* As Reported Revenue of $445 Million and $0.12 Earnings Per Share
* Normalized Revenue of $435 Million and $0.10 Earnings Per Share
* Normalized Operating Margins Reach 8.9 Percent
* Quarterly Normalized Operating Expenses Improve to $162.4 Million Teleconference 5:30 p.m. (ET) Today to Discuss Results, Dial 800-263-8506
HOLTSVILLE, N.Y., May 2 - Symbol Technologies, Inc. (NYSE: SBL), The Enterprise Mobility Company(TM), today announced as reported revenue for the first quarter, ended March 31, 2006, of $444.9 million, including a $9.9 million payment of past due royalties. This compares with first-quarter 2005 as reported revenue of $457.5 million, which included $13 million associated with an inventory transfer to a customer-owned facility, and revenue of $438.9 million in fourth-quarter 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20041029/SYMBOLOGO )
First-quarter 2006 as reported net income was $29.5 million or $0.12 per share, including a $5.2 million net benefit resulting from the past due royalty payment plus interest, along with a favorable legal settlement, partially offset by restructuring and asset impairment charges and stock-based compensation expenses. This compares with first-quarter 2005 as reported net income of $22.2 million or $0.09 per share, which included a $12.4 million net benefit associated with the inventory transfer to a customer-owned facility and tax settlements partially offset by restructuring and asset impairment charges. Fourth-quarter 2005 as reported net income was $23.9 million or $0.09 per share, which included a $1.4 million net benefit associated with a tax settlement partially offset by restructuring and asset impairment charges.
On a normalized basis, first-quarter 2006 net income was $24.3 million or $0.10 per share, excluding stock-based compensation expenses. This compares with first-quarter 2005 normalized net income of $9.7 million or $0.04 per share and fourth-quarter 2005 normalized net income of $22.6 million or $0.09 per share.
"The progress we have made in our product refresh program, penetration of new vertical markets and operational improvements has enabled us to deliver steady results. I thank Symbol's customers, partners, and especially our associates, for their contributions," said Sal Iannuzzi, Symbol president and chief executive officer. "Going forward, we will concentrate on revenue growth initiatives, such as investments in our sales force and product innovation, while also being sharply focused on overall cost containment. I am confident we will continue to deliver consistent financial performance."
First-Quarter 2006 Financial Highlights
-- On a normalized basis, first-quarter 2006 product revenue was $363.1
million versus first-quarter 2005 normalized product revenue of $371.2
million and normalized fourth-quarter 2005 product revenue of $366.4
million. Services revenue was $71.9 million versus $73.2
million in first-quarter 2005 and $72.5 million in the fourth quarter
of 2005.
-- First-quarter 2006 normalized gross profit margins were 46.2 percent
compared with 45.4 percent normalized in first-quarter 2005 and 45.6
percent normalized in the fourth quarter of 2005. Normalized operating
margins were 8.9 percent compared with 4.6 percent normalized in first-
quarter 2005 and 7.6 percent normalized in fourth-quarter 2005.
-- First-quarter 2006 normalized operating expenses were $162.4 million
compared with $181.4 million normalized in the first quarter of 2005
and $166.5 million normalized in fourth-quarter 2005.
-- The ending cash balance as of March 31, 2006, was $156.6 million
compared with $139.1 million as of December 31, 2005. The increase is
primarily attributable to $47.5 million in cash generated from
operations, partially offset by $24.6 million in debt repayment and
$9.1 million in net capital investment.
Second-Quarter 2006 Outlook
The Company currently expects second-quarter 2006 revenue to increase two to four percent from first-quarter normalized revenue of $435 million. Earnings per share in the second quarter of 2006 are currently expected to be in the range of $0.11-$0.12 per share, excluding an impact of $0.01 per share from the expensing of stock options.
Teleconference Information:
Investors are invited to listen to Symbol's conference call discussing the Company's financial results for the first quarter of 2006. The conference call will be held at 5:30 p.m. ET today. To listen to the call, visit the Company's Web site at http://www.symbol.com/investor or dial 800-263-8506 (domestic) and 719-457-2681(international) at least 10 minutes prior to commencement of the call.
Web cast Information:
To listen to a live audio cast (listen only), access http://www.symbol.com/investor and click on the link next to the microphone icon.
