EX-99.1 2 prq2.htm PRESS RELEASE prq2.htm Intermec logo
 
Intermec, Inc.
6001 36th Avenue West
Everett, WA  98203-1264
www.intermec.com
 
FOR IMMEDIATE RELEASE
Contact:

Kevin P. McCarty
Director of Investor Relations
Intermec, Inc.
425-265-2472
kevin.mccarty@intermec.com

 
INTERMEC REPORTS SECOND QUARTER RESULTS
 
·  
Q2’08 Revenues of $218M, up 4% over Q2’07; Growth of 12% YTD
·  
Q2’08 Product Gross Margins up 400 bps over Q2’07
·  
Q2’08 Diluted EPS of $0.13

EVERETT, Wash. – July 31, 2008 – Intermec, Inc. (NYSE: IN) today announced financial results for its second quarter, which ended June 29, 2008.

Second quarter 2008 revenues of $218 million and net earnings from continuing operations of $7.7 million, or $0.13 per diluted share, compared to 2007 second quarter revenues of $211 million and net earnings from continuing operations of $7.9 million, or $0.13 per diluted share. First-half 2008 revenues of $435 million and net earnings from continuing operations of $15.4 million, or $0.25 per diluted share, compared to first-half 2007 revenues of $390 million and net earnings from continuing operations of $3.5 million, or $0.06 per diluted share.

“We are making progress in executing against our objectives of accelerating growth and improving profitability even in an uncertain economic environment,” said Patrick J. Byrne, President and CEO. “Our recent customer wins and channel progress when combined with a transformation of our global supply chain positions Intermec well for delivering solid operating leverage.”
 
 Second Quarter 2008 Operating Performance

·  
Second quarter 2008 revenues of $218 million increased 4 percent compared to the prior-year quarter of 2007.

·  
Geographically, North American revenues increased 5 percent over the comparable prior-year period. Revenues in Europe, Mid-East and Africa (EMEA) increased 10 percent over the prior year period; while Asia Pacific (APAC) and Latin America revenues decreased 11 and 14 percent, respectively.

·  
Systems and Solutions revenue increased 10 percent and Printer & Media revenue decreased 2 percent both over the comparable prior-year period. Service revenue decreased 7 percent compared to the prior-year period.

·  
Gross profit margins increased 210 basis points to 40.7 percent from 38.6 percent in the comparable prior-year period.  Product gross margins increased 400 basis points to 40.0 percent from 36.0 percent over the second quarter of 2007, primarily due to new product introductions, favorable manufacturing absorption and product cost reductions

·  
Operating expenses of $77.8 million increased over the prior-year quarter primarily as a result of a weaker U.S. dollar, incremental R&D investments and costs related to the Company’s ERP upgrade.

·  
Operating expenses were also affected by $1.1 million, or $0.01 per diluted share associated with the Midwest flood that damaged the Company’s Cedar Rapids facility.

·  
Operating expenses also included a $2.9 million gain, or $0.03 per diluted share, from the sale of property. In the prior-year period, operating expenses were benefited by other operating gains of approximately $2.0 million, or $0.02 per diluted share.

·  
The Company’s second quarter 2008 effective tax rate was 35.5 percent compared with 36.7 percent in the prior-year quarter.

·  
The Company’s cash equivalents and short-term investments increased $11.6 million in the quarter. The cash equivalents and short-term investments position at the end of the second quarter totaled $199.3 million.

Year-to-Date 2008 Operating Performance

·  
YTD 2008, revenues of $435 million increased 12 percent compared to $390 million for the prior-year period.

·  
YTD 2008 gross profit margins increased 310 basis points to 40.5 percent compared to 37.4 percent for the prior-year period. YTD product gross margins increased 450 basis points to 40.0 percent compared to 35.5 percent for the prior-year period.

·  
YTD 2008 net earnings from continuing operations were $15.4 million, or $0.25 per diluted share, compared to net earnings from continuing operations of $3.5 million, or $0.06 per diluted share during the YTD of 2007.

Other Business Activities

·  
On July, 10th, the Company announced its plan to relocate the final assembly of its product lines, consolidate two U.S. service depots to existing locations and transfer its on-site field service repair to a third party supplier.  These actions are consistent with the Company’s previously announced strategy to improve its gross margins, by simplifying and streamlining its own global supply chain,  providing meaningful reductions to its cost structure, while serving its customers and partners in a more responsive and efficient manner. The Company expects to record approximately $6.0 million to $7.0 million of this restructuring charge in the second half of 2008, and expect an additional $1.5 million to $2.0 million will be recorded in 2009.

