UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 0-24712
Metrologic Instruments, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-1866172
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
90 Coles Road, Blackwood, New Jersey 08012
(Address of principal executive offices) (Zip Code)
(856) 228-8100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes __ No X
As of August 11, 2003 there were 8,492,328 shares of Common Stock, $.01 par
value per share, outstanding.
METROLOGIC INSTRUMENTS, INC.
INDEX
Page
No.
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
June 30, 2003 (unaudited) and December 31, 2002 3
Condensed Consolidated Statements of Operations (unaudited)
For the Three and Six Months Ended June 30, 2003 and 2002 4
Condensed Consolidated Statements of Cash Flows (unaudited)
For the Six Months Ended June 30, 2003 and 2002 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
Item 4. Controls and Procedures 18
Part II - Other Information
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Metrologic Instruments, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)
June 30, December 31,
Assets 2003 2002
-------- --------
(Unaudited)
Current assets:
Cash and cash equivalents $ 1,688 $ 1,202
Restricted cash - 1,000
Accounts receivable, net of allowance 20,167 20,412
Inventory 15,796 14,039
Deferred income taxes 999 268
Other current assets 1,562 2,258
-------- --------
Total current assets 40,212 39,179
Property, plant and equipment, net 12,185 12,600
Patents and trademarks, net of amortization 4,926 4,688
Holographic technology, net of amortization 310 368
Advance license fee, net of amortization 1,235 1,294
Goodwill 15,855 15,175
Deferred income taxes - 190
Other assets 688 758
-------- --------
Total assets $ 75,411 $ 74,252
======== ========
Liabilities and shareholders' equity
Current liabilities:
Current portion of lines of credit $ 1,756 $ 1,347
Current portion of notes payable 2,592 5,708
Accounts payable 8,261 8,719
Accrued expenses 10,620 9,389
Deferred contract revenue 821 1,707
-------- --------
Total current liabilities 24,050 26,870
Lines of credit, net of current portion 1,735 -
Notes payable, net of current portion 6,613 14,431
Deferred income taxes 651 -
Other liabilities 4,169 3,480
Shareholders' equity:
Preferred stock, $0.01 par value: 500,000 shares
authorized; none issued - -
Common stock, $0.01 par value: 10,000,000 shares
authorized; 8,432,108 and 8,208,833 shares
issued and outstanding at June 30, 2003 and
December 31, 2002, respectively 84 82
Additional paid-in capital 19,579 17,611
Retained earnings 20,590 14,601
Accumulated other comprehensive loss (2,060) (2,873)
--------- --------
Total shareholders' equity 38,193 29,471
--------- --------
Total liabilities and shareholders' equity $ 75,411 $ 74,252
========= ========
See accompanying notes.
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Sales $32,079 $29,412 $64,368 $56,941
Cost of sales 18,445 19,352 37,551 36,908
------- ------- ------- -------
Gross profit 13,634 10,060 26,817 20,033
Selling, general and
administrative expenses 8,072 7,975 15,868 15,255
Research and development
expenses 1,763 1,820 3,524 3,533
Severance costs - 75 27 351
------- ------- ------- -------
Operating income 3,799 190 7,398 894
Other income (expenses)
Interest income 8 32 13 55
Interest expense (280) (871) (745) (1,567)
Foreign currency transaction
gain 130 229 155 224
Gain on extinguishment of debt - - 2,200 -
Other, net (129) (24) (709) (14)
------- ------- ------- -------
Total other income (expenses) (271) (634) 914 (1,302)
------- ------- ------- -------
Income (loss) before income
tax provision (benefit) 3,528 (444) 8,312 (408)
Income tax provision (benefit) 1,341 (169) 2,323 (155)
------- ------- ------- -------
Net income (loss) $ 2,187 $ (275) $ 5,989 $ (253)
======= ======= ======= =======
Basic income (loss) per share:
Weighted average shares
outstanding 8,289,886 8,198,408 8,249,359 8,196,777
Basic income (loss)
per share $ 0.26 $ (0.03) $ 0.73 $ (0.03)
Diluted income (loss) per share:
Weighted average shares
outstanding 8,289,886 8,198,408 8,249,359 8,196,777
Net effect of dilutive
securities 987,784 - 655,315 -
Total shares outstanding
used in computing diluted
income (loss) per share 9,277,670 8,198,408 8,904,674 8,196,777
Diluted income (loss) per
share $ 0.24 $ (0.03) $ 0.67 $ (0.03)
See accompanying notes.
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Six Months Ended June 30,
2003 2002
-------- --------
Operating activities
Net cash provided by operating activities $ 8,278 $ 8,278
Investing activities
Restricted cash 1,000 -
Purchase of property, plant and equipment (660) (1,088)
Patents and trademarks (422) (507)
Purchase of minority interest in subsidiary (70) -
------- -------
Net cash provided used in investing activities (152) (1,595)
Financing activities
Proceeds from exercise of stock options and
employee stock purchase plan 1,693 29
Principal payments on notes payable (15,686) (1,527)
Proceeds from issuance of notes payable 4,129 102
Net proceeds from (payments on) lines of credit 2,364 (901)
Capital lease payments (22) (131)
Issuance of warrants 247 -
Amortization of warrants (20) -
Increase in deferred financing costs (110) -
Net cash used in ------- -------
financing activities (7,405) (2,428)
Effect of exchange rates on cash (235) 132
------- -------
Net increase in cash and cash equivalents 486 4,387
Cash and cash equivalents at beginning of period 1,202 557
------- -------
Cash and cash equivalents at end of period $ 1,688 $ 4,944
======== =======
Supplemental Disclosure
Cash paid for interest $ 1,098 $ 1,400
======== =======
Cash paid for income taxes $ 1,033 $ 26
======== =======
Noncash investing and financing activities:
Equipment acquired through capital leases $ 176 -
======== =======
See accompanying notes.
