION>
Page No.
--------
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION:
Item 1: Consolidated Financial Statements
Balance Sheet ............................................................... 3
Statement of Income ......................................................... 4
Statement of Cash Flows ..................................................... 5
Notes to Consolidated Financial Statements .................................. 6-8
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations ......................................... 9-11
PART II. OTHER INFORMATION:
Item 6: Exhibits and Reports on Form 8-K ................................................ 12
</TABLE>
2
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except per share amounts)
<CAPTION>
June 30, March 31,
1994 1994
--------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash (including cash equivalents of $6,352
and $8,478) ............................................................. $ 23,605 $ 24,041
Short-term investments ....................................................... 802 764
Accounts receivable, net of allowance for
doubtful accounts of $1,744 and $1,635 .................................. 63,421 64,009
Notes and other accounts receivable .......................................... 4,209 5,723
Refundable income taxes ...................................................... 1,317 1,848
Inventories .................................................................. 79,400 79,267
Prepaid expenses and other ................................................... 10,261 10,288
-------- --------
Total current assets .......................................... 183,015 185,940
Property and equipment, net .................................................. 43,976 41,561
Goodwill, net of amortization of $8,415
and $7,551 .............................................................. 18,490 19,354
Intangible and other assets, net ............................................. 12,910 13,113
-------- --------
Total ......................................................... $258,391 $259,968
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable ................................................................ $ 37,418 $ 24,573
Accounts payable ............................................................. 24,309 43,344
Capital lease obligations due within one
year .................................................................... 472 391
Income taxes payable ......................................................... 2,512 2,162
Accrued liabilities .......................................................... 35,964 35,404
-------- --------
Total current liabilities ..................................... 100,675 105,874
Capital lease obligations .................................................... 863 463
Convertible subordinated debentures .......................................... 24,734 24,734
Other long-term liabilities .................................................. 4,035 4,182
-------- --------
Total liabilities ............................................. 130,307 135,253
-------- --------
Stockholders' equity:
Preferred stock, $1.00 par value per share;
500,000 shares authorized, none issued .................................. -- --
Common stock, $.01 par value per share;
50,000,000 shares authorized, 15,432,138
and 15,346,329 shares outstanding ....................................... 154 153
Additional paid-in capital ................................................... 75,809 74,830
Retained earnings ............................................................ 55,833 54,653
Equity adjustment for foreign currency
translation ............................................................. (2,652) (3,587)
Unearned compensation relating to restricted
stock awards ............................................................ (1,060) (1,334)
-------- -------
Total stockholders' equity .................................... 128,084 124,715
-------- -------
Commitments and contingencies ................................................ -- --
-------- -------
Total ........................................................ $258,391 $259,968
======== ========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
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<TABLE>
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except shares and per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended June 30,
--------------------------
1994 1993
---------- ---------
<S> <C> <C>
Revenues:
Product ............................................................... $74,935 $46,350
Customer service ...................................................... 12,498 10,191
---------- ----------
Total revenues ................................................... 87,433 56,541
---------- ----------
Costs and expenses:
Cost of revenues ...................................................... 50,717 32,096
Selling expenses ...................................................... 16,181 12,622
Product development and engineering
expenses ............................................................ 7,782 6,060
General and administrative expenses ................................... 9,064 7,329
---------- ----------
83,744 58,107
---------- ----------
Income (loss) from operations .................................... 3,689 (1,566)
Interest income ............................................................ 115 235
Interest expense ........................................................... (1,075) (540)
---------- ----------
Income (loss) before income taxes ................................ 2,729 (1,871)
Provision for income taxes ................................................. 1,456 106
---------- ----------
Net income (loss) ............................................... $ 1,273 $(1,977)
========== ==========
Earnings per common and common equivalent
share:
Net income (loss) per share ...................................... $ .08 $ (.13)
========== ==========
Average number of common and common
equivalent shares outstanding .......................................... 15,824,000 15,294,000
========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
4
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<TABLE>
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Three Months Ended June 30,
------------------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) .................................................................. $ 1,273 $(1,977)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization ................................................ 5,248 5,110
Non-cash compensation related to
restricted stock awards ................................................... 165 173
Provision for doubtful accounts .............................................. 323 137
Provision for inventory obsolescence ......................................... 2,457 544
Deferred income taxes ........................................................ (130) --
Loss on disposal of assets ................................................... 80 869
Changes in assets and liabilities:
Accounts and notes receivable ........................................... 5,029 (1,085)
Refundable income taxes ................................................. (2,361) (1,215)
Inventories ............................................................. (2,078) 998
Prepaid expenses and other
Intangible and other assets ........................................... 29 458
Accounts payable and accrued ............................................ (763) 1,032
liabilities ........................................................... (18,318) (5,777)
Income taxes payable .................................................... 350 (91)
Other long-term liabilities ............................................. (107) (477)
------- -------
Total adjustments ............................................ (10,076) 676
------- -------
Net cash used in operating activities ............................................. (8,803) (1,301)
Cash flows from investing activities:
Additions to property and equipment ................................................. (5,027) (3,387)
Payments for acquisitions, net of cash
acquired .......................................................................... (533) (4,996)
Short-term investments .............................................................. (38) 645
Software investments ................................................................ (45) (93)
Other ............................................................................... -- (200)
------- -------
Net cash used in investing activities ............................................... (5,643) (8,031)
Cash flows from financing activities:
Notes payable ....................................................................... 12,845 --
Principal payments on capital leases ................................................ (111) (216)
Principal payments for long-term borrowing .......................................... (40) --
Proceeds from exercise of stock options
(includes tax benefit) ............................................................ 995 17
-------- -------
Net cash provided by (used in) financing
activities ....................................................................... 13,689 (199)
Effect of exchange rate changes on cash ............................................. 321 315
-------- -------
Net decrease in cash and cash
equivalents ...................................................................... (436) (9,216)
Cash and cash equivalents at beginning
of period ........................................................................ 24,041 26,515
------- -------
Cash and cash equivalents at end of
period ........................................................................... $23,605 $17,299
======= =======
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
5
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TELXON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Management Representation
The consolidated financial statements of Telxon Corporation and its
subsidiaries (the "Company") have been prepared without audit. In the
opinion of the Company, all adjustments, consisting of normal recurring
adjustments necessary for a fair statement of results for the interim
periods, have been made. The statements, which do not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements, should be read in conjunction with the
audited consolidated financial statements as contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1994.
