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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, 1999
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
1000 SUMMIT DRIVE
CINCINNATI, OHIO 45150
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Index to Financial Statements
Page(s)
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Report of Independent Accountants 2-3
Statements of Financial Condition
as of December 31, 1999 and 1998 4
Statements of Operations and Changes
in Participants' Equity for the years
ended December 31, 1999, 1998 and 1997 5
Notes to Financial Statements 6-8
Consent of Independent Accountants 9
Signature 10
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Compensation 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 statement of financial condition of the Telxon
Corporation 1995 Employee Stock Purchase Plan (the "Plan") as of December 31,
1999, and the related statement of operations and changes in participants'
equity for the year ended December 31, 1999. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial status of the Plan as of December 31, 1999,
and the changes in its financial status for the year ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
March 16, 2000.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Compensation 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 statement 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 the results
of its operations and changes in its participants' equity for each of the two
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 LLP
PRICEWATERHOUSECOOPERS LLP
Cleveland, Ohio,
March 29, 2000.
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TELXON CORPORATION
1995 Employee Stock Purchase Plan
Statements of Financial Condition
as of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
ASSETS
<S> <C> <C>
Employer account receivable $279,425 $367,636
Employer contribution receivable 44,129 60,822
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Total assets $323,554 $428,458
======== ========
LIABILITIES AND PARTICIPANTS' EQUITY
Payable for stock purchases $294,196 $405,483
Amounts due to former participants 24,378 2,349
Residual participant contributions 4,980 20,626
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Total liabilities 323,554 428,458
Participants' equity -- --
-------- --------
Total liabilities and
participants' equity $323,554 $428,458
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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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, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Participant contributions $ 843,366 $876,175 $ 774,569
Employer contributions 130,082 146,131 129,807
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Total additions 973,448 1,022,306 904,376
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Stock purchases 867,431 974,206 865,386
Participant withdrawals 101,037 27,474 37,910
Residual contribution amounts
reserved for participants 4,980 20,626 1,080
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Total deductions 973,448 1,022,306 904,376
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Net additions -- -- --
Participants' equity, beginning of period -- -- --
--------- --------- ----------
Participants' equity, end of period $ -- $ -- $ --
========= ========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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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 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 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 Telxon Corporation's (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, 1999, the participants had purchased
237,686 whole shares of Stock since the Plan's inception and had
accumulated payroll deductions during the July 1, 1999 to December 31,
1999 Payment Period sufficient to purchase 33,384 whole shares of Stock
subsequent to December 31, 1999, leaving 228,930 whole shares of Stock
available for future purchases by Plan participants.
The Plan is not 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
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.
PARTICIPANT CONTRIBUTIONS
Participants may elect to have 1% to 15% of their "Covered
Compensation" (as defined in the Plan and limited to $150,000 per
fiscal year) deducted on an after-tax basis for the purchase of Stock
at an annual limit of $25,000 per calendar year. 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'
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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, 1999 and 1998.
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 $130,082, $146,131, and $129,807 for
the years ended December 31, 1999, 1998 and 1997, 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.
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis
of accounting.
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, $18,000 and $19,000 for the years ended December 31, 1999,
1998 and 1997, respectively.
ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of additions and deductions during the reporting period. Since
actual results could differ from those estimates, management revises
its estimates and assumptions as better or new information becomes
available.
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3. 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.
4. SUBSEQUENT EVENT:
Plan participants' accumulated payroll deductions for the Payment
Period ended December 31, 1999 amounted to $279,425, and have been
recorded as an amount receivable from the Company at December 31, 1999.
Subsequent to year end, $250,067 of these accumulated deductions were
used to purchase 33,384 whole shares of Stock which were issued to
participants in January 2000. As of the Option Price date, the 33,384
whole shares of Stock purchased subsequent to year end had a market
value of $294,196, which has been recorded as the liability "Payable
for stock purchases" at December 31, 1999.
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CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated March 16, 2000 included in this Form 11-K, into the Company's
previously filed Registration Statement on Form S-8 (No. 33-62957).
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Akron, Ohio
March 30, 2000
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Compensation 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.
March 30, 2000
Telxon Corporation
1995 Employee Stock Purchase Plan
TELXON CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
/s/ Margaret E. Pais
Margaret E. Pais, Vice President,
Human Resources/Administration
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