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 March 31, 2004
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 of (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 April 30, 2004, there were 21,513,032 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 -
March 31, 2004 (unaudited) and December 31, 2003 3
Condensed Consolidated Statements of Operations (unaudited)
-Three Months Ended March 31, 2004 and 2003 4
Condensed Consolidated Statements of Cash Flows (unaudited)
- Three Months Ended March 31, 2004 and 2003 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
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 6. Exhibits and Reports on Form 8-K 20
Signatures 21
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Metrologic Instruments, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands except share data)
March 31, December 31,
Assets 2004 2003
-------- --------
(Unaudited)
Current assets:
Cash and cash equivalents $ 50,767 $ 48,817
Accounts receivable, net of allowances
of $558 and $485, respectively 27,362 27,369
Inventory 19,134 16,972
Deferred income taxes 1,757 1,758
Other current assets 3,495 3,692
-------- --------
Total current assets 102,515 98,608
Property, plant and equipment, net 16,819 16,940
Patents and trademarks, net 5,328 5,184
Holographic technology, net 223 252
Advance license fee, net 1,147 1,176
Goodwill 22,143 17,536
Other assets 120 204
-------- --------
Total assets $148,295 $139,900
======== ========
Liabilities and shareholders' equity
Current liabilities:
Current portion of lines of credit $ 3,564 $ 4,886
Current portion of notes payable 381 321
Accounts payable 8,865 7,482
Accrued expenses 12,987 11,518
Deferred contract revenue 480 289
-------- --------
Total current liabilities 26,277 24,496
Notes payable, net of current portion 249 320
Deferred income taxes 3,516 3,515
Other liabilities 3,805 3,961
Shareholders' equity:
Preferred stock, $0.01 par value: 500,000 shares
authorized; none issued - -
Common stock, $0.01 par value: 30,000,000 shares
authorized; 21,372,002 and 20,807,884 shares
issued and outstanding at March 31, 2004 and
December 31, 2003, respectively 214 208
Additional paid-in capital 82,148 80,201
Retained earnings 33,590 28,482
Accumulated other comprehensive loss (1,504) (1,283)
--------- --------
Total shareholders' equity 114,448 107,608
--------- --------
Total liabilities and shareholders' equity $ 148,295 $139,900
========= ========
See accompanying notes.
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands except share and per share data)
Three Months Ended
March 31,
2004 2003
---- ----
Sales $39,700 $31,871
Cost of sales 20,049 19,105
------- -------
Gross profit 19,651 12,766
Selling, general and
administrative expenses 9,374 7,407
Research and development
expenses 1,723 1,761
------- -------
Operating income 8,554 3,598
Other income (expenses)
Interest income 110 5
Interest expense (99) (464)
Other expense, net (326) (555)
Gain on extinguishment
of debt - 2,200
------- -------
Total other
income (expenses) (315) 1,186
------- -------
Income before provision
for income taxes 8,239 4,784
Provision for income taxes 3,131 982
------- -------
Net income $ 5,108 $ 3,802
======= =======
Basic earnings per share
Weighted average shares
outstanding 21,150,698 16,417,665
Basic earnings per share $ 0.24 $ 0.23
Diluted earnings per share
Weighted average shares
outstanding 21,150,698 16,417,665
Net effect of dilutive
securities 1,816,166 645,690
Total shares outstanding
used in computing diluted
earnings per share 22,966,864 17,063,355
Diluted earnings per share $ 0.22 $ 0.22
See accompanying notes.
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
Three Months Ended
March 31,
---------------------------
2004 2003
-------- --------
Operating activities
Net cash provided by
operating activities $ 7,035 $ 6,518
Investing activities
Restricted cash - 1,000
Purchase of property, plant and equipment (615) (374)
Purchase of minority interest in subsidiary (4,963) (70)
Patents and trademarks (248) (216)
Proceeds from sale of property 23 -
------- -------
Net cash provided by (used in)
investing activities (5,803) 340
Financing activities
Proceeds from exercise of stock options and
employee stock purchase plan 1,953 6
Principal payments on notes payable (33) (15,012)
Proceeds from issuance of notes payable - 4,137
Net proceeds from (payments on) lines of credit (1,242) 3,536
Capital lease payments (33) (6)
Issuance of warrants - 247
Increase in financing costs - (110)
Net cash provided by (used in) ------- -------
financing activities 645 (7,202)
Effect of exchange rates on cash 73 65
------- -------
Net increase (decrease) in cash and
cash equivalents 1,950 (279)
Cash and cash equivalents at beginning of period 48,817 1,202
------- -------
Cash and cash equivalents at end of period $ 50,767 $ 923
======== =======
Supplemental Disclosure:
Cash paid for interest $ 57 $ 813
Cash paid for income taxes $ 23 $ -
See accompanying notes.