METROLOGIC INSTRUMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands)
1. Business
Metrologic Instruments, Inc. and its subsidiaries (collectively, the "Company")
design, manufacture and market bar code scanning and high-speed automated data
capture solutions using laser, holographic and vision-based technologies. The
Company offers expertise in one-dimensional and two-dimensional bar code
reading, optical character recognition, image lift, and parcel dimensioning and
singulation detection for customers in retail, commercial, manufacturing,
transportation and logistics, and postal and parcel delivery industries.
Additionally, through its wholly-owned subsidiary, Adaptive Optics Associates,
Inc. ("AOA"), the Company is engaged in developing, manufacturing, marketing and
distributing custom optical systems which include precision laser beam delivery,
high speed imaging control and data processing, industrial inspection, and
scanning and dimensioning systems for the aerospace and defense industry in the
United States and Canada. The Company's products are sold in more than 100
countries worldwide through the Company's sales, service and distribution
offices located in North and South America, Europe and Asia.
2. Accounting Policies
Interim Financial Information
The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the Condensed Consolidated
Financial Statements have been included. The results of the interim periods are
not necessarily indicative of the results to be obtained for a full fiscal year.
The Condensed Consolidated Financial Statements and these Notes should be read
in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in this Quarterly Report on Form 10-Q and
the Company's Registration Statement on Form S-3 filed on August 1, 2003,
including the Consolidated Financial Statements and the Notes to Consolidated
Financial Statements for the year ended December 31, 2002 contained therein.
Stock-Based Compensation
The Company accounts for stock options under SFAS No. 123, "Accounting for
Stock-Based Compensation", as amended by SFAS No. 148, which contains a fair
value-based method for valuing stock-based compensation that entities may use,
which measures compensation cost at the grant date based on the fair value of
the award. Compensation is then recognized over the service period, which is
usually the vesting period. Alternatively, SFAS No. 123 permits entities to
continue accounting for employee stock options and similar equity instruments
under Accounting Principles Board (APB) Opinion 25, "Accounting for Stock Issued
to Employees." Entities that continue to account for stock options using APB
Opinion 25 are required to make pro forma disclosures of net income and earnings
per share, as if the fair value-based method of accounting defined in SFAS No.
123 had been applied.
At June 30, 2003, the Company had one stock-based employee compensation plan.
The Company accounts for the plan under the recognition and measurement
principles of APB No. 25, and related interpretations. Stock-based employee
compensation costs are not reflected in net earnings, as all options granted
under the plan had an exercise price equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on
net earnings and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, to stock-based employee compensation (in
thousands, except per share amounts).
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Net income:
As reported $2,187 $ (275) $5,989 $ (253)
Deduct: (total stock-based employee
compensation expense determined
under fair value based method, net of
related taxes) (139) (70) (275) (157)
------ ------ ------ ------
Pro forma $2,048 $ (345) $5,714 $ (410)
====== ====== ====== ======
Net income (loss) per share:
Basic:
As reported $ 0.26 $(0.03) $ 0.73 $(0.03)
Pro forma 0.25 (0.04) 0.69 (0.05)
Diluted:
As reported $ 0.24 $(0.03) $ 0.67 $(0.03)
Pro forma 0.22 (0.04) 0.64 (0.05)
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes options-pricing model with the following weighted average
assumptions used for grants in 2002; expected volatility of 90%; risk-free
interest rate of 3.9%; and expected lives of 5 years. The estimated fair value
of the options is amortized to expense over the options' vesting period. No
options were granted during the six months ended June 30, 2003.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current
period presentation.
3. Accounts Receivable
In 2002, Metrologic Instruments GmbH, the Company's German subsidiary, entered
into a factoring agreement with a local bank to provide local financing on a
non-recourse basis. The factoring charge ranges from .52% to .62% of the
receivables assigned to the bank and outstanding advances bear interest at
6.75%. The following amounts due from factor relating to non-recourse factoring
were included in accounts receivable:
June 30, December 31,
2003 2002
---- ----
Receivables assigned to factor $ 1,271 $1,645
Less advances from factor $(1,168) (1,091)
------- ------
Due from factor $ 103 $ 554
======= ======
4. Inventory
Inventory consists of the following:
June 30, 2003 December 31, 2002
-------------- ------------------
Raw materials $ 5,801 $ 5,788
Work-in-process 2,406 1,865
Finished goods 7,589 6,386
------ ------
15,796 14,039
------ ------
5. Comprehensive Income
The Company's total comprehensive income was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Net income (loss) $ 2,187 $ (275) $ 5,989 $ (253)
Other comprehensive income
(loss):
Change in equity due to
foreign currency
translation adjustments 528 1,200 813 1,128
------- ------- ------- -------
Comprehensive income $ 2,715 $ 925 $ 6,802 $ 875
======= ======= ======= =======
6. Business Segment Information
The Company generates its revenue from the sale of laser bar code scanners
primarily to distributors, value-added resellers, original equipment
manufacturers and directly to end users, in locations throughout the world. No
individual customer accounted for 10% or more of revenues in the three-month and
six-month periods ended June 30, 2003 or 2002.
The Company manages its business on a business segment basis dividing the
business into two major segments: Industrial scanning and Optical; and Point of
Sale ("POS")/Original Equipment Manufacturers ("OEM"). Sales were attributed to
business segments as set forth in the following table.
