0001104659-06-074173.txt : 20061113 0001104659-06-074173.hdr.sgml : 20061110 20061113101118 ACCESSION NUMBER: 0001104659-06-074173 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20061001 FILED AS OF DATE: 20061113 DATE AS OF CHANGE: 20061113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Intermec, Inc. CENTRAL INDEX KEY: 0001044590 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 954647021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13279 FILM NUMBER: 061205990 BUSINESS ADDRESS: STREET 1: 6001 36TH AVENUE WEST CITY: EVERETT STATE: WA ZIP: 98203-1264 BUSINESS PHONE: 425-265-2400 MAIL ADDRESS: STREET 1: 6001 36TH AVENUE WEST CITY: EVERETT STATE: WA ZIP: 98203-1264 FORMER COMPANY: FORMER CONFORMED NAME: UNOVA INC DATE OF NAME CHANGE: 19970815 10-Q 1 a06-22102_110q.htm QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(D)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2006

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) 265-2400

(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 x No o

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

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x

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 October 27, 2006
Common Stock, $0.01 par value per share		62,193,729 shares

INTERMEC, INC.
TABLE OF CONTENTS
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 1, 2006

PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements

	Consolidated Statements of Operations (unaudited) Three and Nine Month Periods Ended October 1, 2006, and October 2, 2005

	Consolidated Balance Sheets (unaudited) October 1, 2006, and December 31, 2005

	Consolidated Statements of Cash Flows (unaudited) For the Nine Months Ended October 1, 2006, and October 2, 2005

	Notes to Consolidated Financial Statements (unaudited)

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk

ITEM 4.	Controls and Procedures

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings

ITEM 1A.	Risk Factors

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 6.	Exhibits

Signature

PART I. FINANCIAL INFORMATION

INTERMEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share amounts)

(unaudited)

	Three Months Ended					Nine Months Ended
	October 1,		October 2,			October 1,			October 1,
	2006		2005			2006			2005
Revenues:
Product	$	156,951	$	179,640		$	515,741		$	522,590
Service	38,996		40,174			115,474			111,178
Intellectual property settlement	—		—			23,000			—
Total Revenues	195,947		219,814			654,215			633,768

Costs and expenses:
Cost of product revenues	98,807		107,054			315,811			301,755
Cost of service revenues	21,026		25,083			65,311			67,053
Cost of intellectual property settlement	—		—			6,462			—
Selling, general and administrative	70,573		74,143			226,862			222,691
Restructuring charge	1,758		—			4,000			—
Total costs and expenses	192,164		206,280			618,446			591,499
Operating profit from continuing operations	3,783		13,534			35,769			42,269
Gain on sale of investments	—		—			2,305			—
Interest income (expense), net	1,705		(665		)	4,615			(3,911		)
Earnings from continuing operations before income taxes	5,488		12,869			42,689			38,358
Provision for income taxes	2,043		1,601			12,878			9,823
Earnings before discontinued operations	3,445		11,268			29,811			28,535

Earnings (loss) from discontinued operations, net of tax	1,352		(6,697		)	(667		)	(8,416		)

Net earnings	$	4,797	$	4,571		$	29,144		$	20,119

Basic earnings (loss) per share
Continuing operations	$	0.05	$	0.18		$	0.47		$	0.46
Discontinued operations	0.02		(0.11		)	(0.01		)	(0.13		)
Net earnings per share	$	0.07	$	0.07		$	0.46		$	0.33

Diluted earnings (loss) per share
Continuing operations	$	0.05	$	0.18		$	0.46		$	0.45
Discontinued operations	0.02		(0.11		)	(0.01		)	(0.13		)
Net earnings per share	$	0.07	$	0.07		$	0.45		$	0.32

Shares used in computing basic earnings (loss) per share	62,749		62,077			63,009			61,509

Shares used in computing diluted earnings (loss) per share	64,061		63,635			64,428			63,071

See accompanying notes to consolidated financial statements.

INTERMEC, INC.
CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

	October 1.			December 31,
	2006			2005
ASSETS

Current assets:
Cash and cash equivalents	$	218,614		$	256,782
Short-term investments	19,130			—

Accounts receivable, net of allowance for doubtful accounts and sales returns of $7,728 and $8,157	158,161			180,985
Inventories	138,071			82,088
Net current deferred tax assets	47,857			100,656
Assets held for sale	8,529			8,517
Other current assets	14,177			29,468
Total current assets	604,539			658,496

Property, plant and equipment, net of accumulated depreciation of $105,790 and $99,032	41,918			30,820
Intangibles, net	5,976			6,871
Net deferred tax assets	185,373			137,578
Other assets	61,822			68,955
Total assets	$	899,628		$	902,720

LIABILITIES AND SHAREHOLDERS’ INVESTMENT

Current liabilities:
Accounts payable and accrued expenses	$	143,173		$	148,731
Payroll and related expenses	26,727			31,011
Deferred revenue	46,183			38,369
Total current liabilities	216,083			218,111

Long-term deferred revenue	18,845			20,095
Long-term debt	100,000			100,000
Other long-term liabilities	86,679			88,711

Shareholders’ investment:
Common stock	634			627
Additional paid-in capital	703,316			736,224
Accumulated deficit	(215,760		)	(244,903		)
Accumulated other comprehensive loss	(10,169		)	(16,145		)
Total shareholders’ investment	478,021			475,803
Total liabilities and shareholders’ investment	$	899,628		$	902,720

See accompanying notes to consolidated financial statements.

INTERMEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

	Nine Months Ended
	October 1,			October 2,
	2006			2005

Cash and cash equivalents at beginning of period	$	256,782		$	217,899

Cash flows from operating activities of continuing operations:
Net earnings from continuing operations	29,811			28,535
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	7,818			7,504
Change in prepaid pension costs, net	3,458			7,667
Deferred taxes	7,085			7,120
Stock-based compensation and other	5,147			888
Excess tax benefits from stock-based payment arrangements	(4,183		)	—
Changes in operating assets and liabilities:
Accounts receivable	22,824			(9,787		)
Inventories	(55,983		)	(21,604		)
Other current assets	10,825			180
Accounts payable and accrued expenses	2,410			5,998
Payroll and related expenses	(3,892		)	(5,002		)
Other long-term liabilities	2,236			18,128
Other operating activities	2,415			(971		)

Net cash provided by operating activities of continuing operations	29,971			38,656

Cash flows from investing activities of continuing operations:
Capital expenditures	(17,276		)	(7,159		)
Purchases of investments	(19,695		)	—
Decrease in restricted cash	—			50,000
Proceeds from sales of investments	565			—
Capitalization of patent legal fees	(408		)	—
Proceeds from sale of property, plant and equipment	—			6,050
Other investing activities	(128		)	593

Net cash (used in) provided by investing activities of continuing operations	(36,942		)	49,484

Cash flows from financing activities of continuing operations:
Repayment of long-term obligations	—			(108,500		)
Excess tax benefits from stock-based payment arrangements	4,183			—
Proceeds from stock options exercised	5,819			16,373
Stock repurchase	(49,948		)	—
Other financing activities	2,187			1,118

Net cash used in financing activities of continuing operations	(37,759		)	(91,009		)

Net cash used in continuing operations	(44,730		)	(2,869		)
Net cash used in operating activities of discontinued operations	—			(34,662		)
Net cash provided by (used in) investing activities of discontinued operations	6,562			(806		)

Resulting decrease in cash and cash equivalents	(38,168		)	(38,337		)

Cash and cash equivalents at end of period	$	218,614		$	179,562

See accompanying notes to consolidated financial statements.

INTERMEC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Description of the Business

Effective January 1, 2006, we changed our name from UNOVA, Inc. to Intermec, Inc. (“Intermec”). We design, develop, manufacture, integrate, sell, resell and service wired and wireless automated identification and data collection (“AIDC”) products and systems, mobile computing products and systems, wired and wireless bar code printers, label media and radio frequency identification (“RFID”) products and systems. Our products and services are used by customers within and outside of the United States to improve the productivity, quality and responsiveness of their business operations including supply chain management, enterprise resource planning and field sales and service. We grant licenses to use portions of our intellectual property portfolio, including certain patent rights essential to and/or useful in RFID and AIDC products, and receive license fees as well as ongoing royalties based on sales by licensees. Customers for our products and services operate in market segments that include manufacturing, warehousing, direct store delivery, retail, consumer packaged goods, field service, government, and transportation and logistics.

In 2005, we divested our Industrial Automation Systems (“IAS”) businesses, which comprised the Cincinnati Lamb and Landis Grinding Systems divisions. The IAS businesses are classified as discontinued operations for accounting purposes in our consolidated financial statements and related notes.