METROLOGIC INSTRUMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004
(amounts in thousands except per share data)
(Unaudited)
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 110
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 Annual Report on Form 10-K for the year ended December 31, 2003,
including the Consolidated Financial Statements and the Notes to Consolidated
Financial Statements for the year ended December 31, 2003 contained therein.
Stock-Based Compensation
The Company follows Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related interpretations in accounting
for stock options. Under APB 25, if the exercise price of the Company's stock
options equals or exceeds the market price of the underlying common stock on the
date of grant, no compensation expense is recognized. Had compensation expense
for the Company's stock option plan been determined based upon the fair value at
the grant date using the Black Scholes pricing model prescribed under SFAS 123,
the Company's net earnings and net earnings per share would approximate the
pro-forma amounts as follows:
Three Months Ended
March 31,
2004 2003
---- ----
Net income:
As reported $ 5,108 $ 3,802
Deduct: (total stock-based employee
compensation expense determined
under fair value based method, net of
related taxes) (40) (137)
----- -----
Pro forma $ 5,068 $ 3,665
===== =====
Net income per share:
Basic:
As reported $ 0.24 $ 0.23
Pro forma 0.24 0.22
Diluted:
As reported $ 0.22 $ 0.22
Pro forma 0.22 0.21
No options were granted during the three months ended March 31, 2004 and March
31, 2003, respectively.
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.
Stock Splits
On June 6, 2003, the Board of Directors approved a three-for-two stock split of
our common stock. The stock split was payable in the form of a 50% stock
dividend and entitled each stockholder of record at the close of business on
June 23, 2003 to receive three shares of common stock for every two outstanding
shares of common stock held on that date. The stock dividend was payable on July
3, 2003.
On October 7, 2003, the Board of Directors approved a two-for-one stock split of
our common stock. The stock split was payable in the form of a 100% stock
dividend and entitled each stockholder of record at the close of business on
October 20, 2003 to receive two shares of common stock for every outstanding
share of common stock held on that date. The stock dividend was payable on
October 30, 2003.
The capital stock accounts, all share data and earnings per share data in the
consolidated financial statements give effect to the stock splits, applied
retroactively, to all periods presented.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current
period presentation.
3. Inventory
Inventory consists of the following:
March 31, 2004 December 31, 2003
-------------- ------------------
Raw materials $ 7,074 $ 6,444
Work-in-process 2,785 1,945
Finished goods 9,275 8,583
------ ------
Total 19,134 16,972
------ ------
4. Comprehensive Income
The Company's total comprehensive income was as follows:
Three Months Ended
March 31,
2004 2003
---- ----
Net income $ 5,108 $ 3,802
Other comprehensive income
(loss):
Change in equity due to
foreign currency
translation adjustments (221) 285
------- -------
Comprehensive income $ 4,887 $ 4,087
======= =======
5. Goodwill and Other Intangible Assets
Goodwill represents the excess of the cost of businesses acquired over the fair
value of the related net assets at the date of acquisition. The changes in the
net carrying amount of goodwill for the three months ended March 31, 2004
consist of the following:
Industrial/
POS/OEM Optical Total
--------- ---------- ---------
Balance as of December 31, 2003 $ 6,858 $ 10,678 $ 17,536
Purchase of minority interest in
subsidiaries 4,732 - 4,732
Currency translation adjustments (125) - (125)
--------- --------- ---------
Balance as of March 31, 2004 $ 11,465 $ 10,678 $ 22,143
========= ========= =========
Identifiable Intangibles
The Company had identifiable intangible assets with a net book value of $6.7
million and $6.6 million as of March 31, 2004 and December 31, 2003,
respectively.
The following table reflects the components of identifiable intangible assets:
March 31, 2004 December 31, 2003
--------------------- ----------------------
Amortizable Gross Gross
Life Carrying Accumulated Carrying Accumulated
(years) Amount Amortization Amount Amortization
----------- --------------------- ----------------------
Patents and Trademarks 17 7,392 (2,064) 7,143 (1,959)
Holographic Technology 10 1,082 (859) 1,082 (830)
Advance license fee 17 2,000 (853) 2,000 (824)
------ ------ ------ ------
Total 10,474 (3,776) 10,225 (3,613)
====== ====== ====== ======
The Company has determined that the lives previously assigned to these finite-
lived assets are still appropriate, and has recorded $163 and $149 of
amortization expense for the three months ended March 31, 2004 and 2003,
respectively.