Industrial/ Total
Optical POS/OEM Consolidated
------- --------- ---------
Three months ended June 30, 2003:
Sales $ 5,428 26,651 32,079
Income (loss)
before (benefit) provision
for income taxes $ (191) 3,719 3,528
Identifiable assets $16,421 58,990 75,411
Three months ended June 30, 2002:
Sales $ 8,289 21,123 29,412
Income (loss)
before (benefit) provision
for income taxes $ (104) (339) (444)
Identifiable assets $18,971 66,462 85,433
Six months ended June 30, 2003:
Sales $10,486 53,882 64,368
Income (loss)
before (benefit) provision
for income taxes $ (530) 8,842 8,312
Identifiable assets $16,421 58,990 75,411
Six months ended June 30, 2002:
Sales $14,695 42,246 56,941
Income (loss)
before (benefit) provision
for income taxes $ (643) 236 (408)
Identifiable assets $18,971 66,462 85,433
7. Credit Facility
On January 31, 2003, the Company executed an Amendment (the "Amendment") to the
Amended and Restated Credit Agreement dated July 9, 2002. The Amendment, which
extends the Amended and Restated Credit Agreement until January 31, 2006,
provides for a $13,000 revolving credit facility and a $4,500 term loan.
Principal payments on the term loan are $94 a month commencing in March 2003
with the balance due at maturity. The interest rates under the Amendment are
prime plus .25% on borrowings under the revolving credit facility and prime plus
..75% on the Term Loan. The Company has the option to select LIBOR rate interest
plus spreads ranging from 3.00% to 3.50%. The Amendment lowers the commitment
fee to .25% on the unused facility. Beginning with the year ending December 31,
2003, the Company could be required to make additional prepayments under the
Amendment upon the occurrence of certain events, including the sale of common
stock, or if there is excess cash flow, both as defined in the Amendment. The
Amendment contains various negative and positive covenants including minimum
tangible net worth requirements and fixed charge coverage ratios. The security
interest in the Company's assets and properties granted to the bank pursuant to
the Credit Agreement remains in effect under the Amendment. The Amendment
requires the daily application of Company receipts as payments against the
revolving credit facility and daily borrowings to fund cash requirements. In
connection with the Amendment, the personal guarantees of C. Harry Knowles,
Chairman and Chief Executive Officer and his spouse, Janet Knowles, a Director
and Vice President, Administration, were released. Outstanding borrowings under
the revolving credit facility were $1,735 at June 30, 2003.
Subordinated Debt
In connection with the acquisition of AOA, the Company entered into Subordinated
Promissory Notes ("Subordinated Debt") aggregating $11,000 with United
Technologies Optical Systems, Inc. ("UTOS"), the former parent of AOA, with
scheduled maturities of $9,000 in 2003 and $1,000 in 2004 and 2005. Interest
rates were fixed at 10%. In January 2003, the Company and UTOS entered into a
Payoff Agreement to accelerate the principal payments on the Subordinated Debt.
In accordance with the Payoff Agreement, the Company paid UTOS $5,000 on January
31, 2003 and $3,800 on March 31, 2003 as payment in full of its obligation under
the Subordinated Debt. Accordingly, the Company has recorded a $2,200 gain on
the extinguishment of the Subordinated Debt in March 2003.
In order to provide the Company with sufficient subordinated financing within
the time period required to meet the terms of the Payoff Agreement which
provided a $2,200 gain, in January 2003, the Company issued a $4,260
subordinated note to C. Harry Knowles, its Chairman and Chief Executive Officer
and his spouse, Janet H. Knowles, a Director and Vice President, Administration.
The subordinated note bears interest at 10.0% and requires 60 monthly principal
payments of $36 with the balance of $2,130 due in January 2008. In connection
with this note, the Company issued a common stock purchase warrant, expiring on
January 31, 2013, to Mr. and Mrs. Knowles to purchase 97,500 shares of its
common stock at an exercise price of $6.94 per share, which was the fair market
value on the date of issuance. These warrants were valued at the time of issue
at $247 in aggregate, and the resulting original issue discount will be
amortized into interest expense over the life of the subordinated note.
8. Recently Issued Accounting Standards
In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." In addition to other technical provisions, this Statement rescinds
FASB Statement No. 4, which required all gains and losses from extinguishment of
debt to be aggregated and, if material, classified as an extraordinary item, net
of tax. This provision is effective for fiscal years beginning after May 15,
2002, with early adoption permitted. In accordance with the provisions of SFAS
145, the Company has recorded the $2,200 gain on the extinguishment of the
Subordinated Debt in Other Income in the Consolidated Statement of Operations
for the six months ended June 30, 2003.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial statements, to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. The Company is
currently evaluating what impact, if any, adoption of FIN 46, which is required
on July 1, 2003 will have on its consolidated financial position, consolidated
results of operations, or liquidity.
9. Legal Matters
Symbol Technologies, Inc. v. Metrologic
On May 3, 2002, the Company was served with a lawsuit that was filed on April
12, 2002 by Symbol in the United States District Court for the Eastern District
of New York alleging that the Company is in breach of the terms of the License
Agreement between Symbol and the Company (the "Agreement"). The allegations of
breach relate to the dispute between the parties as to which products are
covered by the licenses under the Agreement. On May 30, 2002, the Company was
served with an amended complaint in this action. The amended complaint also
includes new claims of patent infringement from the date of the alleged breach
against the Company and C. Harry Knowles, the Company's Chairman and CEO. The
amended complaint further includes claims for injunctive relief and a claim of
fraudulent transfer related to the transactions under the Amended Credit
Agreement. The Company believes that Symbol's claims in the lawsuit are without
merit and intends to vigorously defend itself.
The Company filed a motion with the court to stay the infringement actions, and
to allow the parties to arbitrate those claims in accordance with the procedures
set forth in the Agreement. In response, Symbol filed a motion to stay the
arbitration proceedings pending a decision by the court as to whether the issues
are subject to arbitration. On October 4, 2002, the parties had a conference
with the judge during which a schedule was set for the filing of the parties'
cross motions for summary judgment.
