<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): July 17, 1996
TELXON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11402 74-1666060
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3330 WEST MARKET STREET, AKRON, OHIO 44333
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (330) 867-3700
<PAGE> 2
ITEM 5. OTHER EVENTS.
On July 17, 1996, Telxon Corporation ("Telxon" or the "Company")
issued a press release announcing its financial results for its fiscal quarter
ended June 30, 1996. A copy of the press release is included as Exhibit 99 to
this Current Report on Form 8-K and is incorporated herein by reference.
The amounts owed from time to time by the Company and its
subsidiaries to other creditors, which, as of June 30, 1996, are reflected in
the consolidated balance sheet included as part of the press release, determine
the extent to which the Company's $82,500,000 aggregate outstanding principal
amount of 5 3/4% Convertible Subordinated Notes due 2003 (the "Notes") is
subordinated. Under the terms of the Indenture (the "Indenture"), dated
December 1, 1995, between the Company and Bank One Trust Company, N.A., as
trustee, pursuant to which the Notes were issued in December 1995, the
indebtedness evidenced by the Notes is subordinated, to the extent provided in
the Indenture, to the prior payment in full of all Senior Indebtedness (as
defined in the Indenture). The Notes are also effectively subordinated to the
amounts of indebtedness and other liabilities of the Company's subsidiaries.
For a discussion summarizing such subordination of the Notes, reference should
be made to the Company's Current Report on Form 8-K dated May 21, 1996, as
filed with the Securities and Exchange Commission on June 3, 1996 and
incorporated herein by reference. The statements in that discussion regarding
the provisions of the Indenture are qualified in their entirety by reference to
the copy of the Indenture included as an exhibit to the registration statement
relating to the Notes which has been filed by the Company under the Securities
Act of 1933 as well as to the Company's Quarterly and Annual Reports on Forms
10-Q and 10-K which have been filed by the Company under the Securities
Exchange Act of 1934 subsequent to the issuance of the Notes.
The amounts of Senior Indebtedness, and the amounts of
indebtedness and other liabilities of the Company's subsidiaries, as of June
30, 1996 were as follows (such amounts varying from time to time depending
upon the operating and capital needs and operating results of Telxon and
its subsidiaries):
<TABLE>
<CAPTION>
<S> <C> <C>
Senior Indebtedness $ 18.0 million
Indebtedness and Other Liabilities 33.3 million
of Subsidiaries*
-------------------
<FN>
* Excludes intercompany liabilities and approximately $3.0
million at June 30, 1996 in subsidiaries' notes and letters of
credit guaranteed by Telxon which are included in the amount of
Senior Indebtedness above.
</TABLE>
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99 Press Release issued by registrant on July 17, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELXON CORPORATION
DATE: July 18, 1996 By: /s/ Glenn S. Hansen
-------------------
Glenn S. Hansen
Vice President, Legal Administration
and Corporate Counsel
<PAGE> 1
Exhibit 99
[TELXON LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
TELXON REPORTS FIRST QUARTER FY 1997 RESULTS
AKRON, OHIO, July 17, 1996 - - Telxon Corporation (TLXN - Nasdaq - NNM)
today reported results for its fiscal 1997 first quarter ended June 30, 1996.
For the quarter ended June 30, 1996, the company reported results in
line with earlier management guidance, recording revenues of $112.4 million and
a net loss of $.29 per share. The first quarter revenues represent an 8.5%
increase from revenues of $103.5 million recorded in the same quarter of the
prior year. The net loss in the quarter ended June 30, 1996, was $4.8 million
compared to net income of $2.2 million, or $.14 per share, in the year earlier
quarter.
Robert F. Meyerson, Chairman and Chief Executive Officer, stated, "The
revenue and cost issues we cited in our June 19th announcement are reflected in
the results of the first quarter. Our industry is now fully into the phase of
virtual product transition which requires more rapid development, lower costs
and more precise execution. By initiating major efficiency improvements and
cost reductions now, Telxon is preparing for this change in market conditions."
Meyerson continued, "The Board of Directors named Frank E. Brick, who
was named President and Chief Operating Officer on June 19, as a member of the
Board, replacing William J. Murphy. Brick has already put in process a number
of actions which are expected to improve overall performance."
Brick indicated, "We have begun the process of streamlining operations
across the board at Telxon. We have already taken steps to reduce the number of
products offered and to achieve greater efficiencies in manufacturing. We are
reducing employee headcount by 200 or approximately 10 percent of the overall
workforce. Reductions are occurring in manufacturing, the deconsolidation of
subsidiaries, and other operating areas. Actions taken to date and in process
are expected to decrease costs by $4.5 to
Telxon Corporation/Corporate Communications Department
3330 West Market Street/P.O. Box 5582/Akron, Ohio 44334-0582
800-800-8001/Fax (330) 873-2058
<PAGE> 2
$5.0 million per quarter from current run-rates. We will continue to review all
aspects of our business and expect to take further actions to achieve more
effective and efficient operations."