2. Basis of Presentation

Our interim financial periods are based on a thirteen-week retail calendar. In the opinion of management, the accompanying balance sheets and interim statements of operations, and statements of cash flows include all adjustments, consisting only 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 financial statements include the accounts of Intermec and its subsidiaries. Intercompany transactions and balances have been eliminated. Equity investments in which we exercise significant influence but do not exercise control and are not the primary beneficiary are accounted for using the equity method. Investments in which we are not able to exercise significant influence over the investee are accounted for under the cost method. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and financial data included in the accompanying notes to the financial statements. Actual results and outcomes may differ from management’s 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 and the audited financial statements and notes thereto included in our December 31, 2005 Form 10-K.

Certain amounts in our prior-period consolidated financial statements and notes have been reclassified to conform to the current-period presentation. The consolidated statement of cash flows for the nine months ended October 2, 2005, reflects the reclassification of $50 million in restricted cash from financing activities to investing activities and $3.9 million of cash used in operating activities of discontinued operations was reclassified from operating activities of continuing operations.

3. Stock-Based Compensation

We adopted Statement of Financial Accounting Standards (“SFAS”) 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”), using the modified prospective transition method beginning January 1, 2006. SFAS 123(R) eliminates the ability to account for share-based compensation transactions, as we formerly did, using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expenses in our consolidated statements of operations.

Our consolidated financial statements for the three and nine months ended October 1, 2006, reflect the impact of adopting SFAS 123(R). In accordance with the modified prospective method, the consolidated financial statements for prior periods have

stock-based compensation expense recognized in the consolidated statement of operations during the third quarter of 2006, included compensation expense for stock-based payment awards granted prior to, but not yet vested, as of December 31, 2005, based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS 148 “Accounting for Stock-Based Compensation—Transition and Disclosure” (“SFAS 148”) and compensation expense for the stock-based payment awards granted subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with SFAS 123(R).

Stock-based compensation expense recognized in the consolidated statement of operations for the three and nine months ended October 1, 2006, is based on options ultimately expected to vest. The expense has been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the pro forma information required under SFAS 148 for the periods prior to January 1, 2006, we accounted for forfeitures as they occurred.

Accordingly, during the three and nine month periods ended October 1, 2006, we recorded stock-based compensation expense for awards granted prior to, but not yet vested as of, January 1, 2006, as if the fair value method required for pro forma disclosure under SFAS 123 were in effect for expense recognition purposes, adjusted for estimated forfeitures. For stock-based awards granted after January 1, 2006, we have recognized compensation expense based on the estimated grant date fair value method using the Black-Scholes valuation model. For these awards, we have recognized compensation expense using a straight-line amortization method. Because SFAS 123(R) requires that stock-based compensation expense be based on awards that are ultimately expected to vest, stock-based compensation for the three and nine month periods ended October 1, 2006, has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures. The impact on our results of operations of recording stock-based compensation for the three and nine month periods ended October 1, 2006 was as follows (in thousands):

	Three Months		Nine Months
	Ended		Ended
	October 1, 2006		October 1, 2006
Cost of revenues	$	74	$	184
Selling, general and administrative	762		3,573
	$	836	$	3,757

Prior to adopting SFAS 123(R), we presented all tax benefits resulting from the exercise of stock options as operating cash flows in the Statement of Cash Flows. SFAS 123(R) requires cash flows resulting from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options. As a result of adopting SFAS 123(R) $4.2 million of excess tax benefits for the nine months ended October 1, 2006, has been classified as a source of cash from financing activities. Cash received from option exercises under all share-based payment arrangements for the nine month periods ended October 1, 2006 and October 2, 2005, was $5.8 million and $16.4 million, respectively. The total income tax benefit recognized in the statement of operations for stock-based compensation costs was $0.3 million, and $1.4 million for the three and nine month periods ended October 1, 2006, and $0.4 million and $1.0 million for the three and nine month periods ended October 2, 2005, respectively.

We calculated the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The following assumptions were used for each respective period:

	October 1, 2006		October 2, 2005
Risk-free interest rates	4.82	%	4.09	%
Expected lives (in years)	4.80		5.00
Expected dividend yield	0.00	%	0.00	%
Expected volatility	40.15	%	52.94	%

Our computation of expected volatility for the third quarter of 2006 is based on a combination of historical and market-based implied volatility from traded options on a group of peer stocks. Prior to 2006, our computation of expected volatility was based on historical volatility. Our computation of expected life in 2006, was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of the options granted based on the above assumptions are $11.46 and $12.80 for the three and nine month periods ended October 1, 2006 and $14.71 and $10.72 for the three and nine month periods ended October 2, 2005, respectively. All grants of our options under all plans must be approved or authorized by the Compensation Committee of the Board of Directors, which consists entirely of outside directors.

The following table summarizes the pro forma effect of stock-based compensation as if the fair value method of accounting for stock compensation had been applied in periods prior to January 1, 2006.

	Three Months			Nine Months
	Ended			Ended
	October 2, 2005			October 2, 2005
Net earnings as reported	$	4,571		$	20,119
Add: stock compensation expense recorded under the intrinsic value method, net of tax effect	593			1,661
Less: pro forma stock compensation expense computed under the fair value method, net of tax effect	(1,485		)	(4,077		)

Pro forma net earnings	$	3,679		$	17,703

Net earnings per share as reported:
Basic	$	0.07		$	0.33
Diluted	$	0.07		$	0.32

Pro forma net earnings per share:
Basic	$	0.06		$	0.29
Diluted	$	0.06		$	0.28

Our 2001, 1999 and 1997 Stock Incentive Plans and our 2004 Omnibus Incentive Compensation Plan (the “Stock Incentive Plans,” collectively) provide for the grant of incentive awards to officers and other key employees. The numbers of shares authorized for grant under the 2004, 2001 and 1999 Plans are 3,000,000, 1,000,000, and 4,500,000, respectively. No additional shares are authorized for grant under the 1997 Plan, which was frozen subsequent to the approval of the 1999 Stock Incentive Plan. As of October 1, 2006, there were 536,294 options outstanding that were granted under the 1997 Plan before it was frozen.

Incentive awards may be granted in the form of stock options with or without related stock appreciation rights, restricted stock, restricted stock units and performance units. Under the Stock Incentive Plans, stock options may not be granted at an exercise price less than the market value of our common stock on the date of grant. The Stock Incentive Plans’ options generally vest in equal increments over five years and expire in ten years.

The 2002 Director Stock Option and Fee Plan (“2002 DSOP”) and the 1997 Director Stock Option Plan (“1997 DSOP”, collectively “DSOPs”) provide for the grant of stock options to our non-employee directors. The numbers of shares authorized for grant under the 2002 DSOP is 745,000. No additional shares are authorized under the 1997 DSOP. Subsequent to the grant of 255,000 options under the 1997 DSOP, it was frozen upon the approval of the 2002 DSOP. Under the 2002 DSOP, stock options are granted annually at an exercise price equal to the fair market value of our common stock on the date of grant. The number of options granted annually to each director is fixed by the Director Plan. Prior to 2006, such options became fully exercisable on the first anniversary of their date of grant. Pursuant to an amendment, the grant made to the directors in January, 2006, vested immediately. Therefore, the corresponding expense was recorded in the quarter ended April 2, 2006.

As of October 1, 2006, there were 2,548,326 shares available for grant under our Stock Incentive Plans and DSOPs. The following table summarizes changes in options outstanding and exercisable under our stock award plans:

			Average
	Number		Exercise Price		Remaining	Intrinsic
	of Shares		Per Share		Term	Value
					(in years)	(in millions)
Stock Options:
Nonvested balance at December 31, 2005	3,218,926		$	13.35
Granted	604,250		28.26
Exercised	(516,750	)	14.41
Forfeited	(84,671	)	21.17
Canceled	(7,000	)	14.71
Outstanding balance at October 1, 2006	3,214,755		16.28		6.22	$	84.7
Exercisable at October 1, 2006	1,925,483		13.59		4.73	50.8

As of October 1, 2006, there was $9.3 million of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of 3 years and 4 months.

			Weighted-
			Average
	Number		Grant Date
	of Shares		Fair Value
Restricted stock awards:
Nonvested balance at December 31, 2005	86,070		$	11.52
Granted	109,088		27.29
Vested	(66,802	)	9.14
Forfeited	(6,977	)	21.94
Nonvested balance at October 1, 2006	121,379		26.40

The fair value of each restricted stock award (“RSA”) is the market price of our stock on the date of grant. The total fair value of RSA’s vested during the three and nine months ended October 1, 2006, and October 2, 2005, was $0 and $ 1.8 million, and $ 0.5 and $ 3.1 million, respectively. As of October 1, 2006, there was $1.8 million of total unrecognized compensation cost related to non-vested RSA’s. That cost is expected to be recognized over a weighted average period of 2 years.