On March 31, 2003, the Court entered its decision on the parties' respective
motions for summary judgment. In finding for the Company, the Court dismissed
certain counts of Symbol's complaint, and granted the Company's motion to compel
arbitration regarding certain matters. On April 9, 2003, Symbol voluntarily
dismissed the remaining counts of the complaint and requested that the Court
enter a final order in the case. The final order was entered on April 23, 2003.
Symbol filed its notice of appeal in May 2003 with the Court of Appeals for the
Second Circuit. The Court of Appeals has set a schedule for the filing of
briefs, with arguments set for November 2003.
Management is of the opinion that there are no legal claims against the Company
which are expected to have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.
10. Guarantees
The Company's borrowings under the Amended Credit Agreement are secured by a
pledge of stock in certain significant subsidiaries owned by and guaranteed by
one of its subsidiaries. The subsidiary would be required to perform under the
guarantees in the event that the Company failed to make principal or interest
payments under the Amended Credit Agreement. The Company's borrowings under the
Amended Credit Agreement were $5,860 and $7,345 at June 30, 2003 and December
31, 2002, respectively. If any subsidiary were to borrow under the new credit
arrangements, the Company may be required to provide a similar guarantee with
respect to the subsidiary's borrowings.
11. Subsequent Events
The Company effected a three-for-two stock split of its common stock through a
fifty percent (50%) stock dividend paid on July 3, 2003 to shareholders of
record at the close of business on June 23, 2003. The accompanying condensed
consolidated financial statements have been restated to reflect the effects of
the dividend as if it had happened on January 1, 2002.
The Company filed a registration statement with the Securities and Exchange
Commission ("SEC") on August 1, 2003 to register for sale 1,500,000 shares of
common stock. In addition, the underwriters may purchase up to an additional
303,375 shares from the Company at the public offering price, less the
underwriting discount, within 30 days from the closing date to cover
over-allotments. There can be no assurance, however, that the registration
statement filed with the SEC will be declared effective or that we will
complete the sale of our common stock.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The following discussion of our results of operations and liquidity and capital
resources should be read in conjunction with our Condensed Consolidated
Financial Statements and the related Notes thereto appearing elsewhere in this
Quarterly Report on Form 10-Q and the Consolidated Financial Statements and the
Notes to Consolidated Financial Statements for the year ended December 31, 2002
appearing in our Registration Statement on Form S-3 filed on August 1, 2003. The
Condensed Consolidated Financial Statements for the three and six months ended
June 30, 2003 and 2002 are unaudited.
Metrologic Instruments, Inc. and its subsidiaries (collectively, "we", "us",
"our" or the "Company") design, manufacture and market bar code scanning and
high-speed automated data capture solutions using laser, holographic and
vision-based technologies. We offer expertise in one-dimensional and
two-dimensional bar code reading, optical character recognition, image lift, and
parcel dimensioning and singulation detection for customers in retail,
commercial, manufacturing, transportation and logistics, and postal and parcel
delivery industries. Additionally, through our wholly-owned subsidiary, Adaptive
Optics Associates, Inc. ("AOA"), we are engaged in developing, manufacturing,
marketing and distributing custom optical systems which include precision laser
beam delivery, high speed imaging control and data processing, industrial
inspection, and scanning and dimensioning systems for the aerospace and defense
industry in the United States and Canada. Our products are sold in more than 100
countries worldwide through our sales, service and distribution offices located
in North and South America, Europe and Asia.
Forward Looking Statements; Certain Cautionary Language
Written and oral statements provided by us from time to time may contain certain
forward looking information, as that term is defined in the Private Securities
Litigation Reform Act of 1995 (the "Act") and in releases made by the Securities
and Exchange Commission ("SEC"). The cautionary statements which follow are
being made pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act. While we
believe that the assumptions underlying such forward looking information are
reasonable based on present conditions, forward looking statements made by us
involve risks and uncertainties and are not guarantees of future performance.
Actual results may differ materially from those in our written or oral forward
looking statements as a result of various factors, including but not limited to,
the following: (i) difficulties or delays in the development, production,
testing and marketing of products, including, but not limited to, a failure to
ship new products when anticipated, failure of customers to accept these
products when planned, any defects in products or a failure of manufacturing
efficiencies to develop as planned; (ii) continued or increased competitive
pressure which could result in reduced selling prices of products or increased
sales and marketing promotion costs; (iii) reliance on third party resellers,
distributors and OEMs, which subject us to business failure risks, credit and
collections exposure, and other business concentration risks; (iv) the future
health of the United States and international economies and other economic
factors that directly or indirectly affect the demand for our products; (v)
foreign currency exchange rate fluctuations between the U.S. dollar and other
major currencies including, but not limited to, the euro, Singapore dollar,
Brazilian real, Chinese renminbi and British pound affecting our results of
operations; (vi) the potential impact on production and sales resulting from the
outbreak of Severe Acute Respiratory Syndrome ("SARS") in Asian and other
markets; (vii) the effects of changes in trade, monetary and fiscal policies,
laws, regulations and other activities of government; agencies and similar
organizations, including, but not limited to trade restrictions or prohibitions,
inflation, monetary fluctuations, import and other charges or taxes,
nationalizations and unstable governments; (viii) continued or prolonged
capacity constraints that may hinder our ability to deliver ordered product to
customers; (ix) a prolonged disruption of scheduled deliveries from suppliers
when alternative sources of supply are not available to satisfy our requirements
for raw material and components; (x) the costs and potential outcomes of legal
proceedings or assertions by or against us relating to intellectual property
rights and licenses; (xi) our ability to successfully defend against challenges
to our patents and our ability to develop products which avoid infringement of
third parties' patents; (xii) occurrences affecting the slope or speed of
decline of the life cycle of our products, or affecting our ability to reduce
product and other costs and to increase productivity; and (xiii) the potential
impact of terrorism and international hostilities.
All forward-looking statements included herein are based upon information
presently available, and we assume no obligation to update any forward-looking
statements.
