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March 7, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Attention: Filing Desk - Stop 1-4
Gentlemen:
Re: Symbol Technologies, Inc.
Annual Report on Form 10-K
For Fiscal Year Ended
December 31, 1994
File No. 1-9802
On behalf of Symbol Technologies, Inc. (the "Company"),
I transmit for filing under the Securities Exchange Act of 1934 (the "Act"),
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994. I have been advised by the Company that the financial
statements contained in the report do not reflect any changes from the
preceding year's financial statements with respect to accounting principles or
practices or in the method of applying such principles or practices.
A certified check in the amount of $250.00 in payment of the filing
fee has been deposited in the SEC lock box account no. 910-8739 at the Mellon
Bank in Pittsburgh, PA.
If you have any questions regarding the enclosed materials, please
call the undersigned by collect telephone at (516) 244-4765.
Very truly yours,
s/Leonard H. Goldner
Leonard H. Goldner
Senior Vice President
and General Counsel
LHG:mk
March 7, 1995
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
In connection with the undersigned's Annual Report on Form 10-K for
the year ended December 31, 1994 and pursuant to Item 601(b)(4)(iii) of
Regulation S-K, the undersigned has not filed as exhibits certain instruments
with respect to long-term debt since the total amount of securities
authorized thereunder does not exceed 10% of the Registrant's total
consolidated assets. The Registrant, however, agrees to furnish a copy of
such documents to the Commission if so requested.
Very truly yours,
SYMBOL TECHNOLOGIES, INC.
By: s/Thomas G. Amato
Thomas G. Amato
Senior Vice President -
Finance and Chief
Financial Officer
TA:mk
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission file number 1-9802
SYMBOL TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 11-2308681
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
116 Wilbur Place
Bohemia, New York 11716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (516) 563-2400
Securities registered pursuant to
Section 12(b) of the Act:
Common Stock, par value $.01 New York Stock Exchange
(Title of each class) (Name of each Exchange on
which registered)
Securities registered purusant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10K. _
|_|
The aggregate market value of the voting stock held by persons other
than officers and directors (and their associates) of the registrant, as of
January 31, 1995 was approximately $570,000,000.
The number of shares outstanding of each of the registrant's classes
of common stock, as of December 31, 1994, was as follows:
Class Number of Shares
Common Stock, par value $.01 25,720,085
Documents Incorporated by Reference: The registrant's Proxy Statement to
be used in conjunction with the Annual Meeting of Shareholders to be held
on May 8, 1995 (the "Proxy Statement") is incorporated into Part III.
PART I
Item 1. Business
The Company
Symbol Technologies, Inc. ("Symbol" and, together with
its subsidiaries, the "Company"), a Delaware corporation, is the
successor by merger in 1987 to Symbol Technologies, Inc., a New
York corporation which was organized in 1973 and is the largest
manufacturer of bar code-based data capture systems. The Company
is the only corporation in its industry with in-house technology
for the design and manufacture of bar code scanning products,
portable data collection systems and radio frequency (RF) data
communications products. Linear bar codes consist of a series of
lines or bars printed on a contrasting background. By varying
the width of the bars and spaces between the bars, the bar code
is encoded with information to identify an item, which enables
the system to provide the user with relevant data about that item
(for example, its location, cost, selling price and
manufacturer). The Company is engaged in one industry segment -
the design, manufacture and marketing of bar code reading
equipment, portable data collection systems and radio frequency
data communications products which are used as strategic building
blocks in data collection systems in retail, parcel delivery and
postal service, warehousing and distribution, factory automation
and many other applications.
Company Products and Services
General
The Company develops, manufactures, sells and services
(i) portable bar code scanning products that employ laser
technology to read data encoded in bar code symbols, and (ii) a
family of portable data collection systems. The Company's bar
code scanning equipment is compatible with a wide variety of data
collection systems, including computers, electronic cash
registers and portable data collection devices. Bar code
scanners are used to enhance accurate data entry and productivity
in retail, parcel delivery and postal service, warehousing and
distribution, factory automation and many other applications.
The Company's portable data collection systems consist
of portable data collection devices, peripheral devices, software
and programming tools, and are designed to provide solutions to
specific customer needs in data collection. They are used to
collect data at remote locations and to transmit information
between these locations and the user's central data processing
facility. Data can be entered by a device which reads bar codes
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or may be keyed into memory on a numeric or alpha-numeric
keyboard. Data can be transmitted and received through direct
connection, regular telephone lines with acoustic couplers and
modems or by radio waves. A majority of the Company's portable
data collection devices include an integrated bar code reader.
Bar Code Scanning Products
Sales of the Company's bar code scanning products have
accounted for approximately 40%, 45% and 50%, respectively, of
the Company's revenues for the years ended December 31, 1994,
1993 and 1992.
The Company's bar code scanning products consists of
devices designed to scan and decode bar code symbols and transmit
data. The Company manufactures various models of its bar code
reading systems, each of which consists of a laser scanner and
interface controller. In some models, the interface controller
is integrated into the handle of the scanner. The laser scanner
reads the symbol and transmits a digitized signal to the
interface controller. The interface controller contains a
microprocessor which decodes the information received and
interfaces with the user's computer.
The Company sells several different hand-held laser
based scanners, the most important of which are the LS 2000 and
LS 3000. The LS 2000 Series is a trigger-operated, visible laser
diode-based scanner with the capability to handle contact as well
as non-contact scanning applications out to the limit of
visibility of the scanning beam. It was first introduced in
1989. Its single board design significantly reduces the cost of
the LS 2000, making it one of the lowest cost scanners produced
by the Company. The LS 2000 Series is primarily sold to point-
of-sale customers and for use in conjunction with portable data
collection devices.
The LS 3000 Series introduced in 1993, consists of
trigger-operated, visible laser diode-based scanners used to read
all common linear bar code symbologies and densities up to a
distance of 20 feet. The LS 3000 Series is particularly well-
suited for industrial and military applications because of its
rugged housing. These devices consume less than one watt of
power during scanning. Specialty versions of the LS 3000 include
long range scanners (3000 LR, ALR and XLR) and low contrast
reading capability scanners (3000 HV and VHD) both using "spot
and scan" two position triggers for ease of aiming and
visibility.
In 1993, the Company introduced the first cableless
hand-held scanner, the LS 3070. The LS 3070 transmits data via
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narrow band RF with a range of up to 50 feet from its base
station. The scanner is particularly useful in environments
where tethered scanning is inadequate.
In 1992, the Company introduced the LT 1700
LaserTouch(R), a family of visible laser-based bar code scanners
that combines the performance and accuracy of laser-based bar
code technology with scanning for applications where near contact
scanning and touch ergonomics are sufficient. These applications
typically include low volume scanning environments including
certain types of retail point-of-sale as well as work station and
portable terminal data entry. The LT 1700 competes with charge
coupled device ("CCD") bar code readers in environments where the
benefits of extended depth of field and range are not required
and cost is an important factor.
In 1992, the Company introduced the PDF 1000, the
first hand-held laser scanner designed to read PDF 417, a high-
density, high-capacity portable data file storing approximately
one kilobyte of data in a machine-readable code. PDF 417 is a
two-dimensional checkerboard-like bar code symbology which
incorporates error detection and correction capability and has
one hundred times the information capacity of a traditional
linear bar code. Unlike linear bar codes, PDF 417 can contain an
entire data record reducing or eliminating the need for an
external system of linked data storage. PDF 417 may be read by
either a laser-based bar code reader or a one- or two-dimensional
CCD bar code reader. Most other two-dimensional bar codes can
only be read by a CCD bar code reader.
The PDF 1000 decodes PDF 417 with subsecond
performance. Unlike the Company's traditional hand-held laser
scanners which trace a single laser line across a linear bar
code, the PDF 1000 scans in a rastering pattern, its laser beam
zigzagging across and down the PDF 417 symbol. The PDF 1000 is
also capable of reading traditional linear bar codes. To date,
sales of the PDF 1000 have not been material.
In addition to its hand-held scanners, the Company also
offers several families of "hands-free" scanners. Unlike the
Company's hand-held scanners, these scanners are usually
triggered by an object sensor to enable use in situations where
use of both hands is required.
In 1991, the Company introduced the LS 5000, a
miniaturized slot scanner, primarily sold to mass merchants, drug
stores, convenience stores and smaller grocery chains. The
Company believes that the LS 5000 was the first slot scanner
based upon visible laser diode scanning technology.
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In 1990, the Company began marketing bar code laser
scanner modules or scan engines which are integrated by
unaffiliated third parties into their portable computing devices.
An example of this type of product is the Delivery Information
Acquisition Device (DIAD) used by United Parcel Services ("UPS")
so that UPS can rapidly and accurately collect data from bar
coded packages, consignee signatures and other delivery
information.
In 1992, the Company introduced the SE 1000 scan
engine. The SE 1000, which measures approximately one cubic inch
and weighs about 1 ounce, enables third-party manufacturers to
integrate high performance laser scanning into a variety of
devices including hand-held computers, medical instruments,
diagnostic equipment, lottery terminals, vending machines and
robotics. With a working range of 2 to 20 inches, the SE 1000
operates at supply voltages as low as three volts, making it
ideal for integration into portable and battery-powered devices.
A version of SE 1000 is available with an integrated decoder and
RS 232 interface.
Since 1988, the Company has been selling a series of
scan modules consisting of solid state laser diode-based laser
scanners. Its latest version, the LS 1220 was introduced in 1994
and will be commercially available in the first quarter of 1995.
These compact, non-contact scanners can be integrated internally
with the user's own equipment or used independently as
fixed-mount scanners on conveyor lines or robotic arms.
In 1989, the Company introduced a series of stand-
mounted laser scanners under the ScanLamp brand name. One
version, the SL 6700 is a single line scanner. In 1994, the
Company introduced the LS 9100, a laser-diode based projection
scanner. The LS 9100 generates a large omnidirectional pattern
of twenty interlocking laser lines that can read bar codes at
various angles for high productivity scanning.
In 1992, the Company introduced "Gladiator", an
innovative arm-mounted bar code-based data transaction system
that allows portable hands-free bar code scanning, data
collection and RF data communications. The Symbol Application
Productivity System (APS) 3395 is a wearable computer system for
users who rely on the efficiency and accuracy of bar code
scanning but require the use of both hands to perform job
functions. The APS 3395 system combines three elements: the
Symbol HF 2000, a laser scanner about the size of a computer
mouse that is mounted to the back of the hand; the Symbol AP
3390, a forearm-mounted keyboard/display module; and a waist-
mounted 16-bit, DOS-based portable terminal.
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The Company also produces a series of low cost,
interface controllers. These devices permit the Company's
scanner products to easily interface with a wide range of
standardized terminals, personal computers, point-of-sale
terminals, portable terminals and dedicated computing hardware.
Product list prices for the Company's bar code scanning
equipment range between $140 to $2,800 depending on product
configuration. The Company offers discounts off list price for
quantity orders and sales are frequently made at prices below
list price.
Portable Data Collection Systems
The Company's portable data collection systems consist
of portable collection devices (or terminals), peripheral
devices, software and programming tools. These systems collect
data at remote locations and transmit information between these
locations and the user's central data processing facility and are
designed to provide data collection solutions for a variety of
applications. A majority of the Company's portable data
collection devices also include an integated bar code reader.
These systems accounted for approximately 50% of the Company's
total revenues for the year ended December 31, 1994 and
approximately 40% of the Company's total revenues for the years
ended December 31, 1993 and 1992.
Portable Collection Devices. The Company's portable
data collection terminals are microprocessor-based, lightweight
and battery-operated hand-held computers. Data may be captured
by a device which reads bar codes or may be keyed into memory via
an integrated keyboard. The data collected by the terminal can
then be transmitted from the terminal to the host computer by
direct connection through regular telephone lines with acoustic
couplers and modems (batch file transfer mode). Data may also be
transmitted instantly as it is collected by radio waves (real-
time transaction processing). Information from the Company's
terminals may be communicated to a stand-alone receiver or
computer which formats the data for input into a host computer,
or directly into a host computer by communications controllers
supplied by the Company. Depending on the model, the Company's
terminals may have up to 4.2 megabytes of Random Access Memory
(RAM) for data storage, multiple input and output capabilities
for the connection of printers, bar code readers and
communications devices. In addition, based upon customer
specifications, the terminals may also have built-in bar code
readers and various built-in communications devices for
transmission and receipt of data.
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In 1990 the Company introduced the next-generation
Spectrum One(R) cellular radio frequency network for wireless data
transactions. Installation of the network at various customer
sites began in 1991 and the network is now installed in several
thousand sites. Based on spread spectrum RF technology, Spectrum
One provides real-time wireless data communications with a host
computer for hundreds of portable and fixed-station computer
terminals and radio-integrated scanners. Unlike traditional RF-
based networks, spread spectrum installation requires no
individual site license from the FCC.
The Spectrum One system works in tandem with the LRT
3800 laser radio terminal, also introduced in 1990, as well as
other products. The LRT 3800 incorporates in a single, hand-held
unit, high-performance laser bar code scanning, a 16-bit DOS-
based portable computer and a radio modem for communication via
the Spectrum One network. Based on visible laser diode scanning
technology, the battery-operated LRT 3800 is compact and
ergonomically designed and provides up to 1.2 megabytes of memory
capacity.
The LDT 3805, also introduced in 1990, is identical to
the LRT 3800 in physical appearance. Its scanning and computing
functions are similar but it has no RF communication capability.
It is optimized for collecting and storing data, later to be
downloaded to a host computer.
Both the LRT and LDT have the capability for data entry
via bar code scanning or by using the full-function keypad. The
pair are ideal for scan-intensive applications such as receiving,
shipping, inventory control, order and shelf-price verification
as well as other applications in both retail and warehousing.
In 1989, the Company introduced the Portable Radio
Terminal (PRT), a narrow band radio frequency version of the PDT
product line. In 1990, the Company introduced another narrow
band RF terminal (RFT), with an improved (more robust) frequency
synthesized radio designed for use in warehousing and other
similar environments.
The Company's Network Systems Organization, situated in
San Jose, California is responsible for design engineering, pilot
installation, systems integration and support for both the
Company and third-party RF-based data communications systems.
The focus of the group is the design of wireless bar code data
transaction systems based on the Company's Spectrum One network
and the integration of those high-performance networks into
customer's data networks and enterprise-wide information systems.
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The PDT (Portable Data Terminal) family of general
purpose data collection terminals features advanced technology
including Very Large Scale Integrated (VLSI) circuits, which
incorporate many standardized integrated circuits into one
computer chip allowing for size and cost reductions. Also, the
PDT family employs surface mounted component technology for
reduced size and increased performance and dependability, as well
as an industry standard 8- and 16-bit microprocessors. The PDT
family includes a series of hand-held terminals which are
available with different features and at varying costs depending
on customer requirements and preferences. The PDT terminals
feature up to sixteen lines of liquid crystal display, slim
lightweight design, multiple input and output ports and up to one
megabyte of internal memory. PDT terminals have various keyboard
configurations, including a user configurable keyboard. The PDT
family was originally introduced in 1985.
In 1990, the Company introduced the PDT 3300, a 16-bit
DOS-compatible batch terminal. The PDT 3300 provides expanded
program capacity and keyboard and display flexibility coupled
with an environmentally sealed unit for use in harsh
environments. The PDT 3300 is the Company's largest selling,
non-integrated batch terminal. In 1992, the Company developed
versions of the PDT 3300 which also incorporate the Company's
Spectrum One network.
The PDT 3100 terminal, a 16-bit DOS-compatible
terminal, was introduced in 1993. Versions of the PDT 3100 also
incorporate the Company's SE 1000 scan engine and feature a
unique swivel-head scanner design which adjusts instantly for
right- or left-hand scanning operation. In 1994, the Company
introduced versions of the PDT 3100 incorporating the Company's
Spectrum One data communications network and direct or accoustic
modems for telephone line communications.
In 1993, the Company announced the co-development with
Albert Heijn of The Netherlands, Europe's largest grocery market
chain, and TNO Product Centre, a leading Dutch engineering design
firm, of a shoppers portable self checkout system. The system
uses an integrated laser scanner terminal, the LST 3803, which
has a limited keyboard and display so that shoppers can scan and
tabulate purchases as they shop. The self checkout system is
currently operational in a pilot program being conducted at an
Albert Heijn supermarket located in Geldermalsen, The
Netherlands. Although Albert Heijn is very pleased with the
results of the pilot and other food and non-food retailers have
expressed an interest in the self checkout concept, due to both
the limited trial and innovative nature of the concept, there can
be no assurance that self checkout will become a commercially
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viable concept or that it will be implemented on a wide scale
either internationally or domestically.
For certain applications in which small size, lower-
cost and one piece integrated bar code readers and terminals are
required, the Company's Datawand product line offers an
attractive alternative to the PDT family. Datawand terminals
were first introduced in 1985. The Company's principal Datawand
product, the Datawand IIB, is a self-contained optical wand bar
code reader terminal which is only 7-1/4 inches long and one inch
in diameter and weighs slightly more than two ounces. The
Datawand IIB is designed to read several standard bar codes and
has a CMOS RAM memory configuration, which can accommodate 32
kilobytes of storage, and a time clock which can automatically
record the time entry of each bar code read. The Datawand IIB is
a unique portable terminal due to its small size and weight, but
it has no display, fewer features and a limited memory compared
to the PDT terminals. Principal applications for the Datawand
IIB are parcel tracking, file tracking, market surveys and
inventory control. In 1989, the Company introduced a new optical
wand bar code reader, the Datawand III, which contains 32
kilobytes of memory and a 16 character single line display.
Although the Datawand scanners require contact with the bar code
and human motion to accomplish the reading, they offer cost-
effective solutions to certain applications.
In 1989, the Company introduced the Scanning Data
Terminal (SDT). The SDT is an 8-bit, ergonomically designed,
wand-integrated, full capability portable terminal. It has an
alpha-numeric keyboard and a self-contained contact wand bar code
reader.
In January 1994, the Company introduced a portable pen
terminal, the PPT 4100, which integrates several key technologies
for improving information management. The 20-ounce unit is a PC-
compatible hand-held terminal that incorporates pen and touch
input on a 5.5" x 3.0" screen; a graphical user interface; an SE
1000 scan engine; and a PCMCIA Spectrum One radio card. The PPT
4100 is intended for use in information-intensive applications in
retail and other environments where managers will benefit by
accessing remote databases to make real-time inventory and
purchasing decisions to significantly enhance customer service
and improve productivity.
Product list prices for the Company's portable data
collection equipment range between $400 to $4,400 depending on
product configuration. The Company offers discounts off list
price for quantity orders and sales are frequently made at prices
below list price.
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Software and Programming Tools. The Company's portable
terminal products utilize software which consists of a number of
specialized applications and communications software programs,
along with a series of program compilers and generators which run
on both IBM and IBM compatible personal computers and DEC VAX or
Micro VAX computers. The compilers and generators allow the
Company's programmers, VARs ("Value Added Resellers") and end-
user customers to generate applications software to meet specific
customer requirements. Through communications software,
information collected by hand-held terminals can be transmitted
to, and data can be received from, most commonly used computer
systems. The Company's PDT terminal architecture is designed to
allow customers to utilize advances in PDT terminals while
preserving the customer's ability to use existing software.
The Company has developed program generators for use by
customers and VARs which are designed to allow them to rapidly
develop and debug programs for use in the Company's PDT
terminals. Using these generators, customers can create their
own programs on IBM and IBM-compatible personal computers and DEC
VAX and Micro VAX computers. These programs can be down loaded
directly from the computer to the Company's terminals or by the
creation of Custom Application Modules (CAMs) which can be
inserted in the PDT. Powergen, one of the Company's program
generators, allows the Company's customers to develop simple
application programs for the PDT family of terminals.