·  
On July 30th, the Company announced that Royal Mail, the leading provider of mail and parcel delivery services in the United Kingdom, has awarded Intermec a contract to provide over 25,000 of its rugged, handheld CN3 mobile computers. The CN3 have been chosen as part of Royal Mail’s investment in new technology to modernize the business, improve efficiency and customer service while cutting operational costs.

Outlook - Third Quarter 2008

Intermec announced its financial forecast for the third quarter of 2008.

·  
Revenues are expected within a range of $220 million to $225 million.

·  
EPS are expected within a range of $0.06 to $0.10 per diluted share, including the expected impact of transition and restructuring related costs.

·  
The restructuring related costs are expected to be $4.0 million to $4.5 million, or $0.04 to $0.05 per diluted share.

·  
The transition related costs associated with our final assembly relocation are expected to approximate $2.0 million to $3.0 million, or $0.02 to $0.03 per diluted share.


Conference Call Information

 
Intermec will hold its conference call on July 31, 2008 at 5 p.m. ET (2 p.m. PT).  The call will be hosted by Intermec President and Chief Executive Officer Patrick J. Byrne, SVP and Chief Financial Officer Lanny H. Michael, SVP Global Sales and Services Michael A. Wills, and Director of Investor Relations Kevin P. McCarty.
 
The dial-in numbers for participants are 1-(800) 621-8495 (US); 1-(210) 234-0002 (International); Passcode: (“Intermec”). The call will be broadcast on the Internet via a link from the investor’s Web page at the Intermec website at www.intermec.com/InvestorRelations

###

About Intermec, Inc.

Intermec, Inc. (NYSE:IN) develops, manufactures and integrates technologies that identify, track and manage supply chain assets. Core technologies include RFID, mobile computing and data collection systems, bar code printers and label media. The Company’s products and services are used by customers in many industries worldwide to improve the productivity, quality and responsiveness of business operations. For more information about Intermec, visit www.intermec.com or call 800-347-2636.  Contact Intermec Investor Relations Director Kevin McCarty at kevin.mccarty@intermec.com, 425-265-2472.

(Forward-looking Statements)
Statements made in this release and related statements that express Intermec’s or our management’s intentions, hopes, indications, beliefs, expectations, forecasts or predictions of the future constitute forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, and relate to matters that are not historical facts. They include, without limitation, statements regarding: potential increases in revenue or product volumes; our objectives for sales channel mix and target customer markets; our ability to develop, market and launch new or enhanced products and platforms as planned; customer acceptance of our products and technologies; our ability to improve business processes; our ability to improve gross margins or profits; our cost reduction plans; and our revenue, expense, earnings or financial outlook for the third quarter of 2008 or any future period.  They also include statements about our ability to compete effectively with our current products and newly launched products, reduce expenses, improve efficiency, realign resources, increase product development capacity, leverage our research and development investment to drive significant future revenue, and continue operational improvement and year-over-year growth, and about the applicability of accounting policies used in our financial reporting. Actual results may differ from those expressed or implied in our forward-looking statements. These statements represent beliefs and expectations only as of the date they were made. We may elect to update forward-looking statements but we expressly disclaim any obligation to do so, even if our beliefs and expectations change. Such forward-looking statements involve and are subject to certain risks and uncertainties. These include, but are not limited to, risks and uncertainties described more fully in  our reports filed or to be filed with the Securities and Exchange Commission including, but not limited to, our annual reports on Form 10-K and quarterly reports on Form 10-Q.

 
 
 

INTERMEC, INC.
  
CONSOLIDATED STATEMENTS OF OPERATIONS
  
(Unaudited, amounts in thousands except per share amounts)
  
                         
   
Three Months Ended
    
Six Months Ended
  
   
June 29,
    
July 1,
    
June 29,
    
July 1,
  
   
2008
    
2007
    
2008
    
2007
  
                         
Revenues
                        
Product
   $ 180,455     $ 169,939     $ 360,028     $ 311,451  
Service
     37,806       40,584       75,011       78,390  
Total revenues
     218,261       210,523       435,039       389,841  
Costs and Expenses
                                
Cost of product revenues
     108,189       108,726       215,894       200,920  
Cost of service revenues
     21,154       20,623       42,859       43,206  
Research and development
     17,143       16,465       33,665       32,971  
Selling, general and administrative
     59,507       52,307       118,143       105,362  
Flood related charge
     1,122       -       1,122       -  
Total costs and expenses
     207,115       198,121       411,683       382,459  
                                 
Operating profit from continuing operations
     11,146       12,402       23,356       7,382  
Gain on sale of investments
     -       -       -       -  
Interest income (expense), net
     826       119       711       378  
Earnings from continuing operations before taxes
     11,972       12,521       24,067       7,760  
Provision for income taxes
     4,250       4,591       8,639       4,261  
Earnings from continuing operations
     7,722       7,930       15,428       3,499  
Loss from discontinued operations, net of tax
             (1,283 )             (1,283 )
Net earnings
   $ 7,722     $ 6,647     $ 15,428     $ 2,216  
                                 
