<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 1, 1996
or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-20060
NORAND CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 42-1323151
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
550 Second Street S.E.
Cedar Rapids, Iowa 52401
(Address of principal executive offices)(Zip Code)
Telephone Number (319) 369-3100
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and, (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
----- -----
As of June 28, 1996, there were 7,646,167 shares of the Registrant's
Common Stock, $0.01 par value, outstanding.
<PAGE> 2
On September 25, 1995, the Company announced that it had discovered
irregularities during the course of the year-end audit of the Company's Italian
subsidiary. As a result of the Company's investigation, it has restated its
quarterly unaudited consolidated financial statements for the first three
quarters of fiscal 1995 and its quarterly unaudited and year-end audited
financial statements for fiscal 1994. See Note 4 to Consolidated Financial
Statements for further discussion of the Italian subsidiary irregularities and
restatement of financial statements. The restated items applicable to the
third quarter of fiscal 1995 are set forth in this report.
NORAND CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1.Consolidated Financial Statements:
Consolidated Balance Sheets
June 1, 1996 and August 31, 1995 3
Consolidated Statements of Operations
Three Months and Nine Months Ended
June 1, 1996 and June 3, 1995
(As Restated) 4
Consolidated Statements of Stockholders' Equity
June 1, 1996, August 31, 1995
and August 31, 1994 (As Restated) 5
Consolidated Statements of Cash Flows
Nine Months Ended June 1, 1996
and June 3, 1995 (As Restated) 6-7
Notes to Consolidated Financial Statements 8-11
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
Index to Exhibits 20
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NORAND CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
JUNE 1, AUGUST 31,
1996 1995
---------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $2,929 $3,809
Accounts receivable, net of allowances for doubtful
accounts and estimated sales returns of $7,945
(unaudited) and $6,423 62,820 68,609
Inventories 36,231 36,678
Deferred tax assets 12,471 6,355
Prepaid expenses and other current assets 4,182 4,643
-------- --------
Total current assets 118,633 120,094
Noncurrent assets:
Property, plant and equipment, net 25,958 23,138
Deferred tax assets 3,266 3,266
Patents and intellectual properties, net 6,621 6,981
Goodwill, net 2,641 2,731
Other noncurrent assets 4,754 4,378
-------- --------
Total assets $161,873 $160,588
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $55,021 $39,876
Accounts payable 22,397 25,517
Accrued payroll and employee benefits 9,019 10,959
Other accrued liabilities 22,144 19,370
Deferred income 9,085 9,595
-------- --------
Total current liabilities 117,666 105,317
-------- --------
Stockholders' equity:
Common stock, $.01 par value: Authorized 15,000,000
shares; issued and outstanding 7,636,196 shares
(unaudited) and 7,534,846 76 75
Additional paid-in capital 74,754 73,150
Accumulated deficit (26,087) (14,312)
Equity adjustment from foreign currency translation (4,536) (3,642)
-------- --------
Total stockholders' equity 44,207 55,271
-------- --------
Total liabilities and stockholders' equity $161,873 $160,588
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
- 3 -
<PAGE> 4
NORAND CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- --------------------------
JUNE 1, JUNE 3, JUNE 1, JUNE 3,
1996 1995 1996 1995
(AS RESTATED) (AS RESTATED)
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Product sales revenue $50,205 $47,938 $134,569 $130,553
Customer service revenue 10,011 9,758 31,485 28,193
--------- --------- --------- ---------
Total revenues 60,216 57,696 166,054 158,746
Cost of products and services 34,315 30,644 100,370 86,049
--------- --------- --------- ---------
Gross profit 25,901 27,052 65,684 72,697
Operating expenses:
Product development and
engineering expenses 4,208 5,252 16,792 15,637
Selling expenses 15,284 12,764 42,630 37,682
General and administrative expenses 3,586 3,307 13,405 9,903
Restructuring charge 0 0 5,192 0
--------- --------- --------- ---------
Total operating expenses 23,078 21,323 78,019 63,222
--------- --------- --------- ---------
Income (loss) from operations 2,823 5,729 (12,335) 9,475
Interest and other expenses 1,695 1,079 4,486 2,551
--------- --------- --------- ---------
Income (loss) before income taxes 1,128 4,650 (16,821) 6,924
Provision (benefit) for income taxes 339 1,372 (5,046) 2,764
--------- --------- --------- ---------
Net income (loss) $789 $3,278 ($11,775) $4,160
========= ========= ========= =========
Net income (loss) per common share $0.10 $0.43 ($1.56) $0.54
========= ========= ========= =========
Average number of common and common
equivalent shares outstanding:
Primary 7,726,070 7,698,939 7,570,381 7,656,653
========= ========= ========= =========
Fully diluted 7,791,012 7,698,939 7,570,381 7,656,653
========= ========= ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements
- 4 -
<PAGE> 5
NORAND CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
ADDITIONAL FROM FOREIGN
COMMON STOCK PAID-IN ACCUMULATED CURRENCY
SHARES AMOUNT CAPITAL DEFICIT TRANSLATION
------ ------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balances, August 31, 1993 7,000,984 $70 $68,542 ($16,980) ($1,864)
Exercises of stock options 349,590 3 573 - -
Additional expenses of initial public offering - - (37) - -
Tax benefit from exercise of stock options - - 516 - -
Foreign currency translation - - - - (220)
Net income (as restated) - - - 6,374 -
--------- --- ------- -------- -------
Balances, August 31, 1994 (as restated) 7,350,574 73 69,594 (10,606) (2,084)
Exercises of stock options 174,455 2 2,737 - -
Tax benefit from exercise of stock options - - 382 - -
Acquisition of subsidiary 9,817 - 437 - -
Foreign currency translation - - - - (1,558)
Net loss - - - (3,706) -
--------- --- ------- -------- -------
Balances, August 31, 1995 7,534,846 75 73,150 (14,312) (3,642)
