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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from to
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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
Pages
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Report of Independent Accountants 2
Statements of Financial Condition
as of December 31, 1998 and 1997 3
Statements of Operations and Changes
in Participants' Equity for the years
ended December 31, 1998, 1997 and 1996 4
Notes to Financial Statements 5-7
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Stock Option and Restricted Stock Committee
of the Board of Directors of Telxon Corporation
and Participants of the Telxon Corporation 1995
Employee Stock Purchase Plan
In our opinion, the accompanying statements of financial condition and the
statements of operations and changes in participants' equity present fairly, in
all material respects, the financial position of the Telxon Corporation 1995
Employee Stock Purchase Plan (the "Plan") at December 31, 1998 and 1997 and the
results of its operations and changes in its participants' equity for each of
the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers L.L.P.
PRICEWATERHOUSECOOPERS L.L.P.
Akron, Ohio
March 29, 1999
2
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Statements of Financial Condition
as of December 31, 1998 and 1997
1998 1997
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ASSETS
Employer account receivable $367,636 $326,232
Employer contribution receivable 60,822 56,624
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Total assets $428,458 $382,856
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LIABILITIES AND PARTICIPANTS' EQUITY
Payable for stock purchases $405,483 $377,496
Amounts due to former participants 2,349 4,280
Residual participant contributions 20,626 1,080
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Total liabilities 428,458 382,856
Participants' equity -- --
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Total liabilities and
participants' equity $428,458 $382,856
======== ========
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, 1998, 1997 and 1996
1998 1997 1996
---- ---- ----
Participant contributions $ 876,175 $774,569 $ 882,202
Employer contributions 146,131 129,807 135,711
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Total additions 1,022,306 904,376 1,017,913
--------- -------- ----------
Stock purchases 974,206 865,386 904,734
Participant withdrawals 27,474 37,910 112,180
Residual contribution amounts
reserved for participants 20,626 1,080 999
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Total deductions 1,022,306 904,376 1,017,913
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Net additions -- -- --
Participants' equity, beginning of period -- -- --
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Participants' equity, end of period $ -- $ -- $ --
========= ========= ==========
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
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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 shares are purchased for an
amount 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, 1998, the participants had purchased 165,061 whole shares
of Stock since the Plan's inception and had accumulated payroll
deductions during the July 1, 1998, to December 31, 1998, Payment
Period sufficient to purchase 29,224 whole shares of Stock subsequent
to December 31, 1998, leaving 305,715 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
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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
---------------
On 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.
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Notes to Financial Statements
1. Description of the Plan, Continued:
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Participant Contributions
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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 the same pending the application thereof to the purchase
of shares at the end of each Payment Period in accordance with the
Plan.
Any 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, 1998 and 1997.
Employer Contributions
----------------------
The 15% discount from market value granted to Plan participants on the
purchase of whole 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 $146,131, $129,807 and $135,711 for
the years ended December 31, 1998, 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
$18,000, $19,000 and $22,000 for the years ended December 31, 1998,
1997 and 1996, respectively.
Plan Termination
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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.
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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 whole shares of Stock under the Plan.
3. Subsequent Event
----------------
Plan participants' accumulated payroll deductions for the Payment
Period ended December 31, 1998, amounted to $367,636, and have been
recorded as an amount receivable from the Company at December 31, 1998.
Subsequent to year end, $344,661 of these accumulated deductions were
used to purchase 29,224 whole shares of Stock which were issued to
participants in January 1999. As of the option price date, the 29,224
whole shares of Stock purchased subsequent to year end had a market
value of $405,483, which has been recorded as the liability "Payable
for stock purchases" at December 31, 1998.
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CONSENT OF INDEPENDENT ACCOUNTANTS
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We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 33-62957) of the Telxon Corporation 1995 Employee Stock Purchase
Plan of our report dated March 29, 1999 appearing on page 2 of this Annual
Report on Form 11-K of Telxon Corporation.
/s/ PricewaterhouseCoopers L.L.P.
PRICEWATERHOUSECOOPERS L.L.P.
Akron, Ohio
March 30, 1999
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Stock Option and Restricted Stock Committee, 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.
Date: March 30, 1999
TELXON CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
/s/ Margaret E. Pais
Margaret E. Pais, Vice President,
Human Resources/Administration
