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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from ________________ to _______________
Commission file number 0-11402
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
TELXON CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
TELXON CORPORATION
3330 WEST MARKET STREET
AKRON, OHIO 44333
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Index to Financial Statements
<TABLE>
<CAPTION>
Pages
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<S> <C>
Report of Independent Accountants 2
Statements of Financial Condition as of December 31, 1997 and 1996 3
Statements of Operations and Changes in Participants' Equity for the years
ended December 31, 1997 and 1996 4
Notes to Financial Statements 5-7
</TABLE>
1
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Option and Stock Committee of the Board of
Directors of Telxon Corporation and Participants
of the Telxon Corporation 1995 Employee Stock
Purchase Plan
We have audited the accompanying statements of financial condition of the Telxon
Corporation 1995 Employee Stock Purchase Plan (the "Plan") as of December 31,
1997 and 1996, and the related statements of operations and changes in
participants' equity for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements 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, the financial statements referred to above present fairly, in
all material respects, the financial position of the Plan as of December 31,
1997 and 1996, and the results of its operations and changes in its
participants' equity for the years then ended in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Akron, Ohio
March 27, 1998
2
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Statements of Financial Condition
as of December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
---- ----
<S> <C> <C>
Employer account receivable $326,232 $357,867
Employer contribution receivable 56,624 62,119
-------- --------
Total assets $382,856 $419,986
======== ========
LIABILITIES AND PARTICIPANTS' EQUITY
Payable for stock purchases $377,496 $414,124
Amounts due to former participants 4,280 4,863
Residual participant contributions 1,080 999
-------- --------
Total liabilities 382,856 419,986
Participants' equity -- --
-------- --------
Total liabilities and participants' equity $382,856 $419,986
======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
3
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Statements of Operations and Changes in Participants' Equity
for the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Participant contributions $ 774,569 $ 882,202
Employer contributions 129,807 135,711
---------- ----------
Total additions 904,376 1,017,913
---------- ----------
Stock purchases 865,386 904,734
Participant withdrawals 37,910 112,180
Residual contribution amounts reserved for participants 1,080 999
---------- ----------
Total deductions 904,376 1,017,913
---------- ----------
Net additions -- --
Participants' equity, beginning of period -- --
---------- ----------
Participants' equity, end of period $ -- $ --
========== ==========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
4
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Notes to Financial Statements
1. Description of the Plan:
-----------------------
The following description of the Telxon Corporation (the "Company")
1995 Employee Stock Purchase Plan, as amended (the "Plan"), provides
only general information. Participants should refer to the Plan
document for a more complete statement of the Plan's provisions.
General
-------
The Plan is an employee stock purchase plan that allows participants to
purchase whole shares of Telxon Common Stock ("Stock") through payroll
deductions. The Plan's fiscal year is divided into two, six-month
periods ("Payment Periods"). The Payment Periods are January 1 to June
30 and July 1 to December 31 and represent the periods during which
participants' payroll deductions are accumulated. At the end of each
Payment Period, the participants' accumulated payroll deductions are
used to purchase whole shares of Stock. The Participants' purchases of
Stock under the Plan are at a cost equal to 85% of the lesser of (1)
the closing price of a share of Stock on the first trading day of the
Payment Period and (2) the closing price of a share of Stock on the
last trading day of the Payment Period ("Option Price").
The Plan, which was approved by the Company's stockholders at their
August 31, 1995 meeting, authorized the sale of up to 500,000 unissued
or treasury shares of Stock to participants through the Plan. At
December 31, 1997, the participants had purchased 120,515 shares of
Stock since the Plan's inception and had accumulated payroll deductions
during the July 1, 1997 to December 31, 1997 Payment Period sufficient
to purchase 20,972 shares of Stock subsequent to December 31, 1997,
leaving 358,513 whole shares of Stock available for future purchases by
Plan participants.
The Plan is neither qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, nor subject to any of the provisions
of the Employee Retirement Income Security Act of 1974 (commonly known
as "ERISA").
Eligibility
-----------
All full-time employees of the Company or any of its participating
subsidiaries who have completed 12 months of continuous employment, and
all part-time employees of the Company or its participating
subsidiaries who satisfy certain service requirements and who have
completed 12 months of continuous employment, are eligible to
participate in the Plan. Eligible employees may only enroll in the Plan
at the beginning of a Payment Period.