Critical Accounting Policies
For a discussion of our critical accounting policies and use of estimates,
please refer to Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in our Registration Statement on Form S-3 filed
on August 1, 2003. The only change in critical accounting policies during the
three or six month periods ended June 30, 2003 is the adoption of SFAS 145
during the first quarter of 2003.
Results of Operations
Most of our product sales in Western Europe, Brazil and Asia are billed in
foreign currencies and are subject to currency exchange rate fluctuations.
Currently, a significant percentage of our products are manufactured in our U.S.
facility, and therefore, sales and results of operations are affected by
fluctuations in the value of the U.S. dollar relative to such foreign
currencies. We expect, however, that the manufacture of our point-of-sale
("POS") products in our Suzhou, China facility to increase in 2003, which will
partially mitigate the profit impact of foreign exchange rate fluctuations with
reduced labor costs in our POS scanners. In the three and six months ended June
30, 2003, sales and gross profit were favorably affected by the continuing
decline in the value of the U.S. dollar in relation to certain foreign
currencies, especially the euro.
Three Months Ended June 30, 2003 Compared with Three Months Ended June 30, 2002
Sales for the quarter ended June 30, 2003 increased by $2.7 million, or 9.1%, to
$32.1 million compared with $29.4 million for the same period in 2002. Sales of
our POS and original equipment manufacturers ("OEM") products increased by
26.2%, sales of industrial products increased by 32.1%, while sales of optical
systems decreased by 58.8%. The decrease in optical systems sales reflects the
completion of certain fixed price optical projects at AOA in 2002. We benefited
from the strengthening of the euro against the U.S. dollar in the second quarter
of 2003. Sales of products denominated in euros or pounds, increased 12% in
2003, while the increase in U.S. dollars for such sales approximated 37.0%.
International sales accounted for $18.9 million, or 58.8% of total sales, in the
three months ended June 30, 2003 and $14.3 million, or 48.7% of total sales, in
the three months ended June 30, 2002. No individual customer accounted for 10.0%
or more of sales in the three months ended June 30, 2003 or 2002.
Cost of sales decreased to $18.4 million in the three months ended June 30, 2003
from $19.4 million in the three months ended June 30, 2002. As a percentage of
sales, cost of sales decreased from 65.8% in 2002 to 57.5% in 2003. The decrease
in the percentage of cost of sales was due to the strengthening of the euro
against the U.S. dollar, increased unit production in our Suzhou, China facility
resulting in reduced labor costs and lower material costs resulting from
engineering efforts to reduce bill of material costs.
Selling, general and administrative ("SG&A") expenses were $8.1 million, or
25.2% of sales, in the three months ended June 30, 2003. SG&A expenses were $8.0
million in the three months ended June 30, 2002, including $732,000 of expenses
related to the Amended and Restated Credit Agreement that was completed on July
9, 2002. Excluding these expenses, SG&A expenses were $7.2 million, or 24.6% of
sales for the three months ended June 30, 2002. The increase in SG&A expenses
was due to increased variable selling expenses associated with the higher sales
volume in 2003, the impact of the strengthening of the euro against the U.S.
dollar on euro denominated expenses, increased marketing expenses and increased
incentive compensation expense. These increases were partially offset by lower
personnel costs resulting from workforce reductions in 2002.
Other income/expense reflect net other expenses of $271,000 in the three months
ended June 30, 2003 compared with net other expenses of $634,000 in the three
months ended June 30, 2002. The decrease results primarily from lower interest
expense in 2003 due to lower outstanding borrowings and reduced interest rates.
Net income was $2.2 million, or $0.24 per diluted share, in the three months
ended June 30, 2003 compared with a net loss of $275,000, or $0.03 per diluted
share, in the same period in 2002. The net income in 2003 and the net loss in
2002 reflect a 38% effective income tax rate. The decrease in the value of the
U.S. dollar relative to other foreign currencies favorably affected diluted
earnings per share in 2003 by approximately $0.12 per diluted share as compared
with the corresponding period in 2002.
Six Months Ended June 30, 2003 Compared with Six Months Ended June 30, 2002
Sales increased 13.0% to $64.4 million in the six months ended June 30, 2003
from $56.9 million in the six months ended June 30, 2002. Sales of our POS and
OEM products increased by 27.5%, sales of industrial products increased by
49.0%, while sales of optical systems decreased by 57.2%. The decrease in
optical systems sales reflects the completion of certain fixed price optical
projects at AOA in 2002. We benefited from the strengthening of the euro against
the U.S. dollar in the first six months of 2003. Sales of products denominated
in euros or pounds increased 8% in 2003, while the increase in U.S. dollars for
such sales approximated 32%.
International sales accounted for $36.6 million, or 56.9% of total sales, in the
six months ended June 30, 2003 and $28.3 million, or 49.7% of total sales, in
the six months ended June 30, 2002. No individual customer accounted for 10.0%
or more of sales in the six months ended June 30, 2003 or 2002.
Cost of sales increased by $643,000 to $37.6 million for the six months ended
June 30, 2003 from $36.9 million for the corresponding period in 2002. As a
percentage of sales, cost of sales was 58.3% in 2003 compared with 64.8% in
2002. The decrease in the percentage of cost of sales was due to the
strengthening of the euro against the U.S. dollar, increased unit production in
our Suzhou, China facility resulting in reduced labor costs, reduced direct
labor and labor-related costs as a result of workforce reductions in March and
April 2002 and lower material costs resulting from engineering efforts to reduce
bill of material costs. These factors were partially offset by increased sales
of lower margin products not manufactured by us.