Replay Information: An audio replay will be available on the Company's Web site on a 24-hour non-stop basis within two hours of the conclusion of the call. An audio replay of the teleconference will be available from 8:30 p.m. ET, May 2, 2006, through midnight CT, June 2, 2006, by calling toll-free 888- 203-1112 (domestic) and 719-457-0820 (international), and entering access code 4118992.
Non-GAAP Financial Measures
In addition to including results of operations data under accounting principles generally accepted in the United States of America (U.S. GAAP), Symbol Technologies disclosed normalized results of operations data for the first quarter of 2006, fourth quarter of 2005, and the first quarter of 2005, including the effects of the restructuring, stock-based compensation expenses and certain other items, which the Securities and Exchange Commission defines as "non-GAAP financial measures." These non-GAAP financial measures should not be considered in isolation or as an alternative to results of operations data or any other measure of performance derived in accordance to U.S. GAAP. However, these non-GAAP financial measures are presented because Symbol believes they provide useful supplemental information for management and investors and allow them to perform meaningful comparisons for the Company's past and present results. For a reconciliation of these non-GAAP measures, see the tables below with the heading "Non-GAAP Financial Measures."
About Symbol Technologies
Symbol Technologies, Inc., The Enterprise Mobility Company(TM), is a recognized worldwide leader in enterprise mobility, delivering products and solutions that capture, move and manage information in real time to and from the point of business activity. Symbol enterprise mobility solutions integrate advanced data capture products, radio frequency identification technology, mobile computing platforms, wireless infrastructure, mobility software and world-class services programs. Symbol enterprise mobility products and solutions are proven to increase workforce productivity, reduce operating costs, drive operational efficiencies and realize competitive advantages for the world's leading companies. More information is available at http://www.symbol.com.
This news release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include price and product competition, dependence on new product development, reliance on major customers, customer demand for our products and services, control of costs and expenses, international growth, general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. For a further list and description of such risks and uncertainties, see the reports filed by Symbol with the Securities and Exchange Commission. Symbol disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For Symbol Technologies:
For media information:
Patricia Hall
Symbol Technologies, Inc.
631.738.5636
patricia.hall@symbol.com
For financial information:
Lori Chaitman
Symbol Technologies, Inc.
631.738.5050
lori.chaitman@symbol.com
Symbol Technologies, Inc. & Subsidiaries
Condensed Consolidated Income Statements (unaudited)
Three Months Ended *
March 31, December 31, March 31,
($ Millions, except per share data) 2006 2005 2005
Product Revenue $373.0 $366.4 $384.2
Services Revenue 71.9 72.5 73.2
Net Revenue 444.9 438.9 457.5
Cost of Revenue 234.2 238.9 251.3
Restructuring & Asset Impairment 0.8 2.3 0.7
Total Cost of Revenue 235.1 241.3 251.9
Gross Profit 209.8 197.6 205.6
Operating Expenses:
Engineering 36.7 34.2 42.4
S,G&A 128.5 132.3 139.0
Restructuring & Asset Impairment 2.0 3.3 (0.1)
Net Recovery From Legal Settlements (1.0) - -
Total Operating Expenses 166.2 169.9 181.2
Income From Operations 43.6 27.8 24.3
Other Income/(Expense), Net 3.5 (1.0) (6.6)
Income Before Income Taxes 47.1 26.8 17.8
Provision/(Benefit) For Income Taxes 17.6 2.9 (4.4)
Net Income $29.5 $23.9 $22.2
Earnings Per Share $0.12 $0.09 $0.09
Average Diluted Shares Outstanding
(in millions) 252.7 252.0 251.3
PERCENTAGE OF REVENUE
Net Revenue 100.0% 100.0% 100.0%
Cost of Revenue 52.7% 54.4% 54.9%
Restructuring & Asset Impairment 0.2% 0.5% 0.1%
Total Cost of Revenue 52.8% 55.0% 55.1%
Gross Profit 47.2% 45.0% 44.9%
Operating Expenses:
Engineering 8.3% 7.8% 9.3%
S,G&A 28.9% 30.1% 30.4%
Restructuring & Asset Impairment 0.4% 0.8% (0.0)%
Net Recovery From Legal Settlements (0.2)% 0.0% 0.0%
Total Operating Expenses 37.4% 38.7% 39.6%
Income From Operations 9.8% 6.3% 5.3%
Other Income/(Expense), Net 0.8% (0.2)% (1.4)%
Income Before Income Taxes 10.6% 6.1% 3.9%
Provision/(Benefit) For Income Taxes 4.0% 0.7% (1.0)%
Net Income 6.6% 5.4% 4.8%
* Certain numbers may differ slightly due to rounding.