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 quarters ended
March 31, 2004 or 2003.
The Company manages its business on a business segment basis and divides the
business into two major segments: Industrial Scanning and Optical; and Point of
Sale ("POS")/Original Equipment Manufacturers ("OEM"). Sales for the three
months ended March 31, 2004 and 2003 were as follows:
2004 2003
---- ----
Business segment net sales:
POS/OEM $ 31,105 26,666
Industrial/Optical 8,595 5,205
---------------------
Total 39,700 31,871
---------------------
Business segment gross profit:
POS/OEM $ 16,744 10,946
Industrial/Optical 2,907 1,820
---------------------
Total 19,651 12,766
---------------------
Business segment operating income (loss):
POS/OEM $ 6,853 3,626
Industrial/Optical 1,701 (28)
---------------------
Total 8,554 3,598
---------------------
Total other income (expenses) $ (315) 1,186
---------------------
Income before income taxes $ 8,239 4,784
---------------------
7. Acquisitions
Metrologic do Brasil
On February 4, 2003, the Company paid cash of $71 and signed 3 promissory notes
with a total discounted value of $204 for the remaining 49% interest in
Metrologic do Brasil. During the three months ended March 31, 2004, the Company
paid one promissory note in the amount of $75 with the two remaining promissory
notes payable on February 4, 2005 and February 4, 2006, respectively.
The Company accounted for this acquisition under the purchase method of
accounting. The total purchase price and costs in excess of assets acquired
(goodwill) was $275.
Metrologic Eria Iberica ("MEI")
On August 5, 2003, the Company entered into a purchasing agreement to purchase
the remaining 49% interest in MEI for a purchase price of 5.9 million euros.
Payments are being made in twelve quarterly installments over three years which
commenced August 5, 2003 and matures April 3, 2006. As of March 31, 2004 we had
purchased an additional 13.99%, of which 4.1% was purchased during the first
quarter of 2004 for approximately 0.5 million euros, or $0.6 million at the
exchange rate on March 31, 2004.
Metrologic Eria France ("MEF")
On March 19, 2004, the Company entered into a purchasing agreement to purchase
the remaining 49% minority interest of MEF for a purchase price of 3.6 million
euros, or $4.3 million at the exchange rate on March 31, 2004. As of March 31,
2004 we owned 100% of MEF.
The Company accounted for this acquisition under the purchase method of
accounting.
8. Recently Issued Accounting Standards
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities," or "FIN 46." 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. In
October 2003, the FASB deferred the effective date for applying the provisions
of FIN 46 to interests held in VIEs created before February 1, 2003 to the end
of the first interim or annual period ending after December 15, 2003. The
adoption of FIN 46 and related interpretations had no significant impact on our
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 Technologies, Inc., in the U.S. District Court for the
Eastern District of New York alleging that the Company was in breach of the
terms of the License Agreement between the Company and Symbol (the "Agreement").
The Complaint sought a declaratory judgment from the Court that the Company was
in breach of the Agreement. On March 31, 2003, the Court entered its decision on
the parties' respective motions for summary judgment, and finding in the
Company's favor, the Court dismissed certain counts of Symbol's complaint. On
April 9, 2003, Symbol voluntarily dismissed the remaining counts of the
complaint. Symbol filed its Notice of Appeal with the U.S. Court of Appeals for
the Second Circuit on May 7, 2003. On December 23, 2003, the Court of Appeals
dismissed Symbol's appeal in this matter. In the interim, Symbol decided to
proceed with the arbitration for which the Company had filed a Demand in June
2002, which had been stayed pending the decision by the lower court. On June 26,
2003, Symbol filed an Amended Answer and Counterclaims asserting that (a) the
Company's allegedly infringing products are royalty bearing products, as defined
under the Agreement, and (b) in the alternative, those products infringe upon
one or more of Symbol's patents. In December 2003, the Company withdrew its
Demand for Arbitration, and the parties have briefed the threshold issue of
arbitrability in this matter on Symbol's remaining counterclaims. In March 2004,
the parties argued their respective positions to the arbitrator and no decision
has yet been reached.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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 of such
parties, 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 any future outbreak of Severe Acute Respiratory Syndrome ("SARS")
in Asian and other markets; (vii) the effects of and 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;
(xiii) and 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.