SG&A expenses increased 4.0% to $15.9 million for the six months ended June 30,
2003 from $15.3 million for the six months ended June 30, 2002. SG&A expenses in
2002 included $732,000 of expenses related to the Amended and Restated Credit
Agreement that was completed on July 9, 2002. Excluding these expenses, SG&A
expenses were $14.5 million for the six months ended June 30, 2002. As a
percentage of sales, SG&A expenses were 24.7% of sales in 2003 compared with
25.5% (excluding the non-recurring expenses of $732,000) in 2002. The increase
in SG&A expenses was due to increased variable selling expenses associated with
the higher sales volume in 2003, the impact of the strengthening of the euro
against the U.S. dollar on euro denominated expenses, increased marketing
expenses and increased incentive compensation expense. These increases were
partially offset by lower personnel costs resulting from workforce reductions in
2002.
R&D expenses remained relatively constant in dollars in the six months ended
June 30, 2003 and 2002, although as a percentage of sales, R&D expenses were
5.5% of sales in 2003 compared with 6.2% in 2002.
Severance costs decreased to $27,000 in the six months ended June 30, 2003 from
$351,000 in the six months ended June 30, 2002. The severance costs in 2002 were
due to workforce reductions in March and April 2002.
Other income/expense reflect net other income of $914,000 in the six months
ended June 30, 2003 compared with net other expense of $1.3 million in the
corresponding period in 2002. Net other income in 2003 included a $2.2 million
gain on the early extinguishment of debt in connection with early repayment of
subordinated debt related to the acquisition of AOA. This debt was repaid in
full in the first quarter of 2003. Net interest expense decreased from $1.5
million to $732,000 due to lower outstanding borrowings and lower interest rates
in 2003. Other expenses in 2003 include costs of $463,000 incurred in connection
with our efforts to refinance our bank debt and restructure our overall debt
position to enable us to realize the gain on the early extinguishment of debt.
Net income was $6.0 million, or $0.67 per diluted share, for the six months
ended June 30, 2003 compared with a net loss of $253,000, or $0.03 per diluted
share, in 2002. Net income reflects a 28% effective income tax rate for the six
months ended June 30, 2003 and a 38% effective tax rate in 2002. The decrease in
the effective tax rate was a result of the $2.2 million gain on early
extinguishment of debt which, for tax purposes, will be treated as a reduction
of the purchase price of AOA, and as such will not be subject to federal or
state income tax. The decrease in the value of the U.S. dollar relative to other
foreign currencies favorably affected diluted earnings per share by
approximately $0.25 per diluted share as compared to the corresponding period in
2002.
Inflation and Seasonality
Inflation and seasonality have not had a material impact on our results of
operations. However, our sales are typically impacted by fluctuations in
seasonal demand from European customers in the quarter ending September 30 for
quarterly results of operations, see Supplementary Data following the Notes to
our Consolidated Financial Statements included in our Registration Statement on
Form S-3 filed on August 1, 2003.
Liquidity and Capital Resources
Our working capital increased to $16.2 million as of June 30, 2003 from $12.3
million as of December 31, 2002 as a result of our profitable operations,
reduction in accounts receivable and the debt restructuring discussed in Note 7
of the Notes to the Consolidated Financial Statements.
Our operating activities provided net cash of $8.3 million for each of the six
months ended June 30, 2003 and 2002. Net cash provided in operating activities
for the six months ended June 30, 2003 resulted primarily from net income of
$6.0 million plus depreciation and amortization, reductions in accounts
receivable and increases in accrued expenses.
On January 31, 2003, we executed an Amendment (the "Amendment") to the Amended
and Restated Credit Agreement dated July 9, 2002. The Amendment, which extends
the Amended and Restated Credit Agreement until January 31, 2006, provides for a
$13 million revolving credit facility and a $4.5 million term loan. Principal
payments on the term loan are $94,000 a month commencing in March 2003 with the
balance due at maturity. The interest rates under the Amendment are prime plus
..25% on borrowings under the revolving credit facility and prime plus .75% on
the term loan. We have the option to select LIBOR rate interest plus spreads
ranging from 3.00% to 3.50%. The Amendment lowers the commitment fee to .25% on
the unused facility. Beginning with the year ending December 31, 2003, we could
be required to make additional prepayments under the Amendment upon the
occurrence of certain events or if there is excess cash flow, both as defined in
the Amendment. The Amendment contains various negative and positive covenants
including minimum tangible net worth requirements and fixed charge coverage
ratios. The security interest in our assets and properties granted to the bank
pursuant to the Amended Credit Agreement remains in effect under the Amendment.
The Amendment requires the daily application of our receipts as payments against
the revolving credit facility and daily borrowings to fund cash requirements.
In connection with the acquisition of AOA, we entered into Subordinated
Promissory Notes ("Subordinated Debt") aggregating $11.0 million with United
Technologies Optical Systems, Inc. ("UTOS"), the former parent of AOA. In
January 2003, we and UTOS entered into a Payoff Agreement to accelerate the
principal payments on the Subordinated Debt. In accordance with the Payoff
Agreement, we paid UTOS $5.0 million on January 31, 2003 and $3.8 million on
March 31, 2003 as payment in full of our obligation under the Subordinated Debt.
Accordingly, we have recorded a $2.2 million gain on the extinguishment of the
Subordinated Debt in March 2003.
In order to provide us with sufficient subordinated financing within the time
period required to meet the terms of the payoff agreement which provided a $2.2
million gain, in January 2003, we issued a $4.3 million subordinated note to C.
Harry Knowles, our Chairman and Chief Executive Officer and his spouse, Janet H.
