10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 2010
OR
o	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: 001-13279

Intermec, Inc.

(Exact name of registrant as specified in its charter)

Delaware	95-4647021
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
6001 36th Avenue West, Everett, WA	98203-1264
(Address of principal executive offices)	(Zip Code)

(425) 348-2600

(Registrant’s telephone number, including area code)

[None]

(Former name, former address and former fiscal year, if changed since last report)

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý	Accelerated filer o
Non-accelerated filer o	Smaller reporting company filer o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 23, 2010
Common Stock, $0.01 par value per share	61,854,804 shares

INTERMEC, INC.

TABLE OF CONTENTS

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 27, 2010

		Page Number
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 27, 2010, and June 28, 2009		1
	Condensed Consolidated Balance Sheets (Unaudited) as of June 27, 2010, and December 31, 2009		2
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 27, 2010, and June 28, 2009		3
	Notes to Condensed Consolidated Financial Statements (Unaudited)		4 - 13
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14 - 21
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		21
ITEM 4.	Controls and Procedures		21
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings		22
ITEM 1A.	Risk Factors		22
ITEM 5.	Other Information		22 - 23
ITEM 6.	Exhibits		24
Signature

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERMEC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 27, 2010			June 28, 2009			June 27, 2010			June 28, 2009
Revenues:
Product	$	128,729		$	123,339		$	244,472		$	252,002
Service		32,432			34,376			65,919			68,286
Total revenues		161,161			157,715			310,391			320,288
Costs and expenses:
Cost of product revenues		81,952			80,927			154,843			164,293
Cost of service revenues		19,799			19,714			39,119			39,851
Research and development		18,315			15,375			33,288			31,288
Selling, general and administrative		45,916			44,711			90,832			95,719
Restructuring charges		225			7,345			962			15,927
Impairment of facility		587			-			3,008			-
Total costs and expenses		166,794			168,072			322,052			347,078
Operating loss		(5,633	)		(10,357	)		(11,661	)		(26,790	)
Interest income		394			261			544			602
Interest expense		(323	)		(227	)		(668	)		(452	)
Loss before income taxes		(5,562	)		(10,323	)		(11,785	)		(26,640	)
Income tax benefit		(2,854	)		(3,781	)		(5,431	)		(9,698	)
Net loss	$	(2,708	)	$	(6,542	)	$	(6,354	)	$	(16,942	)
Basic loss per share	$	(0.04	)	$	(0.11	)	$	(0.10	)	$	(0.28	)
Diluted loss per share	$	(0.04	)	$	(0.11	)	$	(0.10	)	$	(0.28	)
Shares used in computing basic loss per share		61,949			61,606			61,896			61,532
Shares used in computing diluted loss per share		61,949			61,606			61,896			61,532

See accompanying notes to condensed consolidated financial statements.

1

INTERMEC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	June 27, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	186,622		$	201,884
Short-term investments		36,608			36,301
Accounts receivable, net		94,307			106,890
Inventories, net		92,997			101,537
Current deferred tax assets, net		53,080			51,140
Assets held for sale		3,196			-
Other current assets		15,662			16,826
Total current assets		482,472			514,578
Property, plant and equipment, net		36,880			37,383
Other acquired intangibles, net		2,057			2,587
Deferred tax assets, net		188,160			182,457
Other assets		28,004			34,404
Total assets	$	737,573		$	771,409
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	81,222		$	102,607
Payroll and related expenses		21,968			20,683
Deferred revenue		38,559			39,038
Total current liabilities		141,749			162,328
Long-term deferred revenue		21,641			22,010
Pension and other postretirement benefits liabilities		79,116			81,897
Other long-term liabilities		14,319			14,891
Commitments
Shareholders' equity:
Common stock (250,000 shares authorized, 62,362 and 62,203 shares issued and 61,795 and 61,653 outstanding)		624			622
Additional paid-in-capital		708,696			703,590
Accumulated deficit		(180,599	)		(174,245	)
Accumulated other comprehensive loss		(47,973	)		(39,684	)
Total shareholders' equity		480,748			490,283
Total liabilities and shareholders' equity	$	737,573		$	771,409

See accompanying notes to condensed consolidated financial statements.

2

INTERMEC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 27, 2010			June 28, 2009
Cash and cash equivalents at beginning of the period	$	201,884		$	221,335
Cash flows from operating activities:
Net loss		(6,354	)		(16,942	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		7,422			7,846
Impairment of facility		3,008			-
Deferred taxes		(6,790	)		(10,524	)
Stock-based compensation		4,241			4,172
Changes in operating assets and liabilities:
Accounts receivable		8,809			33,604
Inventories		7,025			25,021
Accounts payable and accrued expenses		(19,554	)		(34,884	)
Other long-term liabilities		54			(3,153	)
Other operating activities		1,425			3,531
Net cash (used in) provided by operating activities		(714	)		8,671
Cash flows from investing activities:
Additions to property, plant and equipment		(6,759	)		(4,720	)
Sales of property, plant and equipment		-			1,867
Capitalized patent legal fees		(1,487	)		(2,321	)
Net cash used in investing activities		(8,246	)		(5,174	)
Cash flows from financing activities:
Stock options exercised and other		863			870
Net cash provided by financing activities		863			870
Effect of exchange rate changes on cash and cash equivalents		(7,165	)		1,373
Resulting (decrease) increase in cash and cash equivalents		(15,262	)		5,740
Cash and cash equivalents at end of the period	$	186,622		$	227,075

See accompanying notes to condensed consolidated financial statements.

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Basis of Presentation

Our interim financial periods are based on a thirteen-week internal accounting calendar. In our opinion, the accompanying balance sheets, interim statements of operations and statements of cash flows include all adjustments, consisting mainly of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Intermec and our subsidiaries. Intercompany transactions and balances have been eliminated. Preparing our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and financial data included in the accompanying notes to the financial statements. Actual results and outco mes may differ from our estimates and assumptions.

Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009, as amended (the “2009 Form 10-K”).

Recent Accounting Pronouncements Not Yet Adopted

In October 2009, the Financial Accounting Standard Board (“FASB”) updated its guidance on software revenue recognition.According to this update, tangible products containing software components and non-software components, which function together to deliver the tangible product’s essential functionality are no longer within the scope of the software revenue guidance. This update provides additional guidance on how to determine which software, if any, relating to the tangible product should be excluded from the scope of the software revenue guidance. This update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after January 1, 2011. This update must be adopted in the same period u sing the same transition method as indicated below in the update to revenue arrangements with multiple deliverables. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In October 2009, the FASB updated its guidance on revenue arrangements with multiple deliverables. This guidance alters the criteria for separating consideration in multiple-deliverable arrangements. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. This update also replaces the term "fair value" in the revenue allocation guidance with "selling price" to clarify that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a market participant. It also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangements to all deliverables using the relative selling price method. This update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after January 1, 2011. We are currently assessing the potential impact that adoption of this guidance may have on our consolidated financial statements.

Reclassification

Certain amounts within the 2009 condensed consolidated financial statements have been reclassified to conform to the 2010 presentation.

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Immaterial Restatement of the Statement of Cash Flows

Subsequent to the issuance of our 2009 consolidated financial statements, we determined that certain balances within the 2009 condensed consolidated statement of cash flows were misstated due to non-cash foreign currency adjustments related to working capital items that were inappropriately mapped to the effect of exchange rates on cash and cash equivalents contrary to ASC 30, Statement of Cash Flows. In addition, we corrected for the tax benefit from stock-based payment arrangements as prescribed by ASC 718, Compensation - Stock Compensation. As a result, the affected line items under Cash flows from operating activities, Cash flows from financing activities, and effect of exchange rate changes on cash and cash equivalents of the condensed consolidated statement of cash flows for the six months ended June 28, 2009, have been restated as follows (in thousands):

	Six Months Ended June 28, 2009
	As Reported			As Restated
Cash flows from operating activities:
Deferred taxes	$	(10,634	)	$	(10,524	)
Excess tax benefit from stock-based payment arrangements		547			-
Changes in operating assets and liabilities:
Accounts receivable		32,289			33,604
Inventories		24,516			25,021
Accounts payable and accrued expenses		(34,968	)		(34,884	)
Other long-term liabilities		(2,584	)		(3,153	)
Other operating activities		3,567			3,531
Net cash provided by operating activities		7,809			8,671
Cash flows from financing activities:
Excess tax benefit from stock-based payment arrangements		(547	)		-
Net cash provided by financing activities		323			870
Effect of exchange rate changes on cash and cash equivalents	$	2,782		$	1,373

The "As Reported" amounts are presented after the impact of reclassifications described above.

The restatements impacted only line items within the condensed consolidated statement of cash flows, and do not result in any change in the beginning and ending balances of cash and cash equivalents from the amounts previously reported. The restated line items do not have any impact on the condensed consolidated balance sheets or statements of operations for any period. We have also set forth in Part II, Item 5, disclosure regarding impact of the restatement of the affected line items of the consolidated statement of cash flows for the years ended December 31, 2009 and 2008, and of the condensed consolidated statement of cash flows for the three months ended March 28, 2010, March 29, 2009, and nine months ended September 27, 2009. We do not consider any of these corrections to be material.