The Company has also developed several communication
protocols designed to facilitate transmission and reception of
data between terminals and stand-alone receivers or host
computers. The Company has entered into alliances with
independent suppliers of software who assist the Company in the
development of software.
Customer Support
The Company has a customer support organization which
repairs and maintains the Company's products.
The Company's domestic customer support operations
include locations in Arkansas, California, Georgia, Illinois,
Kentucky, Michigan, Minnesota, New Jersey, New York, Texas and
Virginia. The Company also has foreign customer support offices
in Australia, Austria, Belgium, Canada, France, Germany, Italy,
Norway, Singapore, Spain and the United Kingdom. In Japan,
customer support is provided by Olympus Symbol, Inc. These
centers enhance the Company's ability to respond to its
customers' requirements for fast, efficient service.
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The Company currently offers a variety of service
arrangements to meet customer needs. The Company's On-Site
service provides for maintenance and repairs at any customer
location. Central Service provides for the performance of
maintenance and repairs at selected, centralized customer sites.
Depot Service includes maintenance and repairs at the Company's
field service offices. The Self-Service contracts generally have
a term of from one to five years. In addition, the Company
offers Time-And-Materials service on a non-contract, as-needed
basis.
The Company undertakes to correct defects in materials
and workmanship for a period of time after delivery of its
products. The period of time covered by these warranties varies
depending on the product involved as well as contractual
arrangements but is generally from three to twelve months.
Maintenance and support revenues contributed less than
10% of the Company's total revenues for the years ended December
31, 1994, 1993 and 1992.
Sales and Marketing
The Company presently markets its products domestically
and internationally through a variety of distribution channels,
including a direct sales force, original equipment manufacturers,
VARs and sales representatives and distributors. VARs distribute
the Company's products to customers while also selling to those
customers other products or services not provided by the Company.
The Company's sales organization includes domestic sales offices
located throughout the United States and foreign sales offices in
Australia, Austria, Belgium, Canada, France, Germany, Italy,
Norway, Spain and the United Kingdom. The Company is currently
represented by Olympus Symbol, Inc. in Asia and Japan although
the Company anticipates that in 1995 it will transfer its Asian
operations (other than Japan) to Singapore.
The Company currently has contractual relationships and
strategic alliances with unaffiliated partners. Through these
relationships, the Company is able to broaden its distribution
network and participate in industries other than those serviced
by the Company's direct sales force and distributors.
While the Company does monitor backlog, it does not
consider it to be a reliable predictor of financial performance
for periods other than the then current quarter because customers
generally order products for delivery within 45 days.
Accordingly, shipments made during any particular quarter
generally represent orders received either during that quarter or
shortly before the beginning of that quarter. Shipments for
orders received in a fiscal quarter are generally from products
manufactured in that quarter. The Company maintains significant
levels of raw materials to facilitate meeting delivery
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requirements of its customers. However, there can be no
assurance that during any given quarter, the Company has or can
procure the appropriate mix of raw materials in order to
accommodate any given order. In light of the levels of current
and anticipated backlog, the Company's financial performance in
any quarter is dependent to a significant degree upon obtaining
orders in that quarter which can be manufactured and delivered to
its customers in that quarter. Thus, financial performance for
any given quarter cannot be known or fully assessed until near
the end of that quarter.
Since a substantial portion of the Company's sales of
scanner products are to retail organizations which tend not to
purchase equipment such as the Company's scanner products during
the Christmas selling season, the Company's business has, from
time to time, been seasonal in the fourth quarter. The Company
believes there may again be reduced demand for its scanner
products in the fourth quarter of the current fiscal year. The
Company attempts to offset the reduced demand of the retail
industry by selling its products to other market segments,
although there is no assurance that this effort will be
successful. The Company, pursuant to contract or invoice,
normally extends 30 day payment terms to its customers. Actual
payment terms vary from time to time but generally do not exceed
90 days.
The following table sets forth certain information as
to international sales of the Company:
Year Ended
December 31,
Area 1994 1993 1992
Western Europe $141,090 $98,188 $106,794
Other $ 25,999 14,344 14,719
Foreign sales of the Company are subject to the normal
risks of foreign operations, such as protective tariffs,
export/import controls and transportation delays and
interruptions. The majority of the Company's equipment sales in
Western Europe and Asia are generally billed in foreign
currencies and are subject to currency exchange fluctuations.
Since the Company's products are principally manufactured in the
United States, sales and results of operations could be affected
by fluctuations in the U.S. dollar. Changes in the relative
value of the U.S. dollar in terms of foreign currencies in the
past have had an impact on the Company's sales and margins. The
Company undertakes hedging activities to the extent of known cash
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flow in an attempt to minimize the impact of foreign currency
fluctuations.
In 1991, the Company entered into a comprehensive
technology agreement with respect to bar code data capture
products and the formation of a joint venture with Olympus
Optical Co., Ltd. of Tokyo, Japan ("Olympus"). The parties have
entered into a new agreement, which they anticipate will close by
the end of the first quarter of 1995 which will restructure the
arrangement. Under the new arrangement, Olympus will repurchase
the Company's approximate fifty percent ownership interest in the
joint venture company, Olympus Symbol, Inc. Olympus will then
generally be the Company's sole distributor of its bar code data
capture products in Japan. The Company will generally be
Olympus' sole distributor of its bar code data capture products
throughout the world, except Japan. From time to time on a
negotiated basis, Olympus and the Company will engage in joint
development of bar code data capture products.
Manufacturing
The Company manufactures its principal products at its
Bohemia, New York facilities.
While components and supplies are generally available
from a variety of sources, the Company presently depends on a
limited number of suppliers for several components of its
equipment, certain subassemblies and certain of its products such
as its printers. Certain of the Company's products are
manufactured in Japan. The manufacture of these items is subject
to risks common to all foreign manufacturing activities such as
governmental regulation, currency fluctuations, transportation
delays and interruptions, political and economic disruptions and
the risk of imposition of tariffs or other trade barriers. Due
to the general availability of components and supplies, the
Company does not believe that the loss of any supplier or
subassembly manufacturer would have a material adverse effect on
its business. The Company has in the past, and may in the
future, encounter shortages of supplies and delays in
deliveries of necessary components. In the past, delays in
delivery of components has not had a material adverse effect on
shipments of the Company's products.
Research and Product Development
The Company believes that its future growth depends, in
large part, upon its ability to continue to apply its technology
to develop new products, improve existing products and expand
market applications for its products. The Company's research and
development projects include, among others: improvements to the
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reliability, quality and readability of its laser scanners at
increased working distances and higher density codes (including,
but not limited to, two-dimensional codes); improvements in and
expansion of its series of interface controllers; continued
development of its solid state laser diode scanners; improvements
to packaging and miniaturization technology for bar code data
capture products, portable data collection devices and integrated
bar coded data capture products; development of high performance
digital data radios, high-speed radio frequency data
communications networks and telecommunications protocols and
products; and the addition of application software to provide a
complete line of high performance interface hardware. There can
be no assurance that the Company's research and development
activities will lead to the successful introduction of new or
improved products or that the Company will not encounter delays
or problems in connection therewith. Furthermore, customers may
defer purchases of existing products in anticipation of new or
improved versions of those products. Although the Company
contemplates the introduction of new products in 1995, the
majority are scheduled for introduction in the second half of the
year. Moreover, there can be no assurance that there will not be
delays in commencing volume production of such products or that
such products will ultimately be commercially successful.
The Company uses both its own associates and from time
to time unaffiliated consultants in its product engineering and
research and development programs. Dr. Jerome Swartz, Chairman
of the Board of Directors and Chief Executive Officer of the
Company, leads the Company's research, patent and new product
development programs. From time-to-time the Company has
participated with and/or partially funded research projects
in conjunction with a number of universities including the
State University of New York at Stony Brook, Polytechnic
University of New York and Tel Aviv University in Israel.
The Company expended (including overhead charges)
approximately $16,678,000, $16,258,000 and $ 13,581,000 for
research and development during the years ended December 31,
1994, 1993 and 1992, respectively.
Competition
The business in which the Company is engaged is highly
competitive. To the Company's knowledge, many firms are engaged
in the manufacture and marketing of portable data collection
systems and bar code reading equipment utilizing laser
technology. In addition, the Company's bar code reading
equipment also competes with devices which utilize technologies
other than laser scanners such as CCDs and optical wands.
Furthermore, numerous companies, including present manufacturers
-14-
of scanners, lasers, optical instruments, microprocessors,
notebook computers, PDAs and data radios have the technical
potential to compete with the Company. Many of these firms have
far greater financial, marketing and technical resources than the
Company. The Company competes principally on the basis of
performance and the quality of its products and services.
The Company believes that its principal competitors in
the bar code scanning equipment market are AT&T Global
Information Systems (formerly NCR Corporation), INTERMEC
Corporation, Matsushita Electric Corporation, Metrologic
Instruments, Inc., NipponDenso Co., Ltd., Opticon, Inc., PSC,
Inc. (formerly Photographic Sciences Corporation), Spectra
Physics, Inc. and Welch Allyn, Inc. and that its principal
competitors in the portable data collection systems market are
Fujitsu, Ltd., Hand Held Products, Inc., INTERMEC Corporation,
LXE Inc., Norand Corporation, Mars Electronics and Telxon
Corporation. Some of the Company's competitors in the portable
data collection systems market also participate in the field
service market.
Patent and Trademark Matters
The Company files domestic and foreign patent
applications to support its technology position and new product
development. The Company owns over 160 U.S. Letters Patents
covering various aspects of the technology used in the Company's
principal products and has entered into cross-license agreements
with other companies in the laser scanning business. Key patents
covering basic hand-held laser scanning technology begin to
expire in 2000 and key patents covering scanner integrated
terminals begin to expire in 2005. In addition, the Company owns
numerous foreign companion patents. The Company has also filed
additional patent applications in the U.S. Patent and Trademark
Office as well as in foreign patent offices. The Company will
continue to file patents, both U.S. and foreign, to cover its
most recent research developments in the scanning, data
collection and RF data communications fields. The Company
believes that its patent portfolio does provide some competitive
advantage in that such patents tend to limit the number of
unlicensed competitors and permit the Company to manufacture
products which may have features which provide better performance
and/or lower cost. Although management believes that its patents
provide some competitive advantage, the Company depends more for
its success upon its proprietary know-how, innovative skills,
technical competence and marketing abilities. In addition,
because of rapidly changing technology, the Company's present
intention is not to rely primarily on patents or other
intellectual property rights to protect or establish its market
position. Instead, the Company has established an active program
-15-
to protect its investment in technology by enforcing and
licensing certain of its intellectual property rights. The
Company has entered into royalty-bearing license agreements with,
among others, Hand Held Products, Inc., INTERMEC Corporation, LXE
Inc., Norand Corporation, Olympus Optical Co., Ltd, Opticon
Sensors Europe, B.V., PSC, Inc., Spectra Physics, Inc. and Telxon
Corporation.
From time to time, at the behest of the Company or a
third party, one or more of the Company's patents has been
subject to a reexamination proceeding by the United States Patent
and Trademark Office, including patents that the Company has
licensed to other parties. As a result of such a proceeding, it
is possible that a patent may be clarified, limited, amended, or
even become unenforceable. The Company is currently
participating in such a reexamination proceeding. The Company
does not believe that such reexamination proceeding will have a
material adverse effect on its patent portfolio.
Although there are currently no pending actions, the
Company has in the past initiated several actions, both U.S. and
foreign, relating to patent infringement.
In 1990, Spectra Physics, Inc., ("Spectra") brought
suit against the Company in the United States District Court in
Eugene, Oregon seeking declaratory judgment that a hand held
laser scanner manufactured by Spectra did not infringe the
Company's patents. Spectra further contended that the Company
had violated certain state and federal antitrust laws and that
the Company was liable for unfair competition and for tortious
interference with prospective contractual relations. The Company
counterclaimed that Spectra's products infringed certain of its
patents. The Company believes that Spectra's antitrust and
unfair competition claims are without merit.
In January 1995, the parties entered into a definitive
settlement agreement which settled the litigation. Pursuant to
this agreement, all claims and counterclaims asserted in the
litigation have been dismissed and the Company has affirmed,
clarified and expanded its license with Spectra and confirmed
that Spectra is entitled to sell its SP 300 and SP 400 product
lines without any liability for patent infringement of the
Company's patents. Spectra also entered into a consent judgement
acknowledging the validity and enforceability of the Company's
U.S. Patent Nos. 4,816,660 and 5,247,162, under which it is now
licensed. Under the new agreement, Spectra Physics will pay the
Company an increased royalty for certain products.
The Company has also obtained certain domestic and
international trademark registrations for its products and
maintains certain details about its processes, products and
strategies as trade secrets.
-16-
The Company regards its software as proprietary and
attempts to protect it with copyrights, trade secret law and
international nondisclosure safeguards, as well as restrictions
on disclosure and transferability that are incorporated into its
software license agreements. The Company licenses its software
products to customers rather than transferring title. Despite
these restrictions, it may be possible for competitors or users
to copy aspects of the Company's products or to obtain
information which the Company regards as trade secrets. Computer
software generally has not been patented and existing copyright
laws afford only limited practical protection. In addition, the
laws of foreign countries generally do not protect the Company's
proprietary rights in its products to the same extent as do the
laws of the United States.
Government Regulations
The use of lasers and radio emissions are subject to
regulation in the United States and in other countries in which
the Company does business. In the United States, various Federal
agencies, including the Center for Devices and Radiological
Health of the Food and Drug Administration, the Federal
Communications Commission, the Occupational Safety and Health
Administration and various State agencies, have promulgated
regulations which concern the use of lasers and/or
radio/electromagnetic emissions standards. Member countries of
the European community have enacted or are in the process of
adopting standards concerning electrical and laser safety and
electromagentic compatability and emissions standards.
The Company believes that all of its products are in
material compliance with current standards and regulations;
however, regulatory changes may require modifications to certain
of the Company's products in order for the Company to continue to
be able to manufacture and market these products. There can be
no assurances that more stringent regulations in these or other
areas will not be issued in the future with an adverse effect on
the business of the Company. In addition, sales of the Company's
products could be adversely affected if similar or more stringent
safety standards are adopted by potential customers such as
electronic cash register manufacturers.
The Company's RF terminals include various models all
of which intentionally transmit radio signals as part of their
normal operation. The Company's LRT 3800 laser radio terminal
and certain versions of its portable terminals and its Spectrum
One cellular frequency network utilize spread spectrum radio
technology. The Company has obtained certification from the FCC
for its products which utilize this radio technology. Such
certification is valid for the life of the product unless and
until the circuitry of the product is altered in material
respects, in which case a new certification may be required.
Users of these products in the United States do not require any
-17-
license from the FCC to use or operate the product. Certain of
the Company's products transmit narrow band radio signals as part
of their normal operation. The Company has obtained
certification from the FCC for its narrow band radio products.
However, these models must not only be accepted by the FCC prior
to marketing but users of these devices must themselves also
obtain a site license from the FCC to operate them.
Associates
At December 31, 1994, the Company had 2,387 full-time
associates. Of these, approximately 2,045 were employed
domestically. The Company also employs temporary production
personnel. None of the Company's associates are represented by a
labor union. The Company considers its relationship with its
associates to be good.
-18-
Item 2. Properties
The following table states the location, primary use and approximate
size of all principal plants and facilities of the Company and its subsidiaries
and the duration of the Company's tenancy with respect to each facility.
Location Principal Use Size Tenancy/Ownership
116 Wilbur Place Corporate headquarters 92,000 square Owned (subject to
Bohemia, NY feet mortgage)
110 Wilbur Place Research and develop- 30,000 square Owned (subject to
Bohemia, NY ment and engineering feet mortgage)
12 & 13 Oaklands Park International head- 21,700 square Owned
Fishponds Road quarters, marketing feet
Wokingham, Berkshire and administration
England and U.K. headquarters
110 Orville Drive Manufacturing 110,000 square Leased: expires
Bohemia, NY feet April 6, 1998
1101 Lakeland Avenue Warehousing and 90,400 square Leased: expires
Bohemia, NY administration feet April 6, 1998
2145 Hamilton Ave. Network Systems, 51,500 square Leased: expires
San Jose, CA Engineering, Marketing feet March 31, 1999
Customer Service
340 Fischer Avenue Service and Sales 31,200 square Leased: expires
Costa Mesa, CA feet May 31, 2001
50 Orville Drive Marketing and 28,000 square Leased: expires
Bohemia, NY administration feet December 31,
1995
80 13th Avenue Warehousing 25,800 square Leased: expires
Ronkonkoma, NY feet June 30, 1995
180 Orville Drive Warehousing and 11,300 square Leased: expires
Bohemia, NY facilities management feet May 31, 1997
120 Wilbur Place Sales 7,700 square Leased: expires
Bohemia, NY feet June 30, 1995
In addition to these principal locations, the Company
and its subsidiaries also lease other offices throughout the
-19-
world, ranging in size from approximately 150 to 14,000 square
feet.
The Company also owns a 77,000 square foot facility in
Costa Mesa, California and 2.82 acres of adjacent land. The
Company has entered into a contract for the sale of these
properties for a price of $4,500,000 (in cash and notes) to the
party that currently leases the facility. The lease expires in
June 1995 and the Company anticipates that the sale will be
completed in June 1995 upon expiration of the lease.
Item 3. Legal Proceedings
In March 1993, plaintiffs filed the first Consolidated
Amended Class Action Complaint in the action entitled In re.
Symbol Technologies Class Action Litigation ("First Complaint")
in the Eastern District of New York which essentially asserted
the same alleged violations of Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder as had
been contained in the six separate purported class action suits
previously filed, and alleged a class period of March 17, 1992
through September 14, 1992. Defendants moved to dismiss the
First Complaint for failure to state a cause of action and for
failure to allege fraud with particularity. On September 14,
1993, the Court granted defendants' motion and dismissed the
First Complaint. However, the Court granted plaintiffs leave to
file a new complaint within 30 days. On October 14, 1993, a
Second Consolidated Amended Class Action Complaint ("Second
Complaint") was served. It alleges essentially similar
violations as had the prior complaints but alleges a class period
from June 8, 1992 to September 14, 1992. Defendants moved to
dismiss the Second Complaint and such motion is currently pending
before the Court. Argument on the motion was heard on February
10, 1995 and the parties are awaiting a decision from the Court.
The Company believes that the litigation is without merit and
intends to defend the action vigorously.
See also Patent and Trademark Matters for a discussion
of other litigation involving the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
-20-
Item 4A. Executive Officers of the Registrant
The following table sets forth the names, ages and all
positions and offices held by the Company's executive officers:
Jerome Swartz .......... 54 Chairman of the Board of Directors,
Chief Executive Officer
and Director
Jan Lindelow ........... 49 President, Chief Operating Officer
and Director
Frederic P. Heiman...... 55 Executive Vice President, Chief
Technology Officer, General
Manager-Network Systems
Organization and Director
Thomas G. Amato......... 49 Senior Vice President-Finance and
Chief Financial Officer
Richard Bravman......... 40 Senior Vice President-Business
Development
Brian T. Burke.......... 48 Vice President, Controller
and Chief Accounting Officer
Allen C. Creveling...... 53 Senior Vice President-Human
Resources
Leonard H. Goldner...... 47 Senior Vice President, General
Counsel and Secretary
Roger Kiel.............. 58 Senior Vice President, General
Manager-Scanners and Integrated
Terminals
Jack Lieberman.......... 58 Senior Vice President-Operations
Tomo Razmilovic......... 52 Senior Vice President-Worldwide
Sales and Services and Managing
Director-International Operations
Dr. Swartz co-founded and has been employed by the
Company from its inception in 1973. He has been the Chairman of
the Board of Directors and Chief Executive Officer of the Company
for more than the past five years. Dr. Swartz was an industry
consultant for 12 years in the areas of optical and electronic
systems and instrumentation and has a total of some 120 technical
-21-
papers and issued U.S. patents to his credit, including the
Company's basic patents in hand-held laser scanning. He is also
a trustee of the Polytechnic University of New York and an
adjunct full professor of Electrical Engineering at the State
University of New York at Stony Brook.