Symbol Technologies, Inc. & Subsidiaries
Condensed Consolidated Income Statements (unaudited)
Non-GAAP Financial Measures
Three Months Ended *
March 31, 2006
Restructuring &
($ Millions, except per share data) As Reported Other Items Normalized
Product Revenue $373.0 $(9.9)a $363.1
Services Revenue 71.9 -- 71.9
Net Revenue 444.9 (9.9) 435.0
Cost of Revenue 234.2 (0.4)b 233.8
Restructuring & Asset Impairment 0.8 (0.8) --
Total Cost of Revenue 235.1 (1.3) 233.8
Gross Profit 209.8 (8.7) 201.1
Operating Expenses:
Engineering 36.7 (0.8)b 36.0
S, G&A 128.5 (2.0)b 126.4
Restructuring & Asset Impairment 2.0 (2.0) --
Net Recovery From Legal Settlements (1.0) 1.0 c --
Total Operating Expenses 166.2 (3.8) 162.4
Income From Operations 43.6 (4.9) 38.7
Other Income/(Expense), Net 3.5 (3.4)a 0.1
Income Before Income Taxes 47.1 (8.3) 38.8
Provision For Income Taxes 17.6 (3.1) 14.5
Net Income $29.5 $(5.2) $24.3
Earnings Per Share $0.12 $(0.02) $0.10
Average Diluted Shares Outstanding
(in millions) 252.7 252.7 252.7
PERCENTAGE OF REVENUE
Net Revenue 100.0 % 100.0 %
Cost of Revenue 52.7 % 53.8 %
Restructuring & Asset Impairment 0.2 % 0.0 %
Total Cost of Revenue 52.8 % 53.8 %
Gross Profit 47.2 % 46.2 %
Operating Expenses:
Engineering 8.3 % 8.3 %
S, G&A 28.9 % 29.1 %
Restructuring & Asset Impairment 0.4 % 0.0 %
Net Recovery From Legal Settlements (0.2)% 0.0 %
Total Operating Expenses 37.4 % 37.3 %
Income From Operations 9.8 % 8.9 %
Other Income/(Expense), Net 0.8 % 0.0 %
Income Before Income Taxes 10.6 % 8.9 %
Provision For Income Taxes 4.0 % 3.3 %
Net Income 6.6 % 5.6 %
Three Months Ended *
December 31, 2005
Restructuring &
($ Millions, except per share data) As Reported Other Items Normalized
Product Revenue $366.4 $ -- $366.4
Services Revenue 72.5 -- 72.5
Net Revenue 438.9 -- 438.9
Cost of Revenue 238.9 -- 238.9
Restructuring & Asset Impairment 2.3 (2.3) --
Total Cost of Revenue 241.3 (2.3) 238.9
Gross Profit 197.6 2.3 200.0
Operating Expenses:
Engineering 34.2 -- 34.2
S, G&A 132.3 -- 132.3
Restructuring & Asset Impairment 3.3 (3.3) --
Net Recovery From Legal Settlements -- -- --
Total Operating Expenses 169.9 (3.3) 166.5
Income From Operations 27.8 5.7 33.4
Other Income/(Expense), Net (1.0) 0.7 d (0.3)
Income Before Income Taxes 26.8 6.4 33.1
Provision For Income Taxes 2.9 7.7 10.6
Net Income $23.9 $(1.4) $22.6
Earnings Per Share $0.09 $-- $0.09
Average Diluted Shares Outstanding
(in millions) 252.0 252.0 252.0
PERCENTAGE OF REVENUE
Net Revenue 100.0 % 100.0 %
Cost of Revenue 54.4 % 54.4 %
Restructuring & Asset Impairment 0.5 % 0.0 %
Total Cost of Revenue 55.0 % 54.4 %
Gross Profit 45.0 % 45.6 %
Operating Expenses:
Engineering 7.8 % 7.8 %
S, G&A 30.1 % 30.1 %
Restructuring & Asset Impairment 0.8 % 0.0 %
Net Recovery From Legal Settlements 0.0 % 0.0 %
Total Operating Expenses 38.7 % 37.9 %
Income From Operations 6.3 % 7.6 %
Other Income/(Expense), Net (0.2)% (0.1)%
Income Before Income Taxes 6.1 % 7.6 %
Provision For Income Taxes 0.7 % 2.4 %
Net Income 5.4 % 5.1 %
* Certain numbers may differ slightly due to rounding.
