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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 14, 1999
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 July 14, 1999, Telxon Corporation (the Company") issued a press
release (the "July Release") announcing its operating results for the fourth
quarter of fiscal 1999, and the fiscal year, ended March 31, 1999. The July
Release also notes that the Company will require additional time to complete its
fiscal 1999 10-K for filing.
A copy of the July 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. The July Release includes unaudited
consolidated balance sheets of the Company for March 31, 1999 and, as restated
to reflect the restatement of the Company's financial statements as discussed in
its press releases of February 23, 1999 (the "February Release") and March 1,
1999 (the "March Release"), March 31, 1998 (the March 31, 1998 balance sheet
included in the July Release reflects certain limited adjustments to the balance
sheet for that date included as part of the March Release) and unaudited
condensed consolidated statements of operations for the quarterly and fiscal
annual periods ended March 31, 1999 (the fiscal annual statement gives effect to
the restatements of the Company's financial statements as discussed in the
February Release and the Company's June 16, 1999 press release (the "June
Release")) and, as restated to reflect the restatement of the Company's
financial statements as discussed in the February Release, March 31, 1998. The
February Release, March Release and June Release were each filed under cover of
a Form 8-K dated as of the date of that press release.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99 Press Release issued by the registrant on July 14, 1999.
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 15, 1999 By: /s/ Glenn S. Hansen
-------------------
Glenn S. Hansen
Vice President, Legal Administration
and Corporate Counsel
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EXHIBIT 99
----------
[TELXON LOGO]
NEWS RELEASE
TELXON REPORTS FY99 Q4 AND YEAR-END RESULTS
AKRON, OHIO, July 14, 1999 - - Telxon Corporation (Nasdaq: TLXN), a
world leader in delivering quality, innovative solutions for mobile information
and wireless communications systems, today reported results for its fourth
quarter and fiscal year ended March 31, 1999.
For the quarter ended March 31, 1999, the company recorded revenues of
$77.1 million and a net loss of $84.7 million, or $5.27 per share (diluted), as
compared to revenues of $131.4 million and net income of $4.6 million, or $.29
per share (diluted), in the year earlier quarter. The fiscal 1999 fourth quarter
net loss includes $23.6 million of adjustments related to the company's
previously announced program to discontinue certain of its products, and $7.3
million related to provisions for excess and obsolete inventories. The fourth
quarter results also include severance of $3.6 million, bad debt provisions of
$3.7 million, non-cash compensation expense related to stock options in its
Aironet subsidiary of $3.4 million, and charges relating to a reduction in the
carrying value of investments of $2.1 million.
For the fiscal year ended March 31, 1999, Telxon reported a net loss of
$137.0 million, or $8.50 per share (diluted), as compared to net income of $8.2
million, or $.50 per share (diluted), for fiscal 1998. Revenues were $388.3
million, as compared to revenues of $463.2 million last year. The fiscal 1999
revenues reflect the absence of a $30.0 million sale to a major domestic retail
customer recorded in fiscal 1998 as well as the cancellation in December 1998 of
a $13.0 million order by a large logistics company. Revenues were further
affected by increases to the company's reserve for sales returns and allowances
of $11.7 million and the deferral of revenues of $12.5 million related to
extended product roll-outs. Revenues of $10.4 million were also deferred as a
result of delays in customer acceptance of products delivered. Finally, revenues
were negatively impacted by the delay of revenue recognition for $8.0
Telxon Corporation/3330 West Market Street/P.O. Box 5582/Akron, Ohio 44334-0582
800.800.8001/Fax 330.664.2058/www.telxon.com
<PAGE> 2
million of goods shipped subject to the company's guarantee of customer lease
payments to the third party lessors.
The fiscal 1999 net loss includes charges of $37.4 million for
inventory obsolescence, $9.8 million in under-absorbed manufacturing overhead
costs due to decreased volumes and manufacturing inefficiencies, $3.0 million of
material rework and repair costs, $2.0 million of excess warranty repair costs,
$7.8 million for bad debt provisions, and $8.1 million for costs incurred in
response to takeover and proxy contest proposals and in terminated discussions
of proposed business combination transactions.
The fiscal 1999 tax provision of $17.4 million reflects a valuation
allowance of $10.1 million established against the net deferred tax asset at the
beginning of the year and foreign income taxes of $5.2 million. No tax benefit
has been recognized for the fiscal 1999 net operating loss.
John W. Paxton, Telxon's chairman and CEO, said, "We appreciate the
patience that our investors and business partners have shown as we have worked
diligently to release our fourth quarter and year-end results. As we mentioned
earlier, our fiscal 1999 year-end closing was complicated by the sorting out of
the effects of the company's previously announced restatements. Although we are
able today to release the results for the period, we will require additional
time to complete our fiscal 1999 10-K for filing."
Paxton continued, "As we indicated earlier, we have seen revenue growth
during the first quarter of fiscal 2000, and we are anticipating
quarter-to-quarter sequential growth for the remainder of the year. For the
first quarter, we expect to report revenues in the mid $90 million range, which
will include growth in both domestic and international operations. Our new
management team is in place, we continue to work aggressively on our previously
announced potential financing transactions, and we remain focused on executing
our strategic plan to stabilize the company and position it for future growth."
The company will host a conference call for analysts on Tuesday, July
20 to discuss its fiscal 1999 Q4 and year-end results.
