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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): December 11, 1998
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) 664-1000
Not applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On December 11, 1998, Telxon Corporation (the Company") issued a press
release announcing that it will restate the previously released financial
results for its second quarter, ended September 30, 1998, of its 1999 fiscal
year to reflect a change in the timing of recognizing revenues financed under a
new floor-plan arrangement to a segment of its Value-Added Distributor ("VAD")
channel. The Company announced that, based on advice from its outside auditors,
PricewaterhouseCoopers LLP, revenues under this new financing program are more
appropriately recognized upon the VAD's resale to end-user customers.
In addition, the Company announced in the press release that its
revenues and earnings for fiscal 1999 are anticipated to be negatively affected
as a result of unexpected delays in the general availability of certain models
of its pen-based product line and lower than expected demand from U.S.
customers.
A copy of the press release discussing the above and certain related
matters is included as Exhibit 99 to this Current Report on Form 8-K and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99 Press Release issued by the registrant on
December 11, 1998.
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: December 11, 1998 By: /s/ Kenneth W. Haver
--------------------
Kenneth W. Haver
Senior Vice President and
Chief Financial Officer
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EXHIBIT 99
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[TELXON LOGO]
NEWS RELEASE
TELXON TO RESTATE SECOND QUARTER FY99 RESULTS;
ANTICIPATED BREAK-EVEN EARNINGS FOR FY99
AKRON, OHIO, December 11, 1998 - - Telxon Corporation (Nasdaq-NNM:
TLXN) announced today that it will restate the previously released results for
its second quarter ended September 30, 1998, to reflect a change in the timing
of recognizing revenues financed under a new floor-plan arrangement, to a
segment of its Value-Add Distributor (VAD) channel. The company announced that,
based on advice from its outside auditors, PricewaterhouseCoopers LLP, revenues
under this new financing program are more appropriately recognized upon the VADs
re-sale to end-user customers.
For the second quarter ended September 30, 1998, the company expects to
report revenues of about $110 million, compared to previously announced revenues
of $124 million. The company anticipates that a majority of the approximately
$14 million in revenue under this financing program will be recognized in the
third quarter, with the balance being recognized in the fourth quarter. As a
result, the company expects to report a loss for the second quarter, prior to
non-recurring items, of about $.05 per share (diluted), as compared to
previously announced earnings, prior to non-recurring items, of $.22 per share
(diluted). The company will issue its restated financial statements for the
second quarter shortly.
In addition, the company said that its revenue and earnings for FY99
are anticipated to be negatively affected as a result of unexpected delays in
the general availability of certain models of its pen-based product line and
lower than expected demand from U.S. customers. The company currently
anticipates FY99 revenues to be essentially flat compared to its FY98 revenues
of $466 million.
As a result of the unexpected delays and lower than expected demand,
the
Telxon Corporation/Corporate Communications Department
3330 West Market Street/P.O. Box 5582/Akron, Ohio 44334-0582
800-800-8001/Fax (330) 664-2058
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company anticipates a loss from operations in the third quarter of FY99. To
address the delays, Telxon is initiating a reorganization of its product
development group and a more focused critical path measurement and reporting
system. The company will also focus on cash generation and market demand
creation programs in its plans to return to profitability during the fourth
quarter of FY99. Absent additional business, earnings for FY99, prior to
non-recurring items, are expected to be approximately break-even.
Due to the reduced demand, the company anticipates an increased level
of inventory at the end of the third quarter of FY99. The company plans to
return to normal inventory levels over the next few months.
Telxon remains committed to its VAD business partner channels program
initiated one-year ago and believes that the program's emphasis on value-add
integration and re-distribution service offerings will make it an important
contributor to growth. The company is also evaluating and plans to initiate
changes to enhance the effectiveness of its existing vertical systems marketing
organization and other programs to foster demand for Telxon products.
The company is pleased with the continuing positive performance of both
its Aironet wireless LAN and Metanetics image processing technology
subsidiaries. With their competitive technology, both subsidiaries continue to
meet current internal expectations, offering products that are becoming market
leaders in their respective industries.
Telxon Corporation is a leading global designer and manufacturer of
wireless and mobile information 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
customer services for its customers in more than 60 countries. Telxon's website
address is: http://www.telxon.com.
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, the company's
ability to gain and maintain market acceptance of its products, and implement
appropriate cost reduction, efficiency and other operating improvement
strategies, as well as general and industry-specific economic conditions,
competitive pressures and rapid technological change. Reference should be made
to the discussion of
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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.
# # #
For corporate information:
Alex Csiszar
Vice President, Investor Relations
Telxon Corporation
(330) 664-2961