(a) Metrologic payment (royalties and interest).
(b) Adoption of SFAS 123(R), Share-Based Payment.
(c) Additional proceeds received from favorable PwC settlement.
(d) Impairment of cost basis investment.
Symbol Technologies, Inc. & Subsidiaries
Condensed Consolidated Income Statements (unaudited)
Non-GAAP Financial Measures
Three Months Ended *
March 31, 2006
Restructuring &
($ Millions, except per share data) As Reported Other Items Normalized
Product Revenue $373.0 $(9.9)a $363.1
Services Revenue 71.9 -- 71.9
Net Revenue 444.9 (9.9) 435.0
Cost of Revenue 234.2 (0.4)b 233.8
Restructuring & Asset Impairment 0.8 (0.8) --
Total Cost of Revenue 235.1 (1.3) 233.8
Gross Profit 209.8 (8.7) 201.1
Operating Expenses:
Engineering 36.7 (0.8)b 36.0
S, G&A 128.5 (2.0)b 126.4
Restructuring & Asset Impairment 2.0 (2.0) --
Net Recovery From Legal Settlements (1.0) 1.0 c --
Total Operating Expenses 166.2 (3.8) 162.4
Income From Operations 43.6 (4.9) 38.7
Other Income/(Expense), Net 3.5 (3.4)a 0.1
Income Before Income Taxes 47.1 (8.3) 38.8
Provision/(Benefit) For Income Taxes 17.6 (3.1) 14.5
Net Income $29.5 $(5.2) $24.3
Earnings Per Share $0.12 $(0.02) $0.10
Average Diluted Shares Outstanding
(in millions) 252.7 252.7 252.7
PERCENTAGE OF REVENUE
Net Revenue 100.0 % 100.0 %
Cost of Revenue 52.7 % 53.8 %
Restructuring & Asset Impairment 0.2 % 0.0 %
Total Cost of Revenue 52.8 % 53.8 %
Gross Profit 47.2 % 46.2 %
Operating Expenses:
Engineering 8.3 % 8.3 %
S, G&A 28.9 % 29.1 %
Restructuring & Asset Impairment 0.4 % 0.0 %
Net Recovery From Legal Settlements (0.2)% 0.0 %
Total Operating Expenses 37.4 % 37.3 %
Income From Operations 9.8 % 8.9 %
Other Income/(Expense), Net 0.8 % 0.0 %
Income Before Income Taxes 10.6 % 8.9 %
Provision/(Benefit) For Income Taxes 4.0 % 3.3 %
Net Income 6.6 % 5.6 %
Three Months Ended *
March 31, 2005
Restructuring &
($ Millions, except per share data) As Reported Other Items Normalized
Product Revenue $384.2 $(13.0)d $371.2
Services Revenue 73.2 -- 73.2
Net Revenue 457.5 (13.0) 444.5
Cost of Revenue 251.3 (8.5)d 242.8
Restructuring & Asset Impairment 0.7 (0.7) --
Total Cost of Revenue 251.9 (9.1) 242.8
Gross Profit 205.6 (3.9) 201.7
Operating Expenses:
Engineering 42.4 -- 42.4
S, G&A 139.0 -- 139.0
Restructuring & Asset Impairment (0.1) 0.1 --
Net Recovery From Legal Settlements -- -- --
Total Operating Expenses 181.2 0.1 181.4
Income From Operations 24.3 (4.0) 20.3
Other Income/(Expense), Net (6.6) -- (6.6)
Income Before Income Taxes 17.8 (4.0) 13.7
Provision/(Benefit) For Income Taxes (4.4) 8.4 4.0
Net Income $22.2 $(12.4) $9.7
Earnings Per Share $0.09 $(0.05) $0.04
Average Diluted Shares Outstanding
(in millions) 251.3 251.3 251.3
PERCENTAGE OF REVENUE
Net Revenue 100.0 % 100.0 %
Cost of Revenue 54.9 % 54.6 %
Restructuring & Asset Impairment 0.1 % 0.0 %
Total Cost of Revenue 55.1 % 54.6 %
Gross Profit 44.9 % 45.4 %
Operating Expenses:
Engineering 9.3 % 9.5 %
S, G&A 30.4 % 31.3 %
Restructuring & Asset Impairment (0.0)% 0.0 %
Net Recovery From Legal Settlements 0.0% 0.0 %
Total Operating Expenses 39.6 % 40.8 %
Income From Operations 5.3 % 4.6 %
Other Income/(Expense), Net (1.4)% (1.5)%
Income Before Income Taxes 3.9 % 3.1 %
Provision/(Benefit) For Income Taxes (1.0)% 0.9 %
Net Income 4.8 % 2.2 %
* Certain numbers may differ slightly due to rounding.