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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: 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 or restated results
or other future events pertaining to the company to differ materially from the
forward-looking statements. The important factors affecting the realization of
those results or the occurrence of those events include, without limitation, the
level of customer demand for the company's products, the company's ability to
timely obtain contemplated financing on acceptable terms and in adequate
amounts, the continued adequacy of the company's internal and external sources
of working capital in the interim, and the ability of the company's executive
management to successfully implement its strategic plan to stabilize and grow
the company, 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 more information:
Alex L. Csiszar
Vice President, Investor and Public 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>
MARCH 31, MARCH 31,
1999 1998
------------ ------------
(UNAUDITED) (UNAUDITED
AND AS
RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 22,459 $ 27,500
Accounts receivable, net 84,500 121,932
Notes and other accounts receivable 4,015 15,753
Inventories 129,049 109,935
Prepaid expenses and other 9,029 16,084
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Total current assets 249,052 291,204
Property and equipment, net 69,557 53,969
Intangible and other assets, net 30,235 33,292
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Total $ 348,844 $ 378,465
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 68,567 $ 3,000
Capital lease obligations due within one year 525 968
Accounts payable 64,966 58,634
Income taxes payable 6,434 3,466
Accrued liabilities 74,285 41,988
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Total current liabilities 214,777 108,056
Capital lease obligations 1,435 1,876
Convertible subordinated debentures 106,913 107,224
Other long-term liabilities 5,446 6,867
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Total 328,571 224,023
Minority interest 3,307 1,287
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, 16,234
and 16,219 shares issued 162 162
Additional paid-in capital 87,029 87,489
Retained (deficit) earnings (61,977) 75,267
Equity adjustment for foreign currency translation (5,464) (4,929)
Unearned restricted stock awards (82) (493)
Treasury stock; 78 and 162 shares of common stock
at cost (1,423) (3,062)
Notes related to sale of subsidiary stock (1,279) (1,279)
--------- ---------
Total stockholders' equity 16,966 153,155
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Total $ 348,844 $ 378,465
========= =========
</TABLE>
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Telxon Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
- ------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
--------------------------- ---------------------------
ENDED MARCH 31, ENDED MARCH 31,
--------------------------- ---------------------------
1999 1998 1999 1998
--------------------------- ---------------------------
(UNAUDITED) (UNAUDITED)
AS AS
RESTATED RESTATED
<S> <C> <C> <C> <C>
Revenues:
Product $ 56,391 $ 111,881 $ 305,380 $ 386,410
Customer service 20,692 19,508 82,914 76,746
--------- --------- --------- ---------
Total revenues 77,083 131,389 388,294 463,156
Cost of revenues:
Product 76,596 64,166 241,265 227,850
Customer service 14,704 13,125 55,078 48,836
--------- --------- --------- ---------
Total cost of revenues 91,300 77,291 296,343 276,686
Gross (loss) profit:
Product (20,205) 47,715 64,115 158,560
Customer service 5,988 6,383 27,836 27,910
--------- --------- --------- ---------
Total gross (loss) profit (14,217) 54,098 91,951 186,470
Operating expenses:
Selling expenses 28,410 22,329 96,109 82,054
Product development and engineering
expenses 13,878 8,974 42,986 37,500
General and administrative expenses 21,380 10,429 54,923 39,462
Unconsummated business combination costs - - 8,070 -
Impairment charge - 4,635 - 6,069
--------- --------- --------- ---------
Total operating expenses 63,668 46,367 202,088 165,085
--------- --------- --------- ---------
(Loss) income from operations (77,885) 7,731 (110,137) 21,385
Interest income 232 316 801 1,573
Interest expense (3,045) (1,827) (9,872) (7,181)
--------- --------- --------- ---------
(Loss) income before other non-operating
(expense) income and income taxes (80,698) 6,220 (119,208) 15,777
Other non-operating (expense) income (1,438) 950 (414) 625
--------- --------- --------- ---------
(Loss) income before income taxes (82,136) 7,170 (119,622) 16,402
Provision for income taxes 2,576 2,745 17,360 7,227
--------- --------- --------- ---------
(Loss) income before cumulative effect
of accounting change (84,712) 4,425 (136,982) 9,175
Cumulative effect of an accounting change,
net of taxes - (224) - 1,016
--------- --------- --------- ---------
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net (loss) income $ (84,712) $ 4,649 $(136,982) $ 8,159
========= ========= ========= =========
Net (loss) income per share before accounting change:
Basic $ (5.27) $ 0.28 $ (8.50) $ 0.58
========= ========= ========= =========
Diluted $ (5.27) $ 0.27 $ (8.50) $ 0.56
========= ========= ========= =========
Cumulative effect of an accounting change:
Basic $ - $ 0.01 $ - $ (0.06)
========= ========= ========= =========
Diluted $ - $ 0.01 $ - $ (0.06)
========= ========= ========= =========
Net (loss) income per share:
Basic $ (5.27) $ 0.30 $ (8.50) $ 0.52
========= ========= ========= =========
Diluted $ (5.27) $ 0.29 $ (8.50) $ 0.50
========= ========= ========= =========
Average number of common shares outstanding:
Basic 16,072 15,708 16,108 15,809
Diluted 16,072 16,255 16,108 16,317
</TABLE>