2. Earnings Per Share
Computations of earnings per common and common equivalent share of common
stock are based on the weighted average number of common shares outstanding
during the period increased by the net shares issuable on the assumed
exercise of stock options using the treasury stock method. Common stock
purchase rights outstanding under the Company's Stockholder rights plan,
which potentially have a dilutive effect, have been excluded from the
weighted common shares computation as preconditions to the exercisability
of such rights were not satisfied.
<TABLE>
3. Inventories
Inventories consisted of the following (in thousands):
<CAPTION>
June 30, 1994
(Unaudited) March 31, 1994
------------ --------------
<S> <C> <C>
Purchased components ...................................................... $41,442 $44,378
Work-in-process ........................................................... 16,118 18,664
Finished goods ........................................................... 21,840 16,225
------- ------
$79,400 $79,267
======= =======
</TABLE>
<TABLE>
4. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
<CAPTION>
June 30, 1994
(Unaudited) March 31, 1994
------------- --------------
<S> <C> <C>
Current liability to former share-
holders of acquired companies ....................................... $ 1,000 $ 1,533
Accrued payroll and other employee
compensation ........................................................ 11,054 10,610
Accrued commissions ...................................................... 1,835 2,362
Accrued taxes other than payroll
and income taxes .................................................... 1,955 1,715
Deferred customer service revenues ....................................... 9,675 9,240
Accrued royalties ........................................................ 3,798 3,737
Other accrued liabilities ................................................ 6,647 6,207
------- -------
$35,964 $35,404
======= =======
</TABLE>
6
<PAGE> 7
5. Supplemental Cash Flow Information
<TABLE>
<CAPTION>
Three Months Ended June 30,
1994 1993
-------- ---------
(Unaudited)
(In Thousands)
<S> <C> <C>
Cash paid during the period for:
Interest ............................................................. $1,484 $1,004
Income taxes ......................................................... 75 832
</TABLE>
Capital lease additions or disposals are non-cash transactions and,
accordingly, $592 has been excluded from property and equipment additions
in the 1994 Statement of Cash Flows.
6. Litigation
In December 1992, four class action suits were filed in the United States
District Court, Northern District of Ohio, by certain alleged stockholders
of the Company on behalf of themselves and purported classes consisting of
Telxon stockholders, other than defendants and their affiliates, who
purchased the Company's common stock between May 20, 1992 and
January 19, 1993. The named defendants are the Company, former President
and Chief Executive Officer Raymond D. Meyo, and then current President,
Chief Operating Officer and Chief Financial Officer Dan R. Wipff. On
February 1, 1993, the Plaintiffs filed their Amended and Consolidated Class
Action Complaint related to the four actions, alleging claims for fraud on
the market and negligent misrepresentation, arising from alleged
misrepresentations and omissions with respect to the Company's financial
performance and prospects, and alleged trading activities of the named
individual defendants. The Amended Complaint seeks certification of the
purported class, unspecified compensatory damages, the imposition of a
constructive trust on certain of the defendants' assets and other
unspecified extraordinary equitable and/or injunctive relief, interest,
attorneys' fees and costs. The defendants, including the Company, filed a
Motion to Dismiss which was denied by the court on June 3, 1993.
On April 16, 1993, the Plaintiffs filed their Motion for Class
Certification. The defendants, including the Company, filed their briefs
in opposition to Class Certification on October 13, 1993. On December 17,
1993, the District Court certified the class, consisting of Telxon
stockholders, other than defendants and their affiliates, who purchased
Telxon common stock between May 20, 1992 and December 14, 1992. The
defendants intend to vigorously defend this Consolidated Class Action,
however, the ultimate outcome of this litigation cannot presently be
determined. Accordingly, no provision for any liability that may result
from adjudication has been made in the accompanying consolidated financial
statements.
7
<PAGE> 8
On September 21, 1993, a derivative Complaint was filed in the Court of
Chancery of the State of Delaware, in and for Newcastle County, by an
alleged stockholder of Telxon derivatively on behalf of Telxon. The named
defendants are the Company; Robert F. Meyerson, Chairman of the Board and
Chief Executive Officer; Dan R. Wipff, President and Chief Executive
Officer, Telxon Products, Inc. and director; Robert A. Goodman, Corporate
Secretary and outside director; Norton W. Rose, outside director and Dr.