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

2. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our financial assets and liabilities subject to these fair value measurement provisions as of June 27, 2010, were comprised of the following (in thousands):

								Balance as of
	Level 1		Level 2			Level 3		June 27, 2010
Money market funds	$	103,412	$	-		$	-	$	103,412
Certificates of deposit		23,565		-			-		23,565
Bond fund		30,682		-			-		30,682
Stock		175		-			-		175
Derivative instruments – assets		-		912			-		912
Total assets at fair value	$	157,834	$	912		$	-	$	158,746
								Balance as of
	Level 1		Level 2			Level 3		June 27, 2010
Derivative instruments – liabilities	$	-	$	(564	)	$	-	$	(564	)
Total liabilities at fair value	$	-	$	(564	)	$	-	$	(564	)

Our financial assets and liabilities subject to these fair value measurement provisions as of December 31, 2009, were comprised of the following (in thousands):

								Balance as of
	Level 1		Level 2			Level 3		December 31, 2009
Money market funds	$	111,971	$	-		$	-	$	111,971
Certificates of deposit		12,142		-			-		12,142
Bond fund		30,459		-			-		30,459
Stock		166		-			-		166
Derivative instruments - assets		-		1,743			-		1,743
Total assets at fair value	$	154,738	$	1,743		$	-	$	156,481
								Balance as of
	Level 1		Level 2			Level 3		December 31, 2009
Derivative instruments - liabilities	$	-	$	(1,199	)	$	-	$	(1,199	)
Total liabilities at fair value	$	-	$	(1,199	)	$	-	$	(1,199	)

Our level 2 financial instrument values are based on comparable sales, such as quoted market rates for similar contracts. Level 3 values refer to fair values using unobservable inputs that are not corroborated by market data.

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

2. Fair Value Measurements (continued)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

All other nonfinancial assets and liabilities measured at fair values in the financial statements on a nonrecurring basis are subject to fair value measurements and disclosures. Nonfinancial nonrecurring assets and liabilities included on our condensed consolidated balance sheets include long lived assets that are measured at fair value to test for and measure impairment, at least annually or when necessary. During the three and six months ended June 27, 2010, we recorded impairment losses of approximately $0.6 and $3.0 million, respectively, related to a real estate asset we hold. The fair value of this asset was measured using unobservable inputs (level 3). This asset with an adjusted carrying value of $3.2 million as of June 27, 2010 is classified within assets held for sale.

The estimated fair values of certain cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and payroll and related expenses at June 27, 2010, and June 28, 2009, approximate their carrying values due to their short-term nature.

3. Derivative Instruments

Due to our global operations, we are exposed to foreign currency exchange rate fluctuations in the normal course of our business. Our treasury policies allow us to offset the risks associated with the effects of certain foreign currency exposures through the purchase of foreign exchange forward contracts. Our policy prohibits speculation in financial instruments for profit on the exchange rate price fluctuation. We enter into foreign exchange forward contracts primarily to hedge the impact of fluctuations of foreign exchange arising from intercompany transactions, including inventory purchases made by our subsidiaries that are denominated in U.S. dollars. Our foreign exchange forward contracts are not designated as hedging instruments for accounting purposes; accordingly, we record these contracts at fair value on the consolidat ed balance sheets, with changes in fair value recognized in earnings in the period of change. The aggregate notional amounts of the forward contracts we held for foreign currencies were $47.4 million as of June 27, 2010. Principal currencies we hedged include the Euro, British Pound, Mexican Peso, and Swedish Krona. These contracts do not contain any credit-risk-related contingent features.

We attempt to manage the counterparty risk associated with these foreign exchange forward contracts by limiting transactions to counterparties with which we have an established banking relationship. In addition, these contracts generally settle in approximately 30 days. See Note 2, Fair Value Measurements, for information on the fair value of these contracts.

The net gain resulting from these contracts recorded in selling, general and administrative expense was approximately $0.2 and $0.1 million for the quarters ended June 27, 2010, and June 28, 2009, respectively. We recorded a net asset (liability) of $0.3 and $(0.2) million in other current assets or accounts payable and accrued expense for the quarters ended June 27, 2010, and June 28, 2009, respectively.

4. Accounts Receivable, Net

    Accounts receivable, net, consisted of the following (in thousands):

	June 27, 2010		December 31, 2009
Accounts receivable, gross	$	98,792	$	117,223
Less:
Allowance for sales returns		3,277		9,006
Allowance for doubtful accounts		1,208		1,327
Accounts receivable, net	$	94,307	$	106,890

Our allowance for sales returns includes estimated customer returns and other incentives that were recorded as a reduction of sales for June 27, 2010. For the period ended December 31, 2009, our allowance for sales returns included estimated customer returns, price exceptions, and other incentives that were part of sales. Beginning in 2010, we began to globally record price exceptions directly to the customers‘ account instead of an allowance to gross receivables. One customer, ScanSource, accounted for 11% and 18% of our accounts receivable as of June 27, 2010, and December 31, 2009, respectively.

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

5. Inventories

Inventories consisted of the following (in thousands):

	June 27, 2010		December 31, 2009
Raw materials	$	39,854	$	45,449
Service parts		9,074		7,794
Work in process		225		252
Finished goods		43,844		48,042
Inventories, net	$	92,997	$	101,537

In addition to the inventories described above, service parts inventories totaling $3.8 and $4.3 million that were not expected to be sold within the next 12 months are classified as other assets as of June 27, 2010, and December 31, 2009, respectively.

6. Provision for Income Taxes

The tax benefit for the three and six months ended June 27, 2010, reflects an effective tax rate for continuing operations of 51.3% and 46.1%, respectively, compared to a U.S. statutory rate of 35.0%. The effective tax rate reflects our estimated annual effective tax rate of approximately 50.8% for the fiscal year 2010, which excludes the impact of discrete items. Our projected 2010 effective tax rate is higher than 2009 due primarily to our projected mix and levels of taxable income between jurisdictions and the U.S. research and development tax credit benefits that existed in 2009, which Congress has not renewed for 2010.

The U.S. Congress is currently considering bills that will extend the availability of the research and development tax credit. If the research and development credit is legislatively extended in and applicable to calendar year 2010, we expect there will be a favorable impact on our 2010 effective income tax rate of approximately 4.6% or $1.0 million in benefit.

The tax benefit for the three and six months ended June 28, 2009, reflected an effective tax rate for continuing operations of 36.6% and 36.4%, respectively, compared to a U.S. statutory rate of 35.0%. The effective tax rate reflected our then estimated annual effective tax rate of approximately 37.0% for fiscal year 2009, which excluded the impact of discrete items.

7. Shares Used in Computing Loss per Share

Basic loss per share is calculated using the weighted average number of common shares outstanding and issuable for the applicable period. Diluted loss per share is computed using basic weighted average shares plus the dilutive effect of unvested restricted stock and outstanding stock options using the “treasury stock” method.

	Three Months Ended				Six Months Ended
	June 27, 2010		June 28, 2009		June 27, 2010		June 28, 2009
Weighted average shares - basic		61,948,667		61,606,452		61,895,874		61,532,026
Dilutive effect of unvested restricted shares and stock options		-		-		-		-
Weighted average shares - diluted		61,948,667		61,606,452		61,895,874		61,532,026

Our employees and directors held options to purchase 2,986,482 and 2,672,601 shares of our common stock for the three and six months ended June 27, 2010, respectively, and 3,152,452 and 2,931,060 shares of our common stock for the three and six months ended June 28, 2009, respectively, that were not included in weighted average shares diluted calculation because they were anti-dilutive to the diluted loss per share computation. These options would become dilutive in future periods if the average market price of our common stock exceeds the exercise price of the outstanding options and we report net earnings.

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

8. Stock-Based Compensation

A summary of share-based compensation expense related to employee stock options, Restricted Stock Units (“RSU”) and Performance Stock Units (‘PSU”) for the three and six months ended June 27, 2010, (in thousands) is as follows:

	Three Months Ended June 27, 2010		Six Months Ended June 27, 2010
Stock-based compensation expense:
Cost of revenue	$	63	$	126
Selling, general and administrative		2,153		3,879
Total	$	2,216	$	4,005

For the three and six months ended June 27, 2010, we granted 602,053 and 702,802 options, respectively, to employees with an average fair value of $4.56 and $4.64 per option, respectively, which will vest annually in substantially equal quantities over four years from the date of grant. For the three and six months ended June 27, 2010, we granted 32,320 options to our directors with a fair value of $5.09 per option, which will vest quarterly over one year from the quarter they are granted. The Black-Scholes assumptions used for these calculations are as follows:

	Stock Options Granted to Employees						Stock Options Granted to Directors
	Three Months Ended June 27, 2010			Six Months Ended June 27, 2010			Three and Six Months Ended June 27, 2010
Fair value assumptions:
Expected term in years		5.08			4.98			6.51
Expected volatility		44.31	%		43.05	%		44.29	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Risk-free interest rate		2.08	%		2.10	%		2.08	%

9. Shareholders’ Equity

Our accumulated other comprehensive loss consisted of the following (in thousands):

	June 27, 2010			December 31, 2009
Foreign currency translation adjustment	$	(4,628	)	$	3,900
Unamortized benefit plan costs, net of tax of $23,954 and $23,918		(43,159	)		(43,402	)
Unrealized loss on investments, net of tax of $(66) and $(65)		(186	)		(182	)
Accumulated other comprehensive loss	$	(47,973	)	$	(39,684	)

Other comprehensive (loss) income for the three and six months ended June 27, 2010, and June 28, 2009, was as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 27, 2010			June 28, 2009			June 27, 2010			June 28, 2009
Net loss	$	(2,708	)	$	(6,542	)	$	(6,354	)	$	(16,942	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(4,933	)		5,906			(8,528	)		2,337
Unrealized gain (loss) on investment, net of tax		(26	)		40			(4	)		(16	)
Amortization of benefit plan costs, net of tax		(290	)		24,558			243			25,266
Total other comprehensive (loss) income		(5,249	)		30,504			(8,289	)		27,587
Total comprehensive (loss) income	$	(7,957	)	$	23,962		$	(14,643	)	$	10,645

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INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

10. Segment Reporting

 Our reportable segments are comprised of products and services. The product segment generates revenue from the development, manufacture, sale and resale of wired and wireless automated identification and data collection (“AIDC”) products, mobile computing products, wired and wireless bar code printers, label media and radio frequency identification (“RFID”) products and license fees. The service segment generates revenue from customer support, product maintenance and professional services related to the products and systems integration.