Knowles, a Director and Vice President, Administration. The subordinated note
bears interest at 10.0% and requires 60 monthly principal payments of $36,000
with the balance of $2.1 million due in January 2008. In connection with this
note, we issued a common stock purchase warrant, expiring on January 31, 2013,
to Mr. and Mrs. Knowles to purchase 97,500 shares of our common stock at an
exercise price of $6.94 per share, which was the fair market value on the date
of issuance. These warrants were valued at the time of issue at approximately
$250,000, and the resulting original issue discount will be amortized into
interest expense over the life of the subordinated note. The Board engaged
Janney Montgomery Scott LLC ("JMS") to assist it in connection with this
transaction. Further, the disinterested Board members concluded that the
subordinated debt obtained from Mr. And Mrs. Knowles was on terms at least as
favorable to us as could have been obtained form independent third parties with
respect to interest rate, warrants and payment terms. William Rulon-Miller, a
Director of the Company, is Senior Vice President of JMS. JMS received a fee of
$225,000 for its work in connection with the Amendment and the subordinated
debt.
Our liquidity has been, and may continue to be, adversely affected by changes in
foreign currency exchange rates, particularly the value of the U.S. dollar
relative to the euro, the Brazilian real, the Singapore dollar, and the Chinese
renminbi. In an effort to mitigate the financial implications of the volatility
in the exchange rate between the euro and the U.S. dollar, we have selectively
entered into derivative financial instruments to offset its exposure to foreign
currency risks. Derivative financial instruments may include (i) foreign
currency forward exchange contracts with its primary bank for periods not
exceeding six months, which partially hedge sales to our German subsidiary and
(ii) euro based loans, which act as a partial hedge against outstanding
intercompany receivables and the net assets of our European subsidiary, which
are denominated in euros. Additionally, our European subsidiary invoices and
receives payment in certain other major currencies, including the British pound,
which results in an additional mitigating measure that reduces our exposure to
the fluctuation between the euro and the U.S. dollar although it does not offer
protection against fluctuations of that currency against the U.S. Dollar. No
derivative instruments were outstanding at June 30, 2003.
Our 51% joint venture interests in Metrologic Eria Iberica and Metrologic Eria
France contain options for us to purchase the remaining 49% minority interests.
The purchase option is calculated based on a twelve month multiple of sales and
provides us with a twelve month period in which to find a buyer or negotiate a
purchase price with a default minimum. In August 2003, we entered into an
agreement to purchase the 49% minority interest for approximately 5.9 million
euros, or $6.7 million at the exchange rate on June 30, 2003, over three years
commencing in August 2003.
We have filed a registration statement with the SEC on August 1, 2003 to
register for sale 1,500,000 shares of common stock. In addition, the
underwriters may purchase up to an additional 303,375 shares from us at the
public offering price, less the underwriting discount, within 30 days from the
closing date to cover over-allotments. There can be no assurance, however, that
the registration statement filed with the SEC will be declared effective or
that we will complete the sale of our common stock.
Disclosures about Contractual Obligations and Commercial Commitments
Less
than 1 1-3 4-5 After
Contractual Obligations Total Year Years Years 5 Years
- ----------------------- ----- ---- ----- ----- -----
Long-Term Debt 8,973 2,509 4,312 2,152 -
Capital Lease Obligations 232 83 149 - -
Operating Leases(1) 13,361 2,457 5,690 1,421 3,793
Option to purchase minority
interest in joint venture 6,702 2,474 4,228 - -
--------- ------- -------- ------- ---------
Total Contractual Cash
Obligations $ 29,268 $ 7,523 $ 14,379 $3,573 $ 3,793
========= ======= ======== ====== ========
Total Less
Amounts than 1 1-3 4-5 Over 5
Other Commercial Commitments Committed Year Years Years Years
- ---------------------------- --------- ---- ----- ----- -----
Revolving Credit Facility $ 3,491 $1,756 $1,735 $ - $ -
======== ====== ====== ===== =====
(1)Based on information as of December 31, 2002.
Item 3- Quantitative and Qualitative Disclosures about Market Risk
The information contained in Quantitative and Qualitative Disclosures about
Market Risk contained in our Registration Statement on Form S-3 filed on August
1, 2003 is hereby incorporated herein by reference.
Item 4- Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of the Company's Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer,
evaluated the effectiveness of the Company's disclosure controls and procedures
as of the end of the period covered by this report. Based on that evaluation,
the Chief Executive Officer, Chief Operating Officer, and Chief Financial
Officer concluded that the Company's disclosure controls and procedures as of
the end of the period covered by this report were designed and were functioning
effectively to provide reasonable assurance that the information required to be
disclosed by the Company in reports filed under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. The Company believes that a controls
system, no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the controls system are met, and no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected.
(b) Change in Internal Control over Financial Reporting
No change in the Company's internal control over financial reporting occurred
during the Company's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are currently involved in matters of litigation arising in the normal course
of business as well as the matters described below. The information below
updates disclosure contained in prior periodic reports. Management is of the
opinion that there are no legal claims against us, which are expected to have a
material adverse effect on our consolidated financial position, results of
operations or cash flows.
A. Symbol Technologies, Inc. et. al. v. Lemelson Medical, Educational & Research
Foundation, Limited Partnerships
On September 25, 2002, the District Court issued a trial order allocating
thirty-four (34) days for the trial on this matter commencing November 18, 2002.
The trial was commenced on that date and continued through January 17, 2003. At
the conclusion of the trial, the parties submitted a joint post-trial brief on
June 30, 2003. It is expected that the judge will issue a final ruling within
several months thereafter, but no specific date for a ruling has been set.
B. Metrologic v. PSC Inc.
On November 22, 2002, PSC filed for protection under Chapter 11 of the U.S.
Bankruptcy Code. The Court issued an automatic stay in this case while the
bankruptcy is pending. The stay was lifted by the Court on July 18, 2003, and
the parties are waiting for the judge to issue a ruling on the Markman hearing
regarding construction of the patent claims, which was held in August, 2002.