Mr. Lindelow joined the Company in June 1994.
Previously, he was employed by Asea Brown Boveri LTD, a Swiss
multinational conglomerate, from May 1989 until June 1994. From
January 1992 until leaving ABB, Mr. Lindelow served as President
of its U.S. Industrial and Diversified Business Segment with
responsibility for 15 companies having combined revenue in excess
of $2 Billion and from May 1989 until December 1991, as chairman
and CEO of ABB Power T&D Company Inc. Prior to that time, he was
employed for more than 18 years by Sperry Univac Corporation (now
Unisys Corporation) in various technical and senior management
positions.
Dr. Heiman joined the Company in July 1986. He had
previously been employed by Intel Corporation, a manufacturer of
semiconductor components, from May 1983 until July 1986, in a
number of positions, the most recent of which was as its Director
of Corporate Planning. Dr. Heiman is the inventor or co-inventor
of 20 issued U.S. patents, including the first MOS integrated
circuit chip, which became the basis of much of the modern
revolution in computer and electronics communications and the
first silicon storage tube used in display and scanning
applications.
Mr. Amato joined the Company in October 1990. Prior to
joining the Company he was Senior Vice President of Finance and
Administration and Chief Financial Officer for Amcast Industrial
Corp., a manufacturer of metal components, from 1985 to 1990.
Mr. Bravman has been employed by the Company for more
than the past fifteen years in various management positions.
Mr. Burke joined the Company in 1987. From October
1984 to October 1987, he was President, Chief Executive Officer
and director of Super Web Press Service Corporation, a
manufacturer of printing presses. From August 1976 to October
1984, Mr. Burke served as Vice President - Finance and Operations
of the Linotype Division of Allied Signal Corporation, a
manufacturer of photo composition equipment.
Mr. Creveling joined the Company in February 1989.
From January 1988 to January 1989, he was Chief Financial Officer
at Keystone Camera Corp. From 1971 to 1987, he was employed by
Mars Electronics, a division of M&M/Mars, where he held the position
of Vice President Finance.
-22-
Mr. Goldner joined the Company in September 1990. From
September 1979 until August 1990, he was a partner of the New
York law firm of Shereff, Friedman, Hoffman & Goodman, which firm
was securities counsel to the Company.
Dr. Kiel joined the Company in October 1990. From June
1989 to September 1990, he was president and Chief Executive
Officer of AccuPrint, Inc., a manufacturer of laser printers.
Prior to that, he served from March 1988 to June 1989 as
Executive Vice President and Chief Operating Officer of Color
Systems Technology, Inc., an electronic converter of black and
white film to color film. Dr. Kiel held the position of Vice
President and General Manager of the Printing Systems division of
Xerox Corporation from November 1965 to February 1987.
Mr. Lieberman joined the Company in May 1990. From
September 1987 to May 1990, he was Vice President and General
Manager of the Electronics Products Group of Analogic Corp. From
September 1986 to September 1987, he served as President and
Chief Executive Officer of Digital Pathways, a computer security
company. From 1964 to 1986, he was employed as General Manager
of the Santa Clara Instruments Division of Hewlett Packard
Corporation.
Mr. Razmilovic joined the Company in November 1989.
From January 1989 to August 1989, he was President and Chief
Executive Officer of Cominvest Group, a Swedish multinational
high technology company. From August 1985 to December 1988, he
was President of ICL Europe, a major European computer
manufacturer and he also led its industry marketing and software
development divisions.
-23-
PART II
Item 5. Market for the Registrant's Common Equity and
Related Security Holder Matters
The Company's Common Stock is listed on the New York
Stock Exchange. The following table sets forth, for each
quarter period of the last two years, the high and low sales
prices as reported by the New York Stock Exchange.
Year Ending: High Low
December 31, 1993 First Quarter 15 7/8 11 1/2
Second Quarter 15 1/8 12 1/8
Third Quarter 14 11 1/4
Fourth Quarter 19 3/4 13 1/8
December 31, 1994 First Quarter 20 3/4 15 5/8
Second Quarter 27 7/8 18 1/2
Third Quarter 31 1/4 25
Fourth Quarter 34 3/8 27 5/8
As of January 27, 1995 there were 1,456 holders of
record of the Company's Common Stock.
Historically, changes in the Company's results of
operations or projected results of operations have resulted in
significant changes in the market price of the Company's Common
Stock. As a result, the market price of the Company's Common
Stock has been highly volatile.
Shareholders should be aware that while the Company
does, from time to time, communicate with securities analysts, it
is against the Company's policy to disclose to such analysts any
material non-public information or other confidential commercial
information. Accordingly, shareholders should not assume that
the Company agrees with any report issued by any analyst.
Furthermore, the Company has a policy against issuing financial
forecasts or projections or confirming the accuracy of forecasts
or projections issued by others. Accordingly, to the extent that
reports issued by securities analysts contain any projections,
forecasts or opinions, such reports are not the responsibility of
the Company and have been prepared by each analyst based on his
own judgment and research.
To date, the Company has not paid any cash dividends to
its shareholders. The Company's ability to pay cash dividends is
limited by certain of the Company's loan agreements. The most
-24-
restrictive of which would generally limit dividends payable in
any year to an amount not greater than 50% of the Company's net
income. Any future declaration of cash dividends will depend
upon the Company's earnings and financial condition, capital
requirements and other relevant factors. The Company does not
intend to propose the declaration of any cash dividends in the
foreseeable future but intends to retain its earnings for use in
its business.
-25-
Item 6. Selected Financial Data
(in thousands, except per share data)
Year Ended December 31,
Operating Results: 1994 1993 1992(1) 1991 1990
Net Revenue $465,306 $359,980 $344,940 $319,376 $231,496
Earnings (Loss)
Before Cumulative
Effect of Accounting
Change $34,984 $12,445 ($15,506) $22,768 $7,576
Net Earnings (Loss) $34,984 $12,445 ($16,250) $22,768 $7,576
Earnings (Loss) Per Share:
Primary
Earnings (Loss)
Before Cumulative Effect
of Accounting Change $1.34 $0.50 ($0.65) $0.91 $0.33
Net Earnings (Loss) $1.34 $0.50 ($0.68) $0.91 $0.33
Fully-diluted
Earnings (Loss)
Before Cumulative Effect
of Accounting Change $1.33 $0.50 ($0.65) $0.90 $0.33
Net Earnings (Loss) $1.33 $0.50 ($0.68) $0.90 $0.33
Financial Position:
Total Assets $474,213 $419,615 $378,666 $354,357 $315,131
Working Capital $191,823 $141,739 $88,623 $122,812 $99,138
Long-Term Debt, less
Current Maturities $59,884 $62,077 $14,582 $21,675 $24,803
Stockholders' Equity $316,167 $258,746 $244,961 $262,791 $226,239
Weighted Average Number of Common
Shares Outstanding:
Primary 26,162 24,661 24,028 25,013 22,949
Fully-diluted 26,392 25,072 24,028 25,295 23,216
(1) Includes cumulative effect of a change in accounting for income taxes of
$744,000 or ($0.03) per share and a pre-tax charge of $40,933,000 related to a
workforce reduction and the consolidation and restructuring of the Company's
operations as described in the Notes to the Consolidated Financial
Statements.
-26-
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following table sets forth for the years indicated
(i) certain revenue and expense items expressed as a percentage of
net revenues and (ii) the percentage increase or decrease of such
items as compared to the corresponding prior year.
-27-
Year to Year Changes
Year Ending December 31,
Percentage of Revenue 1994 1993
Year Ending December 31, vs. vs.
1994 1993 1992 1993 1992 (1)
Net Revenue 100.0% 100.0% 100.0% 29.3% 4.4%
Cost of Revenue 50.1 51.6 50.3 25.5 6.9
Amortization of Software
Development Costs 2.1 1.9 1.3 46.5 54.6
Gross Profit 47.8 46.5 48.4 32.8 0.4
Operating Expenses:
Engineering 7.9 9.7 9.1 5.4 11.1
Selling, General and
Administrative 25.7 29.5 32.2 12.5 (4.4)
Amortization of Excess of
Cost Over Fair Value of
Net Assets Acquired 0.6 0.8 0.8 (0.7) 3.6
Restructuring Costs - - 11.9 - (100.0)
34.2 40.0 54.0 10.6 (22.7)
Earnings (Loss) from
Operations 13.6 6.5 (5.6) 168.4 -
Net Other Expense - - (0.4) - (100.0)
Net Interest Expense (1.1) (1.1) (0.5) 20.2 158.7
Earnings (Loss) Before
Income Taxes and
Cumulative Effect of
Accounting Change 12.5 5.4 (6.5) 199.9 -
Provision (Benefit)
for Income Taxes 5.0 1.9 (2.0) 233.2 200.0
Earnings (Loss) before
cumulative effect of
accounting change 7.5 3.5 (4.5) 181.1 -
Cumulative effect of
accounting change - - 0.2 - (100.0)
Net Earnings (Loss) 7.5% 3.5% (4.7)% 181.1% -%
(1) Year to year changes in earnings are not applicable due to the loss
incurred for the year ended December 31, 1992
-28-
For the year ended December 31, 1994
Net revenue of $465,306,000 for the year ended December 31,
1994, increased 29.3 percent over 1993. The increase in net revenue
resulted primarily from the strong performance of new scanner and
terminal products introduced during the last two years and improved
economic conditions which accelerated capital spending for the Company's
productivity-enhancing hardware and systems. The increases were evident
in both scanner and terminal sales. Foreign exchange fluctuations did
not have a material impact on net revenue for the year ended December
31, 1994.
Geographically, North America revenue increased 20.5 percent
over the prior year. International revenue increased 48.5 percent over
the prior year. North America and International revenue continue to
represent approximately two-thirds and one-third of net revenue,
respectively.
Cost of revenue (as a percentage of net revenue) of 50.1
percent for the year ended December 31, 1994, decreased from 51.6
percent in 1993. This improvement resulted primarily from a lower cost
structure as a result of the execution of the consolidation and
restructuring program adopted by the Company in December 1992 offset, in
part, by a change in the mix of the Company's products sold to a higher
percentage of lower margin terminal products. The Company believes it
has derived substantially all of the cost reductions obtainable from the
implementation of the program.
Amortization of software development costs increased to
$9,963,000 for the year ended December 31, 1994, from $6,799,000 in
1993, due to new product releases.
Engineering costs increased to $36,682,000 for the year ended
December 31, 1994, from $34,788,000 in 1993. While engineering expenses
increased 5.4 percent for the year ended December 31, 1994, from the
prior year, as a percentage of revenue such expenses were reduced to 7.9
percent for the year ended December 31, 1994, from 9.7 percent for the
prior year due to the 29.3 percent increase in revenue. The increase in
absolute dollars reflects expenses incurred in connection with the
continuing research and development of new products and the improvement
of existing products.
Selling, general and administrative expenses increased to
$119,733,000 for the year ended December 31, 1994, from $106,412,000 in
1993. While in absolute dollars selling, general and administrative
expenses increased 12.5 percent for the year ended December 31, 1994,
from the prior year, as a percentage of revenue such expenses were
reduced to 25.7 percent for the year ended December 31, 1994, from 29.5
percent in 1993. Expenses, which increased to support a higher revenue
base, were offset, in part, by cost savings realized as a result of the
Company's consolidation and restructuring program.
Net interest expense increased to $4,960,000 for the year
ended December 31, 1994, from $4,126,000 in 1993 due primarily to a full
year's interest incurred on the Company's Senior Notes, which were
issued in March 1993 described in Note 8 of Notes to Consolidated
Financial Statements.
-29-
The effective tax rate for 1994 increased to 40.0 percent from
36.0 percent in 1993. The effective rate for 1993 reflects the
retroactive reinstatement, during the third quarter of 1993, of U.S.
Federal research and development tax credits earned since July 1, 1992.
At December 31, 1994, the Company had net deferred tax assets
of approximately $13,610,000, consisting of current deferred tax assets
of $23,300,000 and long-term deferred tax liabilities of $9,690,000.
The current deferred tax assets reflect a valuation allowance of
approximately $814,000 relating to New York State investment tax credit
carryforwards which may be recaptured or may expire unutilized due to
the limited ten-year carryover period. No other valuation allowance is
necessary due to the Company's history of profitability and anticipated
future profitability.
For the year ended December 31, 1993
Net revenue of $359,980,000 for the year ended December 31,
1993, increased 4.4 percent over 1992. The increase in net revenue,
notwithstanding a 4.3 percent decrease due to unfavorable foreign
exchange fluctuations, resulted primarily from a significant rise in
worldwide terminal sales principally related to scanner-integrated
terminals. While worldwide scanner sales increased during the second
half of 1993 compared with the prior year, for the year ended December
31, 1993, they remained relatively stable compared with 1992.
Geographically, North America revenue increased 10.8 percent
over the prior year. International revenue declined 7.4 percent due to
the unfavorable exchange rate fluctuations described above. North
America and International revenue represent approximately two thirds and
one third of net revenue, respectively.
Cost of revenue (as a percentage of net revenue) of 51.6
percent for the year ended December 31, 1993, increased from 50.3
percent in 1992. This increase resulted primarily from a combination of
the impact on revenue of unfavorable fluctuations in foreign exchange
rates discussed above and a change in the mix of the Company's products
sold to a higher percentage of lower margin terminal products. The
increase was offset, in part, by reduced manufacturing costs related to
the consolidation and restructuring program adopted by the Company in
1992.
Amortization of software development costs increased to
$6,799,000 for the year ended December 31, 1993, from $4,398,000 in 1992
due to new product releases.
Engineering costs increased to $34,788,000 for the year ended
December 31, 1993, from $31,326,000 in 1992. The increase reflects
expenses incurred in connection with the continuing research and
development of new products and the improvement of existing products.
Selling, general and administrative expenses decreased to
$106,412,000 for the year ended December 31, 1993, from $111,362,000 in
1992. As a percentage of revenue, such expenses were reduced to 29.5
percent for the year ended December 31, 1993, from 32.2 percent in 1992.
The decrease primarily reflects cost reductions realized as a result of
the consolidation and restructuring program and the workforce reduction
program adopted by the Company in 1992 and to lower International
expenses due to a strengthened U.S. dollar.
-30-
Net interest expense increased to $4,126,000 for the year ended
December 31, 1993, from $1,595,000 in 1992, due to the issuance of Senior
Notes in March 1993 described in Note 8 of Notes to Consolidated Financial
Statements.
The effective tax rate for 1993 increased to 36.0 percent from
31.1 percent in 1992. The increase primarily resulted from the effect
during 1992 of certain non-recurring permanent differences between
financial accounting income and taxable income, as well as the effect of
changes in the amount of other permanent differences. The effective rate
for 1993 reflects the benefit for the Federal research and development
credit earned since July 1, 1992, as the credit was retroactively
reinstated during the third quarter of 1993.
At December 31, 1993, the Company had net deferred tax assets of
approximately $21,930,000, consisting of current deferred tax assets of
$29,166,000 and long-term deferred tax liabilities of $7,236,000. The
current deferred tax assets reflect a valuation allowance of approximately
$663,000 relating to New York State investment tax credit carryforwards
which may be recaptured or may expire unutilized due to the limited ten-
year carryover period. No other valuation allowance is necessary due to
the Company's history of profitability and anticipated future
profitability.
Liquidity and Capital Resources
The Company utilizes a number of measures of liquidity
including the following:
Year Ended December 31,
1994 1993 1992
Working Capital
(in thousands) $191,823 $141,739 $ 88,623
Current Ratio (Current
Assets to Current
Liabilities) 3.6:1 2.8:1 1.9:1
Long-Term Debt
to Capital 15.9% 19.3% 5.6%
(Long-term debt to long-
term debt plus equity)
Current assets at December 31, 1994, increased $45,852,000
from December 31, 1993, principally due to an increase in cash as a
result of cash generated both from operating activities and financing
activities, in accounts receivable due to higher operating levels, and
in inventories to support increased demand.
Current liabilities at December 31, 1994, decreased $4,232,000
from December 31, 1993, primarily due to incurred restructuring costs
and a decrease in income taxes payable, offset, in part, by an increase
in accounts payable and accrued expenses, deferred revenues and the
reclassification of the first annual installment due under the Company's
7.76% Series A Senior Notes.
-31-
The aforementioned activity resulted in a working capital
increase of $50,084,000 for the fiscal year ended December 31, 1994. As
a result, the Company's current ratio at December 31, 1994, increased to
3.6:1 from 2.8:1 at December 31, 1993.
Working capital increased to $141,739,000 for the fiscal year
ended December 31, 1993, primarily due to an increase in inventories due
to higher demand, increased accounts receivable due to higher sales levels,
increased prepaid expenses, and incurred restructuring costs.
The Company had a positive cash flow from operations (excluding
restructuring costs) during 1994 and generated an increase of $23,890,000
in cash and temporary investments during 1994, primarily as a result of net
earnings and equity proceeds of stock option exercises and the
corresponding tax benefits. The Company used cash in operations during
1993 for incurred restructuring costs and to increase inventories due to
a higher demand and to facilitate product availability to customers during
the consolidation of the Company's manufacturing operations. Such
activities were financed principally through the issuance of Senior Notes.
The Company generated overall positive cash flow for the year ended
December 31, 1993.
Property, plant and equipment expenditures for the year
ended December 31, 1994, totalled $24,790,000 compared to $18,084,000 for
the year ended December 31, 1993. Such expenditures were financed by
existing cash and temporary investments and from a $3,000,000 seven- year
loan from an agency of the State of New York. The loan, which bears
interest at 1.0 percent (payable monthly) is to be repaid in one
installment in 2001. The Company has an agreement to acquire a forty- acre
parcel of land in Suffolk County, New York for $5,000,000. The Company
does not intend to commence construction of a corporate headquarters and
manufacturing facility on this site before the end of 1995. The Company
does not have any other material commitments for capital expenditures.
At December 31, 1994, the Company had $59,884,000 in long-term
debt outstanding, excluding current maturities. In March 1993 the Company
issued $25,000,000 of its 7.76 percent Series A Senior Notes due February
15, 2003, and $25,000,000 of its 7.76 percent Series B Senior Notes due
February 15, 2003, to four insurance companies for working capital and
general corporate purposes. The Series A Senior Notes will be repaid in
equal annual installments beginning in February 1995. The Series B Senior
Notes will be repaid in equal annual installments beginning in February
1997. The Senior Notes represent $47,222,000 of the total balance
outstanding at December 31, 1994. The remaining $12,662,000 is primarily
related to the Industrial Development Bond financing completed in October
1989 and a loan from an agency of the State of New York previously
described.
The long-term debt to capital percentage at December 31, 1994
decreased to 15.9 percent from 19.3 percent at December 31, 1993, primarily
due to increased equity from the results of operations, the proceeds of
stock option exercises and the corresponding tax benefits and the decrease
in long-term debt due to reclassification to current maturities of long-
term debt.
-32-
The Company has loan agreements with three banks pursuant to
which the banks have agreed to provide lines of credit totalling
$30,000,000. As of December 31, 1994, the Company had no outstanding
borrowings under these lines. These agreements expire between June 30,
1995, and December 31, 1995.
The Company believes that it has adequate liquidity to meet its
current and anticipated needs from the results of its operations, working
capital and existing credit facilities.
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
-33-
Item 8. Financial Statements and Supplementary Data
The following documents are filed on the pages listed below, as part
of Part II, Item 8 of this report.