Shared Performance Stock Awards are a form of stock award in which the number of shares ultimately received depends on our performance against specified performance targets. The performance period is January 1 through December 31 and covers a period of 3 fiscal years. At the end of the performance period, the number of shares of stock and stock awards issued will be determined by adjusting upward or downward from the target in a range between 0% and 200%. The final performance percentage on which the payout will be based, considering performance metrics established for the performance period, will be determined by the Board of Directors or a committee of the board in its sole discretion. Shares of stock will be issued following the end of the performance period. Shared Performance Stock Awards are amortized over the vesting period (generally 32 months) using the straight line method. Total compensation expense related to performance stock awards was $ (1.3) million and $ 0.2 million, for the three and nine month periods ended October 1, 2006 and $0.6 million and $1.2 million for the three and nine month periods ended October 2, 2005, respectively. The $ (1.3) million credit included in compensation expense for the three months ended October 1, 2006, related to a change in estimate for our performance against our performance targets.

We administer the Employee Stock Purchase Plan (“ESPP”) under which five million shares are reserved for issuance. Employees with three months of continuous service prior to an offering period are eligible to participate in the Plan. Eligible employees may elect to become participants in the Plan and may contribute up to $21,250 per year through payroll deductions to purchase stock purchase rights. Participants may, at any time and for any reason, cancel their payroll deduction authorizations and have the balance in their stock purchase right account applied to the purchase of shares or have the amount refunded. The offering period begins on the first day of the quarter and ends on the last day of the quarter. The stock purchase rights are used to purchase the common stock of Intermec at 85 percent of the fair market value of a share as of the grant date applicable to the participant. We treat this expense as compensation. The compensation expense related to ESPP was $139,000 for the three months, and $457,000 for the nine months ended October 1,2006.

4. Inventories

Inventories comprise the following (in thousands of dollars):

	October 1,		December 31,
	2006		2005
Raw materials	$	82,310	$	50,505
Work in process	595		705
Finished goods	55,166		30,878

Inventories	$	138,071	$	82,088

5. Notes Receivable

In connection with the sale of Cincinnati Lamb, we received a $12.5 million long-term note receivable secured by the assets sold, bearing interest at an annual rate of LIBOR plus three percent (8.32% as of September 29, 2006) with interest payable quarterly. Principal payments on the note are due beginning April 2007, in six semiannual installments of $1.5 million, $2.0 million, $2.0 million, $2.5 million, $2.0 million and $2.5 million. As of October 1, 2006, the estimated fair value of the note is $11.1 million, based on the estimated cash flows from the note and a risk-adjusted discount rate equal to LIBOR plus three percent. Our consolidated balance sheet as of October 1, 2006, classifies the $11.1 million note receivable as other current assets and other assets.

As part of the sale of Landis Grinding Systems, we received a $10 million two-year note at an interest rate of five percent per annum guaranteed by the buyer’s parent company. As of October 1, 2006, the estimated fair value of the note is $9.6 million, based on the estimated cash flows from the note and a risk-adjusted discount rate equal to LIBOR plus 2.25% (7.55% as of September 29, 2006). This long-term note receivable is included in other assets on our balance sheet.

6. Long-term Debt and Interest, net

We have a secured long-term 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 October 1, 2006, of $18.1 million under the Revolving Facility. We made no borrowings under the Revolving Facility during 2006, and as of October 1, 2006, no borrowings were outstanding under this facility. As of October 1, 2006, we were in compliance with all financial covenants under the Revolving Facility.

We have $100.0 million of ten-year senior unsecured debt outstanding as of October 1, 2006. Interest payments at 7.0% are due semi-annually in March and September. Including underwriting fees, discounts and other issuance costs, the effective interest rate is 7.175%. In March 2005, we retired the $100.0 million of seven-year notes, which were issued March 1998.

Interest income (expense) comprises the following (in thousands of dollars):

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2006			2005			2006			2005
Interest income	$	4,178		$	1,592		$	11,517		$	4,745
Interest expense	(2,473		)	(2,257		)	(6,902		)	(8,656		)
Net interest income (expense)	$	1,705		$	(665	)	$	4,615		$	(3,911	)

We also have letter-of-credit reimbursement agreements totaling $9.2 million at October 1, 2006, compared to $25.8 million at December 31, 2005. As of October 1, 2006, $7.9 million of the agreements related to performance on contracts with current customers and vendors, and $0.2 million of the agreements related to customer contracts assumed by the purchaser of the Cincinnati Lamb operations that were sold and $1.1 million of the agreements related to customer contracts assumed by the purchaser of the Landis operations that were sold. We are indemnified by the purchaser of the Cincinnati Lamb operations on the $0.2 million of letter-of-credit agreements related to Cincinnati Lamb.

We believe it is not practicable to estimate fair values of these instruments and consider the risk of non-performance on the

contracts to be remote. We are indemnified by the purchaser of the Landis operations on the $1.1 million letter-of-credit agreement to Landis.

7. Discontinued Operations

During 2005, we completed our divestiture of the IAS businesses with the sale of the Cincinnati Lamb business in the first quarter of 2005 and the sale of the Landis Grinding Systems business in the fourth quarter of 2005. The earnings from discontinued operations for the three month period ended October 1, 2006, and the loss from discontinued operations for the nine month period ended October 1, 2006, includes period expenses related to finalizing the sale of the Landis Grinding Systems and changes to the estimated purchase price adjustment, net of tax benefits. Also included in the earnings from discontinued operations for the three month period ended October 1, 2006, is a $1.4 million benefit related to our true up of the tax provision.

The loss from discontinued operations for the three and nine month periods ended October 2, 2005, includes the operating results of the Cincinnati Lamb and Landis Grinding Systems businesses as well as the loss on the sale of Cincinnati Lamb, net of related tax benefits.

8. Restructuring Costs

In March 2006, we announced our plan to close our design centers in Goteborg and Lund, Sweden. The activities currently assigned to the design centers in Sweden will be reassigned to other parts of our business or moved to third-party vendors to improve efficiencies and benefit from reduced cost. In addition to the anticipated cost savings, this realignment of resources is expected to increase new product development capacity. The total cost of closing the design centers in Sweden and the elimination of 65 positions in Sweden is estimated to be $4.5 million. The estimated restructuring costs include $2.9 million of employee termination expense, facility closure costs of $1.3 million non-cash and other related costs of $0.3 million. During the three and nine months ended October 1, 2006, we have recorded restructuring charges of $1.8 million and $4.0 million, respectiviely. The recorded restructuring charges primarily relate to employee termination costs and facility closure costs, in accordance with SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”), and we anticipate that the remaining unrecognized restructuring costs will be recognized during the fourth quarter of 2006.

9. Intellectual Property Settlement

During the first quarter of 2006, we received compensation in relation to a settlement of a patent dispute regarding certain of our intellectual property (“IP”). Our patents involved smart battery management technology in which a portable computer incorporates a rechargeable battery that uses a processor chip to communicate data to the portable computer so that the computer can monitor and regulate battery use. The effective date of this settlement was February 27, 2006, and the terms are confidential. The operating profit from this settlement, net of attorneys’ fees and costs, is $16.5 million for the first quarter of 2006. IP settlement compensation of $23.0 million is classified as revenue and $6.5 million of related legal costs are classified as cost of intellectual property settlement in our consolidated statements of operations.

10. Provision for Income Taxes

The tax provision for the three and nine month periods ended October 1, 2006, reflects an effective tax rate for continuing operations of 37.2% and 30.2%, respectively, compared to a U.S. statutory rate of 35%. The effective tax rate for the three months ended October 1, 2006, reflects the U.S. statutory rate and state income tax implications. The tax provision for the nine months ended October 1, 2006, was reduced by $2.1 million, primarily due to the favorable conclusion of a Canadian tax audit during the first quarter of 2006.

The tax provision for the three and nine month periods ended October 2, 2005, reflects an effective tax rate for continuing operations of 12.4% and 25.6% compared to a U.S. statutory rate of 35%. The reduction in the effective tax rate is primarily due to a $3.7 million reduction in the foreign tax contingency accrual as a result of the resolution of a German tax audit.

11. Shares Used in Computing Earnings per Share

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

	Three months Ended
	October 1,	October 2,
	2006	2005
Weighted average common shares — Basic	62,748,714	62,076,898
Dilutive effect of unvested restricted shares and stock options	1,312,122	1,557,960
Weighted average shares — Diluted	64,060,836	63,634,858

	Nine months Ended
	October 1,	October 2,
	2006	2005
Weighted average common shares — Basic	63,008,778	61,509,047
Dilutive effect of unvested restricted shares and stock options	1,418,883	1,561,772
Weighted average shares — Diluted	64,427,661	63,070,819

Our employees and directors held options to purchase 599,901 and 426,484 shares of our common stock for the three and nine months ended October 1, 2006, and 81,140 for the nine month period ended October 2, 2005, respectively, that were not included in weighted average shares diluted because they were antidilutive to the diluted earnings per share computation. These options could 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. There were no antidilutive options held for the three month period ended October 2, 2005.