C. Symbol Technologies, Inc. v. Metrologic
On March 31, 2003, the Court entered its decision on the parties' respective
motions for summary judgment. In finding for us, the Court dismissed certain
counts of Symbol's complaint, and granted us motion to compel arbitration
regarding certain matters. On April 9, 2003, Symbol voluntarily dismissed the
remaining counts of the complaint and requested that the Court enter a final
order in the case. The final order was entered on April 16, 2003. Symbol filed
its notice of appeal in May 2003 with the Court of Appeals for the Second
Circuit. The Court of Appeals has set a schedule for the filing of briefs, with
arguments set for November 2003.
D. Metrologic v. Symbol Technologies, Inc.
On June 18, 2003, we filed suit against Symbol Technologies, Inc. in the U.S.
District Court for the District of New Jersey with claims for patent
infringement of certain of our patents by at least two (2) Symbol products. The
complaint also contains a claim for breach of the 1996 Cross License Agreement
between the parties (the "Agreement"). Symbol's answer to the complaint, filed
on July 30, 2003, included counterclaims requesting that a declaratory judgment
be entered that patents in suit are invalid, or are not infringed by Symbol and
that Symbol is not in breach of the Agreement.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Our Annual Meeting of Shareholders was held on June 19, 2003. At such
meeting, the following matters were voted upon by the shareholders, receiving
the number of affirmative, negative and withheld votes, as well as abstentions
and broker non-votes, set forth below for each matter.
(1) The vote of the common shareholders for the election of C. Harry
Knowles and Stanton L. Meltzer as directors to serve a three-year term ending in
2006 were as follows:
Number of Votes For Number of Votes Withheld Name
4,924,837 213,222 C. Harry Knowles
4,924,216 213,843 Stanton L. Meltzer
(2) The vote of the common shareholders for the appointment of Ernst &
Young as our independent auditors for the fiscal year ending December 31, 2003
was as follows:
5,130,209 For 530 Against 7,320 Abstain
--------- --- -----
The directors whose terms continue after the Annual Meeting of
Shareholders referenced above are Richard C. Close, Janet H. Knowles, John H.
Mathias, Thomas E. Mills IV, Hsu Jau Nan and William Rulon-Miller.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
31.1 Certification pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") executed by the Chief Executive
Officer of the Company.
31.2 Certification pursuant to Rule 13a-14(a) of the
Exchange Act executed by the President and Chief
Operating Officer of the Company.
31.3 Certification pursuant to Rule 13a-14(a) of the
Exchange Act executed by the Chief Financial Officer
of the Company.
32.1 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 executed by the Chief
Executive Officer of the Company.
32.2 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 executed by the President
and Chief Operating Officer of the Company.
32.3 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 executed by the Chief
Financial Officer of the Company.
(b) Reports on Form 8-K.
On April 15, 2003, we filed a Current Report on Form 8-K to
furnish certain information pursuant to Item 12 of Form 8-K
regarding our Results of Operating and Financial Condition.
On April 30, 2003, we filed a Current Report on Form 8-K to
furnish certain information pursuant to Item 12 of Form 8-K
regarding our Results of Operating and Financial Condition.
On June 10, 2003, we filed a Current Report on Form 8-K to
report a three-for-two stock split of the Company's common
stock effected as a 50% stock dividend and paid on July 3,
2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
METROLOGIC INSTRUMENTS, INC.
Date: August 14, 2003
- --------------------- By:/s/C. Harry Knowles
----------------------------------------
C. Harry Knowles
Chairman of the Board and Chief Executive
Officer (Principal Executive Officer)
Date: August 14, 2003
- --------------------- By:/s/Thomas E. Mills IV
----------------------------------------
Thomas E. Mills IV
President and Chief Operating Officer
Date: August 14, 2003
- --------------------- By:/s/Kevin J. Bratton
----------------------------------------
Kevin J. Bratton
Chief Financial Officer (Principal
Financial and Accounting Officer)
Exhibit Index
Page Number
31.1 Certification pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") executed by the Chief Executive
Officer of the Company. 24
31.2 Certification pursuant to Rule 13a-14(a) of the
Exchange Act executed by the President and Chief
Operating Officer of the Company. 25
31.3 Certification pursuant to Rule 13a-14(a) of the
Exchange Act executed by the Chief Financial Officer
of the Company. 26
32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 executed by the Chief Executive Officer of
the Company. 27
32.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 executed by the President and Chief
Operating Officer of the Company. 28
32.3 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 executed by the Chief Financial Officer
of the Company. 29
CERTIFICATION Exhibit 31.1
I, C. Harry Knowles, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Metrologic Instruments,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors;
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 14, 2003 /s/C. Harry Knowles
------------------------
CERTIFICATION Exhibit 31.2
I, Thomas E. Mills IV, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Metrologic Instruments,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors;
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 14, 2003 /s/Thomas E. Mills IV
---------------------
CERTIFICATION Exhibit 31.3
I, Kevin Bratton, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Metrologic Instruments,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors;
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 14, 2003 /s/Kevin J. Bratton
----------------------
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Metrologic
Instruments, Inc. (the "Company") on Form 10-Q for the period ended June 30,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, C. Harry Knowles, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/C. Harry Knowles
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C. Harry Knowles
Chief Executive Officer
August 14, 2003
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Metrologic Instruments, Inc. and
will be retained by Metrologic Instruments, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Metrologic
Instruments, Inc. (the "Company") on Form 10-Q for the period ended June 30,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Thomas E. Mills IV, President and Chief Operating Officer of
the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/Thomas E. Mills IV
- ------------------------------------
Thomas E. Mills IV
President and Chief Operating Officer
August 14, 2003
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Metrologic Instruments, Inc. and
will be retained by Metrologic Instruments, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.
EXHIBIT 32.3
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Metrologic
Instruments, Inc. (the "Company") on Form 10-Q for the period ended June 30,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Kevin J. Bratton, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/Kevin J. Bratton
- ------------------------------------
Kevin J. Bratton
Chief Financial Officer
August 14, 2003
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Metrologic Instruments, Inc. and
will be retained by Metrologic Instruments, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.