Document Page
1. Financial Statements and Accountants' Report:
Independent Auditors' Report F-1
Consolidated Financial Statements:
Balance Sheets as of December 31, 1994 and 1993 F-2
Statements of Operations for the Years Ended F-3
December 31, 1994, 1993 and 1992
Statements of Stockholders' Equity for the F-4
Years Ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the Years Ended F-5
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements F-6
Notes 1-14 through
F-17
2. Financial Statement Schedules:
Schedule VIII S-1
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
-34-
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors:
The section entitled "Nominees for Election"
contained in the Proxy Statement is hereby
incorporated by reference.
(b) Identification of Executive Officers:
See PART I of this Form 10-K.
(c) Section 16(a) Reporting Delinquencies:
The section entitled "Compliance with
Section 16(a) of the Securities Exchange Act"
contained in the Proxy Statement is hereby
incorporated by reference.
Item 11. Executive Compensation
The section entitled "Management Remuneration and Transactions"
contained in the Proxy Statement is hereby incorporated by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The sections entitled "Principal Shareholders" and "Security
Ownership of Management" contained in the Proxy Statement are
hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
The section entitled "Management Remuneration and Transactions"
contained in the Proxy Statement is hereby incorporated by
reference.
-35-
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) 1. FINANCIAL STATEMENTS:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1994 and 1993
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Schedules:
VIII Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of conditions
under which they are required or because the required information
is given in the consolidated financial statements or notes thereto.
Individual financial statements of the Company are omitted as the
Company is primarily an operating company and the subsidiaries
included in the consolidated financial statements filed are
substantially wholly-owned and are not indebted to any person other
than the parent in amounts which exceed 5% of total consolidated
assets at the date of the latest balance sheet filed, excepting
indebtedness incurred in the ordinary course of business which is
not overdue and which matures within one year from the date of its
creation, whether evidenced by securities or not, and indebtedness
which is collateralized by the parent by guarantee, pledge,
assignment or otherwise.
-36-
3.Exhibits
Exhibit
3.1 Certificate of Incorporation of Symbol
Technologies, Inc. (Incorporated by
reference to Exhibit 3.1 to the Form
8-B Registration No. 0-9028, filed
with the Commission on November 23,
1987 (the "Form 8-B").)
3.2 By-laws of the Company as currently in
effect. (Incorporated by reference to
Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1988 (the
"December 1988 Form l0-K").)
4.1 Form of Certificate for Shares of the
Common Stock of the Company.
(Incorporated by reference to Exhibit
4.1 of the Form 8-B.)
10.1 1991 Employee Stock Option Plan. (Incorporated by reference to
Exhibit 10.1 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 (the "1991 Form 10-K").)
10.2 1990 Non-Executive Stock Option Plan
as amended. (Incorporated by reference to Exhibit 4.1 to
Registration Statement No. 33-78622 on Form S-8.)
10.3 1987 Consultant Stock Option Plan,
as amended. (Incorporated by reference to Exhibit 10.3
of the 1991 Form 10-K.)
10.4 Employment Agreement by and between
the Company and Jerome Swartz,
dated as of July 1, 1990. (Incorporated
by reference to Exhibit 10.5 of the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1990 (the "1990 Form 10-K").)
10.5 Employment Agreement by and between
the Company and Frederic P. Heiman,
dated as of July 1, 1990. (Incorporated
by reference to Exhibit 10.8 of the 1990
Form 10-K.)
-37-
10.6 Employment Agreement by and between the Company and
Tomo Razmilovic, dated as of June 1, 1993 and an
Employment Agreement by and between Symbol Technologies
Limited and Tomo Razmilovic, dated as of June 1, 1993.
(Incorporated by reference to Exhibit 10.7 of the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.)
10.7 Employment Agreement by and between the Company and Jan Lindelow,
dated as of June 12, 1994.
10.8 Employment Agreement by and between
the Company and Raymond Martino, dated
as of June 12, 1994.
10.9 Form of 1997 Stock Purchase Warrant
issued to directors. (Incorporated by
reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1988.)
10.10 Form of 2000 Stock Purchase Warrant issued
to directors. (Incorporated by reference to
Exhibit 10.11 to the 1991 Form 10-K.)
10.11 1994 Directors Stock Option Plan. (Incorporated
by reference to Exhibit 4.1 to Registration
Statement No. 33-78678 on Form S-8.)
10.12 Summary of Profit Sharing Bonus Plan.
(Incorporated by reference to Exhibit
10.22 to the December 1988 Form 10-K.)
10.13 Executive Retirement Plan, as amended.
(Incorporated by reference to Exhibit
10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1989 (the "1989 Form
10-K").)
10.14 Lease Agreement and Amended and
Restated Lease Agreement dated as of
October 1, 1989 between Suffolk County
Industrial Development Agency and
Symbol Technologies, Inc.
(Incorporated by reference to Exhibit
10.15 to the 1989 Form 10-K.)
10.15 Form of Note Agreements dated as of February 15, 1993
relating to the Company's 7.76% Series A and Series B
Senior Notes due February 15, 2003 (Incorporated by reference to
Exhibit 10.14 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992.)
21. Subsidiaries.
-38-
23. Consent of Deloitte & Touche
(b) Reports on Form 8-K
Not Applicable
27. Financial Data Schedule - For electronic filing purposes only.
-39-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SYMBOL TECHNOLOGIES, INC.
(Registrant)
By: s/Jerome Swartz
Jerome Swartz
Chairman of the Board
Dated: March 3, 1995
-40-
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
s/Jerome Swartz Chairman of the March 3, 1995
Jerome Swartz Board and Director
(Principal Executive
Officer)
s/Jan Lindelow Director
Jan Lindelow March 3, 1995
s/Raymond R. Martino Director March 3, 1995
Raymond R. Martino
s/Harvey P. Mallement Director March 3, 1995
Harvey P. Mallement
s/Frederic P. Heiman Director March 3, 1995
Frederic P. Heiman
s/Saul P. Steinberg Director March 3, 1995
Saul P. Steinberg
s/Lowell C. Freiberg Director March 3, 1995
Lowell C. Freiberg
s/George Bugliarello Director March 3, 1995
George Bugliarello
s/Charles Wang Director March 3, 1995
Charles Wang
s/Thomas G. Amato Senior Vice President- March 3, 1995
Thomas G. Amato Finance (Chief Financial
Officer)
s/Brian T. Burke Vice President and March 3, 1995
Brian T. Burke Controller (Chief
Accounting Officer)
-41-
SYMBOL TECHNOLOGIES, INC.
AND SUBSIDIARIES
------
CONSOLIDATED FINANCIAL STATEMENTS
COMPRISING ITEM 8 AND SCHEDULE LISTED IN THE
INDEX AT ITEM 14(a)2 OF ANNUAL REPORT ON FORM 10-K
TO SECURITIES AND EXCHANGE COMMISSION FOR THE
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
I N D E X
PAGE
Independent auditors' report F-1
Consolidated financial statements:
Balance sheets F-2
Statements of operations F-3
Statements of stockholders' equity F-4
Statements of cash flows F-5
Notes to consolidated financial statements (1-14) F-6 through F-17
Additional financial information pursuant to the
requirements of Form 10-K:
Schedule:
VIII - Valuation and qualifying accounts S-1
Schedules not listed above have been omitted because they are either not
applicable or the required information has been given elsewhere in the
consolidated financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Symbol Technologies, Inc.
Bohemia, New York
We have audited the accompanying consolidated balance sheets of Symbol
Technologies, Inc. and subsidiaries as of December 31, l994 and l993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994. Our
audits also included the financial statement schedule listed in the index at
Item 14(a)2. These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Symbol Technologies, Inc. and
subsidiaries as of December 31, 1994 and 1993 and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1994 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set
forth therein.
As discussed in Note 9 to the consolidated financial statements, in 1992 the
Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109.
/s/ DELOITTE & TOUCHE LLP
Jericho, New York
February 9, l995
F-1
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except stock par value)
December 31, December 31,
ASSETS 1994 1993
CURRENT ASSETS:
Cash, including temporary investments of
$27,874 and $1,326, respectively $ 31,389 $ 7,499
Accounts receivable, less allowance for doubtful
accounts of $7,269 and $5,112, respectively 96,827 90,106
Inventories, net 101,038 82,885
Deferred income taxes 23,300 29,166
Prepaid expenses and other current assets 13,568 10,614
TOTAL CURRENT ASSETS 266,122 220,270
PROPERTY, PLANT AND EQUIPMENT, net 71,705 63,200
INTANGIBLE ASSETS, net 98,788 99,887
SOFTWARE DEVELOPMENT COSTS, net 18,558 17,276
OTHER ASSETS 19,040 18,982
$474,213 $419,615
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 60,635 $ 56,642
Current portion of long-term debt 5,285 2,586
Income taxes payable 1,382 3,283
Deferred revenue 6,840 5,477
Accrued restructuring costs 157 10,543
TOTAL CURRENT LIABILITIES 74,299 78,531
LONG-TERM DEBT, less current maturities 59,884 62,077
DEFERRED REVENUE 3,639 2,981
OTHER LIABILITIES 20,224 17,280
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00; authorized
10,000 shares; none issued or outstanding - -
Common stock, par value $.01; authorized
40,000 shares; issued 26,719 shares
and 24,716 shares, respectively 267 247
Additional paid-in capital 234,798 201,885
Cumulative translation adjustments (8,187) (5,317)
Retained earnings 109,589 74,605
336,467 271,420
Less:
Treasury stock at cost, 998 shares and
717 shares, respectively (20,300) (12,674)
316,167 258,746
$474,213 $419,615
See notes to consolidated financial statements
F-2
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
Year ended December 31,
1994 1993 1992
NET REVENUE $465,306 $359,980 $344,940
COST OF REVENUE 232,889 185,617 173,567
AMORTIZATION OF SOFTWARE
DEVELOPMENT COSTS 9,963 6,799 4,398
GROSS PROFIT 222,454 167,564 166,975
OPERATING EXPENSES:
Engineering 36,682 34,788 31,326
Selling, general and
administrative 119,733 106,412 111,362
Amortization of excess of
cost over fair value of
net assets acquired 2,773 2,793 2,697
Restructuring costs - - 40,933
159,188 143,993 186,318
EARNINGS (LOSS) FROM OPERATIONS 63,266 23,571 (19,343)
OTHER (EXPENSE)/INCOME:
Other income - - 3,200
Other expense - - (4,768)
Interest income 352 537 472
Interest expense (5,312) (4,663) (2,067)
(4,960) (4,126) (3,163)
EARNINGS (LOSS) BEFORE INCOME
TAXES AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 58,306 19,445 (22,506)
PROVISION (BENEFIT) FOR INCOME
TAXES 23,322 7,000 (7,000)
EARNINGS (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 34,984 12,445 (15,506)
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE - - 744
NET EARNINGS (LOSS) $ 34,984 $ 12,445 ($ 16,250)
EARNINGS (LOSS) PER SHARE:
On Earnings (Loss) before
Cumulative Effect of
Accounting Change:
Primary $1.34 $0.50 ($0.65)
Fully-diluted $1.33 $0.50 ($0.65)
On Cumulative Effect of
Accounting Change:
Primary $ - $ - ($0.03)
Fully-diluted $ - $ - ($0.03)
On Net Earnings (Loss):
Primary $1.34 $0.50 ($0.68)
Fully-diluted $1.33 $0.50 ($0.68)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Primary 26,162 24,661 24,028
Fully-diluted 26,392 25,072 24,028
See notes to consolidated financial statements
F-3
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(All amounts in thousands, except stock par value)
Common Stock
$.01 Par Value
Additional Cumulative Total
Shares Paid-in Translation Retained Treasury Stockholders'
Issued Amount Capital Adjustments Earnings Stock Equity
BALANCE, DECEMBER 31, 1991 23,948 $239 $192,539 ($1,065) $78,410 ($ 7,332) $262,791
Exercise of stock options 375 4 5,044 - - - 5,048
Exercise of warrants 13 - 40 - - - 40
Purchase of treasury shares - - - - - (3,461) (3,461)
Translation adjustments - - - (3,207) - - (3,207)
Net loss - - - - (16,250) - (16,250)
BALANCE, DECEMBER 31, 1992 24,336 243 197,623 (4,272) 62,160 (10,793) 244,961
Exercise of stock options 376 4 4,239 - - - 4,243
Exercise of warrants 4 - 23 - - - 23
Purchase of treasury shares - - - - - (1,881) (1,881)
Translation adjustments - - - (1,045) - - (1,045)
Net earnings - - - - 12,445 - 12,445
BALANCE, DECEMBER 31, 1993 24,716 247 201,885 (5,317) 74,605 (12,674) 258,746
Exercise of stock options 1,993 20 32,803 - - - 32,823
Exercise of warrants 10 - 110 - - - 110
Purchase of treasury shares - - - - - (7,626) (7,626)
Translation adjustments - - - (2,870) - - (2,870)
Net earnings - - - - 34,984 - 34,984
BALANCE, DECEMBER 31, 1994 26,719 $267 $234,798 ($8,187) $109,589 ($20,300) $316,167
See notes to consolidated financial statements
F-4
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
Year ended December 31,
1994 1993 1992
Cash flows from operating activities:
Net earnings (loss) $34,984 $ 12,445 ($16,250)
Adjustments to reconcile
net earnings (loss)
to net cash from operating activities:
Cumulative effect of accounting change - - 744
Depreciation and amortization of
property, plant and equipment 15,263 12,671 15,240
Other amortization 13,756 13,576 10,040
Provision for losses on accounts
receivable 2,336 1,823 2,119
Deferred income taxes 5,854 1,906 (18,560)
Changes in assets and liabilities, net of
effects from acquisitions:
Accounts receivable (10,614) (13,610) (16,829)
Inventories (18,914) (22,195) 2,365
Prepaid expenses and other current
assets (2,954) (3,530) 2,837
Software development cost (11,245) (5,590) (9,058)
Intangible assets (2,289) (1,862) (4,938)
Other assets (463) (6,458) (7,321)
Accounts payable and accrued expenses 3,389 18,104 1,604
Income taxes payable (1,901) (3,016) 3,849
Accrued restructuring costs (10,386) (23,985) 34,528
Other liabilities and deferred revenue 4,977 (3,671) 2,774
Net cash provided by (used in)
operating activites 21,793 (23,392) 3,144
Cash flows from investing activities:
Expenditures for property, plant
and equipment (24,790) (18,084) (14,974)
Other investing activities, net 720 186 170
Net cash used in investing
activities (24,070) (17,898) (14,804)
Cash flows from financing activities:
Proceeds from issuance of notes payable 3,000 50,000 7,500
Principal repayments of notes payable
and long-term debt (2,494) (10,065) (6,860)
Exercise of stock options and
warrants 32,933 4,266 5,088
Purchase of treasury shares (7,626) (1,881) (3,461)
Net cash provided by financing
activities 25,813 42,320 2,267
Effects of exchange rate changes on cash 354 (398) (1,043)
Net increase (decrease) in cash and
temporary investments 23,890 632 (10,436)
Cash and temporary investments,
beginning of year 7,499 6,867 17,303
Cash and temporary investments, end
of year $ 31,389 $ 7,499 $ 6,867
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 5,177 $ 5,172 $ 1,983
Income taxes $ 7,513 $ 4,714 $ 2,711
See notes to consolidated financial statements
F-5
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Consolidation
The consolidated financial statements include the accounts of Symbol
Technologies, Inc. and its subsidiaries (the "Company"), substantially all
of which are wholly-owned. Significant intercompany transactions and balances
have been eliminated in consolidation.
b. Temporary Investments
Temporary investments include highly liquid investments with original
maturities of three months or less and consist of money market funds and
time deposits at December 31, 1994, and 1993. Temporary investments are
stated at cost, which approximates market value. These investments are not
subject to significant market risk.
c. Inventories
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market.
d. Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation and
amortization is provided on a straight-line basis over the following
estimated useful lives:
Buildings and improvements 15 to 40 years
Machinery and equipment 2 to 5 years
Furniture, fixtures and office equipment 5 to 10 years
Leasehold improvements (limited to terms
of the leases) 2 to 10 years
e. Intangible Assets
The excess of cost over fair value of net assets acquired is generally
being amortized on the straight-line method over 40 years.
Patents and trademarks, including costs incurred in connection with the
protection of patents, are amortized over their estimated useful lives, not
exceeding 17 years, using the straight-line method.
f. Software Development Costs
The Company capitalizes costs incurred for internally developed product
software where economic and technological feasibility has been established
and for qualifying purchased product software. Capitalized software costs
are amortized on a straight-line basis over the estimated useful product
lives (normally three years).
F-6
g. Research and Development Expenses
The Company expenses all research and development costs as incurred. The
Company incurred research and development expenses of approximately
$16,678,000, $16,258,000, and $13,581,000, for the years ended December 31,
1994, 1993 and 1992, respectively, which are classified in engineering
expenses.
h. Revenue Recognition
Revenue for sales of the Company's products is recognized upon shipment. In
conjunction with these sales, field service maintenance agreements are sold
for certain products. When such revenue is recorded prior to providing repair
and maintenance service, it is deferred and recognized over the term of the
related agreements.
i. Income Taxes
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS 109")
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
Company's financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the differences between
the financial accounting and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse.
Investment, research and development and other tax credits are accounted for
by the flow-through method.
The cumulative amount of undistributed earnings of foreign subsidiaries at
December 31,l994 approximates $9,322,000. The Company does not provide
deferred taxes on undistributed earnings of foreign subsidiaries since the
Company anticipates no significant incremental U.S. income taxes on the
repatriation of these earnings as tax rates in foreign jurisdictions
generally approximate or exceed the U.S. Federal rate.
j. Earnings Per Share
Primary and fully-diluted earnings per share are based on the weighted
average number of shares of common stock and common stock equivalents
(options and warrants) outstanding during the period, computed in accordance
with the treasury stock method. In 1992, weighted average common stock
equivalents were excluded from the loss per share calculation as their
inclusion would have been anti-dilutive.
k. Foreign Currency Translation and Transactions
Assets and liabilities of foreign subsidiaries are translated at year-end
exchange rates. Results of operations are translated using the average
exchange rates prevailing throughout the year. Gains and losses from foreign
currency transactions are included in net earnings for the year and are not
material. Exchange rate changes arising from translation are included in the
cumulative translation adjustments component ofstockholders' equity.
The Company has only limited involvement with derivative financial instruments
and does not use them for trading purposes. The Company enters into foreign
currency forward exchange contracts to hedge a portion of its intercompany
accounts receivable transactions. The effect of this practice is to minimize
the impact of foreign exchange rate movements on the Company's operating
results. The Company's hedging activities do not subject the Company to
exchange rate risk because gains and losses on these contracts offset losses
and gains on the related intercompany receivables being hedged.
As of December 31, 1994, the Company had no material forward exchange
contracts outstanding. The forward exchange contracts generally have
maturities that do not exceed 12 months and require the Company to exchange
foreign currencies for U.S. dollars at maturity, at rates agreed to at
inception of the contracts.
F-7
2. INVENTORIES
December 31, December 31,
l994 1993
(in thousands)
Raw materials $ 46,442 $ 48,463
Work-in-process 8,485 4,887
Finished goods 46,111 29,535
$101,038 $ 82,885
3. PROPERTY, PLANT AND EQUIPMENT
December 31, December 31,
l994 1993
(in thousands)
Land $ 4,999 $ 4,869
Buildings and improvements 13,635 12,781
Machinery and equipment 62,830 57,883
Furniture, fixtures and office
equipment 34,640 30,089
Leasehold improvements 9,092 5,572
Assets held for sale 4,723 4,723
129,919 115,917
Less: Accumulated depreciation and
amortization 58,214 52,717
$ 71,705 $ 63,200
Assets held for sale, stated at the lower of cost or estimated realizable
value, include land and a building in Costa Mesa, California, that will be
sold as a result of the consolidation and restructuring discussed in Note 7.