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, 2003
contained in our Annual Report on Form 10-K for the year ended December 31,
2003. The Condensed Consolidated Financial Statements for the three months ended
March 31, 2004 and 2003 are unaudited.
Metrologic Instruments, Inc. and its subsidiaries (collectively, "we", "us",
"our" or the "Company") are experts in optical image capture and processing
solutions. We utilize our expertise to design, manufacture and market
sophisticated imaging and scanning solutions serving a variety of point-of-sale,
commercial and industrial applications. Our solutions utilize a broad array of
laser, holographic and vision-based technologies designed to provide superior
functionality and a compelling value proposition for our customers.
Executive Overview
We are experts in optical image capture and processing solutions. We utilize our
expertise to design, manufacture and market sophisticated imaging and scanning
solutions serving a variety of point-of-sale, commercial and industrial
applications. Our solutions utilize a broad array of laser, holographic and
vision-based technologies designed to provide superior functionality and a
compelling value proposition for our customers. In recent years, we have
increased sales, cash flow from operations and net income primarily through the
introduction of new products and a focus on cost reduction activities to
maintain a competitive advantage.
Success factors critical to our business include sales growth through continued
penetration in existing and new markets, maintaining a highly responsive and
cost efficient infrastructure, achieving the financial flexibility to ensure
that we can respond to new market opportunities in order to return value to our
shareholders and selective pursuit of strategic acquisitions.
In order to continue our penetration into new and existing markets, our strategy
involves expanding our sales channels and expanding our product development
activities. We have recently concentrated our direct sales efforts to further
penetrate some of the largest retailers in the United States. During 2003, we
were awarded significant contracts from some major customers in both our POS/OEM
and Industrial/Optical business segments. A significant portion of the shipments
related to these orders occurred in the first quarter of 2004 contributing to
the quarter over quarter sales growth of 24.6%. In addition, we continued to
invest in developing new and improved products to meet the changing needs of our
existing customers. A significant portion of our product development was focused
on the introduction of POS and industrial products that will allow us to
penetrate new markets that we have not previously served. During the first
quarter of 2004, we began to recognize the benefits of the new products
developed during fiscal 2003 as sales for the three months ended March 31, 2004
benefited by approximately $1.1 million related to these new product
developments. Furthermore, we currently have several promising new products in
the pipeline with anticipated rollouts throughout the remainder of fiscal 2004.
We continue to believe 2004 sales will be positively affected as these new
products either begin to ship or ship in larger quantities.
To maintain a highly responsive and cost efficient infrastructure, our focus is
to maximize the efficiency of our organization through process improvements and
cost containment. We continually strive to reduce our manufacturing costs
through product engineering and design efforts. During the three months ended
March 31, 2004, we continued to realize the benefits of these process
improvements through lower direct material costs, direct labor costs, royalty
costs and related overhead costs. In addition, the construction of our
manufacturing facility in Suzhou, China continued on schedule, which will nearly
double the size of the existing China operations and more importantly, will take
advantage of cost efficiencies through lower direct labor costs.
Closely linked to the success factors discussed above is our continued focus to
achieve financial flexibility. In October 2003, we completed a follow-on public
offering, which provided us with net proceeds of $55.5 million. We used a
portion of those net proceeds to pay down existing indebtedness and purchase our
Blackwood, NJ facility. We intend to use the remaining net proceeds to fund
working capital requirements in the future for continued growth of our business.
As of March 31, 2004, we had total debt of approximately $4.2 million compared
to $14.4 million as of March 31, 2003. Furthermore, we had cash and cash
equivalents of approximately $50.8 million as of March 31, 2004. We believe that
our current cash and working capital positions and expected operating cash flows
will be sufficient to fund our working capital, planned capital expenditures and
debt repayment requirements for the foreseeable future.
In addition to our internal development and organic growth, we may selectively
pursue strategic acquisitions that we believe will broaden or complement our
current technology base and allow us to serve additional end users and the
evolving needs of our existing customers. In March 2004, we purchased the
remaining 49% interest in Metrologic Eria France for approximately 3.6 million
euros, or $4.3 million at the exchange rate on March 31, 2004.