Raj Reddy, outside director. The Complaint alleges breach of fiduciary
duty to the Company and waste of the Company's assets in connection with
certain transactions entered into by Telxon and compensation amounts paid
by the Company. The Complaint seeks an accounting, injunction, rescission,
attorneys' fees and costs. On November 12, 1993, Telxon and the individual
director defendants filed a Motion to Dismiss. The plaintiff filed his
brief in opposition to the Motion on May 2, 1994. The defendants intend to
file a responsive final brief and to vigorously defend this action.
In the normal course of its operations, the Company is subject to
performance under contracts, and has various legal actions pending.
However, in management's opinion, any such outstanding matters have been
reflected in the consolidated financial statements, are covered by
insurance or would not have a material adverse effect on the Company's
consolidated financial position.
7. Short-Term and Long-Term Financing
Effective October 20, 1993, the Company entered into a revolving credit,
term loan and security agreement which, as amended, is with two banks
through March 31, 1996. The agreement calls for a credit limit of $50
million and bears interest at the bank's prime lending rate plus 1% or
LIBOR plus 2.5%. Outstanding amounts are secured by substantially all of
the United States assets and certain foreign assets of the Company. The
agreement contains restrictive covenants, certain of which require the
Company to maintain specified levels of net worth and working capital and
to meet certain current ratios, debt to net worth ratios, and fixed charge
coverages. At June 30, 1994 and March 31, 1994 the Company had $37,418 and
$24,573, respectively, outstanding under this agreement and was in
compliance with all restrictive covenants contained in the agreement.
8
<PAGE> 9
TELXON CORPORATION AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Revenues
--------
Total consolidated revenues increased $30.9 million or 55% for the first
quarter of fiscal 1995 as compared to the same period in fiscal 1994.
Product revenues increased $28.6 million or 62% for the comparable
periods. Product revenues include the sale of Portable Tele-Transaction
Computer ("PTC") units, pen-based and touch-screen workslates, hardware
accessories, custom application software and software license fees. The
increase in product revenues was primarily due to an increase in PTC unit
volume supplemented by a minor increase in average selling price per PTC
unit due to sales mix.
Customer service revenues increased $2.3 million or 23% for the first
quarter of fiscal 1995 as compared to the same period in fiscal 1994.
This revenue increase was primarily due to volume increases and growth in
the installed base of the Company's products.
The Company continues to anticipate increases in consolidated revenues
for fiscal 1995 as compared to fiscal 1994.
Operating Expenses
------------------
Cost of revenues as a percentage of total revenues increased to 58% for
the first quarter of fiscal 1995 as compared to 57% for the same period
in fiscal 1994. Gross margins remained consistent with those recorded
during the first quarter of fiscal 1994 as increased fixed manufacturing
costs were offset by efficiencies achieved due to volume increases.
Selling expenses increased $3.6 million or 28% for the first quarter of
fiscal 1995 as compared to the same period in fiscal 1994. This increase
reflects the increased revenues and related variable expenses experienced
in the quarter and additional expenses of the Vertical Systems Group,
composed of five industry-specific marketing groups, which was
established in the third quarter of fiscal 1994. Product development and
engineering expenses increased $1.7 million or 28%. This increase is
primarily attributable to research and development activities related to
new product development including wireless data communications and spread
spectrum technology, pen-based technology and other product improvements.
General and administrative expenses for the first quarter of fiscal 1995
increased $1.7 million or 24% over the comparable period in fiscal 1994
reflecting increased corporate support personnel necessary to support the
Company's revenue growth.
The Company continues to anticipate decreases in selling, product
development and engineering and administrative expenses as a percentage
of revenues for fiscal 1995 as compared to fiscal 1994
primarily due to the anticipated increased revenue levels.
9
<PAGE> 10
Income Taxes
------------
The Company's consolidated effective income tax rate for the first
quarter of fiscal 1995 was 53%. The consolidated effective income tax
rate reflects the income before taxes increased by nondeductible goodwill
amortization, the sum of which is multiplied by the United States
statutory rate and increased by international rate differentials and
partially offset by research and development credits.
Liquidity
---------
At June 30, 1994, the Company had cash, cash equivalents and short-term
investments of $24.4 million, as compared to $24.8 million at March 31,
1994. The Company's current ratio (current assets divided by current
liabilities) was 1.8:1 at both June 30, 1994 and March 31, 1994. The
Company's current ratio remained unchanged despite working capital
(current assets less current liabilities) decreases for the changes in
accounts and notes receivable of $2.1 million, notes payable of $12.8
million and other current assets and liabilities of $1.9 million. These
working capital decreases were offset by an increase to working capital
as a result of the decrease to accounts payable of $19.0 million.
Inventory levels, in total, remained constant at June 30, 1994 as
compared to those recorded at March 31, 1994. Accounts payable decreased
primarily due to reduced production demands and manufacturing inventory
levels and increased borrowing on the Company's credit facility.
The Company believes that its existing resources, including available
cash, cash equivalents and short-term investments, internally generated
funds and the credit facility, will be sufficient to meet working capital
requirements for the next twelve months.