Stock Purchases
---------------
As of the last trading day of each Payment Period, the amount of each
participant's accumulated payroll deductions is applied towards the
purchase of the maximum number of whole shares of Stock possible,
determined by dividing the participant's total contribution by the per
share Option Price applicable for that Payment Period. Purchased shares
of Stock are then issued by the Company and transferred to a brokerage
account outside of the Plan in the name of the participant.
5
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Notes to Financial Statements
1. Description of the Plan (continued):
-----------------------------------
Participant Contributions
-------------------------
Participants may elect to have 1% to 15% of their "Covered
Compensation" (as defined in the Plan) deducted on an after-tax basis
for the purchase of Stock. Participants may only change their deduction
percentages at the beginning of a Payment Period. No interest accrues
or is paid on participants' accumulated payroll deductions. Once made,
the Company may use the payroll deductions for any corporate purpose,
and the Company has no obligation to segregate employees' payroll
deductions from any other funds of the Company or to hold funds
representing such deductions pending the application thereof to the
purchase of shares at the end of each Payment Period in accordance with
the Plan.
Any participant's accumulated contribution amount that is insufficient
to purchase a whole share of Stock at the end of a Payment Period is
carried forward and applied to the purchase of whole shares of Stock in
future Payment Periods or refunded to the participant upon withdrawal
from the Plan. Such amounts are recorded as the liability "Residual
participant contributions" at December 31, 1997 and 1996.
Employer Contributions
----------------------
The 15% discount from market value granted to Plan participants on the
purchase of shares of Stock at the end of each Payment Period
represents the Company's non-cash contribution to the Plan. These
non-cash contributions amounted to $129,807 and $135,711 for the years
ended December 31, 1997 and 1996, respectively.
Participant Refunds
-------------------
Plan participants may withdraw from the Plan at any time by properly
notifying the Company. However, a participant's accumulated payroll
deductions prior to withdrawal from the Plan will continue to be
applied toward the purchase of whole shares of Stock on the last
trading day of the Payment Period.
Participants who terminate their employment relationship with the
Company are not eligible to continue in the Plan. All payroll
deductions accumulated during the Payment Period through the date of
such cessation of employment are refunded to the employee or, in the
event of the employee's death, to his or her estate.
Administrative Expenses
-----------------------
The Company bears all costs in connection with the Plan, including
administrative fees and all fees associated with the issuance of Stock.
Administrative expenses related to the Plan amounted to approximately
$19,000 and $22,000 for the years ended December 31, 1997 and 1996,
respectively.
Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan at any time. The Plan will
also terminate when all or substantially all of the shares of Stock
reserved for the purposes of the Plan (initially 500,000 shares) have
been purchased. Upon termination of the Plan, all payroll deductions
not used to purchase Stock would be refunded to Plan participants.
6
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Notes to Financial Statements
2. Income Tax Status:
------------------
The Plan fulfills the requirements of an "employee stock purchase plan"
as defined in Section 423 of the Internal Revenue Code. As such, the
Plan is not required to file income tax returns or pay income taxes.
Under Section 423, a participating employee will recognize no income,
and the Company will be entitled to no deduction, for federal income
tax purposes when an employee enrolls in the Plan or when a participant
purchases shares of Stock under the Plan.
3. Subsequent Event:
-----------------
Plan participants' accumulated payroll deductions for the Payment
Period ended December 31, 1997, amounted to $326,232, and have been
recorded as an amount receivable from the Company at December 31, 1997.
Subsequent to year end, $320,872 of these accumulated deductions were
used to purchase 20,972 shares of Stock, which were issued to
participants by the Company in January 1998. Those shares had a market
value of $377,496 as of the option price date, which has been recorded
as the liability "Payable for stock purchases" at December 31, 1997.
7
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CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in Registration No. 33-62957 on
Form S-8, dated September 26, 1995, pertaining to the Telxon Corporation 1995
Employee Stock Purchase Plan of our report dated March 27, 1998 on the audits of
the Telxon Corporation 1995 Employee Stock Purchase Plan as of December 31, 1997
and 1996, and for the plan years then ended, which report is included in this
Annual Report on Form 11-K of Telxon Corporation.
/s/ Coopers & Lybrand L.L.P.
----------------------------------
COOPERS & LYBRAND L.L.P.
Akron, Ohio
March 27, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Option and Stock Committee of the Telxon Corporation Board of Directors, the
administrator of the Telxon Corporation 1995 Employee Stock Purchase Plan, has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
TELXON CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
March 31, 1998
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Date
By: /s/ Margaret E. Pais
------------------------
Margaret E. Pais, Vice President,
Human Resources/Administration
of Telxon Corporation