An authorization from our Board of Directors allows us to repurchase up to $100 million in shares of our common stock. On August 7, 2006, we entered into a share repurchase agreement under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of up to $50 million of our common stock pursuant to the previously announced share repurchase authorization by our Board of Directors. For the nine months ended October 1, 2006, we have repurchased $49.9 million in shares of our common stock. On November 3, 2006, we entered into a share repurchase agreement under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of up to $50 million of our common stock pursuant to the same, previously announced share repurchase authorization.

12. Pension and Other Postretirement Benefit Plans

The information in this note represents the net periodic pension and post-retirement benefit costs and related components in accordance with SFAS 132(R). The components of net pension and postretirement periodic benefit cost (credit) for the three and nine month periods ended October 1, 2006, and October 2, 2005, are as follows (in thousands of dollars):

	U.S.						Non-U.S.						Other
	Defined						Defined						Postretirement
Three Months Ended October 1, 2006,	Benefit Plans						Benefit Plans						Benefit Plans
and October 2, 2005:	2006			2005			2006			2005			2006		2005
Service Cost	$	1,741		$	1,701		$	281		$	827		$	4	$	33
Interest Cost	2,988			2,407			567			1,126			66		166
Expected return on plan assets	(2,508		)	(2,537		)	(777		)	(1,006		)	—		—
Amortization and deferrals:
Transition asset	—			—			(40		)	(82		)	—		—
Actuarial loss	1,241			765			115			239			27		17
Prior service cost (benefit)	177			161			—			—			—		—
Curtailment loss (gain)	(2,146		)	—			—			—			—		—
Settlement gain	—			—			—			—			—		—
Special termination benefits	—			—			—			—			—		—
Net pension and postretirement periodic benefit cost	$	1,493		$	2,497		$	146		$	1,104		$	97	$	216

							Non-U.S.						Other
	U.S. Defined						Defined						Postretirement
Nine Months Ended October 1, 2006,	Benefit Plans						Benefit Plans						Benefit Plans
and October 2, 2005:	2006			2005			2006			2005			2006		2005
Service Cost	$	5,223		$	6,511		$	817		$	2,946		$	12	$	100
Interest Cost	8,964			7,447			1,650			4,831			198		1,395
Expected return on plan assets	(7,524		)	(7,549		)	(2,260		)	(4,686		)	—		—
Amortization and deferrals:
Transition asset	—			—			(117		)	(254		)	—		—
Actuarial loss	3,721			2,465			335			1,000			82		357
Prior service cost (benefit)	531			519			—			—			—		(598		)
Curtailment loss (gain)	(2,146		)	57			—			(5,396		)	—		(12,274		)
Settlement gain	—			—			—			(332		)	—		(21,090		)
Special termination benefits	1,350			264			—			—			—		—
Net pension and postretirement periodic benefit cost	$	10,119		$	9,714		$	425		$	(1,891	)	$	292	$	(32,110	)

Effective June 30, 2006, we amended our Financial Security and Savings Program, Pension Plan, Restoration Plan and Supplemental Executive Retirement Plan (collectively, the “U.S. Defined Benefit Plans”). The effect of these amendments was to “freeze” benefit accruals under the U.S. Defined Benefit Plans and to fully vest benefits under the U.S. Defined Benefit Plans, except for the Nonqualified SERP, as of June 30, 2006, for most participants. In accordance with SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (“SFAS 88”), the effects of these amendments require a new measurement date. The impact of the related curtailments reflected in the third quarter of 2006 was $2.1 million as a result of the three month lag period utilized by us for measuring pension obligations.

Our pre-tax loss on the sale of Cincinnati Lamb in the first six months of 2005 takes into consideration the curtailment and settlement gains totaling $39.1 million, comprising $33.4 million relating to the postretirement benefit plans, and $5.7 million relating to the Non-U.S. Defined Benefit Plans. These curtailment and settlement gains comprise the pension and post-retirement obligations assumed by the buyer. In addition, the pre-tax loss on the sale of Cincinnati Lamb includes a loss of $12.9 million representing the cumulative adjustment to recognize the minimum pension liability of our Non-U.S. defined benefit plans, which prior to the sale, had been deferred in the other comprehensive loss component of shareholders’ investment in our consolidated balance sheets.

During the nine months ended October 1, 2006, we contributed approximately $4.9 million to our pension and other postretirement benefit plans, comprising $1.9 million in benefits paid pertaining to unfunded U.S. defined benefit plans, $1.9 million in matching contributions to our 401(k) plan, $1.0 million in contributions to our foreign pension plans, and $0.1 million in benefits paid pertaining to our other postretirement benefits plans. We expect to contribute an additional $2.8 million to these plans during the remainder of 2006, of which $ 1.2 million relates to benefit payments on our unfunded U.S. defined benefit plans, $0.7 million in matching contributions to our 401(k) plan, $0.4 million in contributions to our foreign pension plans and $0.5 million in benefit payments pertaining to our other postretirement benefit plans.

13. Comprehensive Earnings

Our comprehensive earnings comprise the following (in thousands of dollars):

	Three Months Ended
	October 1,		October 2,
	2006		2005
Net earnings	$	4,797	$	4,571
Change in equity due to foreign currency translation adjustments	434		(668		)
Change in equity due to minimum pension liability adjustment	1,727		—
Unrealized loss on cash flow hedges	—		(34		)
Comprehensive earnings	$	6,958	$	3,869

	Nine Months Ended
	October 1,		October 2,
	2006		2005
Net earnings	$	29,144	$	20,119
Change in equity due to foreign currency translation adjustments	4,248		(23,044		)
Change in equity due to minimum pension liability adjustment	1,727		9,144
Unrealized gain on cash flow hedges	—		45
Comprehensive earnings	$	35,119	$	6,264

Foreign currency translation adjustments for the nine months ended October 2, 2005, in the above table, include a credit balance cumulative translation adjustment of $8.3 million which was reclassified from OCI to net earnings as a result of the Cincinnati Lamb sale.

14. Segment Reporting

During the first quarter of 2006, we integrated the corporate expense into our Products and Service segments. Intrasegment transactions have been eliminated and there are no material intersegment transactions. It is not practicable to segregate operating profit, capital expenditures, depreciation and amortization expense or total assets into our Product and Service segments, therefore, in aggregate this information is available in our consolidated financial statements. The following table sets forth our operations by reportable segments (in thousands of dollars):

	Three Months Ended
	October 1,		October 2,
	2006		2005
Revenues
Product	$	156,951	$	179,640
Service	38,996		40,174
Total revenues	$	195,947	$	219,814
Gross profit
Product	$	58,144	$	72,586
Service	17,970		15,091
Total gross profit	$	76,114	$	87,677

Operating profit from continuing operations
Total operating profit from continuing operations	$	3,783	$	13,534

	Nine Months Ended
	October 1,		October 2,
	2006		2005
Revenues
Product	$	538,741	$	522,590
Service	115,474		111,178
Total revenues	$	654,215	$	633,768

Gross profit
Product	$	216,468	$	220,835
Service	50,163		44,125
Total gross profit	$	266,631	$	264,960

Operating profit from continuing operations
Total operating profit from continuing operations	$	35,769	$	42,269

15. Related Party Transactions

Unitrin, Inc. and its subsidiaries (“Unitrin”) is a significant shareholder of Intermec, owning approximately 20% of our outstanding shares. In January 2005, Unitrin’s Life and Health Insurance segment agreed to contract with our subsidiary, Intermec Technology, to develop the software for the next generation of Life and Health Insurance’s handheld computers. For the three and nine month periods ended October 1, 2006, we did not recognize any revenues from this arrangement. For the three and nine month periods ended October 2, 2005, we recognized $2.0 million and $2.2 million in revenues from Unitrin, respectively. We also recorded $0.3 million of deferred service revenue from Unitrin during the three and nine months ended October 2, 2005. We believe that the prices of goods and services sold to Unitrin are comparable to those received from unaffiliated third parties.

16. Commitments and Contingencies

Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information on the nature, frequency, and average cost of warranty claims. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty claims. The following table indicates the change in our warranty accrual included in current liabilities (in thousands of dollars):

Beginning balance January 1, 2006	$	5,542
Payments	(5,727		)
Increase in liability (new warranties issued)	6,425
Ending Balance October 1, 2006	$	6,240

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.