Cash Flows from Operating Activities
------------------------------------
Net cash used in operations was $8.8 million for the first quarter of
fiscal 1995, as compared to $1.3 million for the same period in fiscal
1994. Cash flows for the first quarter of fiscal 1995, as compared to
the same period in fiscal 1994, were positively impacted by the change in
accounts and notes receivable of $6.1 million, the change of the net
loss incurred in the first quarter of fiscal 1994 to net income recorded
in the first quarter of fiscal 1995 of $3.3 million, increased provision
for inventory obsolescence of $1.9 million and other items aggregating
$1.1 million. These positive impacts were offset by negative impacts in
inventories of $3.1 million, accounts payable and accrued liabilities of
$12.6 million, intangible and other assets of $1.8 million, refundable
income taxes of $1.1 million and miscellaneous other items aggregating
$1.3 million.
10
<PAGE> 11
Investing Activities
--------------------
The Company invested $5.0 million in capital equipment during the first
quarter of fiscal 1995, an increase of $1.6 million as compared to the
same period of fiscal 1994. These investments were primarily due to
construction costs related to the company's new manufacturing plant in
Houston, Texas, capitalized leased equipment and purchased tooling. The
decreased utilization of short-term investments accounted for a decrease
in cash of $.7 million. These negative cash flow items were more than
offset by the absence of cash payments for acquisitions and other
positive cash flow impacts of $4.7 million.
Financing Activities
--------------------
Cash flows from financing activities increased $13.9 million during the
first quarter of fiscal 1995 as compared with the same period in the
previous fiscal year. This increase was primarily due to the continued
borrowing on notes payable of $12.9 million and increased proceeds from
the exercise of stock options of $1.0 million.
Effective October 20, 1993, the Company entered into a revolving
credit, term loan and security agreement which, as amended, is
with two banks through March 31, 1996. The agreement calls for a
credit limit of $50 million and bears interest at the prime
lending rate plus 1% or LIBOR plus 2.5%. At June 30, 1994, the
Company had $37.4 million outstanding under this agreement. The
Company anticipates continued borrowing under this agreement
during fiscal 1995.
11
<PAGE> 12
TELXON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - ------- --------------------------------
(A) Exhibits
4.1 Portions of the Restated Certificate of Incorporation of
Registrant pertaining to the rights of holders of
Registrant's Common Stock, par value $.01 per share
incorporated by reference to Exhibit 3.1 to
Registrant's Form 10-K for the year ended March 31,
1993.
4.2 Form of Certificate for the Registrant's Common Stock,
par value $.01 per share, incorporated herein by
reference to Exhibit 4.2 to Registrant's Form 10-K filed
for the year ended March 31, 1990.
4.3 Form of Rights Agreement between Registrant and
AmeriTrust Company National Association, as Rights
Agent, dated as of August 25, 1987, incorporated herein
by reference to Exhibit 2(C) to Amendment No. 1, dated
May 21, 1992, to Registrant's Registration Statement on
Form 8-A, filed December 19, 1983, with respect to
Registrant's Common Stock.
4.3.1 Form of Rights Certificate (included as Exhibit
A to the Rights Agreement included as Exhibit
4.3 to the Annual Report on Form 10-K). Until
the distribution date (as defined in the Rights
Agreement), the Rights Agreement provides that
the common stock purchase rights created
thereunder are evidenced by the certificates
for Registrant's Common Stock (the form of
which is included as Exhibit 4.3 to this Annual
Report on Form 10-K, which stock certificates
are deemed also to be certificates for such
common stock purchase rights) and not by
separate Rights Certificates; as soon as
practicable after the Distribution Date, Rights
Certificates will be mailed to each holder of
Registrant's Common Stock as of the close of
business on the Distribution Date.
4.4 Form of Indenture by and between the Registrant and
AmeriTrust Company National Association, as Trustee,
dated as of June 1, 1987, regarding Registrant's 7-1/2%
Convertible Subordinated Debentures Due 2012,
incorporated herein by reference to Exhibit 4.2 to
Registrant's Registration Statement on Form S-3,
Registration No. 33-14348, filed May 18, 1987.
4.4.1 Form of the Registrant's 7-1/2% Convertible
Subordinated Debentures Due 2012 (set forth in
the form of Indenture included as Exhibit 4.4
to this Annual Report on Form 10-K).
12
<PAGE> 13
10.1 Compensation and Benefits Plans of the Registrant.
10.1.1 Amended and Restated Retirement and Uniform Matching
Profit-Sharing Plan of Registrant, effective July 1, 1993,
incorporated herein by reference to Exhibit 10.1.1 to
Registrant's Form 10-K filed for the year ended March 31, 1994.
10.1.1.a Amendment, dated January 1, 1994, incorporated
herein by reference to Exhibit 10.1.1.A to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.1.b Amendment, dated April 1, 1994, incorporated
herein by reference to Exhibit 10.1.1.b to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.2 1988 Stock Option Plan of Registrant, incorporated herein by
reference to Exhibit 10.1.2 to Registrant's Form 10-K filed
for the year ended March 31, 1994.
10.1.2.a Amendment, dated January 31, 1990, incorporated
herein by reference to Exhibit 10.1.2.a to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.3 1990 Stock Option Plan of the Registrant, as amended,
incorporated herein by reference to Exhibit 10.1.3 to
Registrant's Form 10-K filed for the year ended March 31, 1994.
10.1.4 1990 Stock Option Plan of the Registrant for non-employee
directors, as amended, incorporated herein by reference to
Exhibit 10.1.4 to Registrant's Form 10-K filed for the year
ended March 31, 1994.
10.1.5 Non-Qualified Stock Option Agreement between the Registrant and
Dan R. Wipff, dated October 17, 1988, incorporated herein by
reference to Exhibit 10.1.5 to Registrant's Form 10-K filed
for the year ended March 31, 1994.
