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PROSPECTUS SUPPLEMENT Filed pursuant to Rules 424(b)(5) and (c)
To Prospectus Dated February 23, 1996 Registration No. 333-1189
$82,500,000
TELXON CORPORATION
5 3/4% Convertible Subordinated Notes Due 2003
and
Shares of
Common Stock
Issuable Upon Conversion Thereof
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This Prospectus Supplement ("Supplement") covers the resales by Smith
Barney Inc., which upon the completion of its merger with Salomon Brothers
Inc. will become Salomon Smith Barney, a member of the Travelers Group (the
"Selling Security Holder"), as principal, of $700,000 aggregate principal
amount of 5 3/4% Convertible Subordinated Notes due 2003 (the "Notes") of
Telxon Corporation, a Delaware corporation (the "Company"). The Notes were
issued in a private placement on December 12, 1995 (the "Debt Offering") and
subsequently registered, together with up to 3,000,000 shares of the Common
Stock, par value $.01 per share (the "Common Stock"), of the Company which are
initially issuable upon the conversion of the Notes (the "Conversion Shares"),
for resale from time to time by the holders thereof pursuant to Registration
No. 333-1189 (the "Registration Statement"). This Supplement should be read in
conjunction with the Prospectus, dated February 23, 1996 (the "Prospectus"), to
be delivered with this Supplement. All capitalized terms used but not defined
in this Supplement shall have the meanings given them in the Prospectus.
Based on information provided by the Selling Security Holder to the
Company, the Selling Security Holder is selling the total amount of Notes owned,
and which may be offered, by it pursuant to this Supplement. Additional security
holders or other information concerning the Selling Security Holder may be set
forth from time to time in additional prospectus supplements. The total
outstanding aggregate principal amount of Notes is $82,500,000.
The Notes are unsecured and subordinated to all existing and future
Senior Indebtedness and are effectively subordinated to all existing and future
indebtedness and other liabilities of subsidiaries of the Company. At June 30,
1998, the Company had approximately $31.7 million of outstanding indebtedness
constituting Senior Indebtedness and the subsidiaries of the Company had
approximately $21.5 million of outstanding indebtedness and other liabilities
(excluding intercompany liabilities and
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approximately $1.2 million in subsidiaries' obligations guaranteed by the
Company which are included in the amount of Senior Indebtedness) to which the
Notes were effectively subordinated. The Indenture contains no limitations on
the incurrence of additional indebtedness or other liabilities by the Company
and its subsidiaries. See "Description of Notes-Subordination of Notes" in the
Prospectus. The Notes are convertible into Common Stock at the option of the
holder at any time after February 10, 1996 and at or before maturity, unless
previously redeemed, at a conversion price of $27.50 per share (equivalent to a
conversion rate of approximately 36.36 shares per $1,000 principal amount of
Notes), subject to adjustment in certain events. See "Description of
Notes-Conversion of Notes" in the Prospectus. The Notes are redeemable at the
Company's option at any time on or after January 5, 1999, as a whole or, from
time to time, in part, at prices (expressed as percentages of the principal
amount), together with accrued interest at prices ranging from 103.2857% during
1999 to 100.8214% during 2002. Additionally, in the event any Repurchase Event
(as defined in the Prospectus) occurs, each holder of Notes may require the
Company to repurchase all or any part of the holder's Notes at 100% of the
principal amount thereof plus accrued interest to the repurchase date. See
"Description of Notes-Repurchase at Option of Holders Upon Repurchase Event" in
the Prospectus. Interest is payable semiannually on January 1 and July 1 of each
year at 5 3/4% per annum commencing July 1, 1996. See "Description of
Notes-General" in the Prospectus.
Following their original issuance by the Company, the Notes have been
resold by the initial and subsequent purchasers thereof to qualified
institutional buyers in transactions exempt from registration under Rule 144A
under the Securities Act. Prior to this offering, there has been no public
market for the Notes. However, the Notes are eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market.
Notes sold pursuant to the Registration Statement (including those covered by
this Supplement) will no longer be eligible for trading in the PORTAL Market.
The Conversion Shares have been authorized for listing on the NASDAQ National
Market ("NNM") upon official notice of issuance. The Company's Common Stock is
traded on the NNM under the symbol TLXN. On June 30, 1998, the Company had
16,111,215 shares of issued and outstanding Common Stock, and on July 20, 1998,
the last reported sale price of the Common Stock on the NNM was $28.50 per
share.
Selling security holders may offer Notes or Conversion Shares from time
to time to purchasers directly or through underwriters, dealers or agents. Such
Notes or Conversion Shares may be sold at market prices prevailing at the time
of sale or at negotiated prices. Each selling security holder will be
responsible for payment of any and all commissions to brokers, which will be
negotiated on an individual basis.
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The Company will not receive any of the proceeds from the sale of any
of the Notes or Conversion Shares by the selling security holders. Expenses of
preparing and filing the Registration Statement, the Prospectus, this Supplement
and all other prospectus supplements are borne by the Company.
SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF THE PROSPECTUS AND THE
COMPANY'S FILINGS MADE WITH THE SECURITIES AND EXCHANGE COMMISSION SUBSEQUENT TO
THE DATE OF THE PROSPECTUS AND INCORPORATED BY REFERENCE THEREIN FOR A
DISCUSSION OF CERTAIN FACTORS WHICH PROSPECTIVE INVESTORS SHOULD CONSIDER PRIOR
TO AN INVESTMENT IN THE NOTES OR CONVERSION SHARES. ALSO, SEE THE COMPANY'S
CURRENT REPORT ON FORM 8-K, DATED JULY 20, 1998, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ON JULY 21, 1998, AND INCORPORATED HEREIN BY REFERENCE,
FOR INFORMATION CONCERNING THE COMPANY'S FINANCIAL RESULTS FOR ITS FISCAL
QUARTER ENDED JUNE 30, 1998, AS PUBLICLY ANNOUNCED ON JULY 20, 1998.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
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The date of this Prospectus Supplement is July 21, 1998
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