Financial Accounting Standards Board (“FASB”) Interpretation No. 45, “Guarantors’ Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” requires that we estimate and record the fair value of guarantees as a liability. We do not believe we have any significant exposure related to such guarantees and therefore have not recorded a liability as of October 1, 2006, or December 31, 2005. We have not made any significant indemnification payments as a result of these clauses, nor do we believe the fair value of any of these guarantees has a material effect on our financial position or results of operations.

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. Nevertheless, it is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies or by the creation of significant legal or other expenses related to such matters.

17. Recent Accounting Pronouncements

The Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements (“SAB 108”), in September 2006. SAB 108 provides guidance on how the effects of the carryover or reversal of prior year financial statement misstatements should be considered in quantifying a current year misstatement. Prior practice allowed the evaluation of materiality on the basis of (1) the error quantified as the amount by which the current year income statement was misstated (“rollover method”) or (2) the cumulative error quantified as the cumulative amount by which the current year balance sheet was misstated (“iron curtain method”). Reliance on either method in prior years could have resulted in misstatement of the financial statements. The guidance provided in SAB 108 requires both methods to be used in evaluating materiality. Immaterial prior year errors may be corrected with the first filing of prior year financial statements after adoption. The cumulative effect of the correction would be reflected in the opening balance sheet with appropriate disclosure of the nature and amount of each individual error corrected in the cumulative adjustment, as well as a disclosure of the cause of the error and that the error had been deemed to be immaterial in the past. SAB 108 is effective for fiscal year 2007. We are currently evaluating the impact this Bulletin might have on our financial position or results of operations.

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement is effective for fiscal years beginning after November 15, 2007. We are currently in the process of determining the impact of this Statement on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans–an amendment of FASB Statements No. 87, 88, 106, and 132(R).” The Statement requires employers to recognize in their balance sheet the overfunded or underfunded status of defined benefit post-retirement plans, measured as the difference between the fair value of plan assets and the benefit obligation (the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for other post-retirement plans). Employers must also recognize the change in the funded status of the plan in the year in which the change occurs through comprehensive income. This Statement also requires plan assets and obligations to be measured as of the employer’s balance sheet date. The recognition provisions of this Statement are effective for fiscal years ending after December 15, 2006, however, early application is encouraged. The measurement provision of this Statement will be effective for fiscal years beginning after December 15, 2008. Again, early application is encouraged. We are in the process of determining the impact of this Statement on our consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. This Interpretation is effective as of January 1, 2007. We are currently evaluating the impact of FIN 48 on our financial statements.

In November 2005, the FASB issued Staff Position (“FSP”) FAS123(R)-3, Transition Election to Accounting for the Tax Effects of Share-Based Payment Awards. This FSP requires an entity to follow either the transition guidance for the additional-paid-in-capital pool as prescribed in SFAS No. 123(R), Share-Based Payment, or the alternative transition method as described in the FSP. An entity that adopts SFAS No. 123(R) using the modified prospective application may make a one-time election to adopt the transition method described in this FSP. An entity may take up to one year from the later of its initial adoption of SFAS No. 123(R) or the effective date of this FSP to evaluate its available transition alternatives and make its one-time election. This FSP became effective in November 2005. We continue to evaluate the impact that the adoption of this FSP could have on our financial statements.

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

Special Note About Forward-Looking Statements

Forward-Looking Statements and Risk Factors

Forward-looking statements contained in this filing are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 (alternatively: Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) and are dependent upon a variety of important factors that could cause actual results to differ materially from those reflected in such forward-looking statements. These factors include but are not limited to our ability to maintain or to improve the revenues and profits of our continuing operations, maintain or reduce expenses, maintain or improve operational efficiency, use our investment in research and development to generate future revenue, maintain or improve year-over-year growth in the revenues and profits of our continuing operations and the other factors described in Part I, Item 2 and Part II, Item 1A of this filing. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this quarterly report.

Such forward-looking statements involve and are dependent upon certain risks and uncertainties. When used in this document and in documents it references, the words “anticipate,” “believe,” “will,” “intend,” “project” and “expect” and similar expressions as they relate to Intermec or its management are intended to identify such forward-looking statements.

Forward-looking statements are not guarantees of future performance. A number of factors can impact our business and determine whether we can or will achieve any forward-looking statement made in this report. Any one of these factors could cause our actual results to differ materially from those discussed in a forward-looking statement. We outline these risk factors in reports that we file with the SEC, in press releases and on our website, www.intermec.com.

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

Overview

Continuing Operations

Our strategy consists of: technology leadership in the AIDC industry; expanding, strengthening and leveraging our AIDC intellectual property portfolio; expanding and strengthening our AIDC product portfolio; providing integrated AIDC solutions; partnering with global industry leaders; achieving economies of scale and scope; profitably increasing market share; and increasing the scale of the business.

Our strategy is focused on customers in certain vertical markets, including: retailers; consumer goods manufacturers; industrial goods manufacturers; transportation and logistics providers; and government agencies.

Our strategy is also focused on certain application markets, including: warehouse and distribution center operations; retail store operations; retail store management; in-transit visibility; field service; manufacturing operations; direct store delivery; and RFID supply chain.

Discontinued Operations

In 2005, we divested our Industrial Automation Systems (IAS) businesses, which comprised the Cincinnati Lamb and Landis Grinding Systems divisions. The IAS businesses are classified as discontinued operations for accounting purposes in our consolidated financial statements and related notes.

Results of Operations

The following discussion compares our results of operations for the three and nine month periods ended October 1, 2006, and October 2, 2005. Results from continuing operations include the operations of Intermec Technology and Corporate expenses. The operating results of the IAS business are classified as discontinued operations. Results of operations were as follows (in millions of dollars):

	Three Months Ended					Nine Months Ended
	October 1,		October 2,			October 1,			October 2,
	2006		2005			2006			2005
Revenues:
Product and Service Revenues	$	195.9	$	219.8		$	631.2		$	633.8
Intellectual property settlements	—		—			23.0			—
Total Revenues	195.9		219.8			654.2			633.8

Costs and Expenses:
Cost of product and service revenues	119.8		132.1			381.1			368.8
Cost of intellectual property settlements	—		—			6.5			—
Selling, general and administrative	70.5		74.1			226.8			222.7
Restructuring charge	1.8		—			4.0			—
Total Costs and Expenses	192.1		206.2			618.4			591.5

Operating Profit from
Continuing Operations	3.8		13.6			35.8			42.3

Gain on sale of investments	—		—			2.3			—
Interest, net	1.7		(.7		)	4.6			(4.0		)

Earnings from Continuing
Operations before Income Taxes	5.5		12.9			42.7			38.3

Provision for Income Taxes	2.1		1.6			12.9			9.8

Earnings from Continuing
Operations, net of tax	3.4		11.3			29.8			28.5

Earnings (Loss) from Discontinued
Operations, net of tax	1.4		(6.7		)	(0.7		)	(8.4		)

Net Earnings	$	4.8	$	4.6		$	29.1		$	20.1

Revenues

Revenues by category and geographic category and as a percentage of related revenues from continuing operations for the three and nine month periods ended October 1, 2006, and October 2, 2005, were as follows (in millions of dollars):

	Three Months Ended
	October 1, 2006				October 2, 2005
			Percent of				Percent of		Dollar		Percent
	Amount		Revenues		Amount		Revenues		Change		Change
Revenues by Category:
Product	$	156.9	80.1	%	$	179.6	81.7	%	(22.7	)	(12.6	)%
Service	39.0		19.9	%	40.2		18.3	%	(1.2	)	(2.9	)%
Total Revenues	$	195.9	100	%	$	219.8	100	%	(23.9	)	(10.9	)%

	Three Months Ended
	October 1, 2006				October 2, 2005
			Percent of				Percent of		Dollar		Percent
	Amount		Revenues		Amount		Revenues		Change		Change
Revenues by Geographic Region:
North America	$	113.2	57.8	%	$	131.7	60.0	%	(18.5	)	(14.1	)%
Europe, Middle East and Africa (EMEA)	51.5		26.3	%	61.9		28.2	%	(10.4	)	(16.8	)%
All Others	31.2		15.9	%	26.2		11.8	%	5.0		19.1	%
Total Revenues	$	195.9	100	%	$	219.8	100	%	(23.9	)	(10.9	)%

The decrease in quarterly revenue of $23.9 million, or 10.9%, compared to the corresponding prior year period is primarily attributable to a 19.8% decrease in Systems and Solutions product revenue partially offset by 5.6% growth in Printer/Media product revenue. Our analysis of the causal factors for the revenue decline suggest that the most significant factor was our announcement and availability of several new products. Three major new products were introduced at our annual customer conference in September 2006. Early market assessment would suggest that these products are expected to be well received. We believe certain customers delayed orders to await the availability of the new products. The second factor negatively impacting revenue is the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (the “RoHS Directive”) which became effective July 1, 2006, within the European Union (“EU”). The third factor which contributed to the revenue decline is the increase in competitive intensity relative to product and service programs and pricing. The 2.9% decrease in service revenue is due to a more than 50% reduction in US government service revenue as a result of program timing, partially offset by increases in all other service revenue.