Brick continued, "Telxon continues as a leading producer of wireless
and mobile transaction systems and products. The value of investments the
company has made in technology and technical subsidiaries is important to the
company's future success. Our sales and marketing force is the best in serving
our targeted vertical markets. Our renewed focus on cost containment and
efficiency should produce the sustainable long-term growth in profits we expect
and allow us to continue to supply industry leading products and services to
our customers."
Kenneth W. Haver, Senior Vice President and Chief Financial Officer,
added, "Successful implementation of our cost-cutting initiatives should allow
Telxon to return to profitability, on sales growth of 8-10%, in the second half
sufficient to produce profits for the full year. Planned changes, including a
decrease in accounts receivable DSO, are expected to produce positive operating
cash flow for the year. Telxon's financial condition remains strong, with net
worth of $156 million and working capital of $178 million."
Previously, Telxon announced that its Board of Directors had authorized
the company to repurchase up to three million of its outstanding common shares
in open market transactions over the next year depending on market conditions.
Other than the historical financial information reported above, this
news release constitutes forward-looking statements that are inherently subject
to risks and uncertainties which could cause Telxon's actual results to differ
materially from the forward-looking statements. The important factors affecting
the realization of those results include, without limitation, general and
industry-specific economic conditions, the company's ability to timely develop,
introduce and gain market acceptance of new and enhanced products, competitive
pressures and rapid technological change, and its ability to identify, acquire
and manage new businesses and technologies while controlling manufacturing and
other costs. Reference should be made to the discussion of these and other
factors affecting Telxon's business and results as included from time to time
in the company's filings with the Securities and Exchange Commission.
<PAGE> 3
Telxon Corporation is a leading global designer and manufacturer of
wireless and mobile transaction solution systems for vertical markets. The
company integrates advanced mobile computing and wireless data communication
technology with a wide array of peripherals, application-specific software and
global technical services for its customers in more than 50 countries around the
world. Telxon's executive, engineering, marketing and sales offices are
headquartered in Akron, Ohio; its world manufacturing and domestic customer
service facilities are located in Houston, Texas. Telxon International Division
is headquartered in Brussels, Belgium. Telxon's World Wide Web site address
is: http://www.telxon.com.
# # #
For more information:
Alex L. Csiszar
Senior Director, Investor Relations
Telxon Corporation
(330) 873-2961
<PAGE> 4
Telxon Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
- --------------------------
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1996 1996
--------- ---------
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and short-term investments ............. $ 18,681 $ 35,730
Accounts receivable, net .................... 119,051 133,592
Notes and other accounts receivable ......... 9,349 9,522
Inventories............ ..................... 107,581 111,132
Prepaid expenses and other .................. 9,846 9,939
--------- ---------
Total current assets ............... 264,508 299,915
Property and equipment, net ................. 54,710 54,673
Intangible and other assets, net ............ 37,598 34,621
--------- ---------
Total .............................. $ 356,816 $ 389,209
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable ............................... $ 7,870 $ 66
Current portion of long-term debt ........... 1,156 1,156
Accounts payable ............................ 37,970 59,620
Capital lease obligations due within one year 812 897
Accrued liabilities ......................... 38,982 52,181
--------- ---------
Total current liabilities .......... 86,790 113,920
Capital lease obligations ............................ 1,787 1,982
Convertible subordinated debentures .................. 107,224 107,224
Long-term debt ....................................... 1,265 1,331
Other long-term liabilities .......................... 3,914 3,562
--------- ---------
Total .............................. 200,980 228,019
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, 16,148,923
and 16,096,193 shares outstanding ...... 161 161
Additional paid-in capital .................. 86,239 85,750
Retained earnings ........................... 73,299 78,096
Equity adjustment for foreign currency
translation ............................ (2,182) (2,064)
Unearned restricted stock awards ............ (630) (753)
Treasury stock, 100,000 shares at cost....... (1,051) --
--------- ---------
Total stockholders' equity ......... 155,836 161,190
--------- ---------
Total .............................. $ 356,816 $ 389,209
========= =========
</TABLE>
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Telxon Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
- --------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JUNE 30,
-----------------
1996 1995
------ -------
(Unaudited)
Revenues:
<S> <C> <C>
Product ................................. $ 94,025 $ 87,944
Customer service ........................ 18,358 15,597
--------- ---------
Total revenues ................... 112,383 103,541
Cost of revenues ........................ 76,864 60,414
--------- ---------
Gross profit ............................ 35,519 43,127
Operating expenses:
Selling expenses ........................ 21,108 19,668
Product development and engineering
expenses ............................ 11,086 9,585
General and administrative expenses ..... 11,269 9,136
--------- ---------
43,463 38,389
Income (loss) from operations .... (7,944) 4,738
Interest income ................................ 215 143
Interest expense ............................... (1,970) (1,166)
Other non-operating income ....... 105 --
--------- ---------
Income before income taxes ....... (9,594) 3,715
Provision (benefit) for income taxes ........... (4,797) 1,486
--------- ---------
Net income (loss) ................ $ (4,797) $ 2,229
========= =========
Earnings per common and common equivalent share:
Net income (loss) per share ...... $ (.29) $ .14
========= =========
Average number of common and common
equivalent shares outstanding ............. 16,544 16,102
========= =========
</TABLE>