Basic earnings per share
                                
Continuing operations
   $ 0.13     $ 0.13     $ 0.25     $ 0.06  
Loss from discontinued operations
     -       (0.02 )     -       (0.02 )
Net earnings per share
   $ 0.13     $ 0.11     $ 0.25     $ 0.04  
                                 
Diluted earnings per share
                                
Continuing operations
   $ 0.13     $ 0.13     $ 0.25     $ 0.06  
Loss from discontinued operations
     -       (0.02 )     -       (0.02 )
Net earnings per share
   $ 0.13     $ 0.11     $ 0.25     $ 0.04  
                                 
Shares used in computing earnings (loss) per share
                          
Basic
     61,103       60,251       61,030       60,121  
Diluted
     61,611       61,065       61,543       60,987  

 
 
 


INTERMEC, INC.
  
CONSOLIDATED BALANCE SHEETS
  
(Unaudited, amounts in thousands)
  
             
             
   
June 29,
    
December 31,
  
   
2008
    
2007
  
ASSETS
            
             
Current assets:
            
Cash and cash equivalents
   $ 199,014     $ 237,247  
Short-term investments
     293       28,230  
Accounts receivable, net of allowance for doubtful accounts
                
and sales returns of $10,042 and $12,854
     159,664       191,487  
Inventories
     137,087       113,145  
Net current deferred tax assets
     61,501       61,532  
Other current assets
     14,543       14,690  
Total current assets
     572,102       646,331  
                 
Property, plant and equipment, net
     42,462       47,732  
Intangibles, net
     3,678       4,138  
Net deferred tax assets
     144,079       150,154  
Other assets
     59,138       52,280  
Total assets
   $ 821,459     $ 900,635  
                 
LIABILITIES AND SHAREHOLDERS' INVESTMENT
                
Current liabilities:
                
Accounts payable and accrued expenses
   $ 120,753     $ 141,667  
Payroll and related expenses
     28,978       32,170  
Deferred revenue
     53,776       49,020  
Current portion of long-term debt
     -       100,000  
Total current liabilities
     203,507       322,857  
                 
Long-term deferred revenue
     27,423       20,109  
Long-term debt
     -       -  
Other long-term liabilities
     75,280       73,558  
                 
Shareholders' investment:
                
Common stock
     616       612  
Additional paid-in-capital
     690,728       679,241  
Accumulated deficit
     (182,195 )     (196,795 )
Accumulated other comprehensive loss
     6,100       1,053  
Total shareholders' investment
     515,249       484,111  
Total liabilities and shareholders' investment
   $ 821,459     $ 900,635  

 
 
 
 

INTERMEC, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(Unaudited, amounts in thousands of dollars)
  
             
   
Six Months Ended
  
   
June 29, 2008
    
July 1, 2007
  
             
Cash and cash equivalents at beginning of year
   $ 237,247     $ 155,027  
                 
Cash flows from operating activities of continuing operations:
                
Net earnings (loss) from operations
     15,428       2,215  
Net loss from discontinued operations
     -        1,283  
Adjustments to reconcile net earnings (loss) to net cash
                
provided by (used in) operating activities:
                
Depreciation and amortization
     8,349       6,190  
Deferred taxes
     7,295       3,527  
Excess tax benefits from stock-based payment arrangements
     (1,340 )     (1,181 )
Changes in working capital and other operating activities
     (7,181 )     (11,486 )
Net cash provided by operating activities of continuing operations
     22,551       548  
                 
Cash flows from investing activities of continuing operations:
                
Capital expenditures
     (6,285 )     (5,474 )
Purchases of investments
             (1,355 )
Proceeds on sale of property, plant and equipment
     5,497       -  
Sale of investments
     28,515       1,493  
Other investing activities
     (1,538 )     (1,358 )
Net cash provided by (used in) investing activities of continuing operations
     26,189       (6,694 )
                 
Cash flows from financing activities of continuing operations:
                
Repayment of debt
     (100,000 )     -  
Excess tax benefits from stock-based payment arrangements
     1,340       1,181  
Stock options exercised
     3,845       3,042  
Other financing activities
     1,680       1,008  
Net cash (used in) provided by financing activities of continuing operations
     (93,135 )     5,231  
                 
Net cash provided by operating activities of discontinued operations
     -        250  
Net cash provided by investing activities of discontinued operations
     -       1,351  
Effect of exchange rate changes on cash and cash equivalents
     6,162       3,822  
                 
Resulting increase in cash and cash equivalents
     (38,233 )     4,508  
                 
Cash and cash equivalents at end of period
   $ 199,014     $ 159,535