The accounting policies of our two reportable segments are the same as those used to prepare our consolidated financial statements. Performance and resource allocation are primarily measured by sales and standard gross profit. All other earnings, costs and expenses are aggregated and reported on a consolidated basis.

One distributor, ScanSource Inc., accounted for more than 10% of our revenues. Total sales to this distributor were $40.4 and $70.6 million for the three and six months ended June 27, 2010, respectively, and $31.4 and $52.0 million for the three and six months ended June 28, 2009, respectively.

The following table sets forth our revenues and gross profit by reportable segment (in thousands):

	Three Months Ended				Six Months Ended
	June 27, 2010		June 28, 2009		June 27, 2010		June 28, 2009
Revenues:
Product	$	128,729	$	123,339	$	244,472	$	252,002
Service		32,432		34,376		65,919		68,286
Total	$	161,161	$	157,715	$	310,391	$	320,288
Gross profit:
Product	$	46,777	$	42,412	$	89,629	$	87,709
Service		12,633		14,662		26,800		28,435
Total	$	59,410	$	57,074	$	116,429	$	116,144

The following table sets forth our revenues by product lines (in thousands):

	Three Months Ended				Six Months Ended
	June 27, 2010		June 28, 2009		June 27, 2010		June 28, 2009
Revenues:
Systems and solutions	$	86,292	$	86,249	$	165,443	$	179,387
Printer and media		42,437		37,090		79,029		72,615
Service		32,432		34,376		65,919		68,286
Total	$	161,161	$	157,715	$	310,391	$	320,288

11. Product Warranties

The following table indicates accumulated six months and twelve months change in our warranty liability included in current liabilities as of June 27, 2010, and December 31, 2009, respectively, (in thousands):

	June 27, 2010			December 31, 2009
Beginning balance	$	2,913		$	4,220
Payments or parts usage		(1,976	)		(5,789	)
Additional provision		2,325			4,482
Ending balance	$	3,262		$	2,913

10

INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

12. Commitments and Contingencies   

We have entered into a variety of agreements with third parties that include indemnification clauses, both in the ordinary course of business and in connection with our divestitures of certain product lines. These clauses require us to compensate these third parties for certain liabilities and damages incurred by them. Fair value of guarantees is required to be recorded as a liability. We do not believe that we have any significant exposure related to such guarantees and therefore have not recorded a liability as of June 27, 2010, and December 31, 2009, respectively. We have not made any significant indemnification payments as a result of these clauses. 

We capitalize external legal costs incurred in the defense of our patents where we believe that there is an evident increase in the value of the patent and that the successful outcome of the legal action is probable.  As of June 27, 2010 and December, 31, 2009, $12.0 and $11.4 million of legal patent costs have been capitalized, respectively.

We currently, and from time to time, are subject to claims and lawsuits arising in the ordinary course of business. The ultimate resolution of currently pending proceedings is not expected to have a material adverse effect on our business, financial condition, results of operations or liquidity.

13. Pension and Other Postretirement Benefits Liabilities

The components of net pension and postretirement periodic benefit cost (income) for the three and six months ended June 27, 2010, and June 28, 2009, are as follows (in thousands):

	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Other Postretirement Benefit Plans
	2010			2009			2010			2009			2010		2009
Three Months Ended June 27, 2010, and June 28, 2009
Service cost	$	-		$	241		$	74		$	-		$	-	$	-
Interest cost		2,104			2,975			462			426			64		64
Expected return on plan assets		(2,803	)		(2,703	)		(559	)		(407	)		-		-
Amortization and deferrals:
Transition asset		-			-			(31	)		(31	)		-		-
Actuarial loss		247			339			9			9			11		-
Prior service cost (income)		-			(246	)		-			-			-		-
Curtailment gain		-			(475	)		-			-			-		-
Net pension and postretirement periodic benefit cost (income)	$	(452	)	$	131		$	(45	)	$	(3	)	$	75	$	64

	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Other Postretirement Benefit Plans
	2010			2009			2010			2009			2010		2009
Six Months Ended June 27, 2010, and June 28, 2009
Service cost	$	189		$	569		$	148		$	-		$	-	$	-
Interest cost		4,208			5,912			924			853			128		128
Expected return on plan assets		(5,605)			(5,397	)		(1,118	)		(815	)		-		-
Amortization and deferrals:
Transition asset		-			-			(62	)		(61	)		-		-
Actuarial loss		495			1,291			18			17			22		-
Prior service cost (income)		-			(103	)		-			-			-		-
Curtailment gain		-			(475	)		-						-		-
Net pension and postretirement periodic benefit cost (income)	$	(713	)	$	1,797		$	(90	)	$	(6	)	$	150	$	128

11

INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

13. Pension and Other Postretirement Benefits Liabilities (continued)

Our pension and other postretirement benefit plans contributions for the three and six months ended June, 27, 2010, are as follows (in millions):

	Three Months Ended		Six Months Ended
	June 27, 2010		June 27, 2010
U.S. defined benefit postretirement benefit plans	$	1.9	$	3.7
Matching contributions to 401(k) plan		0.7		1.4
Foreign pension plans		0.6		1.1
Total	$	3.2	$	6.2

Benefits paid pertaining to our other postretirement benefit plans were not material during the three and six month periods ended June 27, 2010.

We expect to contribute an additional $6.6 million to these plans during the remainder of 2010, of which $3.7 million relates to benefit payments to our funded and unfunded U.S. defined benefit plans, $1.5 million in matching contributions to our 401(k) plan, $1.2 million in contributions to our foreign pension plans and $0.2 million in benefit payments pertaining to our other postretirement benefit plans.

In April 2009, our business restructuring plan (see Note 14, Restructuring Charges) resulted in a reduction of our workforce and the curtailment of pension benefits to the terminated employees who were participants in the U.S. pension plans. The curtailment required a new measurement of the liability to determine the gain or loss on curtailment.

14. Restructuring Charges

The total pre-tax restructuring costs for the restructuring plan announced in January 2009 were approximately $9.5 million, including employee termination costs of approximately $8.4 million, and $1.1 million of other transitional costs. We recorded the entire restructuring charge in 2009, and substantially all of the severance-related and periodic transitional costs were cash expenditures.

The total restructuring costs for the restructuring plan announced in April 2009 are in an anticipated pre-tax range of $11.0 to $13.0 million, including employee termination costs of $10.0 to $11.0 million, and $1.0 to $2.0 million of other transitional costs. We recorded $11.1 million of the restructuring charges in 2009, and $0.2 and $1.0 million for the three and six months ended June 27, 2010, respectively. We expect to record the remaining charge, which is related primarily to real estate and is expected to be non-cash, throughout 2010. We anticipate that substantially all of the severance-related and periodic transitional costs will be cash expenditures.

We made cash payments totaling $0.7 and $2.9 million for the three and six months ended June 27, 2010, in connection with the restructuring plans announced in January and April 2009.

The following table displays the restructuring charges incurred by reportable segment (in millions):

			Restructuring Charges Recorded for
Segment	Total Charges Expected to be Incurred		Three Months Ended June 27, 2010		Six Months Ended June 27, 2010		Total Restructuring Charges Incurred to Date
Product	$	1.7	$	-	$	-	$	1.7
Service		1.8		-		-		1.8
Unallocated		19.8		0.2		1.0		18.0
Total	$	23.3	$	0.2	$	1.0	$	21.5

12

    INTERMEC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

14. Restructuring Charges (continued)

The reconciliation of accrued restructuring charges as of June 27, 2010, is summarized in the table below (in millions):

	Accrued Employee Termination Costs per Contract			Accrued One-Time Employee Termination Costs			Accrued Total Employee Termination Costs			Accrued Other Costs		Total Accrued Restructuring Charges
Balance at December 31, 2009	$	2.6		$	0.3		$	2.9		$	-	$	2.9
Restructuring charges recorded in 2010		0.2			0.8			1.0			-		1.0
Utilization of 2009 restructuring plans		(1.8	)		(1.1	)		(2.9	)		-		(2.9	)
Balance at June 27, 2010	$	1.0		$	-		$	1.0		$	-	$	1.0

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND RISK FACTORS; SAFE HARBOR 

Statements made in this filing and any related statements that express Intermec’s or our management’s intentions, hopes, indications, beliefs, expectations, guidance, estimates, 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 about our view of general economic and market conditions, our cost reduction plans, our revenue, expense, earnings or financial outlook for the current or any future period, our ability to develop, produce, market or sell our products, either directly or through third parties, to reduce or control expenses, to improve efficiency, to realign resources, or to continue operational improvement and year-over-year or s equential growth, and about the applicability of accounting policies used in our financial reporting. When used in this document and in documents it refers to, the words “anticipate,” “believe,” “will,” “intend,” “project” and “expect” and similar expressions as they relate to us or our management are intended to identify such 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.

Actual results may differ from those expressed or implied in our forward-looking statements. Such forward-looking statements involve and are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those discussed in a forward-looking statement. 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 2009 Form 10-K and quarterly reports on Form 10-Q, which are available on our website at www.intermec.com.

You are encouraged to review the Risk Factors portion of Item 1A of Part II of this filing, which discusses the risk factors associated with our business.

Overview

Intermec, Inc. (“Intermec”, “us”, “we”, “our”) designs, develops, integrates, sells, resells and services wired and wireless automated identification and data collection (“AIDC”) products and provides related services. Our products include mobile computing products, bar code scanners, wired and wireless bar code printers and label media products, and radio frequency identification (“RFID”) products. These products and services allow customers to identify, track and manage their assets and other resources in ways that improve the efficiency and effectiveness of their business operations. Our products are designed to withstand mobile use and rugged warehouse and field conditions.  