The Company has entered into a contract for the sale of these properties to
the party that currently leases the facility. The lease expires in June
1995 and the Company anticipates that the sale will be completed in June
1995, upon expiration of the lease.
4. INTANGIBLE ASSETS
December 31, December 31,
l994 1993
(in thousands)
Excess of cost over fair value of
net assets acquired $102,695 $102,695
Patents, trademarks and purchased
technologies 18,666 16,264
Executive retirement plan
unrecognized prior service
costs 1,173 1,286
122,534 120,245
Less: Accumulated amortization 23,746 20,358
$ 98,788 $ 99,887
F-8
5. SOFTWARE DEVELOPMENT COSTS
Year Ended December 31,
l994 1993 1992
(in thousands)
Beginning of year $17,276 $18,485 $13,825
Amounts capitalized 11,245 5,590 9,058
28,521 24,075 22,883
Less: Amortization 9,963 6,799 4,398
End of year $18,558 $17,276 $18,485
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
December 31, December 31,
l994 1993
(in thousands)
Accounts payable $24,192 $29,261
Accrued payroll, bonuses, fringe
benefits and payroll taxes 21,208 13,286
Other accrued expenses 15,235 14,095
$60,635 $56,642
7. RESTRUCTURING COSTS
In December 1992 the Company announced a program to restructure its operations
by consolidating engineering and manufacturing operations and streamlining the
sales, marketing and finance and administrative departments along functional
lines. A pre-tax charge of $34,933,000 was accrued to cover costs of the
program including associate severance and related costs, lease terminations,
transfer of manufacturing and engineering operations and losses on asset
dispositions.
In August 1992 the Company implemented a workforce reduction designed to
reduce costs and improve operating efficiencies. Pre-tax costs of $6,000,000,
principally for associate severance and other related costs, were recorded in
connection with this program.
8. LONG-TERM DEBT
December 31, December 31,
1994 1993
(in thousands)
Senior Notes (a) $50,000 $50,000
Industrial Development Bonds (b) 11,844 14,213
State Loan (c) 3,000 -
Other 325 450
65,169 64,663
Less: Current maturities 5,285 2,586
$59,884 $62,077
(a) In March 1993 the Company issued $25,000,000 of its 7.76 percent Series
A Senior Notes due February 15, 2003, and $25,000,000 of its 7.76
percent Series B Senior Notes due February 15, 2003, to four insurance
companies. The Series A Senior Notes will be repaid in equal annual
installments beginning in February 1995. The Series B Senior Notes will
be repaid in equal annual installments beginning in February 1997.
Interest is payable quarterly for these Notes. The financing agreements
contain certain covenants regarding the maintenance of a minimum level
of tangible net worth, as well as certain financial ratios, as defined,
and certain restrictions including limitations on indebtedness.
F-9
(b) Borrowings under the Industrial Development Bond financings accrue
interest at the rate of 8.95 percent, payable quarterly, and the loan is
being repaid in equal annual installments of $2,368,000 which began in
October 1992. The Company's principal New York facilities are pledged
as collateral for this debt. The financing agreements contain certain
covenants regarding the maintenance of a minimum level of tangible net
worth and working capital, as well as certain financial ratios, as
defined, and limitations on investments, dividends and indebtedness.
(c) In 1994, the Company received a $3,000,000 loan from an agency of New
York State. The loan bears interest at 1.0 percent, payable monthly,
and the principal is to be repaid in one installment in 2001. The
interest rate is subject to a covenant requiring a minimum level of full
time permanent employees.
Based on the borrowing rates currently available to the Company for bank
loans with similar terms, the fair value of Senior Notes and Industrial
Development Bonds approximates the carrying value. The fair value of the
State Loan as of December31, 1994, is approximately $1,700,000.
Long-term debt maturities are:
Year ending December 31, (in thousands)
1995 $ 5,285
1996 5,197
1997 8,773
1998 8,763
1999 8,721
Thereafter 28,430
$65,169
9. INCOME TAXES
The provision/(benefit) for income taxes consists of:
Year Ended December 31,
1994 1993 1992
(in thousands)
Current:
Federal $11,067 $ 3,270 $ 4,036
State and local 3,168 1,177 1,091
Foreign 3,233 647 2,386
17,468 5,094 7,513
Deferred:
Federal 4,714 1,481 (11,648)
State and local 1,246 233 (2,589)
Foreign (106) 192 (276)
5,854 1,906 (14,513)
Total Provision/(Benefit)
for Income Taxes $23,322 $ 7,000 ($ 7,000)
As described in Note 1, the Company adopted SFAS 109 during 1992. This
accounting change resulted in a restatement of the Company's deferred tax
accounts as of January 1, 1992, which resulted in a charge of $744,000
($0.03 per share) which is reflected as a cumulative effect of accounting
change in the Company's consolidated statement of operations. Additionally,
the adoption of SFAS 109 resulted in an increase in the income tax benefit
recognized during 1992 and, therefore, a decrease in the loss before
cumulative effect of accounting change of $9,110,000 ($0.38 per share).
F-10
A reconciliation between the statutory U.S. Federal income tax rate and the
Company's effective tax rate is:
Year Ended December 31,
1994 1993 1992
Statutory U.S. Federal
rate 35.0% 34.0% (34.0)%
State taxes, net of
Federal tax effect 4.9 4.8 (4.0)
Tax credits (4.6) (7.3) -
Tax-exempt interest income - - (0.3)
Amortization of excess of
cost over fair value of
net assets acquired 1.5 4.9 4.1
Exempt income of foreign
sales corporation (1.1) (2.3) -
Income of foreign subsi-
diaries taxed at higher
tax rates 1.1 1.8 1.9
Losses of foreign subsi-
diaries for which no
benefit is recognized - - 1.5
Release of excess reserves
for contingencies - - (4.8)
Settlement of lawsuits - - 1.2
Other, net 3.2 0.1 3.3
40.0% 36.0% (31.1)%
At December 31, 1994, 1993 and 1992, other liabilities include deferred
income taxes of $9,690,000, $7,236,000 and $6,893,000, respectively. The
deferred tax assets and liabilities at December 31, 1994, 1993 and 1992,
respectively, are comprised of:
Year Ended December 31,
1994 1993 1992
Deferred Tax Deferred Tax Deferred Tax
Assets/(Liabilities) Assets/(Liabilities) Assets/(Liabilities)
(in thousands)
Receivables $ 4,977 $ 3,405 $ 3,043
Inventory 6,249 11,677 8,094
Net investment in
sales-type leases (2,245) (1,722) (817)
Accrued compensation
and associate
benefits 3,739 3,307 2,153
Other accrued
liabilities 3,382 3,037 2,469
Accrued restructuring
costs 61 4,338 13,807
Deferred revenue
- current 2,296 1,902 1,324
Deferred revenue
- long term 1,511 1,204 379
Deferred patent
and product
development costs (10,427) (9,809) (9,854)
Property, plant and
equipment (1,492) (1,851) (1,664)
Investments 1,338 1,181 390
Cumulative translation
adjustments 945 3,411 2,731
Tax credit
carryforwards 3,410 2,163 2,071
Other, net 680 350 1,106
14,424 22,593 25,232
Less: Valuation
allowance 814 663 560
Net Deferred Taxes $13,610 $21,930 $24,672
The valuation allowance increased by $151,000 during 1994 and by $103,000
during 1993. The valuation allowance decreased $45,000 in 1992. The valuation
allowance relates to state investment tax credit carryforwards which are
likely to be subject to recapture and which are likely to expire unutilized.
No other valuation allowances for deferred tax assets are necessary due to
the Company's history of profitability and anticipated future profitability.
F-11
10. COMMITMENTS AND CONTINGENCIES
a. Lease Agreements
Future minimum annual rental payments required under noncancellable operating
leases are:
Year ending December 31, (in thousands)
1995 $ 4,904
1996 3,993
1997 3,446
1998 2,432
1999 1,386
Thereafter 1,249
$17,410
Rent expense under substantially all operating leases was $5,673,000,
$5,465,000, and $4,734,000 for the years ended December 31, 1994, 1993 and
1992, respectively.
b. Credit Facilities
The Company has loan agreements with three banks pursuant to which the banks
have agreed to provide lines of credit totalling $30,000,000. As of December
31, 1994, and 1993, the Company had no outstanding borrowings under these
lines. Such borrowings would bear interest at the respective bank's cost of
funds rate, which approximated 6% at December 31, 1994. These agreements
expire between June 30, 1995, and December 31, 1995.
c. Capital Expenditures
The Company has an agreement to acquire a forty acre parcel of land in Suffolk
County, New York for $5,000,000. The Company does not intend to commence
construction of a corporate headquarters and manufacturing facility on this
site before the end of 1995.
d. Employment Contracts
The Company has executed employment contracts with certain senior executives
that vary in length for which the Company has a minimum commitment aggregating
approximately $3,625,000 at December 31, 1994.
e. Legal Matters
The Company is currently involved in matters of litigation arising from the
normal course of business. Management is of the opinion that such litigation
will have no material adverse effect on the Company's consolidated financial
position or results of operations.
In March 1993, the Company and certain of its officers received a purported
first Consolidated Amended Class Action Complaint in the action entitled In
re. Symbol Technologies Class Action Litigation ("First Complaint") in the
Eastern District of New York which essentially asserted the same alleged
violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder as had been contained in six separate purported
class action suits previously filed, and alleged a class period of March 17,
1992, through September 14, 1992. Defendants moved to dismiss the First
Complaint for failure to state a cause of action and for failure to allege
fraud with particularity. On September 14, 1993, the Court granted
defendants' motion and dismissed the First Complaint. However, the Court
granted plaintiffs leave to file a new complaint within 30 days. On October
14, 1993, a Second Consolidated Amended Class Action Complaint ("Second
Complaint") was served. It alleges essentially similar violations as had the
prior complaints but alleges a class period from June 8, 1992, to September
14, 1992. Defendants moved to dismiss the Second Complaint and such motion
is currently pending before the Court. The Company believes that the
litigation is without merit and intends to defend it vigorously.
F-12
During 1989 and 1990, the Company, its directors and certain of its officers
were named as defendants in shareholder class action and derivative lawsuits
inconnection with complaints principally alleging violations of federal
securities laws and misrepresentations regarding the Company's August 1989
sale of Common Stock and statements made to the investing public. On March 3,
1992, the Company agreed to settle the lawsuits. A settlement fund of
$11,500,000, which was comprised of $7,250,000 of cash and six-year warrants
valued at $4,250,000, had to be created to settle the litigation. The
$7,250,000 cash portion of the settlement has been provided by an unaffiliated
insurance company. In January 1994, the Company exercised its option of
paying $4,250,000 in cash in lieu of issuing the warrants. This liability
was included in accounts payable and accrued expenses at December 31,
1993.
11. STOCKHOLDERS' EQUITY
a. Stock Option Plans
There are a total of 4,828,000 shares of Common Stock reserved for issuance
under the Company's stock option plans at December 31, 1994.
A summary of changes in the stock option plans is:
Shares Under Option
Number of
Option Price Shares
per Share (in thousands)
Shares under option at December 31, 1992 4,611
Granted $12.00 to $18.25 1,287
Exercised $ 5.50 to $14.88 (376)
Cancelled $ 7.63 to $23.75 (356)
Shares under option at December 31, 1993 5,166
Granted $ 9.00 to $29.88 626
Exercised $ 5.50 to $23.75 (1,993)
Cancelled $ 8.00 to $23.75 (219)
Shares under option at December 31, 1994 3,580
Shares exercisable at December 31, 1994 $ 5.50 to $23.75 1,419
At December 31, l994, an aggregate of 1,248,000 shares remain available for
grant under the stock option plans (1,000,000 of which are subject to
shareholder approval in May 1995). The tax benefits arising from stock
option exercises during the years ended December 31, 1994, 1993 and 1992, in
the amount of $14,066,000, $1,062,000 and $1,460,000, respectively, were
recorded in stockholders' equity as additional paid-in capital.
F-13
b. Treasury Stock
Treasury stock is comprised of 596,000 shares of Common Stock purchased for
a total of $14,958,000 from certain officers related to the exercise of stock
options and 402,000 shares purchased in open market transactions at a total
of $5,342,000 pursuant to the stock repurchase program authorized by the Board
of Directors on May4, 1992.
c. Stock Purchase Warrants
The following table indicates the number of common shares issuable upon
exercise and exercise price per share of all outstanding Directors' warrants
as of December 31,1994:
Exercisable Number of Shares Exercise Price Shares Vested
to Issuable Upon Exercise per Share at December 31, 1994
1997 35,000 $11.00 35,000
2000 39,000 $ 8.13 to $15.50 39,000
2004 20,000 $25.25 to $27.75 -
94,000 74,000
12. ASSOCIATE BENEFIT PLANS
a. Profit Sharing Retirement Plan
The Company maintains a 401(k) profit sharing retirement plan for all U.S.
associates meeting certain service requirements. The Company contributes
monthly 50% of associates' contributions up to a maximum of 6% of annual
compensation. Plan expense for the years ended December 31, 1994, 1993
and 1992 was $2,559,000, $2,336,000 and $2,358,000, respectively.
b. Health Benefits
The Company pays substantially all costs incurred in connection with providing
associate health benefits through a program administered by an insurance
company. Such costs amounted to $8,536,000, $10,275,000 and $8,905,000, for
the years ended December 31, 1994, 1993 and 1992, repectively.
c. Executive Retirement Plan
The Company maintains an Executive Retirement Plan (the "Plan") in which
certain highly compensated associates are eligible to participate.
Participants are selected by a committee of the Board of Directors. Benefits
vest after five years of service and are based on a percentage of average
compensation for the three years immediately preceding termination of the
participant's full-time employment. As of December 31, 1994, 12 officers
were participants in the Plan. The Company's obligations under the Plan
are not funded apart from the Company's general assets. The Company's
funding policy is to set aside assets for the Plan based on the annual net
periodic pension expense. The funded assets are classified in other assets.
F-14
Plan costs are:
Year Ended December 31,
1994 1993 1992
(in thousands)
Service cost - benefits earned during
the period $ 543 $ 513 $ 708
Interest cost on projected benefit
obligation 624 488 530
Amortization of unfunded prior service
costs and unrecognized loss 130 150 303
Net periodic pension expense $1,297 $1,151 $1,541
The Plan's funded status is as follows:
December 31, December 31,
1994 1993
(in thousands)
Accumulated benefit obligation $5,496 $5,007
Projected benefit obligation ($7,830) ($7,003)
Unrecognized net loss 963 1,120
Unrecognized prior service costs 1,173 1,286
Accrued pension costs ($5,694) ($4,597)
The Plan had $4,906,000 and $4,578,000 of vested benefit obligations at
December 31, 1994, and 1993, respectively. The projected benefit obligation
at December 31, 1994, 1993 and 1992 was determined using an assumed weighted
average discount rate of 8.0 percent, 7.0 percent and 7.0 percent,
respectively, and an assumed increase in the long-term rate of compensation
of 5.0 percent, 5.0 percent and 5.0 percent,respectively.
13. OPERATIONS BY GEOGRAPHIC AREA
The Company is engaged in one industry, specifically, the design, manufacture
and marketing of bar code reading equipment, portable data collection systems
and radio frequency data communications products. Operations in this
business segment are summarized below by geographic area. The Company's
operations in Western Europe generally consist of selling and performing field
service maintenance on products designed and manufactured primarily in the
United States.
F-15
North Western
America Europe Other Eliminations Consolidated
(in thousands)
Year ended
December 31, l994:
Sales to unaffiliated
customers $298,217 $141,090 $25,999 $ - $465,306
Transfers between
geographic areas 97,981 - - (97,981) -
Total net revenue $396,198 $141,090 $25,999 ($97,981) $465,306
Earnings before
provision for income
taxes $ 46,502 $ 4,783 $ 836 $ 6,185 $ 58,306
Identifiable assets $296,530 $ 62,839 $ 3,217 $ - $362,586
Corporate assets 111,627
Total assets $474,213
Year ended
December 31, 1993:
Sales to unaffiliated
customers $247,448 $ 98,188 $14,344 $ - $359,980
Transfers between
geographic areas 56,244 - - (56,244) -
Total net revenue $303,692 $ 98,188 $14,344 ($56,244) $359,980
Earnings before
provision for income
taxes $ 18,152 $ 1,062 $ 180 $ 51 $ 19,445
identifiable assets $274,032 $ 50,919 $ 1,738 $ - $326,689
Corporate assets 92,926
Total assets $419,615
Year ended
December 31, 1992:
Sales to unaffiliated
customers $223,427 $106,794 $14,719 $ - $344,940
Transfers between
geographic areas 66,692 - - (66,692) -
Total net revenue $290,119 $106,794 $14,719 ($66,692) $344,940
(Loss) Earnings before
benefit for income
taxes $(15,406) $ 4,141 $ (652) ($10,589) ($22,506)
Identifiable assets $232,868 $ 49,792 $ 1,449 $ - $284,109
Corporate assets 94,557
Total assets $378,666
F-16
In determining earnings before provision for income taxes for each geographic
area, sales and purchases between areas have been accounted for on the basis
of internal transfer prices set by the Company. Certain U.S. operating
expenses are allocated between geographic areas based upon the percentage of
geographic area revenue to total revenue. This allocation has the effect of
reducing reported European and other operating profit.
Identifiable assets are those tangible and intangible assets used in
operations in each geographic area. Corporate assets are principally
temporary investments and the excess of cost over fair value of net assets
acquired.
The Company's export sales, primarily to Europe, approximated $167,089,000,
$112,532,000 and $121,513,000 for the years ended December 31, 1994, 1993 and
1992, respectively.
The Company has customers in the retail industry which accounted for
approximately $38,895,000 in accounts receivable at December 31, 1994.
The carrying amounts of accounts receivable approximate fair value because of
the short maturity of these instruments.
14. SELECTED QUARTERLY FINANCIAL DATA (unaudited)
The following tables set forth unaudited quarterly financial information for
the years ended December 31, 1994 and 1993:
Quarter Ended
March 31 June 30 September 30 December 31
(in thousands, except per share amounts)
Year Ended
December 31, 1994:
Net revenue $103,668 $113,423 $124,433 $123,782
Gross profit 49,465 54,168 59,575 59,246
Net earnings 6,656 8,397 10,295 9,636
Primary and Fully-
diluted earnings
per share: $0.26 $0.32 $0.39 $0.36
Year Ended
December 31, 1993:
Net revenue $83,719 $89,936 $92,378 $93,947
Gross profit 38,185 41,523 43,133 44,723
Net earnings 727 2,249 4,625 4,844
Primary and Fully-
diluted earnings
per share: $0.03 $0.09 $0.19 $0.19
The Company accounts for interim inventories using the gross profit method.
The results of operations in the quarters ended December 31, 1994, and 1993
reflect adjustment of gross profit estimates based upon the actual physical
inventory valuation.
The quarterly earnings per share information is computed separately for each
period. Therefore, the sum of such quarterly per share amounts may differ
from the total for the year.
F-17
SCHEDULE VIII
SYMBOL TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(All amounts in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
(1) (2)
Balance at Charged to Charged Balance
beginning cost and to other at end
Description of year expenses accounts Deductions of year
Allowance for doubtful
accounts:
December 31,
l994 $5,112 $2,336 $ - $ 179 (a) $7,269
December 31,
1993 $4,893 $1,823 $ - $1,604 (a) $5,112
December 31,
1992 $4,181 $2,119 $ - $1,407 (a) $4,893
(a) Uncollectible accounts written off.
S-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
ANNUAL REPORT
ON
FORM 10-K
FOR FISCAL YEAR ENDED
DECEMBER 31, 1994
_________________________________
SYMBOL TECHNOLOGIES, INC.
EXHIBITS
3. Exhibits
Exhibit
3.1 Certificate of Incorporation of Symbol
Technologies, Inc. (Incorporated by
reference to Exhibit 3.1 to the Form
8-B Registration No. 0-9028, filed
with the Commission on November 23,
1987 (the "Form 8-B").)