Forward-looking statements contained in this overview are highly dependent upon
a variety of important factors which could cause actual results to differ
materially from those reflected in such forward looking statements. For a list
of the factors that could cause actual results to differ from expectations,
refer to the section above on Forward Looking Statements.
Results of Operations
Our business is divided into two major segments: Point-of-Sale/Original
Equipment Manufacturers, or POS/OEM, and Industrial Scanning and Optical.
POS/OEM bar code scanners are typically either handheld scanners or fixed
projection scanners. Handheld bar code scanners are principally suited for
retail point-of-sale, document processing, library, healthcare and inventory
applications. Fixed projection scanners, which can be mounted on or in a
counter, are principally suited for supermarkets, convenience stores, mass
merchandisers, health clubs and specialty retailers.
Industrial Scanning and dimensioning products are comprised of fixed position
systems that are either laser or vision-based. These systems range from simple,
one-scanner solutions to complex, integrated systems incorporating
multi-scanner, image capture and dimensioning technologies. Adaptive optical
solutions are highly customized sophisticated, laser-based systems that correct
for the natural distortion of light as it exits a complex laser and travels
through the atmosphere or other transmission medium.
The following table sets forth certain information regarding our revenues by our
two business segments for the periods indicated.
Three Months Ended
March 31,
2004 2003
---- ----
($ in Thousands)
POS/OEM $ 31,105 $ 26,666
Industrial & Optical:
Industrial 5,209 3,084
Optical 3,386 2,121
------ ------
Total Industrial 8,595 5,205
------ ------
Total Company $ 39,700 $ 31,871
====== ======
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 will increase in 2004, which will
result in reduced labor and manufacturing costs in our POS scanners. In the
three months ended March 31, 2004, 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, when compared to the
comparable period in 2003.
The following table sets forth certain information as to our sales by
geographical location:
Three Months Ended
March 31,
2004 % 2003 %
---- ----
($ in Thousands)
North America 17,262 43.5% 14,219 44.6%
Europe 16,929 42.6% 13,757 43.2%
Rest of World 5,509 13.9% 3,895 12.2%
------ ------ ------ ------
Total $ 39,700 100.0% $ 31,871 100.0%
====== ====== ====== ======
Three Months Ended March 31, 2004 Compared with Three Months Ended March 31,
2003
Sales increased 24.6% to $39.7 million in the three months ended March 31, 2004
from $31.9 million in the three months ended March 31, 2003. Sales of our POS
and original equipment manufacturers ("OEM") products increased by 16.6%, sales
of industrial products increased by 68.9% and sales of optical systems increased
by 59.6%. Approximately $2.3 million of the increase in POS/OEM sales resulted
from the strengthening of the euro against the U.S. dollar. POS/OEM sales
increased approximately $4.6 million due to increased unit sales of handheld and
in-counter scanners, of which $1.1 million was attributed to the introduction of
new products during 2003. These factors were partially offset by a decrease of
approximately $1.9 million resulting from lower average selling prices due to
competitive pricing pressures experienced in the retail sector, primarily in
Europe.
The increase in industrial products sales is attributable to a contract with a
major airline customer for bar code scanning equipment and installation services
to build and install scanning stations and tunnels for use in baggage handling
systems. The increase in optical systems sales reflects an increase in customer
funded research and development programs in the first quarter of 2004.
International sales accounted for $22.4 million, or 56.5% of total sales, in the
three months ended March 31, 2004 and $17.7 million, or 55.4% of total sales, in
the three months ended March 31, 2003. The largest portion of the growth in
international sales was from increased sales in Europe. The increase in European
sales is attributable to increased unit volume along with the strengthening of
the euro against the U.S. dollar, offset by lower average selling prices. No
individual customer accounted for 10.0% or more of sales in the three months
ended March 31, 2004 or 2003.
Cost of sales increased to $20.0 million in the three months ended March 31,
2004 from $19.1 million in the three months ended March 31, 2003. As a
percentage of sales, cost of sales decreased from 59.9% in 2003 to 50.5% in
2004. The decrease in the percentage of cost of sales can be attributed to the
following key factors:
o The strengthening of the euro against the U.S. dollar, as discussed
above, net of the effect of decreases in average selling prices.
o A decrease in direct labor and manufacturing costs as a percent of
sales as a result of increased unit production in our Suzhou, China
facility.
o A decrease in direct material costs as a percent of sales resulting
from product redesigns and our engineering efforts to reduce bill of
material costs.