The key element of our strategy is to provide rugged mobile business solutions that help our customers improve their visibility and control of their businesses and, in the process, lower their costs, increase their revenues and improve customer satisfaction and loyalty.  These business solutions are a collaborative effort between Intermec and our channel partners.  In the pursuit of this strategy, we target high growth opportunities in selected application markets; focus on developing and selling differentiated new products and services; emphasize sales through multi-tiered channel arrangements; and continue the evolution of our supply chain and other initiatives to enhance the efficiency of our global operations.

Our reportable segments comprise products and services. The product segment generates revenue from the design, development, manufacture, sale and resale of mobile computing products, bar code scanners, wired and wireless bar code printers and label media products, and RFID products and license fees. We sell products worldwide for field mobility applications, including asset management, direct store delivery, maintenance and repair, in-transit visibility, and routing and navigation, as well as in-premise applications, including asset management, freight yard operations, inventory management, warehouse operations, and work-in-process management. Our service segment generates revenue from customer support, product maintenance and professional services related to the products and to systems integration.

The unfavorable global economy continued to adversely affect our business and revenue during the first half of 2010. Although there are mixed signs that a gradual recovery has begun in some sectors of the economy and regions, we believe that capital spending for both commercial and public sector customers continues to be constrained or slow, particularly for large projects, as contrasted to incremental purchases or small deployments. For potential civilian and military customers in the U.S. Federal government, we expect budgets to continue to be affected by the pace and priority of appropriations and military spending.

14

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Our financial reporting currency is the U.S. dollar, and changes in exchange rates can significantly affect our financial trends and reported results.  Our consolidated revenues and operating expenses are vulnerable to the fluctuations of foreign exchange rates; however, our cost of revenues is primarily denominated in U.S. dollars, and therefore, is less affected by changes in foreign exchange rates. If the U.S. dollar weakens year-over-year relative to currencies in our international locations, our consolidated revenues, costs of revenues and operating expenses will be higher than if currencies had remained constant. If the U.S. dollar strengthens year-over-year relative to currencies in our international locations, our consolidated revenues, costs of revenues and operating expenses will be lower than if currenc ies had remained constant. We believe it is important to evaluate our growth rates before and after the effect of foreign currency changes.

Results of Operations

The following discussion compares our results of operations for the three and six months ended June 27, 2010, and June 28, 2009.

Results of operations and percentage of revenues were as follows (in millions, except for per share data):

	Three Months Ended						Six Months Ended
	June 27, 2010			June 28, 2009			June 27, 2010			June 28, 2009
	Amounts			Amounts			Amounts			Amounts
Revenues	$	161.2		$	157.7		$	310.4		$	320.3
Costs and expenses:
Cost of revenues		101.8			100.6			194.0			204.1
Research and development		18.3			15.4			33.3			31.3
Selling, general and administrative		45.9			44.7			90.8			95.7
Restructuring charges		0.2			7.3			1.0			15.9
Impairment of facility		0.6			-			3.0			-
Total costs and expenses		166.8			168.0			322.1			347.0
Operating loss		(5.6	)		(10.3	)		(11.7	)		(26.7	)
Interest, net		0.0			0.0			(0.1	)		0.1
Loss before income taxes		(5.6	)		(10.3	)		(11.8	)		(26.6	)
Income tax benefit		(2.9	)		(3.8	)		(5.4	)		(9.7	)
Net loss	$	(2.7	)	$	(6.5	)	$	(6.4	)	$	(16.9	)
Basis loss per share	$	(0.04	)	$	(0.11	)	$	(0.10	)	$	(0.28	)
Diluted loss per share	$	(0.04	)	$	(0.11	)	$	(0.10	)	$	(0.28	)
	Percent of Revenues			Percent of Revenues			Percent of Revenues			Percent of Revenues
Revenues
Costs and expenses:
Cost of revenues		63.1	%		63.8	%		62.5	%		63.7	%
Research and development		11.4	%		9.8	%		10.7	%		9.8	%
Selling, general and administrative		28.5	%		28.3	%		29.3	%		29.9	%
Restructuring charges		0.1	%		4.6	%		0.3	%		4.9	%
Impairment of facility		0.4	%		0.0	%		1.0	%		0.0	%
Total costs and expenses		103.5	%		106.5	%		103.8	%		108.3	%
Operating loss		(3.5	%)		(6.5	%)		(3.8	%)		(8.3	%)
Interest, net		0.0	%		0.0	%		(0.0	%)		0.0	%
Loss before income taxes		(3.5	%)		(6.5	%)		(3.8	%)		(8.3	%)
Income tax benefit		(1.8	%)		(2.4	%)		(1.7	%)		(3.0	%)
Net loss		(1.7	%)		(4.1	%)		(2.1	%)		(5.3	%)

15

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Revenues

Revenues by category and geographic region and as a percentage of total revenues for the three and six months ended June 27, 2010, and June 28, 2009, as well as the same three and six months revenue changes were as follows (in millions):

	Three Months Ended
	June 27, 2010		Percent of Revenues			June 28, 2009		Percent of Revenues			Change			Percentage Change
Revenues by category:
Systems and solutions	$	86.3		53.5	%	$	86.2		54.7	%	$	0.1			0.1	%
Printer and media		42.4		26.3	%		37.1		23.5	%		5.3			14.3	%
Service		32.5		20.2	%		34.4		21.8	%		(1.9	)		(5.5	%)
Total revenues	$	161.2		100.0	%	$	157.7		100.0	%	$	3.5			2.2	%
Revenues by geographic region:
North America	$	84.7		52.5	%	$	88.4		56.1	%	$	(3.7	)		(4.2	%)
Europe, Middle East and Africa (EMEA)		49.7		30.8	%		48.5		30.7	%		1.2			2.5	%
All others		26.8		16.7	%		20.8		13.2	%		6.0			28.8	%
Total revenues	$	161.2		100.0	%	$	157.7		100.0	%	$	3.5			2.2	%

The increase in quarterly revenue of $3.5 million, or 2.2%, was attributable to a $5.4 million increase in product revenue, partially offset by $1.9 million decrease in service revenue. The increase in product revenue of $5.4 million, or 4.4%, was primarily due to a $5.3 million increase in printer and media products. The increase in sales revenue in printer and media products was primarily driven by an increase in our distribution business.

The decrease in service revenues for the quarter ended June 27, 2010 of $1.9 million, or 5.5%, was primarily due to the decline in U.S. Federal government projects.

Geographically, revenues in North America decreased by $3.7 million, or 4.2%, while revenues in EMEA and the rest of the world increased by $1.2 million, or 2.5%, and $6.0 million, or 28.8%, respectively, over the corresponding prior-year period. The reduction in North America revenues was attributable to the decline in U.S. Federal government projects, which was partially offset by an increase in sales revenues in systems and solutions and printer and media products. The increase in EMEA revenues was mainly attributable to an increase in our distribution business, partially offset by the changes in foreign currency conversion rates that unfavorably impacted EMEA revenue by $3.6 million, or 7.4 percentage points, as compared to the foreign currency exchange rate used in prior-year period. Across all regions the unfavorable impact of foreign currency rates as compared to the foreign currency exchange rate used in the prior-year period was $1.9 million, or 1.2 percentage points.

16

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

	Six Months Ended
	June 27, 2010		Percent of Revenues			June 28, 2009		Percent of Revenues			Change			Percentage Change
Revenues by category:
Systems and solutions	$	165.5		53.3	%	$	179.4		56.0	%	$	(13.9	)		(7.7	%)
Printer and media		79.0		25.5	%		72.6		22.7	%		6.4			8.8	%
Service		65.9		21.2	%		68.3		21.3	%		(2.4	)		(3.5	%)
Total revenues	$	310.4		100.0	%	$	320.3		100.0	%	$	(9.9	)		(3.1	%)
Revenues by geographic region:
North America	$	159.3		51.3	%	$	192.0		59.9	%	$	(32.7	)		(17.0	%)
Europe, Middle East and Africa (EMEA)		100.6		32.4	%		87.5		27.3	%		13.1			15.0	%
All others		50.5		16.3	%		40.8		12.8	%		9.7			23.8	%
Total revenues	$	310.4		100.0	%	$	320.3		100.0	%	$	(9.9	)		(3.1	%)

Revenue for the six months ended June 27, 2010, decreased $9.9 million, or 3.1%, primarily due to a $7.5 million, or 3.0%, decrease in product revenues. The decrease in product revenues was due to a $13.9 million decrease in systems and solution products, partially offset by a $6.4 million increase in printer and media products. The decline in our systems and solution products revenue was mainly due to the decline in U.S. Federal government projects. The increase in sales revenues in printer and media products was primarily driven by an increase in our distribution business.

The decrease in six month service revenues of $2.4 million, or 3.5%, was primarily attributable to the decline in U.S. Federal government projects.

Geographically, revenues in North America decreased $32.7 million, or 17%, while revenues in EMEA and the rest of the world increased by $13.1 million, or 15.0%, and $9.7 million, or 23.8%, respectively over the corresponding prior-year period. The reduction in North America revenues was primarily due to the decline in U.S. Federal government projects. The increase in EMEA revenues was mainly attributable to an increase in our distribution business, partially offset by the changes in foreign currency conversion rates that unfavorably impacted EMEA revenue by $0.3 million, or 0.3 percentage points, as compared to the prior-year period. Across all regions, the favorable impact of foreign currency rates on total revenue was $4.1 million, or 1.3 percentage points, as compared to the prior-year period, as stronger curr encies in Canada, Mexico and Brazil in particular offset the weakness of the Euro and British pound.