Geographically, products and service revenue in North America decreased 14.1% compared to the corresponding prior-year period primarily due to significant decreases in Systems and Solutions and Service revenue. Europe, Middle East and Africa (“EMEA”) revenue decreased 16.8% due to the decrease in Systems and Solutions product revenue. Revenue for the rest of the world increased 19.1% primarily due to a Direct Store Delivery rollout in Latin America.

For the three months ended October 1, 2006, product revenue includes sales to a significant customer representing 10.2% of total revenue.

	Nine Months Ended
	October 1, 2006				October 2, 2005
			Percent of				Percent of		Dollar		Percent
	Amount		Revenues		Amount		Revenues		Change		Change
Revenues by Category:
Product	$	515.7	78.8	%	$	522.6	82.5	%	(6.9	)	(1.3	)%
Service	115.5		17.7	%	111.2		17.5	%	4.3		3.9	%
Intellectual Property Settlement	23.0		3.5	%	—		—		23.0
Total Revenues	$	654.2	100	%	$	633.8	100	%	20.4		3.2	%

	Nine Months Ended
	October 1, 2006				October 2, 2005
			Percent of				Percent of		Dollar		Percent
	Amount		Revenues		Amount		Revenues		Change		Change
Revenues by Geographic Region:
North America	$	401.4	61.4	%	$	367.0	57.9	%	34.4		9.4	%
Europe, Middle East and Africa (EMEA)	173.8		26.6	%	193.0		30.5	%	(19.2	)	(9.9	)%
All Others	79.0		12.0	%	73.8		11.6	%	5.2		7.0	%
Total Revenues	$	654.2	100	%	$	633.8	100	%	20.4		3.2	%

Revenue growth of 3.2% for the nine months ended October 1, 2006 compared to the prior year period is primarily attributable to the intellectual property settlement revenue of $23.0 million partially offset by a 9.9% decrease in EMEA revenue. Product revenues for the nine months ended October 1, 2006, decreased 1.3% compared with the corresponding prior-year period as a result of the decline in EMEA revenue partially offset by growth of 9.4% and 7.0% in North America and the rest of world, respectively. Systems and Solutions revenue is down 2.4% compared to the prior year period as a result of related EMEA revenue decreasing 14.2%. Service revenue increased 3.9% over the corresponding prior-year period principally due to a 5.5% increase in North American service revenue.

For the nine months ended October 1, 2006, product revenue includes sales to a significant customer representing 10.6% of total revenue.

Our operating results for the nine months ended October 1, 2006, include $23.0 million of revenue and $16.5 million of operating profit from compensation related to a settlement regarding certain of the our intellectual property (“IP Settlement”). This represents the last of the laptop computer manufacturers to settle with us regarding battery power-management patents.

Gross Profit

Gross profit and gross margin by revenue category for the three and nine month periods ended October 1, 2006, and October 2, 2005, were as follows (in millions of dollars):

	Three Months Ended
	October 1, 2006				October 2, 2005
	Gross		Gross		Gross		Gross
	Profit		Margin		Profit		Margin
Product	$	58.1	37.0	%	$	72.6	40.4	%
Service	18.0		46.1	%	15.1		37.6	%
Total Gross Profit and Gross Margin	$	76.1	38.8	%	$	87.7	39.9	%

The total gross profit for the three months ended October 1, 2006 decreased $11.6 million compared to the corresponding prior-year period. Product gross margin for the quarter ended October 1, 2006 decreased 3.4 percentage points. The reduction in product gross margin is due to lower average selling prices, which represents more than half of the decline, with lower absorption on lower volumes, and lower margins in printer/media accounting for the other half. The lower margins in printer/media were driven by a change in printer mix to more portable printers, higher freight costs and an increase in media raw materials.

For the quarter ended October 1, 2006, service gross margin increased 8.5 percentage points. The increase in service gross margin is primarily due to lower operating expenses, a lower mix of US government service revenue which typically have lower margins, the recording of previously expensed service parts, a higher mix of European service sales which typically have higher margins, and improved margins in Latin America due to a higher mix of professional service sales.

	Nine Months Ended
	October 1, 2006				October 2, 2005
	Gross		Gross		Gross		Gross
	Profit		Margin		Profit		Margin
Product	$	199.9	38.8	%	$	220.8	42.3	%
Service	50.2		43.4	%	44.1		39.7	%
Intellectual Property Settlement	16.5		71.9	%	—		—
Total Gross Profit and Gross Margin	$	266.6	40.8	%	$	264.9	41.8	%

Gross profit for the nine months ended October 1, 2006, includes $16.5 million from compensation related to the IP settlement. The total gross profit for the nine months ended October 1, 2006, increased $1.7 million compared to the corresponding prior-year period. The increase in gross profit primarily results from the $16.5 million in gross profit from the intellectual property settlement partially offset by the reduction in product related gross profit. Product gross margin for the nine months ended October 1, 2006, decreased by 3.5 percentage points. The reduction in product gross margin is due to the an increase in mix of lower margin enterprise business, the mix in the various sales regions, and lower margins in printer/media. The lower margins in printer/media were driven by a change in printer mix to more portable printers, higher freight costs and an increase in media raw materials.

For the nine months ended October 1, 2006, service gross margin increased 3.7 percentage points. The increase in service gross margin is primarily due to the increase in revenue, lower operating expenses, a lower mix of US government service revenue which typically have lower margins, the recording of previously expensed service parts, a higher mix of European service sales which typically have higher margins, and improved margins in Latin America due to a higher mix of professional service sales.

Selling, General and Administrative

The total selling, general and administrative (“SG&A”) expenses were $70.6 million and $226.9 million for the three and nine months ended October 1, 2006, respectively, compared with SG&A expenses of $74.1 million and $222.7 million for the corresponding prior-year period. The $3.6 million decrease in our SG&A expense for the third quarter 2006 compared to the prior year period is primarily attributable to a $2.6 million increase in sales and marketing expense, $1.6 million of incremental investment in research and development (“R&D”) expense and $0.8 million in stock option expense recognized as a result of the adoption SFAS 123(R) offset by a $5.3 million reduction of legal costs, a $2.1 million curtailment gain from the changes to our US pension and post-retirement plans, and the recapture of $2.4 million of performance based compensation expense. Our R&D expense as a percentage of product and service revenues was 8.8% for the quarter ended October 1, 2006, compared with 7.1% for the corresponding prior-year period.

The $4.2 million increase in SG&A for the nine months ended October 1, 2006, compared to the prior year period, reflects incremental R&D investment of $5.8 million , $3.6 million of incremental expense related to stock options and the employee stock purchase plan related to the adoption of SFAS No. 123(R), Share-Based Payment, partially offset by a $6.8 million decrease in legal expense.

Restructuring Charge

In March 2006, we announced our plan to close design centers in Goteborg and Lund, Sweden. The activities currently assigned to the design centers in Sweden will be reassigned to other parts of Intermec or moved to third-party vendors to improve efficiencies and benefit from reduced cost. In addition to anticipated cost savings, this realignment of resources is expected to result in a significant increase in new product development capacity. The total cost of closing the design centers in Sweden and the elimination of approximately 65 positions in Sweden is estimated to be approximately $4.5 million. Estimated restructuring costs include employee severance, facility closure and other exit costs. We recorded a restructuring charge of $1.8 million and $4.0 million for the three and nine months ended October 1, 2006. We anticipate the remaining restructuring costs will be recognized over the remainder of 2006. We estimate that the savings from these restructuring activities will begin in the fourth quarter of 2006, and reach its estimated annual pre-tax savings of $8 million in 2007.

We are in the process of developing a plan to restructure our operations and support functions. We expect to complete the plan during the fourth quarter of 2006.

Operating Profit

Our operating profit from continuing operations for the three months ended October 1, 2006 decreased $9.8 million compared to the corresponding prior year period. The decrease in operating profit from continuing operations is primarily attributable to the $11.6 million decrease in total gross profits, and the increase in restructuring charges of $1.8 million related to the closure of the Swedish design centers, partially offset by the $3.6 million decrease in SG&A expenses.