3.2 By-laws of the Company as currently in
effect. (Incorporated by reference to
Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1988 (the
"December 1988 Form l0-K").)
4.1 Form of Certificate for Shares of the
Common Stock of the Company.
(Incorporated by reference to Exhibit
4.1 of the Form 8-B.)
10.1 1991 Employee Stock Option Plan. (Incorporated by
reference to Exhibit 10.1 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991
(the "1991 Form 10-K").)
10.2 1990 Non-Executive Stock Option Plan
as amended. (Incorporated by reference to Exhibit 4.1
to Registration Statement No. 33-78622 on Form S-8.)
10.3 1987 Consultant Stock Option Plan,
as amended. (Incorporated by reference to Exhibit 10.3
of the 1991 Form 10-K.)
10.4 Employment Agreement by and between
the Company and Jerome Swartz,
dated as of July 1, 1990. (Incorporated
by reference to Exhibit 10.5 of the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1990 (the "1990 Form 10-K").)
10.5 Employment Agreement by and between
the Company and Frederic P. Heiman,
dated as of July 1, 1990. (Incorporated
by reference to Exhibit 10.8 of the 1990
Form 10-K.)
10.6 Employment Agreement by and between the Company and
Tomo Razmilovic, dated as of June 1, 1993 and an
Employment Agreement by and between Symbol Technologies
Limited and Tomo Razmilovic, dated as of June 1, 1993.
(Incorporated by reference to Exhibit 10.7 of the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.)
-1-
10.7 Employment Agreement by and between the Company and Jan
Lindelow, dated as of June 12, 1994.
10.8 Employment Agreement by and between
the Company and Raymond Martino, dated
as of June 12, 1994.
10.9 Form of 1997 Stock Purchase Warrant
issued to directors. (Incorporated by
reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K
for the fiscal year ended June 30,
1988.)
10.10 Form of 2000 Stock Purchase Warrant issued
to directors. (Incorporated by reference to
Exhibit 10.11 to the 1991 Form 10-K.)
10.11 1994 Directors Stock Option Plan. (Incorporated
by reference to Exhibit 4.1 to Registration
Statement No. 33-78678 on Form S-8.)
10.12 Summary of Profit Sharing Bonus Plan.
(Incorporated by reference to Exhibit
10.22 to the December 1988 Form 10-K.)
10.13 Executive Retirement Plan, as amended.
(Incorporated by reference to Exhibit
10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1989 (the "1989 Form
10-K").)
10.14 Lease Agreement and Amended and
Restated Lease Agreement dated as of
October 1, 1989 between Suffolk County
Industrial Development Agency and
Symbol Technologies, Inc.
(Incorporated by reference to Exhibit
10.15 to the 1989 Form 10-K.)
10.15 Form of Note Agreements dated as of February 15, 1993
relating to the Company's 7.76% Series A and Series B
Senior Notes due February 15, 2003 (Incorporated by
reference to Exhibit 10.14 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992.)
21. Subsidiaries.
23. Consent of Deloitte & Touche
(b) Reports on Form 8-K
Not Applicable
27. Financial Data Schedule - For electronic filing purposes only.
-2-
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of the
12th day of June, 1994 by and between SYMBOL TECHNOLOGIES, INC., a
Delaware corporation (the "Corporation"), and JAN LINDELOW, (the
"Executive").
W I T N E S S E T H
WHEREAS, the Corporation desires to employ the
Executive and the Executive desires to be employed by the
Corporation in the manner and on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of
the mutual and dependent agreements and covenants herein set forth,
the parties hereto agree as follows:
1. EMPLOYMENT
The Corporation hereby agrees to employ the Executive as
its President and Chief Operating Officer ("Employment"), and the
Executive hereby agrees to accept such Employment and to render
services to the Corporation and its subsidiaries, divisions and
affiliates for the period and on the terms and conditions set forth
in this Agreement. The Corporation hereby agrees to use its best
efforts, undertaken in good faith, to ensure that the Executive
shall be elected a director by the Board of Directors of the
Corporation at its next meeting (and in no event later than June
20, 1994) and nominated by the Board of Directors for reelection by
the shareholders of the Corporation at the next annual meeting of
shareholders and that he shall remain a director of the Corporation
during the period of his Employment under this Agreement; provided,
however, that, except as otherwise provided in subsection 12(b)(3)
in the event that the Executive is not elected at any time during
his Employment under this Agreement, such fact in and of itself
-1-
shall not serve to accelerate, decrease, increase or otherwise
enlarge the benefits to which the Executive shall be entitled under
this Agreement.
2. TERM
The Executive's Employment under this Agreement shall be
for a term of five (5) years, commencing as of July 1, 1994 and
ending on June 30, 1999; provided, however, that the term of the
Executive's actual Employment hereunder shall at all times be
subject to earlier termination in accordance with the provisions of
section 12 hereof.
3. DUTIES
(a) So long as the Executive's Employment under this
Agreement shall continue, the Executive shall, subject to periods
of illness, vacation and other excused absences, devote his entire
business time, attention, and energies to the affairs of the
Corporation and its subsidiaries, divisions and affiliates, use his
best efforts to promote its and their best interests and perform
such executive duties as may be assigned to him by the Chief
Executive Officer of the Corporation; provided, however, that such
executive duties shall be consistent with the position of President
and Chief Operating Officer of the Corporation as such duties exist
as of the date hereof.
(b) So long as the Executive's Employment under this
Agreement shall continue, the Executive shall, if elected or
appointed, serve as an executive officer and/or director of the
Corporation and of any subsidiary, division or affiliate of the
Corporation and shall hold, without any compensation other than
that provided for in this Agreement, the offices in the Corporation
and in any such subsidiary, division or affiliate to which he may,
at any time or from time to time, be elected or appointed.
4. COMPENSATION
(a) The Corporation hereby agrees to pay to the
Executive, and the Executive hereby agrees to accept, as
-2-
compensation for services rendered under this Agreement, a base
salary at the rate of four hundred thirty-seven thousand five
hundred Dollars ($437,500) per annum for the period ending December
31, 1995 payable at such intervals as the Corporation customarily
pays the salaries of its executive officers. Effective January 1,
1996 and each January 1st thereafter, the Executive and the
Corporation shall negotiate, in good faith, with respect to
increasing said base salary for an additional one year period in an
amount mutually satisfactory to the Corporation and the Executive.
(b) In addition to the base salary provided for in
subsection 4(a) above, the Executive shall participate in the
Corporation's profit sharing bonus plan and thereby be entitled to
receive an annual bonus for each fiscal year during the term of
this Agreement in the amounts determined pursuant to such plan.
The target amount of the Executive's bonus under said plan shall be
100% of his base salary actually earned in each fiscal year. The
target bonus for 1994 shall be guaranteed by the Corporation which
guaranteed amount shall be paid to the Executive upon commencement
of his employment with the Corporation. Fifty percent of the
target bonus for 1995 shall be guaranteed by the Corporation.
Payment of the bonus provided herein (other than 1994's guaranteed
portion) shall be paid to the Executive no later than ninety (90)
days after the completion of each fiscal year.
(c) During the term of this Agreement, the Executive
shall participate in the Corporation's Executive Retirement Plan.
The Executive acknowledges that he has previously been provided
with a copy of said plan.
(d) In addition to the foregoing, it is hereby agreed
that the Corporation shall, at its sole expense, provide and the
Executive shall be entitled to receive, during his Employment
hereunder, the employee fringe benefits provided by the
Corporation, from time to time, to its executive officers,
including, but not limited to, benefits relating to life, medical
and disability insurance, vacation time, and participation in the
Corporation's Section 401(k) Plan; provided, however, that as used
in this Agreement, the term employee fringe benefits' shall not
-3-
include any salary or other bonus plan, except as set forth in this
Agreement.
(e) As a bonus for entering into this Agreement and to
compensate the Executive for a portion of the compensation he will
be forfeiting from his prior employer, the Corporation will pay the
Executive $111,750 within ten (10) days after the date he first
commences Employment with the Corporation and $111,750 payable on
the earlier of (i) the date of the termination of his Employment or
(ii) March 1, 1995.
5. AUTOMOBILE
During the period of the Executive's Employment under
this Agreement, the Corporation shall either (i) make available to
the Executive the use of an automobile, with a lease allotment of
up to $1,000 per month as well as gasoline, maintenance and
insurance expenses associated with such automobile or (ii)
reimburse the Executive for comparable automobile expenses if the
Executive chooses to lease his own automobile.
6. EXPENSES; OPTIONS
(a) The Corporation shall pay or reimburse the Executive
for all reasonable travel and other expenses incurred or paid by
him in connection with the performance of his duties under this
Agreement, upon presentation to the Corporation of expense
statements or vouchers and such other supporting documentation as
it may, from time to time, reasonably require; provided, however,
that the maximum amount available for such expenses may, at any
time or from time to time, be fixed in advance for executive
officers by the Board of Directors of the Corporation.
(b)(1) The Corporation agrees, as promptly as
practicable to cause the award to the Executive by the
Compensation/Stock Option Committee of the Board of Directors of
the Corporation, subject to shareholder approval as required, of
stock options to purchase 250,000 shares of the Corporation's
Common Stock (50,000 of which shall be a bonus for entering into
-4-
this Agreement). All of the above options shall be at an exercise
price equal to the closing price of the Corporation's Common Stock
on the later of (i) date of the award thereof, or (ii) the date the
Executive first commences employment (including part-time) with the
Corporation. These options shall have a term of ten years; 25% of
these options shall vest July 1, 1996 and 25% of these options
shall vest on each of the next three consecutive anniversary dates
of that date. The Executive acknowledges that he has been provided
with a summary of the provisions of the Corporation's stock option
plan.
(2) In the event that for any reason the options or
any portion thereof to be granted pursuant to subsection 6(b)(1)
are not issued or the stockholders of the Corporation do not
approve at the next annual meeting of stockholders an amendment to
the stock option plan increasing the number of stock options
available for grant to an amount sufficient to cover the total
options granted pursuant to this Agreement, unless the Corporation
and the Executive enter into an arrangement satisfactory to the
Executive which provides him with economic benefits comparable to
those he would have obtained from the options provided herein, then
the Executive will be deemed to have been granted stock
appreciation rights equal to the number of stock options not
approved by the stockholders or not issued. The Executive shall be
entitled to payment by the Corporation of an amount equal to the
difference between the closing price of the Corporation's Common
Stock at the time of exercise less the closing price of the
Corporation's Common Stock provided in subsection 6(b)(1) above
multiplied by the number of stock appreciation rights granted. All
vesting and rights to exercise stock appreciation rights granted
pursuant to this subsection shall conform to the vesting and
exercise rights of stock options that would have been granted
pursuant to subsection 6(b)(1) above.
(3) Furthermore, in December 1995 and on a biennial
basis thereafter the Executive shall be eligible to be awarded
additional options subject to satisfactory job performance. All
such options shall be at an exercise price equal to the closing
price of the Corporation's Common Stock on the date of award and
-5-
shall otherwise contain terms and conditions similar to those
options referred to in subsection 6(b)(1) hereof.
(c) All outstanding options to purchase shares of Common
Stock of the Corporation awarded to the Executive during the term
of this Agreement shall vest regardless of any conditions precedent
to the vesting of such options (such as the passage of time) if and
when there is a change in control of the Corporation as hereafter
defined. As used in this Agreement, a change in control of the
Corporation shall mean a change in control of a nature that would
be required to be reported in response to Item 1 of Form 8-K
promulgated under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"); provided, that, without limitation, such a
change in control shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Corporation or any "person" who on
the date hereof is a director or officer of the Corporation, is or
becomes the "beneficial owner", (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation's then outstanding securities and the
Corporation's Board of Directors, after having been advised that
such ownership level has been reached, does not, within fifteen
(15) business days, adopt a resolution approving the acquisition of
that level of securities ownership by such person; or (ii) during
any period of two consecutive years during the term of this
Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period has
been approved in advance by directors representing at least two-
thirds of the directors then in office who were directors at the
beginning of the period.
(d) Notwithstanding the then-current state of the
Corporation's By-Laws, the Executive shall be entitled at all times
to the benefit of the maximum indemnification and advancement of
expenses available from time to time under the laws of the State of
Delaware.
-6-
(e) The Corporation and/or any of its subsidiaries,
divisions or affiliates may, from time to time, apply for and
obtain, for its or their benefit and at its or their sole expense,
key man life, health, accident, disability, or other insurance upon
the Executive, in any amounts that it or they may deem necessary or
desirable to protect its or their respective interests, and the
Executive agrees to cooperate with and assist the Corporation or
such subsidiary, division or affiliate in obtaining any and all
such insurance by submitting to all reasonable medical
examinations, if any, and by filling out, executing, and delivering
any and all such applications and other instrument as may
reasonably be necessary.
(f) The Corporation shall also reimburse the Executive
for the cost, in an amount not to exceed $10,000 per annum, of term
life insurance which the Executive may obtain, which insurance
shall be for the sole benefit of the Executive and/or his
designated beneficiaries.
(g) The Corporation agrees to pay or reimburse the
Executive for the reasonable expenses incurred by him in connection
with his relocation, prior to July 1, 1995, to the Long Island area
in accordance with the Corporation's existing policy with respect
to relocation of executive employees provided, however, that the
Executive shall be entitled to be reimbursed for additional
temporary housing expenses for a period of up to one year. In the
event the Executive voluntarily terminates his employment during
the first year of his Employment, the Executive shall reimburse the
Corporation for any and all relocation expenses paid or reimbursed
pursuant to this subsection.
7. INVENTIONS
(a) The Executive agrees to and hereby does assign to
the Corporation or any subsidiary, affiliate or division of the
Corporation designated by the Corporation, all his right, title and
interest throughout the world in and to all ideas, methods,
developments, products, inventions, processes, improvements,
-7-
modifications, techniques, designs and/or concepts relating
directly or indirectly to the business of the Corporation, its
subsidiaries, affiliates or divisions, whether patentable or
unpatentable, which the Executive may conceive and/or develop
during his employment by the Corporation (whether pursuant to this
Agreement or otherwise) or which the Executive may conceive and/or
develop during a twenty-four (24) month period following the
termination of his employment if such concept and/or development
during such twenty-four (24) month period is a direct result of the
Executive's activities while employed by the Corporation, whether
or not conceived and/or developed at the request of the Corporation
or any subsidiary, affiliate or division (the "Inventions");
provided, however, that if the Corporation or such subsidiary,
affiliate or division determine that it will not use any such
Invention or that it will license or transfer any such Invention to
an unaffiliated third party, then it will negotiate in good faith
with the Executive, if the Executive so requests, with respect to
a transfer or license of such Invention to the Executive.
(b) The Executive further agrees to promptly communicate
and disclose to the Corporation any and all such Inventions as well
as any other knowledge or information which he may possess or
obtain relating to any such Inventions.
(c) In furtherance of the foregoing, the Executive
agrees that at the request of the Corporation, and at its expense,
he will make or cooperate in making of applications for letters
patent of the United States or elsewhere and will execute such
other agreements, documents or instruments which the Corporation
may reasonably consider necessary to transfer to and vest in the
Corporation or any subsidiary, affiliate or division, all right,
title and interest in any such Inventions, and all applications for
any letters patent issued in respect of any of the foregoing.
(d) The Executive shall assist, upon request, in
locating writings and other physical evidence of the making of the
Inventions and provide unrecorded information relating to them and
give testimony in any proceeding in which any of the Inventions or
any application or patent directed thereto may be involved,
-8-
provided that reasonable compensation shall be paid the Executive
for such services and the Executive shall be reimbursed for any
expenses incurred by him in connection therewith, except that
during such period of time as the Executive is employed by the
Corporation, the Corporation shall not be obligated to compensate
the Executive at a higher rate for the giving of testimony than the
rate established by law for the compensation of witnesses in the
court or tribunal where the testimony is given or in the district
where the testimony is taken. The Corporation shall give the
Executive reasonable notice should it require such services, and,
to the extent reasonably feasible, the Corporation shall use its
best efforts to request such assistance at times and places as will
least interfere with any other employment of the Executive.
(e) At the expense of the Corporation, the Executive
shall assign to the Corporation all his interest in copyrightable
material which he produces, composes, or writes, individually or in
collaboration with others, which arises out of work performed by
him on behalf of the Corporation, and shall sign all papers and do
all other acts necessary to assist the Corporation to obtain
copyrights on such material in any and all jurisdictions.
8. CONFIDENTIAL INFORMATION
The Executive hereby acknowledges that, in the course of
his employment by the Corporation, he will have access to secret
and confidential information which relates to or affects all
aspects of the business and affairs of the Corporation and its
subsidiaries, affiliates and divisions, and which are not available
to the general public ("Confidential Information"). Without
limiting the generality of the foregoing, Confidential Information
shall include information relating to inventions (including,
without limitation, Inventions), developments, specifications,
technical and engineering data, information concerning the filing
or pendency of patent applications, business ideas, trade secrets,
products under development, production methods and processes,
sources of supply, marketing plans, and the names of customers or
prospective customers or of persons who have or shall have traded
or dealt with the Corporation. Accordingly, the Executive agrees
-9-
that he will not, at any time, without the express written consent
of the Corporation, directly or indirectly, disclose or furnish, or
negligently permit to be disclosed or furnished, any Confidential
Information to any person, firm, corporation or other entity except
in performance of his duties hereunder.
9. CONFIDENTIAL MATERIALS
The Executive hereby acknowledges and agrees that any and
all models, prototypes, notes, memoranda, notebooks, drawings,
records, plans, documents or other material in physical form which
contain or embody Confidential Information and/or information
relating to Inventions and/or information relating to the business
and affairs of the Corporation, its subsidiaries, affiliates and
divisions and/or the substance thereof, whether created or prepared
by the Executive or by others ("Confidential Materials"), which are
in the Executive's possession or under his control, are the sole
property of the Corporation. Accordingly, the Executive hereby
agrees that, upon the termination of his employment with the
Corporation, whether pursuant to this Agreement or otherwise, or at
the Corporation's earlier request, the Executive shall return to
the Corporation all Confidential Materials and all copies thereof
in his possession or under his control and shall not retain any
copies of Confidential Materials.
10. NON-COMPETITION
(a) The Executive agrees that he shall not, so long as
he shall be employed by the Corporation in any capacity (whether
pursuant to this Agreement or otherwise), without the express
written consent of the Corporation, directly or indirectly, own,
manage, operate, control or participate in the ownership,
management, operation or control or be employed by or connected in
any manner with, any business which is or may be in competition,
directly or indirectly, with the business of the Corporation or any
subsidiary, affiliate or division of the Corporation.
(b) The Executive agrees that for a period of twelve
(12) months, commencing on the effective date of the termination of
-10-
his employment, whether such termination is pursuant to the terms
of this Agreement or otherwise, he shall not, without the express
written consent of the Corporation, directly or indirectly, own,
manage, operate control or participate in the ownership,
management, operation or control, or be employed by or connected in
any manner with, any business, firm or corporation which is engaged
in any business activity competitive with the business of the
Corporation and its subsidiaries, affiliates and divisions as such
business is conducted during the period of his employment by the
Corporation (whether pursuant to this Agreement or otherwise) and
at the termination thereof.
(c) The Executive agrees that for a period of twelve
(12) months, commencing twelve (12) months after the effective date
of the termination of his employment, whether such termination is
pursuant to the terms of this Agreement or otherwise, he shall not,
without the express written consent of the Corporation, directly or
indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control, or be employed by or
connected in any manner with any business, firm or corporation
which is listed as a competitor of the Corporation in the
Corporation's latest Annual Report on Form 10-K filed with the
Securities and Exchange Commission prior to the date of termination
of his employment.