(a) Metrologic payment (royalties and interest).
(b) Adoption of SFAS 123(R), Share-Based Payment.
(c) Additional proceeds received from favorable PwC settlement.
(d) Inventory transfer to a customer-owned facility.
Symbol Technologies, Inc. & Subsidiaries
Condensed Consolidated Balance Sheets
Balance Sheet at *
March 31, December 31, March 31,
($ Millions) 2006 2005 2005
(unaudited) (audited) (unaudited)
Assets
Cash and Cash Equivalents $156.6 $139.1 $218.2
Accounts Receivable, Net 219.0 213.0 174.1(a)
Inventories, Net 195.2 182.2 172.4
Deferred Income Taxes 186.9 172.5 180.4
Other Current Assets 31.2 22.9 27.0
Total Current Assets 788.9 729.7 772.1
Property, Plant & Equipment, Net 223.2 240.2 249.5
Intangible and Other Assets, Net 814.8 846.4 912.7
Total Assets $1,826.9 $1,816.3 $1,934.3
Liabilities & Stockholders' Equity
A/P and Accrued Expenses $347.4 $371.5 $470.1(a)
Current Portion of L.T.D. 44.4 57.9 79.2
Income Taxes Payable 11.4 10.7 9.0
Deferred Revenue 67.0 57.3 52.1
Total Current Liabilities 470.2 497.4 610.4
Long-Term Debt, less Current
Maturities 33.3 44.5 162.7
Other Liabilities and Deferred
Revenue 75.8 67.1 61.4
Total Stockholders' Equity 1,247.6 1,207.3 1,099.8
Total Liabilities and Stockholders'
Equity $1,826.9 $1,816.3 $1,934.3
Quarterly Financial Ratios
(unaudited):
Days Sales Outstanding 45 44 35
Inventory Turnover 4.8 5.3 5.8
Return on Assets 6.5% 5.3% 4.5%
Working Capital % of Revenue 17.9% 13.2% 8.8%
Current Ratio 1.7 1.5 1.3
* Certain numbers may differ slightly due to rounding.
(a) Certain reclassifications were made to previously disclosed amounts to
conform to current presentations. The balance sheet above includes a
reclassification to reflect net credit customer accounts receivable
balances as a component of accounts payable and accrued expenses and
not as a reduction of accounts receivable as was reflected in the
Company's Q1 2005 and prior filings.
Symbol Technologies, Inc. & Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
Three Months Ended *
March 31, December 31, March 31,
($ Millions) 2006 2005 2005
Cash Flows from Operating Activities
Net Income $29.5 $23.9 $22.2
Depreciation & Amortization 17.6 17.2 17.3
Other, Net 41.2 16.4 3.5
Changes in Assets & Liabilities
Accounts Receivable (6.3) (24.8) (11.6)
Inventories (17.9) (22.5) 33.2
Accounts Payable & Accrued
Expenses (24.2) 16.4 6.5
Other, Net 7.6 (1.5) 1.8
Net Cash provided by Operating
Activities 47.5 25.1 72.9
Cash Flows from Investing Activities
Expenditures for PP&E (5.5) (9.1) (21.1)
Other, Net (3.6) (4.7) (2.0)
Net Cash used in Investing Activities (9.1) (13.8) (23.1)
Cash Flows from Financing Activities
Net Changes in Debt (24.6) (26.1) (50.3)
Other, Net 3.7 (1.9) 1.1
Net Cash used in Financing Activities
(including FX) (20.9) (28.0) (49.2)
Net Change in Cash and Cash
Equivalents 17.5 (16.7) 0.6
Beginning Cash and Cash Equivalents
Balance 139.1 155.8 217.6
Ending Cash and Cash Equivalents
Balance $156.6 $139.1 $218.2
* Certain numbers may differ slightly due to rounding.