Operating profit from continuing operations for the nine months ended October 1, 2006 decreased $6.5 million compared with the corresponding prior-year period. The decrease in operating profit from continuing operations is primarily attributable to the $16.5 million of operating profit from the IP settlement in the first quarter of 2006, more than offset by the decrease in product and service gross profits of $14.8 million, the $4.2 million increase in SG&A expense and the $4.0 million of restructuring charges related to the closure of the Swedish design centers.

Interest, Net

Net interest income was $1.7 million and $4.6 million for the three and nine months ended October 1, 2006, respectively, compared to interest expense of $.7 million and $3.9 million for the corresponding prior-year period. The improvement in net interest reflects the reduction in the outstanding debt balance, as well as higher investment returns.

Provision for Income Taxes

The tax provision for the three and nine month periods ended October 1, 2006, reflects an effective tax rate for continuing operations of 37.2% and 30.2% respectively, compared to a U.S. statutory rate of 35%. The effective tax rate for the three months ended October 1, 2006, reflects the U.S. statutory rate and state income tax implications. The tax provision for the nine months ended October 1, 2006, was reduced by $2.1 million, primarily due to the favorable conclusion of a Canadian tax audit during the first quarter of 2006.

Loss from Discontinued Operations

During 2005, we completed our divestiture of the IAS businesses with the sale of the Cincinnati Lamb business in the first quarter of 2005, and the sale of the Landis Grinding Systems business in the fourth quarter of 2005. The earnings from discontinued operations for the three months ended and the loss from discontinued operations for the nine months ended October 1, 2006, include period expenses related to finalizing the sale of the Landis Grinding Systems and changes to the closing balance sheets and estimated purchase price adjustments, net of tax benefits. Also included in earnings from discontinued operations for the three month period ended October 1, 2006, is a $1.4 million benefit related to our true up of the tax provision.

The operating loss from discontinued operations for the three and nine months ended October 2, 2005, includes the operating results of the Cincinnati Lamb and Landis Grinding Systems businesses as well as the loss on the sale of Cincinnati Lamb, net of related tax benefits.

Liquidity and Capital Resources

Our cash and cash equivalents as of October 1, 2006, totaled $218.6 million. Operating activities of continuing operations for the first nine months of 2006 provided $30.0 million of cash flow, primarily due to the $29.8 million from net earnings from continuing operations, which includes the IP Settlement in March 2006. Also included in cash flows from operating activities of continuing operations was $22.8 million provided from the net reduction of the accounts receivable balance and $56.0 million used for the purchase of inventories. The increase in inventory reflects a build up of additional inventory to support new products and the transition to RoHS Directive compliant products. We expect inventory to decline by $20 to $25 million in the fourth quarter of 2006.

Investing activities of continuing operations for the first nine months of 2006 used $36.9 million, primarily for the purchase of short-term investments totaling $19.7 million and $17.3 million of capital expenditures.

Financing activities of continuing operations reflect the use of $49.9 million for the repurchase of common stock, $5.8 million of proceeds provided from the exercise of stock options and $4.2 million of excess tax benefit provided from stock-based payment arrangements during the first nine months of 2006.

For the nine months ended October 1, 2006, cash and cash equivalents decreased by $38.2 million. In total, net cash used in continuing operations was $44.7 million. Discontinued operations provided net cash of $6.5 million, which related to a partial receipt of a receivable, offset by period expenses related to finalizing the sale of the Landis Grinding Systems.

Effective June 30, 2006, we amended our Financial Security and Savings Program, Pension Plan, Restoration Plan and Supplemental Executive Retirement Plan (collectively, the “U.S. Defined Benefit Plans”). The effect of these amendments was to “freeze” benefit accruals under the U.S. Defined Benefit Plans and to fully vest benefits under the U.S. Defined Benefit Plans, except for the Nonqualified SERP, as of June 30, 2006, for most participants. This resulted in a net curtailment benefit of $2.1 million for our U.S. Defined Benefit Plans. We anticipate that the expense of the U.S. Defined Benefit Plans will

significantly decline. We estimate the net annual reduction in retirement benefit expense to approximate $7 million. In an effort to align our compensation structure, benefit plans and programs with trends typical of our industry, we have implemented new compensation programs which offset a portion of the expected reduction in retirement benefit expense for the fourth quarter of 2006 and offset a proportionately smaller portion of such expense reduction in 2007.

Net of outstanding letters of credit and limitations on minimum availability, we had borrowing capacity at October 1, 2006, of $18.1 million under the Revolving Facility. We made no borrowings under the Revolving Facility during the first nine months of 2006, and as of October 1, 2006, no borrowings were outstanding under the Revolving Facility. As of October 1, 2006, we were in compliance with the financial covenants of each of the Revolving Facility. The key terms of the Revolving Facility are as follows:

· Our obligation under the Revolving Facility are secured by substantially all the U.S. assets of Intermec and our U.S. subsidiaries and a pledge of 65% of the stock of certain of our foreign subsidiaries.

· Borrowings under the Revolving Facility bear interest at a variable rate equal to (at our option) (i) LIBOR plus an applicable margin ranging from 1.5% to 2.5% based on consolidated leverage, or (ii) the greater of the federal funds rate plus 0.50% or the Bank’s prime rate, plus an applicable margin ranging from 0.5% to 1.5% based on consolidated leverage.

· The Revolving Facility places certain restrictions on the ability of Intermec and our subsidiaries to consolidate or merge, make acquisitions, create liens, incur additional indebtedness or dispose of assets.

· Financial covenants include a Consolidated Leverage test, a Consolidated Interest Coverage test and a Consolidated Net Worth test, each as defined in the agreement.

We have $100.0 million of ten-year senior unsecured debt outstanding as of October 1, 2006. Interest payments at 7.0% are due semi-annually in March and September with the principal balance due March 2008. Including underwriting fees, discounts and other issuance costs, the effective interest rate is 7.175%.

Management believes that cash and cash equivalents on hand, combined with projected cash flow from operations, assets held for sale and available borrowings under our Revolving Facility will be sufficient to fund our operations, research an development efforts, anticipated capital expenditures, liabilities, commitments, and other capital requirements, for at least the next twelve months.

Contractual Obligations

Our contractual commitments as of October 1, 2006, have not changed materially from those disclosed in Item 7 of our annual report on Form 10-K for the year ended December 31, 2005.

Critical Accounting Policies

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 management 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. Significant estimates and assumptions were used to determine the provisions for uncollectible accounts receivable, excess and obsolete inventory, tax valuation allowances, recoverability of intangible assets, warranty costs, retiree medical and pension obligations, estimated net realizable value of assets held for sale and litigation loss contingencies. Despite these inherent limitations, management believes that Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and the financial statements and related footnotes provide a meaningful and fair perspective of Intermec. Management’s beliefs regarding significant accounting policies have not changed significantly from those disclosed in Item 7 of our annual report on Form 10-K for the year ended December 31, 2005.

New Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk primarily from its short-term and long-term borrowings and to foreign exchange rate risk with respect to our foreign operations and from foreign currency transactions.

Due to our global operations, our cash flows and earnings are exposed to foreign exchange rate fluctuations. When appropriate, we may attempt to limit our exposure to changing foreign exchange rates by entering into short-term foreign currency exchange contracts. As of October 1, 2006, we held short-term contracts for the purpose of hedging foreign currency cash flows with an aggregate notional amount of $147.3 million.

Except as noted in the preceding paragraph, as of October 1, 2006, there have been no material changes in information provided in Item 7A of our annual report on Form 10-K for the year ended December 31, 2005, which contains a complete discussion of our material exposures to interest rate and foreign exchange rate risks.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation our management, including the CEO and CFO, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of October 1, 2006.

An evaluation was also performed under the supervision and with the participation of our management, including the CEO and CFO, of any change in our internal controls over financial reporting that occurred during the last nine months and that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. That evaluation did not identify any change in our internal controls over financial reporting that occurred during the latest fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

Readers of this Report 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 II, “Item 1A. Risk Factors” in our Reports on Form 10-Q for the period ended April 2, 2006, and in our Report on Form 10-Q for the period ended July 2, 2006, which could materially affect our business, financial condition or operating results. The risks described in our Report on Form 10-Q for the period ended April 2, 2006, and our Report on Form 10-Q for the period ended July 2, 2006, 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.

The risk factor included in the Report on Form 10-Q for the period ended April 2, 2006, under the caption “If Intermec is unable to increase sales to large enterprise customers while increasing sales to medium and small businesses, its growth and results of operations may be adversely affected” is restated in its entirety as follows.