o More favorable product mix resulting from increased sales of certain
more profitable handheld scanners in 2004. o A decrease in royalty
costs due to reduction in the number of products covered by the
agreement between Symbol Technologies and the Company
Selling, general and administrative ("SG&A") expenses increased 26.6% to $9.4
million in the three months ended March 31, 2004 from $7.4 million for the three
months ended March 31, 2003. As a percentage of sales, SG&A expenses increased
slightly from 23.2% of sales in the three months ended March 31, 2003 to 23.6%
of sales in the corresponding period in 2004. The increase in SG&A expenses was
due to increased variable selling expenses associated with the higher sales
volume in 2004, the strengthening of the euro against the U.S. dollar on euro
denominated expenses, increased professional service fees and an increase in
salaries and wages and incentive compensation expense.
R&D expenses remained relatively flat in dollars at $1.7 million for the three
months ended March 31, 2004 compared to $1.8 million in the corresponding period
in 2003; however, as a percent of sales, R&D expenses decreased to 4.3% of sales
from 5.5% of sales. The decrease in R&D expenses as a percent of sales can be
attributed to more engineers working specifically on customer funded research
programs during 2004 and higher sales volume in 2004. Costs of the engineers
working on such programs are charged to costs of sales for the time spent on the
programs.
Net interest income/expense reflects net interest income of $0.01 million for
the three months ended March 31, 2004 compared with net interest expense of $0.5
million for the comparable period in 2003. The decrease can be attributed to the
following factors: (i) lower interest expense and related borrowings outstanding
in 2004 due to repayments and/or termination of outstanding debt issuances
during fiscal 2003 and (ii) higher interest income due to higher cash and cash
equivalent balance resulting from proceeds received from the follow-on public
offering that closed in October 2003.
Other income/expense reflects net other expense of $0.3 million for the three
months ended March 31, 2004 compared with net other income of $1.6 million for
the comparable period in 2003. The change can be attributed to (i) a $2.2
million gain in 2003 on the early repayment of subordinated debt related to the
acquisition of AOA in 2003, (ii) $0.5 million of bank charges in 2003 incurred
in connection with our efforts to refinance our bank debt and restructure our
overall debt position (iii) and foreign exchange losses of approximately $0.2
million in 2004 as compared with foreign exchange gains of $0.03 million in
2003.
Net income was $5.1 million, or $0.22 per diluted share for the three months
ended March 31, 2004 compared with net income of $3.8 million or $0.22 per
diluted share in 2003. Net income reflects a 38% effective tax rate for both
periods. The decrease in the value of the U.S. dollar relative to other foreign
currencies favorably affected diluted earnings per share by approximately $0.05
per diluted share as compared to the corresponding period in 2003.
Inflation and Seasonality
Inflation and seasonality have not had a material impact on our results of
operations. However, our sales are typically impacted by fluctuation decreases
in seasonal demand from European customers in our third quarter.
Liquidity and Capital Resources
Operating activities
Net cash provided from operations was $7.0 million and $6.5 million for the
three-month periods ended March 31, 2004 and 2003, respectively. Net cash
provided by operating activities for the three months ended March 31, 2004 can
be attributed primarily to net income of $5.1 million, depreciation and
amortization of approximately $0.9 million, increases in accounts payable and
accrued expenses offset by increases in inventory and accounts receivable.
Our working capital increased $2.1 million or 2.8% to $76.2 million as of March
31, 2004 from $74.1 million as of December 31, 2003. The key component of the
increase in working capital was an increase in inventory of $2.2 million as a
result of a buildup in the inventory levels resulting from longer delivery cycle
of finished goods from the Suzhou, China facility as we increase our production
volume in Suzhou, along with higher inventory levels at AOA and a decrease in
short term debt of approximately $1.3 million.
Investing activities
Cash used in investing activities was $5.8 million for the three months ended
March 31, 2004 as compared to cash provided by investing activities of $0.3
million for the comparable period in 2003. The increase in cash used in
investing activities is primarily due to (i) the quarterly installment made to
purchase the 49% minority interest of Metrologic Eria Iberica, (ii) the purchase
of the remaining 49% interest in Metrologic Eria France (See "Acquisition of
Minority Interests" below for additional information), and (iii) increase in
cash used for property, plant and equipment purchases of $0.6 million primarily
for manufacturing expansion related investments as well as manufacturing
automation and information technology related equipment.