10.1.6 Non-Qualified Stock Option Agreement between the Registrant and
Raj Reddy, dated as of October 17, 1988, incorporated herein by
reference to Exhibit 10.1.6 to Registrant's Form 10-K filed
for the year ended March 31, 1994.
13
<PAGE> 14
10.1.7 Description of compensation arrangements between the Registrant and
Robert F. Meyerson, Chairman of the Board of Registrant, incorporated
herein by reference to Exhibit 10.14 to Registrant's Form 10-K filed
for the year ended March 31, 1990.
10.1.8 Employment Agreement between the Registrant and Dan R. Wipff, dated as
of April 1, 1991, incorporated herein by reference to Exhibit 19.02 to
Registrant's Form 10-Q filed for the quarter ended September 30, 1991.
10.1.9 Consulting agreement between the Registrant and Accipiter Corporation,
dated March 6, 1992, incorporated herein by reference to Exhibit 10.17
to the Registrant's Form 10-K filed for the year ended March 31, 1992.
10.1.10 Services and Non-Competition Agreement, dated as of January 18, 1993,
among Accipiter Corporation, Robert F. Meyerson and the Registrant,
incorporated herein by reference to Exhibit 10.28 to the Registrant's
Form 10-Q filed for the quarter ended December 31, 1992.
10.1.11 Employment Agreement between the Registrant and John H. Cribb effective
as of April 1, 1993, incorporated herein by reference to Exhibit
10.1.11 to Registrant's Form 10-K filed for the year ended March 31,
1994.
10.1.12 Severance and Settlement Agreement, dated as of December 23, 1992,
between the Registrant and Raymond D. Meyo, incorporated herein by
reference to Exhibit 10.26 to the Registrant's Form 10-Q filed for the
quarter ended December 31, 1992.
10.1.13 Consulting Agreement, dated as of December 23, 1992, between the
Registrant and Raymond D. Meyo, incorporated herein by reference to
Exhibit 10.26 to the Registrant's Form 10-Q filed for the quarter ended
December 31, 1992.
10.1.14 Employment Agreement between the Registrant and D. Michael Grimes,
dated as of February 25, 1993, incorporated herein by reference to
Exhibit 10.1.14 to the Registrant's Form 10-K filed for the year ended
March 31, 1993.
10.1.15 Employment Agreement between the Registrant and William J. Murphy,
dated as of March 12, 1993, incorporated herein by reference to Exhibit
10.1.15 to the Registrant's Form 10-K filed for the year ended March
31, 1993.
14
<PAGE> 15
10.1.16 Employment Agreement among the Registrant, Itronix Corporation,
a wholly owned subsidiary of the Registrant, and Lawrence L.
Allman, dated as of April 12, 1993, incorporated herein by
reference to Exhibit 10.1.16 to the Registrant's Form 10-K
filed for the year ended March 31, 1993.
10.1.16.a Agreement to amend and restate Allman
Employment Agreement between the Registrant and
Lawrence Allman, incorporated herein by
reference to Exhibit 10.1.16.a to Registrant's
Form 10-K filed for the year ended March 31,
1994.
10.1.17 1992 Restricted Stock Plan of the Registrant, incorporated
herein by reference to Exhibit 10.1.17 to the Registrant's Form
10-Q filed for the quarter ended December 31, 1993.
10.1.17.a Amendment, dated December 7, 1993, incorporated
herein by reference to Exhibit 10.1.17.A to the
Registrant's Form 10-Q filed for the quarter
ended December 31, 1993.
10.2 Material Leases of the Registrant.
10.2.1 Lease between Registrant and 3330 W. Market Properties,
dated as of December 30, 1986, incorporated herein by
reference to Exhibit 10.2.1 to Registrant's Form 10-K
filed for the year ended March 31, 1994.
10.2.2 Lease between Itronix, a wholly-owned subsidiary of the
Registrant, and Hutton Settlement, Inc., dated as of
April 5, 1993, incorporated herein by reference to
Exhibit 10.2.3 to the Registrant's Form 10-K filed for
the year ended March 31, 1993.
10.3 Credit Agreements of the Registrant.
10.3.1 Revolving Credit, Term Loan and Security Agreement
between the Registrant and the Bank of New York
Commercial Corporation dated as of October 20, 1993,
incorporated by reference to Exhibit 10.3 to the
Registrant's Form 10-Q filed for the quarter ended
September 30, 1993.
10.3.1.a First Amendment to Revolving Credit,
Term Loan and Security Agreement
between the Registrant and the Bank of
New York Commercial Corporation dated
as of March 30, 1994, incorporated
herein by reference to Exhibit 10.3.1.a
to Registrant's Form 10-K filed for the
year ended March 31, 1994.
15
<PAGE> 16
10.3.1.b Second Amendment to Revolving Credit, Term Loan and
Security Agreement between the Registrant and Bank of
New York Commercial Corporation dated as of June 10,
1994, incorporated herein by reference to Exhibit
10.3.1.b to Registrant's Form 10-K filed for the year
ended March 31, 1994.
10.4 Amended and Restated Agreement between the Registrant and Symbol
Technologies, Inc., dated as of September 30, 1992, incorporated herein
by reference to Exhibit 10.4 to Registrant's Form 10-K for the year
ended March 31, 1993.