Exercises of stock options (unaudited) 101,350 1 1,604 - -
Foreign currency translation (unaudited) - - - - (894)
Net loss (unaudited) - - - (11,775) -
--------- --- ------- -------- -------
Balances, June 1, 1996 (unaudited) 7,636,196 $76 $74,754 ($26,087) ($4,536)
========= === ======= ======== =======
</TABLE>
See accompanying notes to the consolidated financial statements
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<PAGE> 6
NORAND CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
NINE MONTH PERIOD ENDED
---------------------------------
JUNE 1, JUNE 3,
1996 1995 (AS RESTATED)
---------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($11,775) $4,160
-------- -------
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 5,463 4,245
Amortization 3,020 1,548
Amortization of deferred royalty income (1,815) (1,711)
Deferred tax assets (6,116) 0
Provision for doubtful accounts and sales returns 4,360 4,490
Changes in assets and liabilities:
Accounts receivable 1,115 (11,519)
Inventories 412 (5,038)
Prepaid expenses and other assets 728 478
Deferred income 1,305 1,647
Accounts payable and accrued liabilities (6,301) (3,170)
Accrued restructuring, net 3,512 0
-------- -------
Total adjustments 5,683 (9,030)
-------- -------
Net cash used in operating activities (6,092) (4,870)
-------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (8,282) (7,645)
Additions to software, patents, and intellectual properties (2,494) (3,455)
-------- -------
Net cash used in investing activities (10,776) (11,100)
-------- -------
Cash flows from financing activities:
Net borrowings under line of credit agreement 15,119 15,957
Issuances of common stock 1,605 2,500
Payments of refinancing expenses (642) (144)
-------- -------
Net cash provided by financing activities 16,082 18,313
-------- -------
Effect of exchange rate changes on cash (94) (14)
-------- -------
Net increase (decrease) in cash and cash equivalents (880) 2,329
Cash and cash equivalents:
Beginning of period 3,809 2,987
-------- -------
End of period $2,929 $5,316
======== =======
</TABLE>
See accompanying notes to the consolidated financial statements
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<PAGE> 7
NORAND CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
NINE MONTH PERIOD ENDED
---------------------------------
JUNE 1, JUNE 3,
1996 1995 (AS RESTATED)
---------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Interest paid on all debt obligations $3,897 $2,077
======== =======
Income taxes paid (refunded), net ($1,197) $2,829
======== =======
</TABLE>
See accompanying notes to the consolidated financial statements
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<PAGE> 8
NORAND CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements include all necessary adjustments (consisting of
normal recurring accruals and the restructuring charge recorded in the
second quarter of fiscal 1996) to present fairly the Company's financial
position as of June 1, 1996, and the results of its operations and cash
flows for the nine months ended June 1, 1996 and June 3, 1995, in
conformity with generally accepted accounting principles applied on a
consistent basis. The preparation of financial statements in conformity
with generally accepted accounting principles 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 revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
The results of operations for the three months and nine months ended
June 1, 1996, are not necessarily indicative of the results to be expected
for the full year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended August 31, 1995.
2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market,
and consist of the following:
<TABLE>
<CAPTION>
June 1, August 31,
1996 1995
------- ---------
<S> <C> <C>
Parts and materials $19,146 $13,572
Work in process 1,740 1,799
Finished goods 10,867 15,808
Field service and sales supplies 4,478 5,499
------- -------
Total $36,231 $36,678
======= =======
</TABLE>
3. SHORT-TERM DEBT
In October 1995, as a result of non-compliance with the Company's
bank credit agreement (the "Agreement"), the Company amended and
recollateralized the Agreement resulting in an increase in the effective
interest rate by 1.0 percent on LIBOR borrowings and 0.5 percent on prime
rate borrowings.
As a result of the losses for the year ended August 31, 1995 and
losses for the quarter ended December 2, 1995, the Company was not in
compliance with certain covenants under the Agreement. Borrowings under
the Agreement had increased from $39.5 million as of August 31, 1995 to
$61.2 million on December 2, 1995 to fund operations and capital
additions. Due to the covenant violations, on December 14, 1995,
available borrowings under the Agreement were frozen at the balance then
outstanding of $57.4 million.
On January 25, 1996, the Company amended and restated the Agreement
(the "Restated Agreement") with its lending group wherein the lending
group agreed to waive any defaults under or
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<PAGE> 9
violations of the Agreement occurring on or before January 25, 1996. The
Restated Agreement provides for an amortizing term loan beginning at $52.0
million and amortizing by $1.0 million per month beginning September 15,
1996, to $48.0 million on December 15, 1996, and up to $11.5 million in a
borrowing base revolving loan. The Restated Agreement is limited to $63.5
million in aggregate borrowings. Obligations under the Restated
Agreement will mature on December 31, 1996. The Company's obligations
under the Restated Agreement are secured by substantially all of the
assets of the Company. No foreign currency borrowings are permitted under
the Restated Agreement. The effective interest rate, effective January
25, 1996, under the Restated Agreement is the agent's alternate base rate
plus 1.75% for all borrowings up to $57.4 million and the agent's
alternate base rate plus 2.75% for borrowings above $57.4 million. The
Restated Agreement contains financial covenants, measured at varying
dates, relating to tangible net worth, capital additions, and cash flows.