Financing activities
Cash provided by financing activities was $0.6 million for the three months
ended March 31, 2004 compared to cash used in financing activities of $7.2
million for the comparable period in 2003. Cash provided by financing activities
for the three months ended March 31, 2004 consist of $2.0 million of proceeds
from the exercise of stock options and employee stock purchase plan offset by
$1.2 million of net repayments on outstanding lines of credit.
We believe that our current cash and working capital positions and expected
operating cash flows will be sufficient to fund our working capital, planned
capital expenditures and debt repayment requirements for the foreseeable future.
Foreign Currency Exchange
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 our exposure to foreign
currency risks. Derivative financial instruments may include (i) foreign
currency forward exchange contracts with our 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 March 31, 2004.
Acquisition of Minority Interests
Our original 51% minority interests in Metrologic Eria Iberica and Metrologic
Eria France contained options for us to purchase the remaining 49% interests. In
August 2003, we entered into an agreement to purchase the 49% minority interest
of Metrologic Eria Iberica for approximately 5.9 million euros, or $6.8 million
at the exchange rate on September 30, 2003, over three years commencing in
August 2003. As of March 31, 2004, we had purchased an additional 13.99%, of
which 4.1% was purchased during the first quarter of 2004, for approximately 0.5
million euros, or $0.6 million at the exchange rate on March 31, 2004.
In March 2004, we entered into an agreement to purchase the 49% minority
interest of Metrologic Eria France for approximately 3.6 million euros, or $4.3
million at the exchange rate on March 31, 2004. As of March 31, 2004, we owned
100% of Metrologic Eria France.
Impact of Recently Issued Accounting Standards
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities," or "FIN 46." 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. In
October 2003, the FASB deferred the effective date for applying the provisions
of FIN 46 to interests held in VIEs created before February 1, 2003 to the end
of the first interim or annual period ending after December 15, 2003. The
adoption of FIN 46 and related interpretations had no significant impact on our
consolidated financial position, consolidated results of operations or
liquidity.
Item 3- Quantitative and Qualitative Disclosures about Market Risk
The information contained in Item 7A of the Company's Annual Report on Form 10-K
for the year ended December 31, 2003 is hereby incorporated herein by reference.
Item 4- Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, as of the end of the period
covered by this report, we carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures. This evaluation
was carried out under the supervision and with the participation of our
Management, including our principal executive officer and principal financial
officer. These officers concluded that these disclosure controls and procedures
are sufficient to provide that (a) material information relating to the Company
is made known to these officers by other employees of the Company, particularly
material information related to the period for which this periodic report is
being prepared; and (b) this information is recorded, processed, summarized,
evaluated and reported, as applicable, within the time periods specified in the
rules and forms promulgated by the Securities and Exchange Commission.
There have been no changes in the Company's internal controls over financial
reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is currently involved in matters of litigation arising in the normal
course of business as well as the matters described below. 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.
A. Symbol Technologies, Inc. et. al. v. Lemelson Medical, Educational & Research
Foundation, Limited Partnerships
On July 21, 1999 the Company and six other leading members (Accu-Sort Systems,
Inc., Intermec Technologies Corporation, a wholly-owned subsidiary of UNOVA,
Inc., PSC Inc., Psion Teklogix Corporation, Symbol Technologies, Inc., and Zebra
Technologies Corporation) of the Automatic Identification and Data Capture
Industry (the "Auto ID companies") jointly initiated a litigation against the
Lemelson Medical, Educational, & Research Foundation, Limited Partnership (the
"Lemelson Partnership"). The suit was commenced in the U.S. District Court,
District of Nevada in Reno, Nevada, and later transferred to the District Court
in Las Vegas, Nevada. In the litigation, the Auto ID companies sought, among
other remedies, a declaration that certain patents, which have been asserted by
the Lemelson Partnership against end users of bar code equipment, are invalid,
unenforceable and not infringed.
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 on this matter was held from November 2002 through January 2003. On
January 23, 2004, the Judge issued a decision in favor of the Auto ID companies
finding that the patents in suit were not infringed, invalid and unenforceable.
On February 12, 2004, the Lemelson Partnership filed motions to alter or amend
the Court's judgment and requesting additional findings of fact to support the
findings of law in the court's decision. The Auto ID companies will vigorously
oppose these motions.