10.5 Stock Purchase Agreement by and among the Registrant, Robert F.
Meyerson and members of the Meyerson family dated as of March 18, 1992,
incorporated herein by reference to Exhibit 10.22 to the Registrant's
Form 10-K filed for the year ended March 31, 1992.
10.6 Stock Purchase Agreement, dated December 31, 1992, among the
Registrant, Robert F. Meyerson and certain members of Mr. Meyerson's
family, incorporated herein by reference to Exhibit 10.30 to the
Registrant's Form 10-Q filed for the quarter ended December 31, 1992.
10.7 Plan and Agreement of Merger, dated as of January 18, 1993, among the
Registrant, WSACO, Inc. and Teletransaction, Inc., incorporated herein
by reference to Exhibit 10.29 to the Registrant's Form 10-Q filed for
the quarter ended December 31, 1992.
10.7.1 Notice of Termination by WSACO, Inc., as contemplated by
Section 5.7 of the Plan and Agreement of Merger, of Amended and
Restated Consulting Agreement between Accipiter Corporation and
Teletransaction, Inc., incorporated herein by reference to
Exhibit 10.7.1 to Registrant's Form 10-K for the year ended
March 31, 1993.
10.8 Asset Purchase Agreement between the Registrant and Retail Management
Systems Corporation, dated as of April 3, 1992, incorporated herein
by reference to Exhibit 10.23 to the Registrant's Form 10-K filed for
the year ended March 31, 1992.
10.9 Stock Purchase Agreement among the Registrant and the stockholders of
Telesystems SLW Inc., dated as of April 10, 1992, relating to the
acquisition of all the capital stock of Telesystems SLW Inc.,
incorporated herein by reference to Exhibit 10.24 to the Registrant's
Form 10-K filed for the year ended March 31, 1992.
10.10 Agreement of Merger among the Registrant, Itracquico Corporation and
Itronix Corporation dated as of March 22, 1993, incorporated herein by
reference to Exhibit 10.10 to the Registrant's Form 10-K for the year
ended March 31, 1993.
16
<PAGE> 17
10.11 Agreement for Sale and Licensing of Assets between AST
Research, Inc. and PenRight! Corporation, a wholly-owned
subsidiary of the Registrant, dated as of January 26, 1994,
incorporated herein by reference to Exhibit 10.11 to the
Registrant's Form 10-Q for the quarter ended December 31, 1993.
11.01 Computation of Common Shares outstanding and earnings per share
for fiscal years ended 1994, 1993 and 1992, filed herewith.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Registrant during the
fiscal quarter ended June 30, 1994 for which this Quarterly Report on
Form 10-Q is filed.
17
<PAGE> 18
TELXON CORPORATION AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1994
TELXON CORPORATION
------------------
(Registrant)
________________________________________
Gerald J. Gabriel
Corporate Controller
(Principal Accounting Officer)
18
<PAGE> 19
TELXON CORPORATION
EXHIBITS TO
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1994
19
<PAGE> 20
INDEX TO EXHIBITS
-----------------
Page
- - ----
* 4.1 Portions of the Restated Certificate of Incorporation of
Registrant pertaining to the rights of holders of Registrant's
Common Stock, par value $.01 per share incorporated by
reference to Exhibit 3.1 to Registrant's Form 10-K for the year
ended March 31, 1993.
* 4.2 Form of Certificate for the Registrant's Common Stock, par
value $.01 per share, incorporated herein by reference to
Exhibit 4.2 to Registrant's Form 10-K filed for the year ended
March 31, 1990.
* 4.3 Form of Rights Agreement between Registrant and AmeriTrust
Company National Association, as Rights Agent, dated as of
August 25, 1987, incorporated herein by reference to Exhibit
2(c) to Amendment No. 1, dated May 21, 1992, to Registrant's
Registration Statement on Form 8-A, filed December 19, 1983,
with respect to Registrant's Common Stock.
* 4.3.1 Form of Rights Certificate (included as Exhibit A to
the Rights Agreement included as Exhibit 4.3 to the
Annual Report on Form 10-K). Until the Distribution
Date (as defined in the Rights Agreement), the Rights
Agreement provides that the common stock purchase
rights created thereunder are evidenced by the
certificates for Registrant's Common Stock (the form of
which is included as Exhibit 4.3 to this Annual Report
on Form 10-K, which Stock Certificates are deemed also
to be certificates for such common stock purchase
rights) and not by separate Rights Certificates; as
soon as practicable after the Distribution Date, Rights
Certificates will be mailed to each holder of
Registrant's Common Stock as of the close of business
on the Distribution Date.
* 4.4 Form of Indenture by and between the Registrant and
AmeriTrust Company National Association, as Trustee, dated as
of June 1, 1987, regarding Registrant's 7-1/2% Convertible
Subordinated Debentures Due 2012, incorporated herein by
reference to Exhibit 4.2 to Registrant's Registration Statement
on Form S-3, Registration No. 33-14348, filed May 18, 1987.
* 4.4.1 Form of the Registrant's 7-1/2% Convertible Subordinated
Debentures Due 2012 (set forth in the form of indenture
included as Exhibit 4.4 to this Annual Report on Form
10-K).
* 10.1 Compensation and Benefits Plans of the Registrant.
20
<PAGE> 21
Page
- - ----
* 10.1.1 Amended and Restated Retirement and Uniform Matching
Profit-Sharing Plan of Registrant, effective July 1, 1993,
incorporated herein by reference to Exhibit 10.1.1 to
Registrant's Form 10-K filed for the year ended March 31, 1994.
