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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): July 20, 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
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ITEM 5. OTHER EVENTS.
On July 20, 1998, Telxon Corporation ("Telxon" or the "Company") issued a
press release announcing its financial results for the first quarter, ended June
30, 1998, of its 1999 fiscal year. A copy of the press release is included as
Exhibit 99 to this Current Report on Form 8-K and 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, 1998, 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 (the "Prior Report"), as filed with the
Securities and Exchange Commission on June 3, 1996 and incorporated herein by
reference. The "Designated Senior Indebtedness" discussed in the Prior Report
currently consists of (i) the Company's five-year $100 million credit facility
with The Bank of New York, as agent for a syndicate of participating lenders,
and (ii) a supplemental 364-day $20 million guidance facility, dated August 5,
1997, with Bank One, NA (fka Bank One, Akron, N.A.), which is also one of the
participants in the Bank of New York facility. The amounts of other indebtedness
to which the Notes were so subordinated as of June 30, 1998 are discussed below.
The statements in the Prior Report regarding the provisions of the Indenture are
further 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 Current, Quarterly and Annual Reports on Forms 8-K, 10-Q and 10-K
which have been filed by the Company under the Securities Exchange Act of 1934
subsequent to the filing of the Prior Report.
The amounts of Senior Indebtedness, and the amounts of indebtedness and
other liabilities of the Company's subsidiaries, as of June 30, 1998 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):
Senior Indebtedness $31.7 million
Indebtedness and Other Liabilities of Subsidiaries* 21.5 million
- ----------
* Excludes intercompany liabilities and approximately $1.2 million at June 30,
1998 in subsidiaries' obligations guaranteed by Telxon which are included in the
amount of Senior Indebtedness above.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99 Press Release issued by the registrant on July 20, 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: July 21, 1998 By: /s/ Kenneth W. Haver
------------------------------------
Kenneth W. Haver
Senior Vice President and
Chief Financial Officer
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EXHIBIT 99
[TELXON LOGO]
NEWS RELEASE
TELXON REPORTS FIRST QUARTER FY1999 RESULTS
AKRON, OHIO, July 20, 1998 -- Telxon Corporation (Nasdaq-NNM: TLXN) today
reported that its first quarter after-tax earnings from operations rose 37% on a
10% increase in revenues.
For the quarter ended June 30, 1998, the company reported revenues of
$115.0 million and after-tax earnings from operations of $2.2 million, or $.13
per share (diluted), as compared to earnings of $1.6 million, or $.10 per share
(diluted), in the year earlier quarter. As previously announced, the company
recorded a non-operating charge of $1.7 million related to costs incurred in
response to an unsolicited takeover proposal by Symbol Technologies (NYSE: SBL)
and a non-operating charge of $1.9 million related to the reorganization of its
Metanetics primary production and integration activities. In addition, the
company also recorded a non-operating gain for the quarter of $.4 million.
Frank E. Brick, Telxon's president and chief executive officer, said, "I am
pleased that we achieved our earnings growth target during the quarter. I remain
excited and confident in our ability to execute our business plan, which is
targeted to deliver double-digit revenue growth and 30% earnings growth for
fiscal 1999. We saw strong revenue growth during the quarter in both our Aironet
and Metanetics subsidiaries, as well as increasing demand for our new pen-based
computer products."
Telxon Corporation is a worldwide leader in the wireless mobile information
systems industry. 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 around the world. Telxon's executive, engineering,
marketing and sales offices are
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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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.
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 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
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Telxon Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1998 1998
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 15,536 $ 27,500
Accounts receivable, net 136,826 125,739
Notes and other accounts receivable 15,496 22,949
Inventories 110,860 108,178
Prepaid expenses and other 12,844 11,307
--------- ---------
Total current assets 291,562 295,673
Property and equipment, net 58,398 52,108
Intangible and other assets, net 45,739 42,758
--------- ---------
Total $ 395,699 $ 390,539
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 25,005 $ 3,000
Capital lease obligations due within
one year 988 968
Accounts payable 45,621 58,634
Income taxes payable 1,729 3,390
Accrued liabilities 39,374 41,034
--------- ---------
Total current liabilities 112,717 107,026
Capital lease obligations 1,956 1,876
Convertible subordinated debentures 106,913 107,224
Other long-term liabilities 5,525 6,897
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Total 227,111 223,023
Minority interest 2,828 2,791
Stockholders' equity:
Preferred Stock, $1.00 par value per share;
500 shares authorized, none issued -- --
Common Stock, $.01 par value per share;
50,000 shares authorized, 16,230
and 16,219 shares issued 162 162
Additional paid-in capital 88,213 87,994
Retained earnings 85,233 85,053
Equity adjustment for foreign currency
translation (5,112) (4,929)
Unearned restricted stock awards (415) (493)
Treasury stock; 119 and 162 shares of
common stock at cost (2,321) (3,062)
--------- ---------
Total stockholders' equity 165,760 164,725
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Total $ 395,699 $ 390,539
========= =========
</TABLE>
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Telxon Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JUNE 30,
------------------------
1998 1997
------------------------
(UNAUDITED)
<S> <C> <C>
Revenues:
Product $ 94,077 $ 86,691
Customer service 20,970 18,222
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Total revenues 115,047 104,913
Cost of revenues:
Product 57,310 52,561
Customer service 12,826 11,126
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Total cost of revenues 70,136 63,687
Gross profit:
Product 36,767 34,130
Customer service 8,144 7,096
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Total gross profit 44,911 41,226
Operating expenses:
Selling expenses 21,361 18,100
Product development and engineering
expenses 8,930 9,126
General and administrative expenses 9,436 9,703
Take-over defense costs 1,749 --
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Total operating expenses 41,476 36,929
Income from operations 3,435 4,297
Interest income 179 498
Interest expense (1,713) (1,792)
--------- ---------
Income before other
non-operating expense
and income taxes 1,901 3,003
Other non-operating expense (1,490) (157)
--------- ---------
Income before income taxes 411 2,846
Provision for income taxes 165 1,252
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Net income $ 246 $ 1,594
========= =========
</TABLE>
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<TABLE>
<CAPTION>
THREE MONTHS
ENDED JUNE 30,
------------------------
1998 1997
------------------------
(UNAUDITED)
<S> <C> <C>
Net Income per common share:
Basic $ 0.02 $ 0.10
========= =========
Diluted $ 0.01 $ 0.10
========= =========
Average number of common shares outstanding:
Basic 16,080 15,525
Diluted 16,924 15,783
</TABLE>