(d) Anything to the contrary herein notwithstanding, the
provisions of this section shall not be deemed violated by the
purchase and/or ownership by the Executive of shares of any class
of equity securities (or options, warrants or rights to acquire
such securities, or any securities convertible into such
securities) representing (together with any securities which would
be acquired upon the exercise of any such options, warrants or
rights or upon the conversion of any other security convertible
into such securities) the lesser of (i) 1% or less of the
outstanding shares of any such class of equity securities of any
issuer whose securities are listed on a national securities
exchange or traded on NASDAQ, the National Quotation Bureau
Incorporated or any similar organization or (ii) securities having
a market value of less than $100,000 at the time of purchase;
-11-
provided, however, that the Executive shall not be otherwise
connected with or active in the business of the issuers described
in this subsection 10(d).
11. REMEDY FOR BREACH
The Executive hereby acknowledges that in the event of
any breach or threatened breach by him of any of the provisions of
sections 7, 8, 9 or 10 of this Agreement, the Corporation would
have no adequate remedy at law and could suffer substantial and
irreparable damage. Accordingly, the Executive hereby agrees that,
in such event, the Corporation shall be entitled, without the
necessity of proving damages, and notwithstanding any election by
the Corporation to claim damages, to obtain a temporary and/or
permanent injunction to restrain any such breach or threatened
breach or to obtain specific performance of any of such provisions,
all without prejudice to any and all other remedies which the
Corporation may have at law or in equity.
12. TERMINATION
(a) This Agreement and the Employment of the Executive
by the Corporation shall terminate upon the earliest of the dates
specified below:
(i) the close of business on the date as of which
the term of the Executive's Employment hereunder has terminated as
provided in section 2 hereof; provided, however, that such term is
not extended by any other agreement between the Executive and the
Corporation; or
(ii) the close of business on the date of death of
the Executive; or
(iii) the close of business on the effective
date of the voluntary termination by the Executive of his
Employment with the Corporation other than for Good Reason as
hereafter defined; or
-12-
(iv) the close of business on the effective date of
voluntary termination by the Executive of his Employment with the
Corporation for Good Reason; or
(v) the close of business on the fourteenth (14th)
day following the date on which the Corporation provides the
Executive with written notice of its intention to terminate the
Employment of the Executive for "cause" (as defined in subsection
12(b)(1) below), which notice shall set forth the basis for such
termination; provided, however, within the first seven (7) days of
this period the Chief Executive Officer of the Corporation shall
meet with the Executive and discuss in detail the reasons for the
Executive's termination and permit the Executive (if possible) to
cure the refusal to perform, gross negligence or willful misconduct
asserted as the occurrence of such cause or, at the Executive's
request, permit him to resign without the Corporation's making any
public disclosure of the basis of the Corporation's action
(provided, however, that for purposes of this Agreement any such
resignation shall still be deemed to be a termination for "cause"
(as provided herein)), provided, further the Corporation shall not
purport to terminate the Executive's Employment for "cause" unless
there exists clear and convincing evidence of the existence of such
"cause" pursuant to the criteria set forth in subsection 12(b)(1)
below; or
(vi) the close of business on the thirtieth (30th) day
following the date on which the Chief Executive Officer provides
the Executive with written notice of his intention to terminate the
Employment of the Executive for "inadequate performance" (as
defined in subsection 12(b)(2) below) which notice shall specify
the basis of the Executive's inadequate performance, provided,
however, (a) within the first fifteen (15) days of this period, the
Chief Executive Officer and the entire Board of Directors shall
meet with the Executive and discuss in detail the reasons for the
Executive's termination and permit the Executive (if possible) to
cure such inadequate performance or, at the Executive's request,
permit him to resign without the Corporation's making any public
disclosure of the basis of the Corporation's action (provided,
however, that for purposes of the Agreement any such resignation
shall still be deemed to be a termination for inadequate
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performance as provided herein) and (b) the Board of Directors
shall, by a unanimous vote (not including the Executive if he is
then a member of the Board), ratify the decision of the Chief
Executive Officer and in addition determine that such termination
is being made in good faith and that there is a reasonable basis
for the Chief Executive Officer's decision; or
(vii) the close of business on the last day of
the month within which the Board of Directors of the Corporation
elects to terminate the Executive's Employment following and as a
result of the inability of the Executive, by reason of physical or
mental disability, for six (6) months within any twelve (12) month
period during the term of this Agreement, to render services of the
character contemplated by this Agreement.
(b)(1) For purposes of this Agreement, the term
"cause" shall mean a reasonable determination made in good faith by
vote of a majority of the members of the Board of Directors of the
Corporation then holding office (other than the Executive if he
shall then be a director) that one of the following conditions
exists or one of the following events has occurred;
(i) conviction of the Executive for a felony
offense; or
(ii) the refusal by the Executive to perform such
service as may reasonably be delegated or assigned to him,
consistent with his position, by the Chief Executive Officer of the
Corporation; willful misconduct or gross negligence on his part in
connection with the performance of such duties.
(2) For purposes of this Agreement, the term
inadequate performance shall mean a determination by the Chief
Executive Officer, made in good faith, that the Executive's
performance has not met the reasonable expectations of the Chief
Executive Officer and the Board of Directors and that his continued
Employment is not in the best interests of the Corporation.
(3) For purposes of this Agreement, the Executive
-14-
shall have "Good Reason" to terminate his Employment if any duties
are assigned to the Executive that are inconsistent with his
position, duties and responsibilities as President of the
Corporation or his duties as set forth in section 3 hereof are
materially changed without his written consent or he is not elected
or reelected to the Board of Directors, provided, however, that he
shall give the Corporation written notice of his intention to so
terminate his Employment and the reasons therefore and the
Executive and the Chief Executive Officer shall meet to discuss the
reasons for the Executive's termination within fifteen (15) days of
the notice and permit the Corporation (if possible) to remedy the
situation.
(c)(1) In the event of the termination of the
Executive's Employment for cause pursuant to subsection 12(a)(v) or
voluntarily by the Executive pursuant to subsection 12(a)(iii),
then the sole compensation required to be paid by the Corporation
to the Executive shall consist of his accrued but as then unpaid
base salary. In addition, he shall be eligible to exercise any
then vested options held by him up to and including the date of the
termination of his Employment.
(2) In the event of the termination of the
Executive's Employment pursuant to subsection 12(a)(i) (due to a
failure to extend the terms of the Executive's Employment),
12(a)(ii) (due to the death of the Executive) or 12(a)(vii) (due to
the disability of the Executive), then the Executive shall be paid
at the time of such termination an amount equal to the bonus (twice
the bonus if the termination occurs prior to December 31, 1995) (as
provided in subsection 4(b)) earned by him during the last
completed fiscal year immediately preceding any such termination
and shall continue to pay him for the next twelve (12) months, his
then annual base salary. The Corporation shall also, to the extent
that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs continue to
provide the Executive, at the Corporation's sole expense, for one
year after termination of his Employment, with all of the employee
fringe benefits referred to in subsection 4(d) that he was entitled
to receive immediately prior to the termination of his Employment
including but not limited to life, health and disability insurance
-15-
as well as the use of the automobile referred to in section 5,
provided, however, he will not be credited for this period with an
additional year of service under the Executive Retirement Plan
referred to in subsection 4(c). The Executive shall not be
required to mitigate any of the payments provided in this
subsection 12(c)(2). In addition, in the event of the Executive's
death or disability, the Executive shall be eligible to exercise
any then vested options held by him in accordance with the
Corporation's stock option plan. In the event the term of the
Executive's Employment is not extended after the expiration of the
initial term provided in section 2, then all outstanding options
awarded to the Executive shall immediately vest regardless of any
condition precedent to the vesting of such options (such as the
passage of time) and the Executive shall be eligible to exercise
such options up to and including the date of the termination of his
Employment.
(3)(i) In the event of the termination of the
Executive's Employment for "inadequate performance" pursuant to
subsection 12(a)(vi), then the Executive shall be paid at the time
of such termination an amount equal to the bonus (twice the bonus
if the termination occurs prior to December 31, 1995) (as provided
in subsection 4(b)) earned by him during the last completed fiscal
year immediately preceding any such termination and shall continue
to pay him for the next twenty-four (24) months, his then annual
base salary. The Executive shall also be paid a second bonus, in
the amount he would have received had his Employment continued for
an additional year and which he would have then earned pursuant to
subsection 4(b) The Corporation shall also, to the extent that the
Executive's continued participation is possible under the general
terms and provisions of such plans and programs, continue to
provide the Executive, at the Corporation's sole expense, for two
years after the termination of his Employment, with all of the
employee fringe benefits referred to in subsection 4(d) that he was
entitled to receive immediately prior to the termination of his
Employment including but not limited to life, health, and
disability insurance as well as the use of the automobile referred
to in section 5, provided, however, he will not be credited for
this period with an additional year of service under the Executive
-16-
Retirement Plan referred to in subsection 4(c). The Executive
shall be required to mitigate the second bonus payment as well as
any compensation which is payable to him in the second twelve (12)
month period by seeking other comparable employment.
(ii) In the event of the termination of the
Executive's Employment after July 1, 1995 but prior to June 30,
1996 by the Corporation for inadequate performance, 50,000 of the
options awarded to the Executive pursuant to subsection 6(b)(1)
hereof shall vest seven (7) days prior to the date of the
termination of his Employment. During such period, all other
options which have not vested as of the date of the termination of
his Employment shall be cancelled and shall be null and void. In
the event of termination by the Corporation for inadequate
performance subsequent to June 30, 1996, the Executive shall be
eligible to exercise any of the vested options held by him up to
and including the date of termination of his Employment.
(iii) In the event of the termination of the
Executive's Employment after July 1, 1995 but prior to June 30,
1996 by the Corporation for inadequate performance, and only to the
extent that the Executive exercises any of the options referred to
in subsection 12(c)(3)(ii), the Executive shall repay to the
Corporation all or a portion of $111,750 equal to the number of
options exercised multiplied by the amount by which the closing
price of the Corporation's Common Stock on the date he exercises
such options exceeds the exercise price thereof. The Executive may
retain any and all profits derived from such options in excess of
$111,750.
(4)(i) In the event of the termination of the
Executive's Employment voluntarily for Good Reason pursuant to
subsection 12(a)(iv) or by the Corporation in breach of its
obligations hereunder (it being understood that a purported
termination pursuant to subsection 12(a)(v) or (vi) hereof which is
disputed and finally determined not to have been proper shall be a
termination by the Corporation in breach of its obligations
hereunder) then the Executive shall be paid at the time of such
termination an amount equal to the bonus (twice the bonus if the
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termination occurs prior to December 31, 1995) (as provided in
subsection 4(b)) earned by him during the last completed fiscal
year immediately preceding any such termination and shall continue
to pay him for the next twelve (12) months, his then annual salary.
The Executive shall not be required to mitigate these payments by
seeking other comparable employment.
(ii) in lieu of any further salary and bonus
compensation payments to the Executive for periods subsequent to
the first year following termination of his Employment, the
Corporation shall pay as liquidated damages to the Executive his
annual base salary, payable at such times as the Corporation
customarily pays the salaries of its executive officers for the
remainder of the term of Employment originally provided hereby,
plus amounts equal to the bonus paid or payable each year for the
remainder (except to the extent such bonus shall have been paid as
provided in subsection 4(i) above) of the original term of the
Employment hereunder at the times set forth in subsection 4(b)
hereof; and
(iii) the Corporation shall also pay all other
damages to which the Executive may be entitled to, including
damages for any and all loss of employee fringe benefits to the
Executive under the Corporation's employee benefit plans which the
Executive would have received had the Executive's Employment
continued for the full term provided in section 2 hereof (including
specifically, but without limitation, the benefits which the
Executive would have been entitled to receive pursuant to any of
the Corporation's pension plans including, but not limited to, the
Executive Retirement Plan had his Employment continued for the full
term provided in section 2 hereof at the rate of compensation
specified herein), and including all reasonable legal fees and
expenses incurred by him as a result of such termination and in
enforcing his rights hereunder; the parties hereby agreeing that in
lieu of paying damages for the loss of employee fringe benefits the
Corporation may continue to provide such benefits or their
equivalent for the remainder of the term hereof; and
(iv) the Executive shall be required to mitigate the
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amount of any payment or other benefit provided in subsection
12(c)(4)(ii) and (iii) by seeking other comparable employment
except for the benefits under the Executive Retirement Plan if the
Executive's Employment is terminated after January 1, 1997; and
(v) in the event of the termination of the
Executive's Employment voluntarily for Good Reason pursuant to
subsection 12(a)(iv) or by the Corporation in breach of its
obligations hereunder then all outstanding options awarded to the
Executive shall immediately vest regardless of any conditions
precedent to the vesting of such options (such as the passage of
time) and the Executive shall be eligible to exercise any vested
options held by him for the longer of one year from such
termination or through the end of the initial term provided in
section 2.
13. NO CONFLICTING AGREEMENTS
In order to induce the Corporation to enter into this
Agreement and to employ the Executive on the terms and conditions
set forth herein, the Executive hereby represents and warrants that
he is not a party to or bound by any agreement, arrangement or
understanding, written or otherwise, which prohibits or in any
manner restricts his ability to enter into and fulfill his
obligations under this Agreement, to be employed by and serve as an
executive of the Corporation.
14. MISCELLANEOUS
(a) This Agreement shall become effective as of the date
hereof and, from and after that time, shall extend to and be
binding upon the Executive, his personal representative or
representatives and testate or intestate distributees, and upon the
Corporation, its successors and assigns; and the term Corporation,
as used herein, shall include successors and assigns.
(b) Nothing contained in this Agreement shall be deemed
to involve the creation by the Corporation of a trust for the
benefit of, or the establishment by the Corporation of any other
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form of fiduciary relationship with the Executive, his
beneficiaries or any of their respective legal representatives or
distributees. To the extent that any person shall acquire the
right to receive any payments from the Corporation hereunder, such
right shall be no greater than the right of any unsecured general
creditor of the Corporation.
(c) Any notice required or permitted by this Agreement
shall be given by registered or certified mail, return receipt
requested, addressed to the Corporation at its then principal
office or to the Executive at his residence address, or to either
party at such other address or addresses as it or he may from time
to time specify for the purpose in a notice similarly given to the
other party.
(d) This Agreement shall be construed and enforced in
accordance with the laws of the State of New York. Any dispute or
controversy arising under or in connection with this Agreement
shall be settled exclusively by binding arbitration in Suffolk
County of the State of New York and shall proceed under the rules
then prevailing of the American Arbitration Association (AAA). The
dispute shall be referred to a single arbitrator if such
arbitration is mutually agreeable to the parties within twenty (20)
days of the demand for arbitration, otherwise to a single
arbitrator appointed by the AAA upon application by either party.
Any award determined by an arbitrator must be in accordance with
the terms of this Agreement and shall be final and binding upon the
parties. Judgment upon any award made in such arbitration may be
entered and enforced in any court of competent jurisdiction. The
Corporation and the Executive waive any right of appeal with
respect to any judgment entered on an arbitrator's award in any
court having jurisdiction. In the event that it is necessary for
any party hereto incur legal expenses in defending its or his
rights hereunder, the losing party shall reimburse the winning
party for all reasonable legal fees and expenses incurred by him or
it as a result thereof.
(e) Except as stated otherwise herein, this instrument
contains the entire agreement of the parties relating to the
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subject matter hereof, and there are no agreements, representations
or warranties not herein set forth. No modification of this
Agreement shall be
valid unless in writing and signed by the Corporation and the
Executive. A waiver of the breach of any term or condition of this
Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition.
(f) If any provision of this Agreement shall be held
invalid, such invalidity shall not affect any other provisions of
this Agreement not held so invalid, and all other such provisions
shall remain in full force and effect to the full extent consistent
with the law.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement as of the day and year first above
written.
SYMBOL TECHNOLOGIES, INC.
By: s/Jerome Swartz
EXECUTIVE
ATTEST:
s/Leonard H. Goldner s/Jan Lindelow
JAN LINDELOW
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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of the
12th day of June, 1994 by and between SYMBOL TECHNOLOGIES, INC., a
Delaware corporation (the "Corporation"), and RAYMOND R. MARTINO
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and the Corporation are parties to
an Employment Agreement, dated as of July 1, 1990, (the "Prior
Employment Agreement"), setting forth the terms and conditions of
the Executive's employment by the Corporation; and
WHEREAS, the Executive has expressed a desire to retire
and end his Prior Employment Agreement; and
WHEREAS, the Corporation desires to continue to employ
the Executive until such time as it hires an individual to replace
the Executive, and to have the Executive assist the Corporation and
his replacement until such replacement completes his/her transition
period and becomes acclimated to the Corporation and, further,
desires to continue to employ the Executive thereafter; and
WHEREAS, the Executive desires to continue to be employed
by the Corporation in the manner and on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of
the mutual and dependent agreements and covenants herein set forth,
the parties hereto agree as follows:
1. Prior Employment Agreement
The Executive and the Corporation agree that the Prior
Employment Agreement will terminate upon the execution of this
Agreement.
2. Employment
The Corporation hereby agrees to employ the Executive as
its President and Chief Operating Officer, and the Executive hereby
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agrees to render services to the Corporation and its subsidiaries,
divisions and affiliates for the period and on the terms and
conditions set forth in this Agreement. However, after the
Corporation hires a new President and Chief Operating Officer, the
Executive shall assume a new position in an executive capacity,
with his job title to be agreed upon by the Executive and Chairman
of the Board. For the balance of the contractual term, the
Executive shall render such services as may be required of the
Executive by the Chairman of the Board from time to time as set
forth in Section 4 of this Agreement.
3. Term
The Executive's employment under this Agreement shall be
as follows: from the date of the execution of this Agreement
through and including December 31, 1994, the Executive shall remain
as a full-time employee of the Corporation. However, following the
commencement of employment by the Executive's replacement, the
Executive shall begin the transition to part-time employee status,
as soon thereafter as practicable. The Corporation anticipates
this transition being completed by September 30, 1994, but in no
event later than December 31, 1994. Thereafter (i.e., commencing
January 1, 1995), the Executive shall remain as a part-time
employee for a five year term, unless this Agreement is terminated
earlier pursuant to the provisions of Section 13 hereof. The
Executive shall be compensated for his services as a part-time
employee pursuant to Section 5 of this Agreement.
4. Duties
a. So long as the Executive's employment under this
Agreement shall continue on a full-time basis, pursuant to Section
three (3) above, the Executive shall, subject to periods of
illness, vacation and other excused absences, devote his entire
business time, attention, and energies to the affairs of the
Corporation and its subsidiaries, divisions and affiliates, use his
best efforts to promote its and their best interests and perform
such executive duties as may be assigned to him by the Chief
Executive Officer of the Corporation; provided, however, that such
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executive duties shall be consistent with and shall generally be of
the nature of the services ordinarily and customarily performed by
the Executive prior to the date hereof.
(1) In accordance with the provisions of Section
three (3) of this Agreement, when the Executive assumes his new
position, the Executive shall be responsible for performing those
executive-level duties and responsibilities that may be assigned to
him from time to time. Such duties shall include, but not be
limited to, serving as advisor to the Chairman; assisting in key
sales, marketing activities, strategic alliances and licensing
arrangements; consultation with respect to patent strategy, etc.
b. So long as the Executive's employment under this
Agreement shall continue pursuant to Section 3 above, the Executive
shall, if elected or appointed, serve as an executive officer
and/or director of the Corporation and of any subsidiary, division
or affiliate of the Corporation and shall hold, without any
compensation other than that provided for in this Agreement, the
executive offices in the Corporation and in any such subsidiary,
division or affiliate to which he may, at any time or from time to
time, be elected or appointed. If the Executive is elected or
appointed to serve on the Corporation's Board of Directors during
the term hereof, the Executive shall not be entitled to receive any
fees (other than reimbursement of covered expenses) that are
provided by the Corporation to its outside Directors, as it is
contemplated that the compensation provided to Executive, pursuant
to Section 5 hereof, is designed to compensate Executive for all
services he may render to the Corporation.