The Company was in compliance with all covenants under the Restated
Agreement as of June 1, 1996.
The Company paid a commitment fee at closing amounting to 0.5% of the
total facility. An additional 0.5% fee will be payable on September 15,
1996 if the Company does not comply with certain terms of the Restated
Agreement. The total amount outstanding under this facility was $54.6
million at June 1, 1996.
4. ITALIAN SUBSIDIARY IRREGULARITIES AND RESTATEMENT OF FISCAL 1995
SECOND QUARTER UNAUDITED FINANCIAL STATEMENTS
Irregularities Discovered
On September 25, 1995, the Company announced that it had discovered
irregularities during the course of the year-end audit at its Italian
subsidiary. At that time the managing director of the Italian subsidiary
was removed. The Company's investigation of the irregularities in its
Italian subsidiary continued following the initial announcement. The
investigation subsequently revealed a complex set of irregularities, which
took place over a period of time. The irregularities were facilitated by
third parties, certain of which were associated with the former managing
director.
As a result of the investigation attributable to the Italian
subsidiary, the Company recorded in its 1995 and 1994 financial statements
pretax charges and costs related to sales returns, inventory losses,
certain local taxes which may not be recoverable, professional costs for
the investigation, and the settlement or anticipated settlement of
numerous third party claims against the Italian subsidiary. Included in
the Company's restated results for the third quarter and nine months ended
June 3, 1995, after restatement for irregular sales and costs, are pretax
charges and costs totaling $0.1 million and $1.8 million, respectively,
which result from certain local taxes which may not be recoverable and
$0.5 million in the first quarter resulting from inventory losses.
The Company believes that a thorough investigation has been completed
in order to determine the aggregate losses due to the irregularities. The
Company has continued to pursue potential further recoveries from third
parties and insurance. Such potential recoveries have not been reflected
in the accompanying financial statements. During the first nine months of
fiscal 1996 the Company settled numerous previously identified third party
claims for costs which approximated previous estimates. No new claims have
been presented that would have a material adverse financial impact on the
Company. Based upon the results of its investigation and claim settlements,
the Company does not believe that the aggregate charges and operating losses
relating to these known facts and circumstances will materially exceed the
amount of losses and costs already recorded. However, there can be no
assurance that additional third party claims will not be discovered in future
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<PAGE> 10
periods which will result in further losses related to this matter.
Such losses could be material to the consolidated results of operations in any
future period. Management does not believe that any such losses will be
material to the Company's consolidated financial position.
Restatement of Financial Statements
As discussed above, the previously reported results for the third
quarter of fiscal 1995 have been restated by the Company in order to
reflect the correction of the irregularities discovered at its Italian
subsidiary. The effect of the restatement adjustments on results for the
three months and nine months ended June 3, 1995 is as follows:
<TABLE>
<CAPTION>
Three Month Nine Month
Period Ended Period Ended
June 3, 1995 June 3, 1995
--------------------- ---------------------
Previously Previously
Reported Restated Reported Restated
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Product sales revenue $ 48,338 $ 47,938 $ 131,894 $ 130,553
Customer service revenue 9,759 9,758 28,193 28,193
---------- --------- ---------- ---------
Total revenue 58,097 57,696 160,087 158,746
Cost of products and services 30,524 30,644 85,838 86,049
---------- --------- ---------- ---------
Gross profit 27,573 27,052 74,249 72,697
Operating expenses:
Product development and
engineering expenses 5,252 5,252 15,637 15,637
Selling expenses 12,712 12,764 36,294 37,682
General and administrative
expenses 3,307 3,307 9,903 9,903
---------- --------- ---------- ---------
Total operating expenses 21,271 21,323 61,834 63,222
---------- --------- ---------- ---------
Income from operations 6,302 5,729 12,415 9,475
Interest and other expenses 1,079 1,079 2,551 2,551
---------- --------- ---------- ---------
Income before income taxes 5,223 4,650 9,864 6,924
Provision for income taxes 1,567 1,372 2,959 2,764
---------- --------- ---------- ---------
Net income $ 3,656 $ 3,278 $ 6,905 $ 4,160
========== ========= ========== =========
Net income per common share $ 0.47 $ 0.43 $ 0.90 $ 0.54
========== ========= ========== =========
Average number of common and
common equivalent shares
outstanding 7,698,939 7,698,939 7,656,653 7,656,653
========== ========= ========== =========
</TABLE>
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<PAGE> 11
5. RESTRUCTURING
During the second quarter of fiscal 1996, the Company recorded a
charge of $5.2 million ($3.6 million after-tax) related to a company-wide
restructuring of operations. The restructuring charge includes $4.7
million for severance and other costs related to a workforce reduction
(substantially all of which occurred prior to March 2, 1996) and $0.5
million of lease exit costs associated with the closing or consolidating
of certain facilities. The Company believes that annual cost savings
resulting from the restructuring will be in excess of these charges. As
of June 1, 1996, the Company had disbursed $1.7 million of the charge,
primarily for severance and lease exit costs. The Company expects to
expend the majority of the remaining balance of the charge by the end of
the calendar year, except for amounts due in installments under
longer-term severance and lease agreements.