17

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Gross Profit

Gross profit and gross margin by revenue category for the three and six months ended June 27, 2010, and June 28, 2009, were as follows (in millions):

	Three Months Ended										Six Months Ended
	June 27, 2010					June 28, 2009					June 27, 2010					June 28, 2009
	Gross Profit		Gross Margin			Gross Profit		Gross Margin			Gross Profit		Gross Margin			Gross Profit		Gross Margin
Product	$	46.8		36.3	%	$	42.4		34.4	%	$	89.6		36.7	%	$	87.7		34.8	%
Service		12.6		39.0	%		14.7		42.7	%		26.8		40.7	%		28.4		41.6	%
Total gross profit
and gross margin	$	59.4		36.9	%	$	57.1		36.2	%	$	116.4		37.5	%	$	116.1		36.3	%

The total gross profit for the three and six months ended June 27, 2010, increased by $2.3 million and $0.3 million, respectively, compared to the corresponding prior-year periods. The increase in total gross profit was primarily due to a $4.4 million, or 10.3%, and $1.9 million, or 2.2%, increase in the gross profit for the product segment for the three and six months ended June 27, 2010, respectively, compared to the corresponding prior-year periods. The increase in product gross profit was primarily due to increased volume of product sales for the three months ended June 27, 2010, and more favorable product and geographic related mix for the six months ended June 27, 2010.

Product gross margin increased 1.9 percentage points for the three and six months ended June 27, 2010, compared to the corresponding prior-year periods. The increase in product margin was primarily due to continued margin management.

The decrease in service gross profit and gross margin from the corresponding prior year periods was mainly attributable to the decline in U.S. Federal government projects.

Operating Expenses and Interest Expense (in millions)

	Three Months Ended
	June 27, 2010			June 28, 2009		Change
Research and development expense	$	18.3		$	15.4	$	2.9
Selling, general and administrative expense		45.9			44.7		1.2
Restructuring charges		0.2			7.3		(7.1	)
Impairment loss		0.6			-		0.6
Interest, net		(0.1	)		-		0.1

	Six Months Ended
	June 27, 2010		June 28, 2009		Change
Research and development expense	$	33.3	$	31.3	$	2.0
Selling, general and administrative expense		90.8		95.7		(4.9	)
Restructuring charges		1.0		15.9		(14.9	)
Impairment loss		3.0		-		3.0
Interest, net		0.1		0.1		(0.2	)

Research and Development Expenses The total research and development expenses (“R&D”) were $18.3 and $33.3 million for the three and six months ended June 27, 2010, respectively, compared to R&D expenses of $15.4 million and $31.3 million for the corresponding prior-year periods. The increase for the three and six months ended June 27, 2010, was due to increased R&D investment for new product introduction planned for the second half of 2010. 

18

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Selling, General and Administrative Expenses Total selling, general and administrative (“SG&A”) expenses were $45.9 and $90.8 million for the three and six months ended June 27, 2010, respectively, compared to SG&A expenses of $44.7 million and $95.7 million for the corresponding prior-year periods. The decrease in SG&A expenses for the six months ended June 27, 2010, of $4.9 million, compared to the six months ended June 28, 2009, was primarily attributable to the labor-related savings from our two restructuring activities announced in 2009, reduction in pension-related costs from the freezing of our pension plans in December 2009 and other ongoing cost reduction programs.

Restructuring Charges The decrease in restructuring charges of $7.1 million and $14.9 million for the three and six months ended June 27, 2010, respectively, compared to the corresponding prior-year periods was mainly due to substantial completion of the two restructuring programs announced in 2009 to reduce our operating costs and improve efficiency in light of the economic downturn. Details of these two programs are as follows:

The total pre-tax restructuring costs for the restructuring plan announced in January 2009 were approximately $9.5 million, including employee termination costs of approximately $8.4 million, and $1.1 million of other transitional costs. We recorded the entire restructuring charge in 2009, and substantially all of the severance-related and periodic transitional costs were cash expenditures. We expect to achieve an annual labor-related savings of $14.0 to $16.0 million in connection with this restructuring plan.

The total restructuring costs for the restructuring plan announced in April 2009 are in an anticipated pre-tax range of $11.0 to $13.0 million, including employee termination costs of $10.0 to $11.0 million, and $1.0 to $2.0 million of other transitional costs. We recorded $11.1 million of the restructuring charges in 2009, and $1.0 million for the six months ended June 27, 2010. We expect to record the remaining charge throughout 2010. We anticipate that substantially all of the severance-related and periodic transitional costs will be cash expenditures. We expect to achieve annualized labor-related savings of $17.0 to $19.0 million in connection with this restructuring plan.

Impairment of facility The impairment loss of $0.6 and $3.0 million for the three and six months ended June 27, 2010, respectively, reflected our write-down of a real estate asset we held for sale at June 27, 2010.

 Interest, Net Net interest (income) expense was $(0.1) and $0.1 million for the three and six months ended June 27, 2010, respectively, compared to net interest income of $0.0 and $0.1 million for the corresponding prior-year periods. The decrease in net interest income was mainly due to lower average interest rates comparing to prior-year periods.

 Income tax (benefit) expense (in millions)

	Three Months Ended									Six Months Ended
	June 27, 2010			June 28, 2009			Change from prior year			June 27, 2010			June 28, 2009			Change from prior year
Income tax benefit	$	(2.9	)	$	(3.8	)		$	0.9	$	(5.4	)	$	(9.7	)	$	4.3

The tax benefit for the three and six months ended June 27, 2010, reflects an effective tax rate for continuing operations of 51.3% and 46.1%, respectively, compared to a U.S. statutory rate of 35.0%. The effective tax rate reflects our estimated annual effective tax rate of approximately 50.8% for the fiscal year 2010, which excludes the impact of discrete items. Our projected 2010 effective tax rate is higher than 2009 due primarily to our projected mix and levels of taxable income between jurisdictions and the U.S. research and development tax credit benefits that existed in 2009, which Congress has not renewed for 2010.

The U.S. Congress is currently considering bills that will extend the availability of the research and development tax credit. If the research and development credit is legislatively extended in and applicable to calendar year 2010, we expect there will be a favorable impact on our 2010 effective income tax rate of approximately 4.6% or $1.0 million in benefit.

The tax benefit for the three and six months ended June 28, 2009, reflected an effective tax rate for continuing operations of 36.6% and 36.4%, respectively, compared to a U.S. statutory rate of 35.0%. The effective tax rate reflected our then estimated annual effective tax rate of approximately 37.0% for fiscal year 2009, which excluded the impact of discrete items.

19

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources

Our principal sources of liquidity are our cash, cash equivalents and short-term investments, as well as the cash flow that we generate from our operations. In addition, we have an unsecured Revolving Credit Facility as described in the Capital Resources section below.

Cash Flow Summary

The following discussion reflects the effects of the immaterial restatement discussed in Item 1, Note 1 - Immaterial Restatement of the Statement of Cash Flows, to the condensed consolidated financial statements. Our cash flows are summarized in the following table (in thousands):

	Six Months Ended
	June 27, 2010				June 28, 2009
Net cash (used in) provided by operating activities		$	(714	)		$	8,671
Net cash used in investing activities			(8,246	)			(5,174	)
Net cash provided by financing activities			863				870

At June 27, 2010, cash, cash equivalents and short-term investments totaled $223.2 million, a decrease of $15.0 million compared to the December 31, 2009 balance of $238.2 million. Our short-term investments consist primarily of low risk securities, including short-term bond funds and time deposits. We invest in these short-term securities mainly to facilitate liquidity and for capital preservation. Due to the nature of these instruments, we consider it reasonable to expect that their fair market values will not be significantly impacted by a change in interest rates, and that they can be liquidated for cash upon demand.

Cash used in operating activities for the six months ended June 27, 2010, was $0.7 million and consisted of net loss of $6.4 million, adjustments for non-cash items of $7.9 million and cash used by working capital and other activities of $2.2 million. Cash used in operating activities in the first half of 2010 was primarily due to net loss and payment of trade payables and other purchases. 

For the six months ended June 27, 2010, investing activities used $8.2 million of cash primarily due to capital expenditures of $6.8 million. Cash used in investing activities for six months ended June 28, 2009 was $5.2 million. This was related to capital expenditures of $4.7 million and capitalized patent legal fees of $2.3 million, offset by proceeds from sale of property of $1.9 million.

Financing activities for the six months ended June 27, 2010, and June 28, 2009, provided cash of $0.9 million for both periods, related primarily to the issuance of stock under our Employee Stock Purchase Plan and exercised stock options.

Capital Resources

Our principal capital resources include cash, cash equivalents and short-term investments. In addition, we have an unsecured Revolving Credit Facility (the “Revolving Facility”) with a maximum amount available under the Revolving Facility of $50.0 million. Net of outstanding letters of credit and limitations on availability, we had borrowing capacity at June 27, 2010, of $48.5 million under the Revolving Facility. We had no borrowings under the Revolving Facility during the three and six months ended June 27, 2010. As of June 27, 2010, we were in compliance with the financial covenants of the Revolving Facility. The Revolving Facility matures in October 2012. There have been no changes to key terms of the Revolving Facility as previously disclosed on the 2009 Form 10-K.

We believe that cash, cash equivalents, and short-term investments combined with projected cash flows from operations will provide adequate funding to meet our expected working capital, restructuring cost, capital expenditure and pension contribution requirements for the next twelve months. From time to time, we may look for potential acquisition targets for growth opportunities within our market, or to expand into new markets.  Additionally, our Board had authorized us to repurchase up to $75 million of our outstanding common stock in open market purchases or privately negotiated transactions. The number of shares and the timing of any share repurchases will depend on factors such as the stock price, economic and market conditions, regulatory restrictions, and the attractiveness of other capit al deployment opportunities.   