* 10.1.1.a Amendment, dated January 1, 1994, incorporated
herein by reference to Exhibit 10.1.1.a to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
* 10.1.1.b Amendment, dated April 1, 1994, incorporated
herein by reference to Exhibit 10.1.1.b to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
* 10.1.2 1988 Stock Option Plan of Registrant, incorporated herein by
reference to Exhibit 10.1.2 to Registrant's Form 10-K filed for
the year ended March 31, 1994.
* 10.1.2.a Amendment, dated January 31, 1990, incorporated
herein by reference to Exhibit 10.1.2.A to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
* 10.1.3 1990 Stock Option Plan of the Registrant, as amended,
incorporated herein by reference to Exhibit 10.1.3 to
Registrant's Form 10-K filed for the year ended March 31, 1994.
* 10.1.4 1990 Stock Option Plan of the Registrant for non-employee
directors, as amended, incorporated herein by reference to
Exhibit 10.1.4 to Registrant's Form 10-K filed for the year
ended March 31, 1994.
* 10.1.5 Non-Qualified Stock Option Agreement between the Registrant and
Dan R. Wipff, dated October 17, 1988, incorporated herein by
reference to Exhibit 10.1.5 to Registrant's Form 10-K filed for
the year ended March 31, 1994.
* 10.1.6 Non-Qualified Stock Option Agreement between the Registrant and
Raj Reddy, dated as of October 17, 1988, incorporated herein by
reference to Exhibit 10.1.6 to Registrant's Form 10-K filed for
the year ended March 31, 1994.
* 10.1.7 Description of compensation arrangements between the Registrant
and Robert F. Meyerson, Chairman of the Board of Registrant,
incorporated herein by reference to Exhibit 10.14 to
Registrant's Form 10-K filed for the year ended March 31, 1990.
21
<PAGE> 22
Page
- - ----
* 10.1.8 Employment Agreement between the Registrant and Dan R. Wipff,
dated as of April 1, 1991, incorporated herein by reference to
Exhibit 19.02 to Registrant's Form 10-Q filed for the quarter
ended September 30, 1991.
* 10.1.9 Consulting Agreement between the Registrant and Accipiter
Corporation, dated March 6, 1992, incorporated herein by
reference to Exhibit 10.17 to the Registrant's Form 10-K filed
for the year ended March 31, 1992.
* 10.1.10 Services and Non-Competition Agreement, dated as of January 18,
1993, among Accipiter Corporation, Robert F. Meyerson and the
Registrant, incorporated herein by reference to Exhibit 10.28
to the Registrant's Form 10-Q filed for the quarter ended
December 31, 1992.
* 10.1.11 Employment Agreement between the Registrant and John H. Cribb
effective as of April 1, 1993, incorporated herein by reference
to Exhibit 10.1.11 to Registrant's Form 10-K filed for the year
ended March 31, 1994.
* 10.1.12 Severance and Settlement Agreement, dated as of December 23,
1992, between the Registrant and Raymond D. Meyo, incorporated
herein by reference to Exhibit 10.26 to the Registrant's Form
10-Q filed for the quarter ended December 31, 1992.
* 10.1.13 Consulting Agreement, dated as of December 23, 1992, between
the Registrant and Raymond D. Meyo, incorporated herein by
reference to Exhibit 10.26 to the Registrant's Form 10-Q filed
for the quarter ended December 31, 1992.
* 10.1.14 Employment Agreement between the Registrant and D. Michael
Grimes, dated as of February 25, 1993, incorporated herein by
reference to Exhibit 10.1.14 to the Registrant's Form 10-K
filed for the year ended March 31, 1993.
* 10.1.15 Employment Agreement between the Registrant and William J.
Murphy, dated as of March 12, 1993, incorporated herein by
reference to Exhibit 10.1.15 to the Registrant's Form 10-K
filed for the year ended March 31, 1993.
* 10.1.16 Employment Agreement among the Registrant, Itronix Corporation,
a wholly owned subsidiary of the Registrant, and Lawrence L.
Allman, dated as of April 12, 1993, incorporated herein by
reference to Exhibit 10.1.16 to the Registrant's Form 10-K
filed for the year ended March 31, 1993.
22
<PAGE> 23
Page
- - ----
* 10.1.16.a Agreement to amend and restate Allman Employment
Agreement between the Registrant and Lawrence
L. Allman, incorporated herein by reference to
Exhibit 10.1.16.a to Registrant's Form 10-K
filed for the year ended March 31, 1994.
* 10.1.17 1992 Restricted Stock Plan of the Registrant, incorporated
herein by reference to Exhibit 10.1.17 to the Registrant's
Form 10-Q filed for the quarter ended December 31, 1993.
* 10.1.17.a Amendment, dated December 7, 1993, incorporated
herein by reference to Exhibit 10.1.17.a to the
Registrant's Form 10-Q filed for the quarter
ended December 31, 1993.
* 10.2 Material Leases of the Registrant.
* 10.2.1 Lease between Registrant and 3330 W. Market Properties, dated
as of December 30, 1986, incorporated herein by reference to
Exhibit 10.2.1 to Registrant's Form 10-K filed for the year
ended March 31, 1994.