6. LITIGATION
In October 1995, two class action complaints were filed against the
Company and certain of its officers in United States District Court in
Cedar Rapids, Iowa, seeking unspecified damages on behalf of a purported
class of purchasers of Norand stock on the ground that the defendants
violated the federal securities laws by allegedly making materially false
and misleading statements concerning the Company's results of operations
and future prospects during the period from March 20, 1995 until September
25, 1995. On November 24, 1995, a third lawsuit was filed in the same
court raising substantially the same claims on behalf of a broader
purported class of purchasers of Norand stock.
All three lawsuits were consolidated under the caption In re Norand
Corporation Securities Litigation (Master File No. C 95-323). On December
23, 1995, a single amended and consolidated complaint was filed in the
consolidated action, superseding all previous pleadings. The complaint
was filed on behalf of a purported class consisting of purchasers of
Norand stock from September 26, 1995 through November 17, 1995, and names
as defendants the Company, five of its present or former senior officers,
and Arthur Andersen LLP, the Company's independent public accountant. The
consolidated complaint alleges, among other things, that the Norand
defendants materially overstated the Company's revenues and earnings by
improperly recording sales in its Italian subsidiary and misled the market
by failing to disclose alleged problems with certain of its products that
affected its revenues in the fourth quarter of fiscal 1995.
The Company believes that all of the claims described above are
without merit and intends to vigorously defend the lawsuits. However,
there can be no assurance with respect to the outcome of the litigation.
The Company is also subject to certain legal proceedings and claims
which have arisen in the ordinary course of its business and have not been
finally adjudicated. In management's opinion, the ultimate resolution of
these matters will not be material to the Company's consolidated financial
position or results of operations.
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<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS AS A PERCENTAGE OF TOTAL REVENUES (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------- ---------------------------------------
JUNE 1, JUNE 3, JUNE 1, JUNE 3,
1996 1995 (AS RESTATED) 1996 1995 (AS RESTATED)
------------------ ------------------ ------------------ --------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales revenue $50,205 83.4% $47,938 83.1% $134,569 81.0% $130,553 82.2%
Customer service revenue 10,011 16.6% 9,758 16.9% 31,485 19.0% 28,193 17.8%
------- ----- ------- ----- -------- ----- -------- -----
Total revenues 60,216 100.0% 57,696 100.0% 166,054 100.0% 158,746 100.0%
Cost of products and services 34,315 57.0% 30,644 53.1% 100,370 60.4% 86,049 54.2%
------- ----- ------- ----- -------- ----- -------- -----
Gross profit 25,901 43.0% 27,052 46.9% 65,684 39.6% 72,697 45.8%
------- ----- ------- ----- -------- ----- -------- -----
Operating expenses:
Product development and
engineering expenses 4,208 7.0% 5,252 9.1% 16,792 10.1% 15,637 9.9%
Selling expenses 15,284 25.3% 12,764 22.1% 42,630 25.7% 37,682 23.7%
General and administrative expenses 3,586 6.0% 3,307 5.8% 13,405 8.1% 9,903 6.2%
Restructuring charge 0 0.0% 0 0.0% 5,192 3.1% 0 0.0%
------- ----- ------- ----- -------- ----- -------- -----
Total operating expenses 23,078 38.3% 21,323 37.0% 78,019 47.0)% 63,222 39.8%
------- ----- ------- ----- -------- ----- -------- -----
Income (loss) from operations 2,823 4.7% 5,729 9.9% (12,335) (7.4)% 9,475 6.0%
Interest and other expenses 1,695 2.8% 1,079 1.8% 4,486 2.7% 2,551 1.6%
------- ----- ------- ----- -------- ----- -------- -----
Income (loss) before income taxes 1,128 1.9% 4,650 8.1% (16,821) (10.1)% 6,924 4.4%
Provision (benefit) for income taxes 339 0.6% 1,372 2.4% (5,046) (3.0)% 2,764 1.7%
------- ----- ------- ----- -------- ----- -------- -----
Net income (loss) $789 1.3% $3,278 5.7% ($11,775) (7.1)% $4,160 2.7%
======= ===== ======= ===== ======== ===== ======== =====
</TABLE>
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<PAGE> 13
INTRODUCTION
Norand designs, manufactures, and markets mobile computing systems
and wireless data communication networks using radio frequency technology.
These systems automate the collection, processing and communication of
information related to product sales and distribution, inventory control
and warehouse data management. Norand systems include hand-held computers
and radio frequency terminals as well as a variety of other hardware
devices; application-specific software; communication networks; systems
integration and support services; and related peripheral items including
portable printers and bar code scanning devices.
The discussion of Norand's results of operations and financial
condition should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto appearing elsewhere in
this quarterly report.