Depending on our assessment of the economic environment from time-to-time, we may decide to hold more cash than may be required to fund our future investment in working capital, capital expenditures and research and development and to implement changes in our cost structure. Projected cash flows from operations are largely based on our revenue estimates, cost estimates, and the related timing of cash receipts and cash disbursements. If actual performance differs from estimated performance, cash flows from operations could be positively or negatively impacted.

20

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Contractual Obligations

Our contractual commitments as of June 27, 2010, have not changed materially from those disclosed in Item 7 of our 2009 Form 10-K.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual amounts could differ from those estimates under different assumptions or conditions. Our critical accounting policies and estimates are discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2009 Form 10-K. There have been no material changes to the critical accounting policies and estimates previously disclosed in that report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 27, 2010, there have been no material changes in the information provided in Item 7A of our 2009 Form 10-K, which contains a complete discussion of our material exposures to foreign currency exchange rate risk.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, including the Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(e) as of the end of the period covered by this quarterly report. Based on that evaluation, management, including the CEO and CFO, has concluded that our disclosure controls and procedures as defined in Rule 13a-15(e) were effective as of June 27, 2010. There were no changes in our internal control over financial reporting during the quarter ended June 27, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

21

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We currently, and from time to time, are subject to claims and lawsuits arising in the ordinary course of business. Such claims and lawsuits may take the form of counter claims in lawsuits we bring to enforce our rights. The ultimate resolution of currently pending proceedings is not expected to have a material adverse effect on our business, financial condition, results of operations or liquidity.

ITEM 1A. RISK FACTORS

You are encouraged to review the discussion of Forward Looking Statements and Risk Factors appearing in this report at Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2009 Form 10-K and the factors discussed in Part II, Item A, "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 28, 2010 (the "First Quarter Form 10-Q"), which could materially affect our business, financial condition or operating results. The risks described in our 2009 Form 10-K and in the First Quarter Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

ITEM 5. OTHER INFORMATION

As described more fully in Note 1 of the Notes to Condensed Consolidated Financial Statements, we have identified certain immaterial misstatements of the balances of individual line items within our consolidated statements of cash flows for certain annual periods and our condensed consolidated statements of cash flows for certain quarterly periods.  When these line items from the affected prior periods are required to be disclosed in future periodic reports, we will present the individual balances both as originally reported and as restated, as explained below.  In addition, we have presented below the restated information for the three months ended March 29, 2009, for the reader’s ease of reference.

The restatements impacted only line items within the statements of cash flows indicated in Note 1 and in this Item 5, and do not result in any change in the beginning and ending balances of cash and cash equivalents from the amounts previously reported.  The restated line items do not have any impact on the balance sheets or statements of operations for any period. We do not consider any of these corrections to be material.

Immaterial Restatement of the Statement of Cash Flows

The "As Reported" amounts presented below reflect the impact of reclassifications described in Note 1 of the Notes to Condensed Consolidated Financial Statements. 

The following table displays the affected line items under Cash flows from operating activities and effect of exchange rate changes on cash and cash equivalents of the consolidated statements of cash flows for the years ended December 31, 2009 and 2008, which will be restated as follows (in thousands) when the 2010 Form 10-K is filed:

	For the Year Ended December 31, 2009						For the Year Ended December 31, 2008
	As Reported			As Restated			As Reported			As Restated
Cash flows from operating activities:
Deferred taxes	$	(12,169	)	$	(11,941	)	$	9,759		$	9,811
Changes in operating assets and liabilities:
Accounts receivable		31,211			34,228			52,938			42,431
Inventories		15,072			15,730			(7,781	)		(10,316	)
Other current assets		(2,421	)		(2,252	)		285			(1,415	)
Accounts payable and accrued expenses		(10,059	)		(10,127	)		(25,853	)		(22,955	)
Payroll and related expenses		(4,116	)		(4,514	)		(7,371	)		(6,069	)
Deferred revenue		(4,160	)		(5,133	)		(3,740	)		(1,935	)
Net cash provided by operating activities		21,363			23,996			70,488			61,803
Effect of exchange rate changes on cash and cash equivalents	$	6,801			4,168		$	(10,883	)	$	(2,198	)

22

ITEM 5. OTHER INFORMATION

Immaterial Restatement of the Statement of Cash Flows (continued)

The following tables display the affected line items under Cash flows from operating activities, Cash flow from financing activities, and effect of exchange rate changes on cash and cash equivalents of the condensed consolidated statement of cash flows for the three months ended March 28, 2010, and March 29, 2009. The condensed consolidated statement of cash flows for the three months ended March 28, 2010 will be restated as follows (in thousands) when the 2011 first quarter Form 10-Q is filed:

	Three Months Ended March 28, 2010						Three Months Ended March 29, 2009
	As Reported			As Restated			As Reported			As Restated
Cash flows from operating activities:
Deferred taxes	$	(3,195	)	$	(3,230	)	$	(6,183	)	$	(6,222	)
Excess tax benefit from stock-based payment arrangements		-			-			557			-
Changes in operating assets and liabilities:
Accounts receivable		6,573			4,129			30,613			28,418
Inventories		6,683			5,727			9,228			8,480
Accounts payable and accrued expenses		(22,166	)		(21,485	)		(31,192	)		(30,346	)
Other long-term liabilities		2,785			3,201			975			1,147
Other operating activities		(1,007	)		(628	)		484			799
Net cash (used in) provided by operating activities		(5,900	)		(7,859	)		91			(2,115	)
Cash flows from financing activities:
Excess tax benefit from stock-based payment arrangements		-			-			(557	)		-
Effect of exchange rate changes on cash and cash equivalents	$	(3,944	)	$	(1,985	)	$	(3,567	)	$	(1,918	)

The following table displays the affected line items under Cash flows from operating activities, Cash flow from financing activities, and effect of exchange rate changes on cash and cash equivalents of the condensed consolidated statement of cash flows for the nine months ended September 27, 2009. The condensed consolidated statement of cash flows for the nine months ended September 27, 2009, will be restated as follows (in thousands) when the 2010 third quarter Form 10-Q is filed:

	Nine Months Ended September 27, 2009
	As Reported			As Restated
Cash flows from operating activities:
Deferred taxes	$	(12,022	)	$	(11,835	)
Excess tax benefit from stock-based payment arrangements		640			-
Changes in operating assets and liabilities:
Accounts receivable		31,157			33,743
Inventories		26,838			27,684
Accounts payable and accrued expenses		(22,030	)		(22,357	)
Other long-term liabilities		(5,630	)		(6,596	)
Other operating activities		(1,768	)		(2,199	)
Net cash provided by operating activities		18,108			19,363
Cash flows from financing activities:
Excess tax benefit from stock-based payment arrangements		(640	)		-
Effect of exchange rate changes on cash and cash equivalents	$	7,488		$	5,593

23

ITEM 6. EXHIBITS

10.1	Form of Restricted Stock Unit Agreement for awards under the Intermec, Inc. 2008 Omnibus Incentive Plan, as Amended and Restated as of May, 25, 2010
10.2	Form of Performance Share Unit Agreement under the 2008 Long-Term Performance Share Program, under the Intermec, Inc. 2008 Omnibus Incentive Plan, as Amended and Restated as of June 30, 2010
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated as of August 2, 2010
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated as of August 2, 2010
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated as of August 2, 2010
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated as of August 2, 2010
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

24

SIGNATURE

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.

Intermec, Inc.
(Registrant)
	/s/ Robert J. Driessnack
	Robert J. Driessnack
	Senior Vice President and Chief Financial Officer
	August 4, 2010

EX-10.1

INTERMEC, INC.

2008 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (the “Agreement”) is made as of ___________ _____, 20____ between Intermec, Inc., a Delaware corporation (the “Company”), and [Name] (the “Participant” or "you").

WHEREAS, the Company’s 2008 Omnibus Incentive Plan (the “Plan”) was adopted by the Board of Directors of the Company on March 19, 2008, and approved by the stockholders of the Company on May 23, 2008; and

WHEREAS, [If applicable:  as an inducement to you to remain in the employ of the Company or one of its Related Companies (collectively, the “Company”),] the Company desires to award you restricted Stock Units (as that term is defined in the Plan) in accordance with the terms and conditions of the Plan and this Agreement.

NOW, THEREFORE, in consideration of the premises, the mutual covenants hereinafter set forth, and other good and valuable consideration, the Company and you hereby agree as follows:

1.         Award.              The Company hereby grants you [If applicable:, as a matter of separate inducement and agreement, and not in lieu of salary or other compensation for services,] an Award of [__________] restricted Stock Units (“RSUs”) comprising the right to receive shares of the Common Stock, par value $.01 per share, of the Company (the “Common Stock”) o n the terms and conditions hereinafter set forth (the “Awarded Shares”), such number of Awarded Shares to be subject to adjustment as provided in Section 14.1 of the Plan. You shall have no obligation to pay the Company additional consideration for the Awarded Shares.  The Grant Date for the RSUs is __________, 20____.

The Plan, a copy of which has been made available to you, is incorporated herein by reference and is made part of this Agreement as if fully set forth herein. By accepting the Award, you also acknowledge receipt of the Plan and the plan summary for the Plan.  You are encouraged to review the Company's most recent annual report and proxy statement, which may be found at www.intermec.com.  Capitalized terms used in this Agreement which are not defined herein shall have the meanings assigned to such terms in the Plan, it being understood that the terms “restricted Stock Units” and “RSUs ” shall mean and refer to the right to receive only the Awarded Shares. This Agreement is subject to, and the Company and you agree to be bound by, all of the terms and conditions of the Plan as the same exist at the time this Agreement became effective. The Plan shall control in the event there is any express conflict between the Plan and the terms hereof and with respect to such matters as are not expressly covered in this Agreement. The Company hereby reserves the right to alter, amend, modify, restate, suspend or terminate the Plan and this Agreement in accordance with Section 16.1 of the Plan, but no such subsequent amendment, modification, restatement, or termination of the Plan or this Agreement shall adversely affect in any material way your rights under this Agreement without your written consent.  This Agreement shall be subject, without further action by the Company or you, to such amendment, modification or restatement.

