Telxon Reports Second Quarter FY1997 Results
AKRON, Ohio, Oct. 18 /PRNewswire/ -- Telxon Corporation (Nasdaq-NNM: TLXN)
today reported results for its fiscal 1997 second quarter ended September 30,
1996.
For the quarter ended September 30, 1996, the company reported results in
line with earlier management guidance, recording revenues of $108.3 million
and a net loss of $4.7 million, or $.29 per share. This includes $.04 per
share, or $1.4 million the company booked for non-recurring costs involved
with a workforce reduction that occurred in July. The company reported
revenues of $107.0 million and net income of $2.8 million, or $.17 per share,
in the year earlier quarter.
For the first six months of fiscal 1997, Telxon recorded revenues of
$220.7 million and a net loss $9.5 million, or $.58 per share. This compares
to net income of $5.0 million, or $.31 per share, on revenues of
$210.5 million, for the same period last year.
Robert F. Meyerson, Chairman and Chief Executive Officer, stated, "During
the second quarter of fiscal 1997, we continued to address changes in market
conditions and have begun implementing the cost reduction and efficiency
improvement strategies we identified earlier. Since electing Frank E. Brick
President and Chief Operating Officer in June, we are pleased with the
leadership role he has taken in implementing significant cost reductions and
consolidations so the company can return to its five year plan of consistent
and profitable growth as soon as possible."
Frank Brick, President and Chief Operating Officer, said, "The
implementation of our new business model consists of three phases. Phase One
focuses on reducing product costs and improving gross margins, Phase Two
centers upon improving operating efficiencies and lowering the overall cost of
serving our world-wide markets, and Phase Three redesigns our infrastructure
and logistics systems to address changing market conditions more efficiently."
Brick continued, "Specific actions have either been initiated or are under
review related to each of these phases. As part of Phase One, we have
implemented a number of engineering programs aimed at reducing the cost of our
products through new design procedures, improved sourcing and proposed model
consolidations. As part of Phase Two, we have made key management changes in
sales, product marketing, product development, customer service and operations
that will drive greater efficiencies throughout our core business processes.
As part of Phase Three, all operations are under review for further
consolidation. In addition, we continue to consider strategies in which the
passive value of investments in our technical subsidiaries can be better
reflected in the company's value."
Kenneth W. Haver, Senior Vice President and Chief Financial Officer,
added, "The early benefits of these initiatives have been only partially
reflected in our fiscal 1997 Q2 results. Benefits from these phased
initiatives are expected to be fully realized over the next three to four
quarters. We expect the total impact of these initiatives under all phases,
once fully implemented, to generate overall annual cost reductions in excess
of $40 million below historical run-rates."
Haver continued, "During the quarter, we experienced a strong book-to-bill
rate, as our ending backlog increased by over $10 million. Our gross profit
margins, as a percentage of sales, are expected to increase over the next 2-3
quarters, as cost reductions are implemented and planned efficiency
improvements are more fully realized. Q2 gross profit margins were affected
by a portion of the non-recurring charges mentioned previously, and the impact
of a single large volume, low margin, customer roll-out. These two items
combined to decrease margins by 2-3%."
"Although our DSO improved slightly during the quarter, the improvement
was 5-7 days less than expected, due to a delayed installation of a single,
large customer roll-out. This collection is expected to be substantially
completed within the third quarter."
Other than the historical financial information reported above, this news
release constitutes forward-looking statements that are inherently subject to
risks and uncertainties which could cause Telxon's actual results to differ
materially from the forward-looking statements. The important factors
affecting the realization of those results include, without limitation, the
company's success in identifying and implementing appropriate cost reduction
and efficiency improvement strategies as outlined above, as well as general
and industry-specific economic conditions, the company's ability to timely
develop, introduce and gain market acceptance of new and enhanced products,
competitive pressures and rapid technological change, and its ability to
identify, acquire and manage new businesses and technologies. Reference
should be made to the discussion of these and other factors affecting Telxon's
business and results as included from time to time in the company's filings
with the Securities and Exchange Commission.