ITALIAN SUBSIDIARY IRREGULARITIES AND RESTATEMENT OF FINANCIAL STATEMENTS
Irregularities Discovered
On September 25, 1995, the Company announced that it had discovered
irregularities during the course of the year-end audit at its Italian
subsidiary. At that time the managing director of the Italian subsidiary was
removed. The Company's investigation of the irregularities in its Italian
subsidiary continued following the initial announcement. The investigation
subsequently revealed a complex set of irregularities, which took place over a
period of time. The irregularities were facilitated by third parties, certain
of which were associated with the former managing director.
As a result of the investigation attributable to the Italian subsidiary,
the Company recorded in its 1995 and 1994 financial statements pretax charges
and costs related to sales returns, inventory losses, certain local taxes which
may not be recoverable, professional costs for the investigation, and the
settlement or anticipated settlement of numerous third party claims against the
Italian subsidiary. Included in the Company's restated results for the third
quarter and nine months ended June 3, 1995, after restatement for irregular
sales and costs, are pretax charges and costs totaling $0.1 million and $1.8
million, respectively, which result from certain local taxes which may not be
recoverable and $0.5 million in the first quarter resulting from inventory
losses. See Note 4 to Consolidated Financial Statements for a summary of the
restatement.
The Company believes that a thorough investigation has been completed in
order to determine the aggregate losses due to the irregularities. The Company
has engaged legal counsel to continue to investigate the irregularities and
pursue potential further recoveries from third parties and insurance. Such
potential recoveries have not been reflected in the accompanying financial
statements. During the first nine months of fiscal 1996 the Company settled
numerous previously identified third party claims for costs which approximated
previous estimates. No new claims have been presented that would have a
material adverse financial impact on the Company. Based upon the results of its
investigation and claim settlements, the Company does not believe that the
aggregate charges and operating losses relating to known facts and circumstances
will materially exceed the amount of recorded losses and costs. However, there
can be no assurances that additional third party claims will not be discovered
in future periods which will result in further losses related to this matter.
Such losses could be material to the consolidated results of operations in any
future period. Management does not believe that any such losses will be
material to the Company's consolidated financial position.
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<PAGE> 14
RESTRUCTURING
On January 25, 1996, the Company announced that it was reviewing its
world-wide operations. As part of its review, the Company announced a
company-wide restructuring of its operations and implemented actions
designed to improve its financial performance in the short and long term.
These actions are targeted at improving gross margins, significantly
reducing operating expenses and enhancing the capability of launching and
supporting new products and systems. The actions that the Company has
taken resulted in a restructuring charge of $5.2 million ($3.6 million
after-tax). The restructuring charge includes $4.7 million for severance
and other costs related to reductions in the Company's domestic and
international workforce (substantially all of which occurred prior to
March 2, 1996) and $0.5 million for lease exit costs associated with the
closing or consolidating of certain facilities.
While this charge reduced second quarter net income, the Company
believes that annual cost savings resulting from the restructuring will be
in excess of these charges. In addition, the Company believes that it
will be able to continue financing the cost of the restructuring from
existing working capital and the borrowing capacity of its amended credit
facility. The Company believes that the combination of increasing
revenues along with the potential savings of the restructuring initiatives
should continue to result in improved financial results. However, no
assurances can be given as to the actual extent of any savings or
improvements that might be realized or that additional actions and
additional charges against earnings might not occur in the future.
The restructuring of the Company's operations will aid its transition
to an open systems mobile computing company delivering local wireless and
remote business solutions. The transition has required changes in the
organization's size, structure and skill sets required to profitably
operate in this new environment. The Company will continue to make
critical sales channel and R&D investments to support its vertical market
solutions strategy.
The objectives of the restructuring are to:
* Reduce operating expenses
* Increase efficiencies and coordination of development
activities
* Strengthen product and systems integration support through
consolidation of resources
* Strengthen the procurement and logistics functions
* Complete the consolidation of world-wide sales and marketing
* Provide increased financial control.
The actions were taken to improve both the short and long term
performance of the business by creating a more effective marketing, sales
and support organization, with ongoing investment in new products and more
efficient manufacturing, procurement and logistics capabilities.
Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward looking statements that involve
risks and uncertainties and actual results could differ materially from
expected results. Potential risks and uncertainties include, without
limitation, continued pressures in
- 14 -
<PAGE> 15
the marketplace, the Company's ability to realize the benefits of the
announced restructuring of the Company, the future need for additional
restructuring, and the Company's ability to achieve increased revenues
from new products and markets and lower operating expenses.
RESULTS OF OPERATIONS
Revenues
Consolidated revenues for the quarter and nine months ended June 1,
1996, increased $2.5 million or 4.4% and $7.3 million or 4.6%,
respectively, compared to revenues for the same periods in the prior
fiscal year. Product revenues increased $2.3 million or 4.7% and $4.0
million or 3.1%, respectively, from the comparable prior periods. The
modest growth in product revenues is due to slower than expected sales
growth caused by component shortages and late-in-the-quarter product mix
shifts. At the end of the quarter ended June 1, 1996, the Company began
volume shipments of the new, small form factor RF terminal, the 6400
PEN*KEY(R) which was first shipped during the second quarter. Customer
service revenues increased $0.2 million or 2.6% and $3.3 million or 11.7%,
respectively, from the comparable prior periods due primarily to continued
growth in the Company's installed world-wide customer base. The growth in
customer service revenues in the third quarter of 1996 was slowed as a
result of the expiration of certain long-term maintenance contracts for
the Company's legacy products.