2.           Acceptance of Award.  This Award is subject to your timely acceptance in accordance with this Paragraph 2.  Unless you accept the Award by ________, 20___[which date is December 31 of the year of grant, for RSUs granted before July 1 of such year, and June 30 of the year following the year of grant for RSUs granted on or after July 1 in a calendar year] (the “Acceptance Deadline”), this Award will be cancelled automatically, and you will have no further right under this Agreement to any Awarded Shares.  It is your sole responsibility to take appropriate actions by the Acceptance Deadline to accept the Award.

3.         Restriction Period.  Subject to the provisions of Paragraphs 2 and 4 of this Agreement, there shall be a Period of Restriction (the “Restriction Period”) beginning on the Grant Date and ending [MODIFY AS APPROPRIATE] on the [___] anniversary of the Grant Date (the “Vesting Date”).  Except as otherwise provided in Paragraph 4 hereof, all RSUs still subject to restriction on the date of your Termination of Service shall be forfeited by you.

4.         Termination Due to Death or Disability or Change of Control.  Notwithstanding any other provision of this Agreement, all RSUs granted hereunder still subject to restriction shall become fully vested and free of all restrictions to the full extent of the original grant upon the occurrence of either of the following events: (a) your Termination of Service by reason of death or (b) your Termination of Service by reason of Disability.  The effect of a Change of Control on the RSUs shall be governed by the terms of a Company change of control policy or agreement as then in effect and applicable to the RSUs.   In the event no policy or agreement addresses the effect of a Change of Control on the RSUs, the terms of the Plan shall govern.

5.         Nontransferability.  Until the earlier of (a) the end of the Restriction Period with respect to any of the RSUs granted hereunder or (b) the vesting of such RSUs in accordance with the provisions of this Agreement or the Plan, you shall not be permitted to sell, assign, transfer, pledge, or otherwise encumber the RSUs or the Awarded Shares.

6.         Form and Timing of Payment.  If and when the Restriction Period ends with respect to RSUs awarded hereunder without a prior forfeiture of such RSUs, or if and when RSUs vest pursuant to the provisions of Paragraph 4 hereof, and subject to the payment of withholding taxes as provided in Paragraph 8 hereof, the Company will direct its transfer agent to issue to you within thirty (30) days after such event, in uncertificated form, the number of unrestricted shares of Common Stock equal to the number of RSUs as to which the Restriction Period has ended or that have vested pursuant to Paragraph 4.

7.         Rights as a Stockholder.  Except as otherwise provided in this Agreement or the Plan, you shall not have any rights of a stockholder with respect to the RSUs or, prior to vesting, the Awarded Shares.

8.         Withholding.  No later than the date as of which an amount first becomes includable in your gross income for federal income tax purposes with respect to any Awarded Shares, you shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local, or foreign taxes of any kind required by law to be withheld by the Company with respect to such amount (the “Mandatory Withholding Taxes”). The obligations of the Company hereunder shall be conditional on such payment or arrangements. Notwithstanding the foregoing, to the maximum extent permitt ed by applicable law, the Company has the right to retain, without notice to you, from the total number of shares of Common Stock issuable and deliverable to you pursuant to this Agreement, or from salary or other amounts payable to you, the number of shares or cash having a value not less than the Mandatory Withholding Taxes; the Company currently intends to satisfy such Mandatory Withholding Taxes by retaining shares of Common Stock otherwise issuable under this Award (up to the minimum statutory amount required to be withheld by the Company).

1

Regardless of any action the Company takes with respect to any or all of the Mandatory Withholding Taxes, you acknowledge that the ultimate liability for all withholding taxes legally due by you is and remains your responsibility and that the Company (a) makes no representations or undertakings regarding the treatment of any withholding taxes in connection with any aspect of the RSUs, including the grant, lapse of the Restriction Period or other vesting of the RSUs, the subsequent sale of shares of Common Stock received upon lapse of the Restriction Period or other vesting of the RSUs, if any, and the receipt of any dividends or dividend equivalents; and (b) does not commit to structure the terms of the Award or any aspect of the Award to reduce or eliminate your liability for withholding taxes.

9.         Miscellaneous

(a)         You understand and acknowledge that you are one of a limited number of employees of the Company and its Related Companies who have been selected to receive grants of RSUs and that your Award is considered Company confidential information. You hereby covenant and agree not to disclose the Award of RSUs pursuant to this Agreement to any other person except (i) your immediate family and legal or financial advisors who agree to maintain the confidentiality of this Agreement, (ii) as required in connection with the administration of this Agreement and the Plan as it relates to this Award or under applicable law, and (iii) to the extent the terms of this Award have been publicly disclosed.

(b)         The grant of RSUs to you in any year shall give you neither any right to similar grants in future years nor any right to be retained in the employ or service of the Company or its Related Companies, such employment being terminable to the same extent as if the Plan and this Agreement were not in effect. The right and power of the Company and its Related Companies to dismiss or discharge you is specifically and unqualifiedly unimpaired by this Agreement.

(c)         Each notice relating to this Agreement shall be in writing and delivered in person or by mail to the Company at its office, 6001 36th Avenue West, Everett, WA 98203-1264, to the attention of the Company’s Secretary or at such other address as the Company may specify in writing to you by a notice delivered in accordance with this paragraph.  All notices to you shall be delivered to you at your address in the Company’s records or at such other address as you may specify in writing to the Secretary of the Company by a notice delivered in accordance with this Paragraph 9(c).

(d)         This Agreement, including the provisions of the Plan incorporated by reference herein, comprises the whole Agreement between the parties hereto with respect to the subject matter hereof, and shall be governed by and construed in accordance with the laws of the State of Washington, U.S.A., without reference to principles of conflicts of law.  This Agreement shall become effective when it has been executed or accepted electronically by the Company and you.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the grant of this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Washington, U.S.A., and agree that such litigation shall be conducted only in the courts of Washington, U.S.A., or the federal courts for the United States for the Western District of Washington, and no other courts where this grant is made and/or to be performed.

(e)         This Agreement shall inure to the benefit of and be binding upon each successor of the Company and, to the extent specifically provided herein and in the Plan, shall inure to the benefit of and shall be binding upon your heirs, legal representatives, and successors.

(f)         If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement.

(g)         This Agreement may be executed in separate counterparts, each of which when so executed and delivered will be an original, but all of which together will constitute one and the same instrument. In pleading or proving this Agreement, it will not be necessary to produce or account for more than one such counterpart.

(h)           Payments made pursuant to this Agreement are intended to qualify for an exception from Section 409A of the Code.  Notwithstanding any other provision in this Agreement and the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement and/or the Plan so that the RSUs granted to you qualify for exemption from or comply with Section 409A; provided, however, that the Company makes no representations that the RSUs shall be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to the RSUs.  Also notwithstanding the foregoing, if at the time of a scheduled Vesting Date, including on e provided for under Paragraph 3 of this Agreement, you are a "specified employee" of the Company within the meaning of that term under Section 409A and as determined by the Company, and payment would be treated as a payment made on "separation from service" within the meaning of that term under Section 409A, then, if such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409A, the payment shall be delayed until the date which is six months after the date of such separation from service or if earlier the date of your death.

IN WITNESS WHEREOF, this Agreement is executed by you and by the Company through its duly authorized officer or officers as of the day and year first above written.

INTERMEC, INC.

By:     

Patrick J. Byrne

        Chief Executive Officer and President

Dated:  ________________________________                        PARTICIPANT:

[NAME]

EX-10.2

Intermec, Inc.

2008 Long-Term Performance Share Program

Agreement for the Award Period

January 1,  [YEAR] through December 31, [YEAR]

This Performance Share Unit Agreement (the “Agreement”) is made as of __________, 20___ between Intermec, Inc., a Delaware corporation (the “Company”), and [NAME]   (the “Participant”).

WHEREAS, the Intermec, Inc. 2008 Omnibus Incentive Plan (the “Plan”) was adopted by the Board of Directors of the Company on March 19, 2008, and was approved by the stockholders of the Company on May 23, 2008; and

WHEREAS, the Committee has adopted the 2008 Long-Term Performance Share Program, as amended (the “Program”), as a sub-plan of the Plan and authorized the Award represented by this Agreement;

NOW, THEREFORE, in consideration of the premises, the mutual covenants hereinafter set forth, and other good and valuable consideration, the Company and the Participant hereby agree as follows:

Article 1.  Award

The Participant is hereby awarded, as a matter of separate inducement and agreement, and not in lieu of salary or other compensation for services,  [TOTAL SHARES GRANTED]  Performance Share Units (the “Target Award”), on the terms and conditions hereinafter set forth.  The number of Performance Share Units (“PSUs”) that the Participant may earn under this Agreement shall range from 0% to 200% of the Target Award (the “Earned PSUs”), as determined by the achievement of the performance measures set forth in Article 3 of this Agreement.  The Earned PSUs shall be paid in shares of the common stock, par value $.01 per share, of the Company (the “Common Stock”) as set forth in Article 6 of this Agreement.  The Participant shall have no obligation to pay the Company additional consideration for the Earned PSUs.

The Plan and the Program, copies of which have been made available to the Participant, are incorporated herein by reference and made part of this Agreement as if fully set forth herein. Capitalized terms used in this Agreement that are not defined herein shall have the meanings assigned to such terms in the Plan and the Program. This Agreement is subject to, and the Company and the Participant agree to be bound by, all of the terms and conditions of the Plan and the Program as the same exist at the time this Agreement became effective. The Plan and the Program shall control in the event there is any express conflict between the terms hereof and the Plan or the Program and with respect to such matters as are not expressly covered in this Agreement. The Company hereby reserves the right to alter, amend, modify, restate, suspend or termi nate the Plan, the Program and this Agreement in accordance with Section 16.1 of the Plan, but no such subsequent amendment, modification, restatement, or termination of the Plan, the Program or this Agreement shall adversely affect in any material way the Participant’s rights under this Agreement without the Participant’s written consent.  This Agreement shall be subject, without further action by the Company or the Participant, to such amendment, modification, or restatement.