Telxon Corporation is a leading global designer and manufacturer of
wireless and mobile transaction solution systems for vertical markets. The
company integrates advanced mobile computing and wireless data communication
technology with a wide array of peripherals, application-specific software and
global technical services for its customers in more than 50 countries around
the world. Telxon's executive, engineering, marketing and sales offices are
headquartered in Akron, Ohio; its world manufacturing and domestic customer
service facilities are located in Houston, Texas. Telxon International
Division is headquartered in Brussels, Belgium. Telxon's World Wide Web site
address is: telxon.com.
Telxon Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share amounts)
September 30, March 31,
1996 1996
(Unaudited)
ASSETS
Current assets:
Cash and short-term
investments $ 16,128 $ 35,730
Accounts receivable, net 112,015 133,592
Notes and other accounts
receivable 9,931 9,522
Inventories 106,870 111,132
Prepaid expenses and other 9,540 9,939
Total current assets 254,484 299,915
Property and equipment, net 53,574 54,673
Intangible and other assets, net 38,377 34,621
Total $346,435 $389,209
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 17,335 $ 66
Current portion of long-term
debt 384 1,156
Accounts payable 33,717 59,620
Capital lease obligations due
within one year 811 897
Accrued liabilities 29,575 52,181
Total current liabilities 81,822 113,920
Capital lease obligations 1,566 1,982
Convertible subordinated
debentures 107,224 107,224
Long-term debt -- 1,331
Other long-term liabilities 3,599 3,562
Total 194,211 228,019
Stockholders' equity:
Preferred Stock, $1.00
par value per share;
500,000 shares
authorized, none
issued -- --
Common Stock, $.01 par
value per share;
50,000,000 shares
authorized, 16,099,952
and 16,096,193 shares
outstanding 162 161
Additional paid-in
capital 86,395 85,750
Retained earnings 68,597 78,096
Equity adjustment for
foreign currency
translation (1,848) (2,064)
Unearned restricted
stock awards (470) (753)
Treasury stock, 58,246 shares
at cost (612) --
Total stockholders' equity 152,224 161,190
Total $346,435 $389,209
Telxon Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share amounts)
Three Months
Ended September 30,
1996 1995
(Unaudited)
Revenues:
Product $ 89,439 $ 90,191
Customer service 18,875 16,825
Total revenues 108,314 107,016
Cost of revenues 73,979 61,500
Gross profit 34,335 45,516
Operating expenses:
Selling expenses 21,037 18,748
Product development and
engineering expenses 10,096 12,029
General and administrative
expenses 10,548 9,105
Total operating expenses 41,681 39,882
Income (loss) from operations (7,346) 5,634
Interest income 136 151
Interest expense (2,162) (1,532)
Other non-operating income (expense) (32) 355
Income (loss) before income taxes (9,404) 4,608
Provision (benefit) for income taxes (4,702) 1,797
Net income (loss) $ (4,702) $ 2,811
Earnings per common and common
equivalent share:
Net income (loss) per share $ (.29) $ .17
Average common and common equivalent
shares outstanding 16,182 16,248
Six Months
Ended September 30,
1996 1995
(Unaudited)
Revenues:
Product $183,464 $178,135
Customer service 37,233 32,422
Total revenues 220,697 210,557
Cost of revenues 150,852 121,914
Gross profit 69,845 88,643
Operating expenses:
Selling expenses 42,220 38,416
Product development and
engineering expenses 21,204 21,614
General and administrative
expenses 21,711 18,241
Total operating expenses 85,135 78,271
Income (loss) from operations (15,290) 10,372
Interest income 351 294
Interest expense (4,132) (2,698)
Other non-operating income 73 355
Income (loss) before income taxes (18,998) 8,323
Provision (benefit) for income taxes (9,499) 3,283
Net income (loss) $ (9,499) $ 5,040
Earnings per common and common
equivalent share:
Net income (loss) per share $ (.58) $ .31
Average common and common equivalent
shares outstanding 16,265 16,066
CONTACT: Alex L. Csiszar, Senior Director, Investor Relations, of Telxon Corporation, 330-873-2961 Telxon's press
releases available through Company News On-Call by fax, 800-758-5804, ext. 847150, or at prnewswire.com
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