Gross Profit
Norand's gross profit for the quarter and nine months ended June 1,
1996, decreased $1.2 million or 4.2% and $7.0 million or 9.6%,
respectively, from the comparable prior periods. Gross profit as a
percent of total revenues decreased from 46.9% to 43.0% for the quarter
and from 45.8% to 39.6% for the nine months ended June 1, 1996. The
decrease in gross profits is due primarily to $2.4 million of inventory
write-offs in the second quarter of fiscal 1996, a continued shift in
product mix to the new PEN*KEY family of products which carry a lower
margin than the products they replace, higher costs associated with
shipments of new products, and lower margins in all markets due to
competitive pricing pressures.
The Company expects fourth quarter gross margins to remain in the
range of gross margin percentages recorded in the three and nine month
periods ended June 1, 1996. The Company expects the margins to be lower
in the fourth quarter of fiscal 1996 compared to the same period in fiscal
1995 due to the continued shift in product mix and competitive pricing
pressures, as discussed above.
Operating Expenses
Product Development and Engineering. Product development and
engineering expenses for the quarter and nine months ended June 1, 1996,
decreased $1.0 million or 19.9% and increased $1.2 million or 7.4%,
respectively, from the comparable prior periods due primarily to the
timing of costs incurred in the completion of development projects related
to the PEN*KEY family of products combined with continued development and
enhancement of other new and existing product lines. Product development
and engineering expenses as a percent of total revenue were 7.0% and 10.1%
for the quarter and nine months ended June 1, 1996, respectively, compared
with 9.1% and 9.9% for the comparable prior periods.
- 15 -
<PAGE> 16
Selling. Selling expenses for the quarter and nine months ended June
1, 1996, increased $2.5 million or 19.7% and $4.9 million or 13.1%,
respectively, from the comparable prior periods due primarily to $1.7
million of incremental bad debt reserves recorded in the third quarter of
1996 and higher sales commissions on increased revenues. Selling expenses
as a percent of total revenues were 25.3% and 25.7% for the quarter and
nine months ended June 1, 1996, respectively, compared to 22.1% and 23.7%
for the comparable periods in the prior year.
General and Administrative. General and administrative expenses for
the quarter and nine months ended June 1, 1996, increased $0.3 million or
8.4% and $3.5 million or 35.4%, respectively, from the comparable prior
periods. General and administrative expenses as a percent of total
revenues were 6.0% and 8.1% for the quarter and nine months ended June 1,
1996, respectively, compared to 5.8% and 6.2% for the comparable periods
in the prior year. The increase for the quarter ended June 1, 1996 is due
primarily to increased patent amortization compared to the third quarter
in 1995. The increase for the nine months ended June 1, 1996 is primarily
due to an additional $1.0 million of professional fees related to the
completion of the Company's Italian investigation and certain other costs,
$1.1 million of costs relative to the development, maintenance and defense
of the Company's intellectual properties, $1.2 million of depreciation,
telecommunication costs and personnel related expenses, and $0.3 million
of legal costs recorded in the first quarter of fiscal 1996 relative to
shareholder class action lawsuits.
Interest and Other Expenses
Interest and other expenses for the quarter and nine months ended
June 1, 1996, increased $0.6 million and $1.9 million, respectively, due
primarily to increased short-term debt for financing the continued growth
in the Company's foreign and domestic operations, and higher interest
rates.
Income Taxes
The Company's effective tax rate was 30.0% for the quarter and nine
months ended June 1, 1996. The effective tax rate for the quarter and
nine months ended June 1, 1996 is comparable to the same periods in fiscal
1995, exclusive of the effect of the costs and losses for the
irregularities in Italy, which were not tax benefited.
Net Income
Net income of $0.8 million and the net loss of $11.8 million for the
quarter and nine months ended June 1, 1996, respectively, compared to net
income of $3.3 million and $4.2 million for the comparable periods in
fiscal 1995. The decrease in net income for the quarter compared to the
third quarter of 1995 is due primarily to decreased margins, increased
operating expenses and increased interest and other expenses offset by a
decrease in the provision for income taxes. The net loss for the nine
months ended June 1, 1996 compared to the net income for the prior year is
due to decreased margins, increased operating expenses (which include the
restructuring charge recorded in the second quarter of 1996), and
increased interest and other expenses, offset by an income tax benefit.
- 16 -
<PAGE> 17
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operations were $6.1 million and $4.9 million for
the nine months ended June 1, 1996, and June 3, 1995, respectively. The
cash outflows from operations resulted primarily from the net loss of
$11.8 million and decreases in accounts payable and other current
liabilities offset by reduced accounts receivable and inventories.
The Company invested $10.8 million and $11.1 million in capital
equipment and intellectual properties in the nine month periods ended June
1, 1996 and June 3, 1995, respectively. Capital equipment investments
were primarily concentrated in production machinery, tooling and
equipment, office automation tools, continued investment in the
implementation of SAP business systems software, and sales and product
development equipment to support continued business growth.
The Company believes that capital equipment and systems additions as
well as working capital requirements can be funded from operations or by
existing borrowing capacity under the Company's current credit facility
which matures on December 31, 1996. The Company fully expects to be able to
obtain financing to replace the existing credit facility when it matures.
- 17 -
<PAGE> 18
NORAND CORPORATION
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
See Exhibit Index which is incorporated herein by reference.