* 10.2.2 Lease between Itronix, a wholly-owned subsidiary of the
Registrant, and Hutton Settlement, Inc., dated as of April 5,
1993, incorporated herein by reference to Exhibit 10.2.3 to the
Registrant's Form 10-K filed for the year ended March 31, 1993.
* 10.3 Credit Agreements of the Registrant.
* 10.3.1 Revolving Credit, Term Loan and Security Agreement between the
Registrant and the Bank of New York Commercial Corporation dated
as of October 20, 1993, incorporated by reference to Exhibit
10.3 to the Registrant's Form 10-Q filed for the quarter ended
September 30, 1993.
* 10.3.1.a First Amendment to Revolving Credit, Term Loan
and Security Agreement between the Registrant
and the Bank of New York Commercial Corporation
dated as of March 30, 1994, incorporated herein
by reference to Exhibit 10.3.1.a to Registrant's
Form 10-K filed for the year ended March 31,
1994.
* 10.3.1.b Second Amendment to Revolving Credit, Term Loan
and Security Agreement between the Registrant
and Bank of New York Commercial Corporation
dated as of June 10, 1994, incorporated herein
by reference to Exhibit 10.3.1.b to Registrant's
Form 10-K filed for the year ended March 31,
1994.
23
<PAGE> 24
Page
- - ----
* 10.4 Amended and Restated Agreement between the Registrant and
Symbol Technologies, Inc., dated as of September 30, 1992,
incorporated herein by reference to Exhibit 10.4 to Registrant's
Form 10-K for the year ended March 31, 1993.
* 10.5 Stock Purchase Agreement by and among the Registrant, Robert F.
Meyerson and members of the Meyerson family dated as of March
18, 1992, incorporated herein by reference to Exhibit 10.22 to
the Registrant's Form 10-K filed for the year ended March 31,
1992.
* 10.6 Stock Purchase Agreement, dated December 31, 1992, among the
Registrant, Robert F. Meyerson and certain members of Mr.
Meyerson's family, incorporated herein by reference to Exhibit
10.30 to the Registrant's Form 10-Q filed for the quarter ended
December 31, 1992.
* 10.7 Plan and Agreement of Merger, dated as of January 18, 1993,
among the Registrant, WSACO, Inc. and Teletransaction, Inc.,
incorporated herein by reference to Exhibit 10.29 to the
Registrant's Form 10-Q filed for the quarter ended December 31,
1992.
* 10.7.1 Notice of Termination by WSACO, Inc., as contemplated
by Section 5.7 of the Plan and Agreement of Merger, of
Amended and Restated Consulting Agreement between
Accipiter Corporation and Teletransaction, Inc.,
incorporated herein by reference to Exhibit 10.7.1 to
Registrant's Form 10-K for the year ended March 31,
1993.
* 10.8 Asset Purchase Agreement between the Registrant and Retail
Management Systems Corporation, dated as of April 3, 1992,
incorporated herein by reference to Exhibit 10.23 to the
Registrant's Form 10-K filed for the year ended March 31, 1992.
* 10.9 Stock Purchase Agreement among the Registrant and the
stockholders of Telesystems SLW Inc., dated as of April 10,
1992, relating to the acquisition of all the capital stock of
Telesystems SLW Inc., incorporated herein by reference to
Exhibit 10.24 to the Registrant's Form 10-K filed for the year
ended March 31, 1992.
* 10.10 Agreement of Merger among the Registrant, Itracquico Corporation
and Itronix Corporation dated as of March 22, 1993, incorporated
herein by reference to Exhibit 10.10 to the Registrant's Form
10-K for the year ended March 31, 1993.
* 10.11 Agreement for Sale and Licensing of Assets between AST
Research, Inc. and PenRight! Corporation, a wholly-owned
subsidiary of the Registrant, dated as of January 26, 1994,
incorporated herein by reference to Exhibit 10.11 to the
Registrant's Form 10-Q for the quarter ended December 31, 1993.
24
<PAGE> 25
Page
- - ----
11.01 Computation of Common Shares outstanding and earnings per share
for fiscal years ended 1994, 1993 and 1992, filed herewith.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Registrant during the
fiscal quarter ended June 30, 1994 for which this Quarterly Report on
Form 10-Q is filed.
___________________________________________
* Previously filed.
25
<PAGE> 1
<TABLE>
EXHIBIT 11.01
-------------
EXHIBIT 11.01* TO REPORT ON FORM 10-Q
TELXON CORPORATION AND SUBSIDIARIES
COMPUTATION OF COMMON SHARES OUTSTANDING
AND EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
<CAPTION>
Three Months Ended
June 30,
--------------------
1994 1993
------- -------
<S> <C> <C>
Net income (loss) applicable to common shares $ 1,273 $(1,977)
======= =======
Weighted average common shares outstanding
for the period 15,824 15,294
Increase in weighted average from:
Dilutive effect of stock options 7 8
------- -------
Weighted average common shares assuming issuance
of the above securities 15,831 15,302
======= =======
Net income (loss) per common share:
On the weighted average
common shares outstand-
ing for the year $ .08 $ (.13)
Assuming issuance of shares
for dilutive stock
options** $ .08 $ (.13)
<FN>
* Numbered in accordance with Item 601 of Regulation S-K.
** This calculation is submitted in accordance with Regulation S-K Item 601(b)(1) although not required for income
statement presentation because it results in dilution of less than three percent. The Company's 7 1/2% Convertible
Debentures were omitted from the fully diluted calculation due to their antidilutive effect.
</TABLE>
26