5. Compensation
a.(i) The Corporation hereby agrees to pay to the
Executive, and the Executive hereby agrees to accept, as
compensation for services rendered under this Agreement, a base
salary at the rate of four hundred thirty-seven thousand five
hundred dollars ($437,500) per annum for the period from January 1,
1994 through and including December 31, 1994, payable at such
intervals as the Corporation customarily pays the salaries of its
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executive officers.
(ii) During the period commencing January 1, 1995
through December 31, 1999, the Executive shall be paid a salary of
$150,000 per annum, for all services rendered by him to the
Corporation. Such salary shall be payable at such intervals as the
Corporation pays the salaries of its executive officers.
b. In addition to the base salary provided for in
subsection 5(a)(i) above, the Executive shall participate in the
Corporation's profit sharing plan and thereby be entitled to
receive an annual bonus for fiscal year 1994. The Executive's
annual target bonus amount for the fiscal year ending December 31,
1994 shall be 100% of Executive's base salary. Payment of the
bonus provided herein shall be paid to the Executive no later than
90 days after the completion of the fiscal year. The Executive
shall not participate in this Plan after December 31, 1994.
c. Through December 31, 1994, the Executive shall
continue to participate in the Corporation's Executive Retirement
Plan. Thereafter, he will not be eligible to participate in the
Plan. The Corporation also agrees to provide the Executive with a
discounted lump sum equal to his retirement benefit payable under
this Plan no later than April 1, 1995.
d. In addition to the foregoing, it is hereby agreed
that the Corporation shall, at its sole expense, provide and the
Executive shall be entitled to receive, during calendar year 1994,
the employee fringe benefits provided by the Corporation, from time
to time, to its executive officers, but in no event less favorable
to the Executive than benefits provided to him by the Corporation
as of the date of this Agreement, including, but not limited to,
benefits relating to life, medical and disability insurance, vaca-
tion time, and participation in the Corporation's existing Section
401(k) Plan; provided, however, that as used in this Agreement, the
term "employee fringe benefits" shall not include any salary or
other bonus plan, except as set forth in this Agreement.
e. In addition to the foregoing, it is hereby agreed
that commencing January 1, 1995 and continuing for the balance of
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this Agreement the Corporation shall provide and Executive shall be
entitled to receive employee fringe benefits provided by the
Corporation, from time to time to its executive officers, at its
sole expense, but in no event less favorable to the Executive than
the benefits provided to him by the Corporation as of the date of
this Agreement relating to life and disability insurance. In
addition, the Executive shall be eligible to participate in the
Corporation's group health insurance plan and 401(k) plan;
provided, however, that in the event the Executive is not entitled
to remain a member of the Corporation's group health insurance
plan, then commencing on the date the Executive is no longer
entitled to remain a member and continuing for eighteen (18) months
thereafter, the Corporation shall pay the Executive's group health
insurance premiums to enable the Executive to remain a member of
the Corporation's group health insurance plan. This period shall
constitute the Executive's COBRA continuation period as required by
applicable federal law.
6. Automobile
During the term of this Agreement, the Corporation shall
make available to the Executive the use of an automobile, with a
lease allotment of up to $1,250 per month as well as in 1994,
gasoline, maintenance and insurance expenses associated with such
automobile.
7. Expenses; Options
a. The Corporation shall pay or reimburse the Executive
for all reasonable travel and other expenses incurred or paid by
him in connection with the performance of his employment duties
under this Agreement, upon presentation to the Corporation of
expense statements or vouchers and such other supporting
documentation as it may, from time to time, reasonably require;
provided however that the maximum amount available for such
expenses may, at any time or from time to time, be fixed in advance
by the Board of Directors of the Corporation.
b. All outstanding options to purchase shares of Common
Stock of the Corporation now held by the Executive or hereafter
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awarded to the Executive during the term of this Agreement shall
vest regardless of any conditions precedent to the vesting of such
options (such as the passage of time) if and when there is a
"change in control of the Corporation" as hereafter defined. As
used in this Agreement, a "change in control of the Corporation"
shall mean a change in control of a nature that would be required
to be reported in response to Item 1 of Form 8-K promulgated under
the Securities Exchange Act of 1934, as amended, (the "Exchange
Act"); provided, that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act), other
than the Corporation or any "person" who on the date hereof is a
director or officer of the Company, is or becomes the "beneficial
owner", (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 25% or
more of the combined voting power of the Company's then outstanding
securities and the Corporation's Board of Directors, after having
been advised that such ownership level has been reached, does not,
within fifteen (15) business days, adopt a resolution approving the
acquisition of that level of securities ownership by such person;
or (ii) during any period of two consecutive years during the term
of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period has
been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at
the beginning of the period.
c. Notwithstanding the then-current state of the
Corporation's By-Laws, the Executive shall be entitled at all times
to the benefit of the maximum indemnification and advancement of
expenses available from time to time under the laws of the State of
Delaware.
d. The Corporation and/or any of its subsidiaries,
divisions or affiliates may, from time to time, apply for and
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obtain, for its or their benefit and at its or their sole expense,
key man life, health, accident, disability, or other insurance upon
the Executive, in any amounts that it or they may deem necessary or
desirable to protect its or their respective interests, and the
Executive agrees to cooperate with and assist the Corporation or
such subsidiary, division or affiliate in obtaining any and all
such insurance by submitting to all reasonable medical examina-
tions, if any, and by filling out, executing, and delivering any
and all such applications and other instrument as may reasonably be
necessary.
e. Any time after July 1, 1994, but prior to
December 31, 1994, the Corporation agrees to purchase the
Executive's primary residence located in St. James, New York, at
the residence's then fair market value (FMV). This home-sale
purchase provision will occur during this period at any time at the
Executive's request. The FMV shall be determined in accordance
with the appraisal formula: the Corporation shall arrange to have
the Executive's home appraised by two professional real estate
appraisers. The Corporation shall then average the two appraisals
to arrive at the home-sale purchase price. If the two appraisals
differ by more than five percent, the Corporation shall order a
third appraisal, and the purchase price shall then become the
average of the closest two of the three appraisals. The FMV
purchase price shall be paid to the Executive within thirty (30)
days of the completion of the appraisal process.
8. Inventions
a. The Executive agrees to and hereby does assign to
the Corporation or any subsidiary, affiliate or division of the
corporation designated by the Corporation, all his right, title and
interest throughout the world in and to all ideas, methods,
developments, products, inventions, processes, improvements,
modifications, techniques, designs and/or concepts relating
directly or indirectly to the business of the Corporation, its
subsidiaries, affiliates or divisions, whether patentable or
unpatentable, which the Executive may conceive and/or develop
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during his employment by the Corporation (whether pursuant to this
Agreement or otherwise) or which the Executive may conceive and/or
develop during a period of thirty (30) months following the
termination of his employment (whether pursuant to this Agreement
or otherwise) if such conception and/or development during such
thirty (30) month period is a direct result of the Executive's
activities while employed by the Corporation, whether or not
conceived and/or developed at the request of the Corporation or any
subsidiary, affiliate or division (the "Inventions"); provided,
however, that if the Corporation or such subsidiary, affiliate or
division determine that it will not use any such Invention or that
it will license or transfer any such Invention to an unaffiliated
third party, then it will negotiate in good faith with the
Executive, if the Executive so requests, with respect to a transfer
or license of such Invention to the Executive.
b. The Executive further agrees to promptly communicate
and disclose to the Corporation any and all such Inventions as well
as any other knowledge or information which he may possess or
obtain relating to any such Inventions.
c. In furtherance of the foregoing, the Executive
agrees that at the request of the Corporation, and at its expense,
he will make or cooperate in the making of applications for letters
patent of the United States or elsewhere and will execute such
other agreements, documents or instruments which the Corporation
may reasonably consider necessary to transfer to and vest in the
Corporation or any subsidiary, affiliate or division, all right,
title and interest in any such Inventions, and all applications for
any letters patent issued in respect of any of the foregoing.
d. The Executive shall assist, upon request, in
locating writings and other physical evidence of the making of the
Inventions and provide unrecorded information relating to them and
give testimony in any proceeding in which any of the Inventions or
any application or patent directed thereto may be involved,
provided that reasonable compensation shall be paid the Executive
for such services and the Executive shall be reimbursed for any
-8-
expenses incurred by him in connection therewith, except that
during such period of time as the Executive is employed by the
Corporation, the Corporation shall not be obligated to compensate
the Executive at a higher rate for the giving of testimony than the
rate established by law for the compensation of witnesses in the
court or tribunal where the testimony is given or in the district
where the testimony is taken. The Corporation shall give the
Executive reasonable notice should it require such services, and,
to the extent reasonably feasible, the Corporation shall use its
best efforts to request such assistance at times and places as will
least interfere with any other employment of the Executive.
e. At the expense of the Corporation, the Executive
shall assign to the Corporation all his interest in copyrightable
material which he produces, composes, or write, individually or in
collaboration with others, which arises out of work performed by
him on behalf of the Corporation, and shall sign all papers and do
all other acts necessary to assist the Corporation to obtain
copyrights on such material in any and all jurisdictions.
9. Confidential Information
The Executive hereby acknowledges that, in the course of
his employment by the corporation he has had and will have access
to secret and confidential information which relates to or affects
all aspects of the business and affairs of the Corporation and its
subsidiaries, affiliates and divisions, and which are not available
to the general public ("Confidential Information"). Without
limiting the generality of the foregoing, Confidential Information
shall include information relating to inventions (including,
without limitation, Inventions), developments, specifications,
technical and engineering data, information concerning the filing
or pendency of patent applications, business ideas, trade secrets,
products under development, production methods and processes,
sources of supply, marketing plans, and the names of customers or
prospective customers or of persons who have or shall have traded
or dealt with the Corporation. Accordingly, the Executive agrees
that he will not, at any time, without the express written consent
-9-
of the Corporation, directly or indirectly, disclose or furnish, or
negligently permit to be disclosed or furnished, any Confidential
Information to any person, firm, corporation or other entity except
in performance of his duties hereunder.
10. Confidential Materials
The Executive hereby acknowledges and agrees that any and
all models, prototypes, notes, memoranda, notebooks, drawings,
records, plans, documents or other material in physical form which
contain or embody Confidential Information and/or information
relating to Inventions and/or information relating to the business
and affairs of the Corporation, its subsidiaries, affiliates and
divisions and/or the substance thereof, whether created or prepared
by the Executive or by others (Confidential Materials), which are
in the Executive's possession or under his control, are the sole
property of the Corporation. Accordingly, the Executive hereby
agrees that, upon the termination of his employment with the
Corporation, whether pursuant to this Agreement or otherwise, or at
the Corporation's earlier request, the Executive shall return to
the Corporation all Confidential Materials and all copies thereof
in his possession or under his control and shall not retain any
copies of Confidential Materials.
11. Non-competition
a. The Executive agrees that he shall not, so long as
he shall be employed by the Corporation in any capacity (whether
pursuant to this Agreement or otherwise), without the express
written consent of the Corporation, directly or indirectly, own,
manage, operate, control or participate in the ownership,
management, operation or control or be employed by or connected in
any manner including as a consultant, with any business which is or
may be in competition, directly or indirectly, with the business of
the Corporation or any subsidiary, affiliate or division of the
Corporation.
b. The Executive agrees that for a period of thirty
(30) months, commencing on the effective date of the termination of
his employment, whether such termination is pursuant to the terms
-10-
of this Agreement or otherwise, he shall not, without the express
written consent of the Corporation, directly or indirectly, own,
manage, operate, control, or participate in the ownership,
management, operation or control, or be employed by or connected in
any manner including as a consultant, with any business, firm or
corporation which is engaged in any business activity competitive
with the business of the Corporation and its subsidiaries,
affiliates and divisions as such business is conducted during the
period of his employment by the Corporation (whether pursuant to
this Agreement or otherwise and at the termination thereof).
c. Anything to the contrary herein notwithstanding, the
provisions of this section shall not be deemed violated by the
purchase and/or ownership by the Executive of shares of any class
of equity securities (or options, warrants or rights to acquire
such securities, or any securities convertible into such
securities) representing (together with any securities which would
be acquired upon the exercise of any such options, warrants or
rights or upon the conversion of any other security convertible
into such securities) 2% or less of the outstanding shares of any
such class of equity securities of any issuer whose securities are
listed on a national securities exchange or traded on NASDAQ, the
National Quotation Bureau Incorporated or any similar organization;
provided, however, that the Executive shall not be otherwise
connected with or active in the business of the issuers described
in this subsection 11(c).
12. Remedy for Breach
The Executive hereby acknowledges that in the event of
any breach or threatened breach by him of any of the provisions of
sections 8, 9, 10 or 11 of this Agreement, the Corporation would
have no adequate remedy at law and could suffer substantial and
irreparable damage. Accordingly, the executive hereby agrees that,
in such event, the Corporation shall be entitled, without the
necessity of proving damages, and notwithstanding any election by
the Corporation to claim damages, to obtain a temporary and/or
permanent injunction to restrain any such breach or threatened
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breach or to obtain specific performance of any of such provisions,
all without prejudice to any and all other remedies which the
Corporation may have at law or in equity.
13. Termination
a. This Agreement and the employment of the Executive
by the Corporation shall terminate upon the earliest of the dates
specified below:
(1) the close of business on the date as of which
the term of the Executive's employment hereunder has
terminated as provided in section 3 hereof; provided,
however, that such term is not extended by any other
agreement between the Executive and the Corporation; or
(2) the close of business on the date of
death of the Executive; or
(3) the close of business on the effective
date of the voluntary termination by the Executive
of his employment with the Corporation; or
(4) the close of business on the day
following the date on which the Corporation shall
have given to the Executive written notice of the
election of its Board of Directors to terminate his
employment for "cause" (as defined in subsection
(b) of this section 13).
b. For purposes of this Agreement, the term "cause"
shall mean a determination by vote of a majority of the members of
the Board of Directors of the Corporation then holding office
(other than the Executive if he shall then be a director) that one
of the following conditions exists or one of the following events
has occurred;
(1) conviction of the Executive for a felony
offense; or
(2) the refusal by the Executive to perform such
service as may reasonably be delegated or assigned to
him, consistent with his position, by the Chief Executive
Officer of the Corporation; continued neglect by the
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Executive of his duties hereunder; or willful misconduct
or gross negligence on his part in connection with the
performance of such duties.
14. No Conflicting Agreements
In order to induce the Corporation to enter into this
Agreement and to employ the Executive on the terms and conditions
set forth herein, the Executive hereby represents and warrants that
he is not a party to or bound by any agreement, arrangement or
understanding, written or otherwise, which prohibits or in any
manner restricts his ability to enter into and fulfill his
obligations under this Agreement, to be employed by and serve as an
executive of the Corporation. This Agreement supersedes the Prior
Employment Agreement in all respects.
15. Miscellaneous
a. This Agreement shall become effective as of the date
hereof and, from and after that time, shall extend to and be
binding upon the Executive, his personal representative or
representatives and testate or intestate distributees, and upon the
Corporation, its successors and assigns; and the term
"Corporation", as used herein, shall include successors and
assigns.
b. Nothing contained in this Agreement shall be deemed
to involve the creation by the Corporation of a trust for the
benefit of, or the establishment by the Corporation of any other
form of fiduciary relationship with the Executive, his
beneficiaries or any of their respective legal representatives or
distributees. To the extent that any person shall acquire the
right to receive any payments from the Corporation hereunder, such
right shall be no greater than the right of any unsecured general
creditor of the Corporation.
c. Any notice required or permitted by this Agreement
shall be given by registered or certified mail, return receipt
requested, addressed to the Corporation at its then principal
office or to the Executive at his residence address, or to either
party at such other address or addresses as it or he may from time
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to time specify for the purpose in a notice similarly given to the
other party.
d. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York. In this
connection, Executive hereby consents to the jurisdiction of the
courts of the State of New York to resolve any disputes arising out
of the interpretation or administration of this Agreement.
e. This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and there are no
agreements, representations or warranties not herein set forth. No
modification of this Agreement shall be valid unless in writing and
signed by the Corporation and the Executive. A waiver of the
breach of any term or condition of this Agreement shall not be
deemed to constitute a waiver or any subsequent breach of the same
or any other term or condition.
f. If any provision of this Agreement shall be held
invalid, such invalidity shall not affect any other provisions of
this Agreement not held so invalid, and all other such provisions
shall remain in full force and effect to the full extent consistent
with the law.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement as of the day and year first above
written.
SYMBOL TECHNOLOGIES, INC.
By: s/Raymond R. Martino
By: s/Jerome Swartz
-14-
EXHIBIT 21.
SYMBOL TECHNOLOGIES, INC.
100% Owned by Symbol Technologies, Inc.
Symbol Technologies International, Inc.
116 Wilbur Place
Bohemia, NY 11716
State of Incorporation: Delaware
SymboLease, Inc.
116 Wilbur Place
Bohemia, NY 11716
State of Incorporation: Delaware
SymboLease Canada, Inc.
2540 Matheson Boulevard East
Mississauga, Ontario, Canada L4W 4Z2
State of Incorporation: Delaware
True Data Corporation
116 Wilbur Place
Bohemia, NY 11716
State of Incorporation: Delaware
Symbol Technologies Texas, Inc.
116 Wilbur Place
Bohemia, NY 11716
State of Incorporation: Texas
Symbol Technologies Asia, Inc.
116 Wilbur Place
Bohemia, NY 11716
State of Incorporation: Delaware
Symbol Technologies International, Inc.
116 Wilbur Place
Bohemia, NY 11716
State of Incorporation: New York
100% Owned Subsidiaries of Symbol Technologies International, Inc.
(Delaware)
Symbol Australia Pty. Ltd.
432 St. Kilda Road
Melbourne, Victoria 3004
Australia
Country of Incorporation: Australia
-1-
Symbol Technologies GmbH
2 Haus - 5 Stock
Prinz-Eugenstrasse 70
1040 Wein
Austria
Country of Incorporation: Austria
Symbol Technologies Canada, Inc.
2540 Matheson Blvd. East
Mississauga, Ontario, Canada L4W 4Z2
Country of Incorporation: Canada
Symbol Technologies S.A.
Centre d'Affaire d'Anthony
3 Rue du la Renaissance
92184 Antony Cedex, France
Country of Incorporation: France
Symbol Technologies GmbH
Waldstrasse 68
6057 Dietzenbach
Germany
Country of Incorporation: Germany
Symbol Technologies, S.R.L.
Via Cristoforo Colombo, 49
20090 Trezzano
S/L Naviglio, Milan, Italia
Country of Incorporation: Italy
Symbol Technologies, S.A.*
Calle Princesa 32
Edificion Piovera Azul
28042 Madrid
Spain
Country of Incorporation: Spain
Symbol Technologies Limited
12 Oaklands Park
Fishponds Road
Wokingham
Berkshire, England RG11 2FD
Country of Incorporation: United Kingdom
* Majority owned by Symbol Technologies International, Inc.
-2-
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 2-81405, No. 2-94868, No. 2-94876, No. 33-3771,
No. 33-13009, No. 33-18748, No. 33-25509, No. 33-25484, No. 33-
25567, No. 33-25510, No. 33-35821, No. 33-43580, No. 33-48025,
No. 35-48026, No. 33-78622 and No. 33-78678 on Form S-8 and No.
33-18745, No. 33-25432, No. 33-43581, No. 33-43584 and No. 33-
45016 on Form S-3 of Symbol Technologies, Inc. of our report
dated February 9, 1995, appering in this Annual Report on Form
10-K of Symbol Technologies, Inc. for the year ended December
31, 1994.
s/Deloitte & Touche LLP
Jericho, New York
March 6, 1995