- 18 -
<PAGE> 19
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 thereunto duly authorized.
NORAND CORPORATION
(Registrant)
Dated: July 12, 1996
N. Robert Hammer
--------------------------------
N. Robert Hammer
Chairman, President and Chief Executive Officer
Dated: July 12, 1996
Robert A. Hurd
--------------------------------
Robert A. Hurd
Controller, Chief Accounting Officer
and Assistant Treasurer
- 19 -
<PAGE> 20
NORAND CORPORATION
EXHIBIT INDEX
Exhibit No. Description
- - ----------- -----------
10(uuuu) Incentive Stock Option Agreement dated March 29, 1996,
between Norand Corporation and Thomas O. Miller
10(vvvv) Incentive Stock Option Agreement dated February 6, 1996,
between Norand Corporation and Thomas O. Miller
10(wwww) Incentive Stock Option Agreement dated March 29, 1996,
between Norand Corporation and Robert A. Hurd
10(xxxx) Incentive Stock Option Agreement dated February 6, 1996,
between Norand Corporation and Robert A. Hurd
10(yyyy) Incentive Stock Option Agreement dated January 25, 1996,
between Norand Corporation and John A. Niemzyk
10(zzzz) Incentive Stock Option Agreement dated March 29, 1996,
between Norand Corporation and John A. Niemzyk
10(aaaaa) Incentive Stock Option Agreement dated March 29, 1996,
between Norand Corporation and N. Robert Hammer
10(bbbbb) Incentive Stock Option Agreement dated March 29, 1996,
between Norand Corporation and Alan G. Bunte
10(ccccc) Incentive Stock Option Agreement dated February 6, 1996,
between Norand Corporation and Alan G. Bunte
11 Computation of Per-Share Income
27 Financial Data Schedule
- 20 -
<PAGE> 1
Exhibit 10 (uuuu)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: Thomas O. MILLER
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 03/29/1996
Per share option price: $16.50
Shares granted: 15,475
Grant number: 126
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
03/29/2001 15,475 Quarterly 03/28/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on June 29, 1996, and thereafter on each September 29,
December 29, March 29 and June 29 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on March 29, 2001. Any fractional share shall be added to the
number of shares which first become exercisable in the following quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
5/27/96 Thomas O. Miller
- - -------------------- -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 10 (vvvv)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: Thomas O. MILLER
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 02/06/1996
Per share option price: $18.00
Shares granted: 7,500
Grant number: 321
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
02/06/2001 7,500 Quarterly 02/05/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on May 6, 1996, and thereafter on each August 6,
November 6, February 6 and May 6 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on February 6, 2001. Any fractional share shall be added to
the number of shares which first become exercisable in the following
quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
5/27/96 Thomas O. Miller
- - ---------------------- -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 10 (wwww)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: Robert A. HURD
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 03/29/1996
Per share option price: $16.50
Shares granted: 4,235
Grant number: 252
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
03/29/2001 4,235 Quarterly 03/28/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on June 29, 1996, and thereafter on each September 29,
December 29, March 29 and June 29 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on March 29, 2001. Any fractional share shall be added to the
number of shares which first become exercisable in the following quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
4/23/96 Robert A. Hurd
- - ------------------- -------------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
----------------------------
<PAGE> 1
Exhibit 10 (xxxx)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: Robert A. HURD
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 02/06/1996
Per share option price: $18.00
Shares granted: 750
Grant number: 311
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
02/06/2001 750 Quarterly 02/05/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on May 6, 1996, and thereafter on each August 6,
November 6, February 6 and May 6 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on February 6, 2001. Any fractional share shall be added to
the number of shares which first become exercisable in the following
quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
4/23/96 Robert A. Hurd
- - --------------------- -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 10 (yyyy)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: John A. Niemzyk
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: January 25, 1996
Per share option price: $13.25
Shares granted: 20,000
Grant number: 343
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
------- ------ --------- -----------
<S> <C> <C> <C>
07/25/1996 2,000 End of Period 01/24/2006
01/25/2001 18,000 Quarterly 01/24/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-tenth of
the total shares on July 25, 1996, and thereafter on each October 25,
January 25, April 25 and July 25 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on January 25, 2001. Any fractional share shall be added to
the number of shares which first become exercisable in the following
quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
5/24/96 John A. Niemzyk
- - ------------------ -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 10 (zzzz)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: John A. NIEMZYK
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 03/29/1996
Per share option price: $16.50
Shares granted: 5,415
Grant number: 224
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
03/29/2001 5,415 Quarterly 03/28/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on June 29, 1996, and thereafter on each September 29,
December 29, March 29 and June 29 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on March 29, 2001. Any fractional share shall be added to the
number of shares which first become exercisable in the following quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
4/26/96 John A. Niemzyk
- - ----------------- -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 10 (aaaaa)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: NEIL HAMMER
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 03/29/1996
Per share option price: $16.50
Shares granted: 35,100
Grant number: 6
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
03/29/2001 35,100 Quarterly 03/28/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on June 29, 1996, and thereafter on each September 29,
December 29, March 29 and June 29 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on March 29, 2001. Any fractional share shall be added to the
number of shares which first become exercisable in the following quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
7/9/96 Neil Hammer
- - ----------------- ---------------------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
----------------------------
<PAGE> 1
Exhibit 10 (bbbbb)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: Alan G. BUNTE
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 03/29/1996
Per share option price: $16.50
Shares granted: 9,285
Grant number: 161
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
03/29/2001 9,285 Quarterly 03/28/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on June 29, 1996, and thereafter on each September 29,
December 29, March 29 and June 29 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on March 29, 2001. Any fractional share shall be added to the
number of shares which first become exercisable in the following quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
7/9/96 Alan G. Bunte
- - ----------------- -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 10 (ccccc)
NORAND CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
Name: Alan G. BUNTE
THIS AGREEMENT sets forth the terms of a stock option granted under the
Norand Corporation Long-Term Performance Program (the "Plan").