B. Metrologic v. PSC Inc.
On October 13, 1999, the Company filed suit for patent infringement against PSC
Inc. (PSC) in United States District Court for the District of New Jersey. The
complaint asserts that at least seven of the Company's patents are infringed by
a variety of point-of-sale bar code scanner products manufactured and sold by
PSC. The patents cited in the complaint cover a broad range of bar code scanning
technologies important to scanning in a retail environment including the
configuration and structure of various optical components, scanner
functionalities and shared decoding architecture. The complaint seeks monetary
damages as well as a permanent injunction to prevent future sales of the
infringing products.
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 was pending. The stay was lifted on July 18, 2003, and the Court
issued a ruling on the Markman hearing on August 26, 2003 entering a decision
and order providing an interpretation of the claims in suit. No date has been
set for trial.
C. Symbol Technologies, Inc. v. Metrologic
On May 3, 2002, we were served with a lawsuit that was filed on April 12, 2002
by Symbol Technologies, Inc., in the U.S. District Court for the Eastern
District of New York alleging that we were in breach of the terms of the License
Agreement between us and Symbol (the "Agreement"). The Complaint sought a
declaratory judgment from the Court that we were in breach of the Agreement. On
March 31, 2003, the Court entered its decision on the parties' respective
motions for summary judgment, and finding in our favor, the Court dismissed
certain counts of Symbol's complaint. On April 9, 2003, Symbol voluntarily
dismissed the remaining counts of the complaint. Symbol filed its Notice of
Appeal with the U.S. Court of Appeals for the Second Circuit on May 7, 2003. On
December 23, 2003, the Court of Appeals dismissed Symbol's appeal in this
matter. In the interim, Symbol decided to proceed with the arbitration for which
the Company had filed a Demand in June 2002, which had been stayed pending the
decision by the lower court. On June 26, 2003, Symbol filed an Amended Answer
and Counterclaims asserting that (a) Metrologic's allegedly infringing products
are royalty bearing products, as defined under the Symbol Agreement, and (b) in
the alternative, those products infringe upon one or more of Symbol's patents.
In December 2003, we withdrew our Demand for Arbitration, and the parties have
now briefed the threshold issue of arbitrability in this matter on Symbol's
remaining counterclaims. In March 2004, the parties argued their respective
positions to the arbitrator and no decision has yet been reached.
D. Metrologic v. Symbol Technologies, Inc.
On June 18, 2003, the Company filed suit against Symbol Technologies, Inc. in
the U.S. District Court for the District of New Jersey alleging claims of patent
infringement of certain of our patents by at least two Symbol products. The
complaint also contains a claim for breach of the 1996 Cross License Agreement
between the parties (the "Cross License 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, are not
infringed by Symbol and that Symbol is not in breach of the Cross License
Agreement. This matter is in the early stages of discovery.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
31.1 Certification by Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification by Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
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 Chief Financial Officer
of the Company.
(b) Reports on Form 8-K.
On February 13, 2004 and February 17, 2004, we furnished
pursuant to Item 12, certain information regarding our
Results of Operations and Filing Condition on current
reports on Form 8-K.
On February 20, 2004, we filed a Current Report on Form 8-K
reporting certain information pursuant to Item 5 of Form
8-K regarding the resignation of Thomas E. Mills IV,
President and Chief Operating Officer of Metrologic.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
METROLOGIC INSTRUMENTS, INC.
Date: May 7, 2004 By:/s/ C. Harry Knowles
------------ ----------------------------------------
C. Harry Knowles
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: May 7, 2004 By:/s/ Kevin J. Bratton
------------ -----------------------------------------
Kevin J. Bratton
Chief Financial Officer
(Principal Financial and Accounting Officer)
Exhibit Index Page Number
31.1 Certification by Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. 23
31.2 Certification by Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. 24
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. 25
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 Chief Financial Officer
of the Company. 26
Exhibit 31.1
CERTIFICATIONS
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 officer 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 officer 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 (or persons
performing the equivalent functions):
(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: May 7, 2004 /s/ C. Harry Knowles
----------------------------------
By: C. Harry Knowles
Chief Executive Officer
Exhibit 31.2
CERTIFICATIONS
I, Kevin J. 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 officer 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 officer 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 (or persons
performing the equivalent functions):
(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: May 7, 2004 /s/ Kevin J. Bratton
----------------------------------
By: Kevin J. Bratton
Chief Financial Officer
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 ending March 31,
2004 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
- ------------------------------------
By: C. Harry Knowles
Chief Executive Officer
May 7, 2004
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 ending March 31,
2004 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
- ------------------------------------
By: Kevin J. Bratton
Chief Financial Officer
May 7, 2004
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.