Article 2.  Measurement Period, Performance Period and Award Period

For all purposes of this Agreement, “Measurement Period” means January 1, [YEAR] through December 31, [YEAR], “Performance Period” means January 1, [YEAR] through December 31, [YEAR] and “Award Period” means January 1, [YEAR] through December 31, [YEAR].

Article 3.  Achievement of Performance Measures

The number of Earned PSUs to be earned under this Agreement shall be based upon the achievement of the following Performance Period performance measures set by the Committee, and measured with respect to the Measurement Period as of December 31, [YEAR]:

[PERFORMANCE MEASURES AND DETERMINATION OF ACHIEVEMENT]

 At the end of the Measurement Period, the number of Earned PSUs shall be determined but shall be subject to a forfeiture restriction until December 31, [YEAR], subject to the terms of this Agreement.  During such time as the Earned PSUs remain subject to the forfeiture restriction, they are referred to in this Agreement as Restricted Stock Units (“RSUs”).

Article 4. Termination/Forfeiture Provisions

Except as otherwise provided below in this Article 4, a Participant shall be eligible for payment of Earned PSUs, as determined in Article 3, only if the Participant’s employment with the Company or a Related Company continues through the end of the Award Period.

In the event of a Participant’s termination of employment as a result of death or disability prior to the end of the Award Period,  the former employee (or beneficiary)  will be entitled to receive a payout of Earned PSUs on the same basis as other Participants, provided that (1) such amount shall be  prorated for the number of full months worked during the Award Period as a percentage of the total number of full months in the Award Period and (2) payout shall be made within 2-1/2 months after the later of the termination or the certification by the Compensation Committee of payouts for the Award Period, notwithstanding the requirement applicable generally that no payout is due unless the Participant  remains employed until the end of the Awa rd Period.

The effect of a Change of Control on PSUs and RSUs shall be governed by the terms of the Company's change of control policy applicable to the Participant (either the Executive Change of Control Policy for the Plan or the Standard Change of Control Policy for the Plan, effective January 7, 2009).

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Article 5. Rights as a Stockholder

During the Award Period, the Participant shall have no rights of a stockholder with respect to the PSUs, RSUs or the Earned PSUs.  Notwithstanding the foregoing, the Participant shall be entitled to receive any dividend equivalents declared by the Board, as provided in the Program.

Article 6. Form and Timing of Payment

Except as set forth in Article 4 or in the Program, payment of Earned PSUs shall be made in the form of shares of Common Stock within 2½ months following the close of the Award Period.  The Company shall direct its transfer agent to issue to the Participant, in uncertificated form, the number of unrestricted shares of Common Stock that are payable to the Participant under the Agreement.

Article 7. Nontransferability

PSUs and RSUs may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  The Participant’s rights under this Agreement shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s legal representative.

Article 8. Administration

It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan, the Program and this Agreement, all of which shall be binding upon the Participant.

Article 9.  Withholding.

No later than the date as of which an amount first becomes includable in the  gross income of the Participant for federal income tax purposes with respect to any Earned PSUs or RSUs, the Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local, or foreign taxes of any kind required by law to be withheld by the Company with respect to such amount (the “Mandatory Withholding Taxes”). The obligations of the Company hereunder shall be conditional on such payment or arrangements. Notwithstanding the foregoing, to the maximum extent permitted by applicable law, the Company has the right to retain, without notice to the Participant, from the total number of shares of Common Stock issuable and deliverable to the Participant pursuant to this Agreement, or from salary or other amounts payable to the Participant, the number of shares or cash having a value not less than the Mandatory Withholding Taxes; the Company currently intends to satisfy such Mandatory Withholding Taxes by retaining shares of Common Stock otherwise issuable under this Award (up to the minimum statutory amount required to be withheld by the Company).

Regardless of any action the Company takes with respect to any or all of the Mandatory Withholding Taxes, the Participant acknowledges that the ultimate liability for all withholding taxes legally due by the Participant is and remains the Participant’s responsibility and that the Company (a) makes no representations or undertakings regarding the treatment of any withholding taxes in connection with any aspect of the Earned PSUs or RSUs, including the grant or other vesting of the Earned PSUs or RSUs, the subsequent sale of shares of Common Stock received upon vesting of the Earned PSUs or RSUs, if any, and the receipt of any dividends or dividend equivalents; and (b) does not commit to structure the terms of the Award or any aspect of the Award to reduce or eliminate the Participan t’s liability for withholding taxes.

Article 10. Miscellaneous

A.         The Participant understands and acknowledges that the Participant is one of a limited number of employees of the Company and its Related Companies who have been selected to receive grants of PSUs and that the Participant’s Award is considered Company confidential information. The Participant hereby covenants and agrees not to disclose the Award of PSUs pursuant to this Agreement to any other person except (i) the Participant’s immediate family and legal or financial advisors who agree to maintain the confidentiality of this Agreement, (ii) as required in connection with the administration of this Agreement and the Plan as it relates to this Award or under applicable law, and (iii) to the extent the terms of this Award have been publicly disclosed.

B.         The grant of PSUs to the Participant in any year shall give the Participant neither any right to similar grants in future years nor any right to be retained in the employ of the Company or its Related Companies, such employment being terminable to the same extent as if the Program and this Agreement were not in effect. The right and power of the Company and its Related Companies to dismiss or discharge the Participant is specifically and unqualifiedly unimpaired by this Agreement.

C.         Each notice relating to this Agreement shall be in writing and delivered in person or by mail to the Company at its office, 6001 36th Avenue West, Everett, WA 98203-1264, to the attention of the Company’s Secretary or at such other address as the Company may specify in writing to the Participant by a notice delivered in accordance with this paragraph. All notices to the Participant shall be delivered to the Participant at the Participant’s address in the Company’s records or at such other address as the Participant may specify in writing to the Secretary of the Company by a notice delivered in accordance with this paragraph.

D.         This Agreement, including the provisions of the Plan and the Program incorporated by reference herein, comprises the whole Agreement between the parties hereto with respect to the subject matter hereof, and shall be governed by and construed in accordance with the laws of the State of Washington, U.S.A., without reference to principles of conflicts of law.  This Agreement shall become effective when it has been executed or accepted electronically by the Company and the Participant.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant of the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Washington, U.S.A., and agree that such li tigation shall be conducted only in the courts of Washington, U.S.A., or the federal courts for the United States for the Western District of Washington, and no other courts where this grant is made and/or to be performed.

E.         This Agreement shall inure to the benefit of and be binding upon each successor of the Company and, to the extent specifically provided herein and in the Plan and the Program, shall inure to the benefit of and shall be binding upon the Participant’s heirs, legal representatives, and successors.

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F.         If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement.

G.         This Agreement may be executed in separate counterparts, each of which when so executed and delivered will be an original, but all of which together will constitute one and the same instrument. In pleading or proving this Agreement, it will not be necessary to produce or account for more than one such counterpart.

H.         The Company may, in its sole discretion, decide to deliver any documents related to the PSUs granted under, and participation in, the Program or future PSUs that may be granted under the Program by electronic means or to request the Participant’s consent to participate in the Program by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Program through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

I.           Payments made pursuant to this Agreement are intended to qualify for an exemption from Section 409A of the Code.  Notwithstanding any other provision in this Agreement and the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement, the Program  or the Plan so that the Award granted hereunder to the Participant qualifies for exemption from or complies with Section 409A; provided, however, that the Company makes no representations that the Agreement or the Award shall be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to the Award.  The Participant, by executi ng this Agreement, shall be deemed to have waived any claim against the Company and its affiliates with respect to any such tax, economic and legal consequences.  Also notwithstanding the foregoing, if at the time of a scheduled vesting or payout date under the Agreement, the Participant is a “specified employee” of the Company within the meaning of that term under Section 409A and as determined by the Company, and payment would be treated as a payment made on “separation from service” within the meaning of that term under Section 409A, then, if such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409A, the payment shall be delayed until the date which is six months after the date of such separation from service or if earlier the date of the Participant's death.

IN WITNESS WHEREOF, this Agreement is executed by the Participant and by the Company through its duly authorized officer as of the day and year first above written.

INTERMEC, INC.

By:  

Patrick J. Byrne

        Chief Executive Officer and President

PARTICIPANT:

IMPORTANT

PLEASE ACCEPT ELECTRONICALLY OR

SIGN AND RETURN PROMPTLY

[NAME]

EX-31.1

Exhibit 31.1

CERTIFICATION 

I, Patrick J. Byrne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intermec, 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(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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.

August 4, 2010

/s/ Patrick J. Byrne

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION 

I, Robert J. Driessnack , Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intermec, 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(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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.

August 4, 2010

/s/  Robert J. Driessnack 

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(SUBSECTIONS (a) AND (b) OF SECTION 1350,

CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

In connection with the Quarterly Report on Form 10-Q of Intermec, Inc. (the “Company”) for the period ended June 27, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick J. Byrne, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, 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/  Patrick J. Byrne 

Chief Executive Officer

August 4, 2010

EX-32.2

Exhibit 32.2

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(SUBSECTIONS (a) AND (b) OF SECTION 1350,

CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

In connection with the Quarterly Report on Form 10-Q of Intermec, Inc. (the “Company”) for the period ended June 27, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Driessnack, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, 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/  Robert J. Driessnack 

Senior Vice President and

Chief Financial Officer

August 4, 2010