In consideration of the continuing services of Optionee and the covenants
set forth in this Agreement, the Company has granted to Optionee an option
(the "Option") to purchase shares of the Company's Common Stock, $.01 par
value, subject to the restrictions and conditions of this Agreement and the
terms of the Plan, which are hereby incorporated by reference herein. Each
such shares shall be purchased at the per share option price set forth on
the face of this Agreement (the "Option Price"). The Option is intended to
be an incentive stock option under Section 422 of the Internal Revenue
Code; provided, however, that to the extent that the terms of this Option
do not satisfy the requirements of Section 422, the Option shall be a non
qualified option.
<TABLE>
<S> <C>
Date of grant: 02/06/1996
Per share option price: $18.00
Shares granted: 5,000
Grant number: 303
</TABLE>
Your vesting schedule and term of exercisability for this stock option
grant are as follows:
VESTING SCHEDULE
<TABLE>
<CAPTION>
Vesting Shares Vesting Last Day
Date Vested Occurs at to Exercise
---------- ------ --------- -------------
<S> <C> <C> <C>
02/06/2001 5,000 Quarterly 02/05/2006
</TABLE>
The Option shall, therefore, first become exercisable as to one-twentieth
of the total shares on May 6, 1996, and thereafter on each August 6,
November 6, February 6 and May 6 shall become exercisable as to
one-twentieth of the total shares, with the last one-twentieth being
exercisable on February 6, 2001. Any fractional share shall be added to
the number of shares which first become exercisable in the following
quarter.
Optionee hereby agrees that the Option to acquire shares of the Company's
common stock is granted pursuant to and in accordance with the terms of the
Company's Long-Term Performance Program and the Stock Option Grant
Agreement (such Stock Option Grant Agreement being attached hereto as
Exhibit A) (the "Agreement"), both of which are incorporated herein and
made an integral part of this Agreement, Optionee further acknowledges
receipt of a copy of the Company's Long-Term Incentive Program Prospectus
and the Company's Stock Option Agreement.
This Agreement consists of the face page and the terms and conditions
attached hereto.
IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and
for the Company by its duly authorized officer, on the dates indicated
below.
7/9/96 Alan G. Bunte
- - ----------------- -----------------------------
DATE OPTIONEE
Norand Corporation:
By: James B. Harrington
--------------------------
<PAGE> 1
Exhibit 11
NORAND CORPORATION
COMPUTATION OF PER SHARE INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------------------- ------------------------------------------
June 1, 1996 June 3, 1995 June 1, 1996 June 3, 1995
(as restated) (as restated)
--------------------- --------------------- -------------------- --------------------
Fully Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted Primary Diluted
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) to common
shareholders (in thousands) $789 $789 $3,278 $3,278 ($11,775) ($11,775) $4,160 $4,160
========= ========= ========= ========= ========= ========= ========= =========
Earnings Per Share Pursuant to APB 15
Weighted average common
shares outstanding 7,624,476 7,624,476 7,498,468 7,498,468 7,570,381 7,570,381 7,439,253 7,439,253
Incremental shares outstanding
assuming exercise of weighted
average common stock options
granted pursuant to APB 101,594 166,536 198,471 198,471 0* 0* 217,400 217,400
--------- --------- --------- --------- --------- --------- --------- ---------
Average common and common
equivalent shares outstanding
pursuant to APB 15 7,726,070 7,791,012 7,696,939 7,696,939 7,570,381 7,570,381 7,656,653 7,656,653
========= ========= ========= ========= ========= ========= ========= =========
Earnings (loss) per common share
pursuant to APB 15 $0.10 $0.10 $0.43 $0.43 ($1.56) ($1.56) $0.54 $0.54
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
* Anti-dilutive
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> JUN-01-1996
<CASH> 2,929
<SECURITIES> 0
<RECEIVABLES> 70,765
<ALLOWANCES> 7,945
<INVENTORY> 36,231
<CURRENT-ASSETS> 118,633
<PP&E> 60,520
<DEPRECIATION> 34,562
<TOTAL-ASSETS> 161,873
<CURRENT-LIABILITIES> 117,666
<BONDS> 0
0
0
<COMMON> 76
<OTHER-SE> 44,131
<TOTAL-LIABILITY-AND-EQUITY> 161,873
<SALES> 166,054
<TOTAL-REVENUES> 166,054
<CGS> 100,370
<TOTAL-COSTS> 100,370
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,043
<INTEREST-EXPENSE> 4,486
<INCOME-PRETAX> (16,821)
<INCOME-TAX> (5,046)
<INCOME-CONTINUING> (11,775)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,775)
<EPS-PRIMARY> (1.56)
<EPS-DILUTED> (1.56)
</TABLE>