· If we are unable to increase sales to large enterprise customers while increasing sales to medium and small businesses, our growth and results of operations may be adversely affected. One element of our strategy is to increase sales to large enterprises, because they are high volume consumers of supply chain products and systems and because their purchase decisions influence the purchase decisions of medium and small businesses. Another element is to concurrently increase sales to medium and small businesses. This is because large enterprise sales tend to have lower gross profit margins than sales to medium and small businesses. There is no assurance that we will be able to successfully implement our sales strategy. Our revenue, revenue growth, gross profit margins and results of operations could be materially and adversely affected if we do not achieve our objectives in both elements of our sales strategy.

The risk factor included in the Report on Form 10-Q for the period ended April 2, 2006, under the caption “Unfavorable results in pending patent lawsuits could have a material adverse impact on Intermec’s business” is restated in its entirety as follows.

· Unfavorable results in pending or future patent lawsuits could have a material adverse impact on our business. We are periodically involved in patent infringement lawsuits in which we charge another firm with infringing our patents or they charge us with infringing their patents or both. There is no assurance that we will prevail in such lawsuits or that we will prevail on any of the claims or defenses we assert in those cases. An unfavorable result in one or more of these lawsuits or on one or more of our claims or defenses in actions in which we are defending against infringement claims could prevent us from selling one or more of our products, product lines or systems. Such an unfavorable result could also increase the cost of those products, product lines and systems by forcing us to pay a royalty to the other party or by causing us to invest in acquiring or developing alternative technology. An unfavorable result in one or more of the lawsuits or on one or more of our claims or defenses in cases in which we are claiming patent infringement might give the other party the right to compete with us using technology that is the same as or similar to our patented technology. It might also deprive us of royalty revenue from third parties that are using such technology. Any of these events could have a material adverse effect on our revenues, revenue growth, gross profit margin and results of operations.

The risk factor included in the Report on Form 10-Q for the period ended April 2, 2006, under the caption “Since some of Intermec’s competitors are substantially larger or more profitable than Intermec, they are a significant competitive threat” is restated in its entirety as follows.

· Since some of our competitors are substantially larger or are more profitable, they are a significant competitive threat. Some of our competitors are substantially larger in terms of revenue or profit than we are. The scale advantage of these firms may allow them to invest more in R&D, systems and human resources than we can. These advantages may enable our larger competitors to weather market downturns longer or adapt more quickly to market trends or price declines than we can. Those competitors may also be able to precipitate such market changes. There is no assurance that the strategies we use to counteract our competitors’ advantages will successfully eliminate all or a substantial portion of this scale imbalance. If we are unable to offset all or a significant portion of this imbalance, our revenues, revenue growth and results of operations may be materially and adversely affected.

The risk factor included in the Report on Form 10-Q for the period ended July 2, 2006, under the caption “Patent litigation costs may materially impact or increase the volatility of our financial results” is restated in its entirety as follows.

· Patent litigation costs and revenues from such litigation may materially impact or increase the volatility of our financial results. We are periodically involved in patent litigation. Since patent litigation involves complex technical and economic issues, these cases can be expensive to prosecute or defend, and it is difficult to predict the amount or the timing of costs associated with such litigation. When appropriate, we include such costs in Selling, General and Administrative (SG&A) expense and record those expenses as they are incurred. In some periods, patent litigation expense could be a significant percentage of SG&A expense and could result in large fluctuations from prior periods, increasing the volatility of our SG&A expense and potentially impacting our earnings per share. In appropriate circumstances, we capitalize patent litigation costs as intangible assets. In those situations, the expenses are capitalized currently and amortized in future periods, affecting future reported earnings. Cash payments of such costs would adversely affect our cash flow and cash positions in periods when the payments are made. There is no assurance that patent litigation will generate royalty revenue for us, but when it does, we generally amortize that revenue over the useful life of the patents, affecting current and future reported earnings. Since it is difficult to predict the amount or the timing of revenues associated with such litigation, this revenue could cause large fluctuations in our total revenues as compared with prior periods, increasing the volatility of our total revenues and potentially impacting our earnings per share.

You should carefully consider the following additional risk factors.

· Business combinations, private equity transactions and similar events have altered the structure of our industry and could intensify competition within the industry. Motorola’s recently announced acquisition of Symbol Technologies, Inc., Metrologics’ recently announced private equity transaction and similar events have altered the structure of our industry and may spawn more transactions and additional structural changes. Separately or together, any of these events could intensify competition within our industry by expanding the presence in our industry of firms that have not traditionally participated extensively in this line of business, by enhancing the business and financial resources of some of the largest firms in our industry and by increasing the financial resources available to some of the smaller firms. There is no assurance that any of the strategies we employ to react to the structural changes in our industry will be successful. Failure of our strategies could result in material adverse impacts to our revenues, revenue growth and results of operations.

· Our business could be adversely impacted if competitors offer deep discounts on products or unusually favorable service packages. From time to time, our competitors offer deep discounts on their products or unusually favorable service packages to customers. These favorable pricing arrangements may be short-lived or may be available on a longer-term or even a permanent basis. If we do not respond to these competitive initiatives with equally attractive offers or initiatives,

we could experience a material decline in sales, revenues, revenue growth and results of operations.

· Changes in the demand for our products or our introduction of enhanced or new products could result in substantial charges against the carrying value of our inventory. To satisfy anticipated demand for our products and to fulfill our warranty, maintenance and service obligations, we maintain significant inventories of our products and related parts. Our failure to successfully implement our sales strategy, counteract our competitors’ strategies, or adapt to the changing structure of our industry could reduce demand for our products. Our introduction of new or improved products could also reduce demand for older product lines or make them obsolete. In such situations, we may have excess or obsolete inventory, which we might have to sell at substantially lower prices than originally planned. Under certain circumstances, we could also be required to write off the carrying value of all or a portion of the excess or obsolete inventory. Any such write-downs or write-offs could materially and adversely impact our revenues, revenue growth, gross profit margins and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

				(c) Total Number of	(d) Maximum Number of
	(a) Total			Shares Purchased as	Shares (or Approximate
	Number of	(b) Average		Part of Publicly	Dollar Value) that May
	Shares	Price Paid		Announced Plans or	Yet Be Purchased Under
	Purchased	per Share		Programs	the Plans or Programs
July 3 to July 30, 2006	—	—		—	—
July 31 to August 27, 2006	764,170	$	28.98	764,170	$	77,856,124
August 28 to October 1, 2006	972,175	28.60		972,175	50,000,000
Total	1,736,345	$	28.77	1,736,345	$	50,000,000

ITEM 6. EXHIBITS

3(II)		Amended and Restated Bylaws

10.1		Summary Sheet — Employment Arrangement with Lanny H. Michael

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated as of November 9, 2006.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated as of November 9, 2006.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated as of November 9, 2006.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated as of November 9, 2006.

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)


	By	/s/ Lanny H. Michael

		Lanny H. Michael
		Senior Vice President and Chief Financial Officer


		November 9, 2006

EX-3.II 2 a06-22102_1ex3dii.htm EX-3

Exhibit 3(II)

BY-LAWS OF
INTERMEC, INC.

(AS AMENDED SEPTEMBER 14, 2006)

ARTICLE I
OFFICES AND RECORDS

SECTION 1.1. Delaware Office.

The principal office of the Corporation in the State of Delaware shall be located in the City of Wilmington, County of New Castle, and the name and address of its registered agent is Corporation Service Company, 1013 Centre Road, Wilmington, Delaware.

SECTION 1.2. Other Offices.

The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.

SECTION 1.3. Books and Records.

The books and records of the Corporation may be kept outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors.

ARTICLE II
STOCKHOLDERS

SECTION 2.1. Annual Meeting.

The annual meeting of the stockholders of the Corporation shall be held on such date commencing in the year 1999 and at such place and time as may be fixed by resolution of the Board of Directors.

SECTION 2.2. Special Meeting.

Subject to the rights of the holders of any series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation (“Preferred Stock”) with respect to such series of Preferred Stock, special meetings of the stockholders may be called only by the Chairman of the Board or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the “Whole Board”).

SECTION 2.3. Place of Meeting.

The Board of Directors or the Chairman of the Board, as the case may be, may designate the place of meeting for any annual meeting or for any special meeting of the stockholders called by the Board of Directors or the Chairman of the Board. If no designation is so made, the place of meeting shall be the principal office of the Corporation.

SECTION 2.4. Notice of Meeting.

Written or printed notice, stating the place, day, and hour of the meeting and the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his, her, or its address as it appears on the stock transfer books of the Corporation. Such further notice shall be given as may be required by law. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present in accordance with Section 7.4 of these By-Laws. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be canceled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.

SECTION 2.5. Quorum and Adjournment.

Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The Chairman of the meeting or a majority of the shares so represented may adjourn the meeting from time to time, whether or not there is such a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

SECTION 2.6. Proxies.

At all meetings of stockholders, a stockholder may vote by proxy executed in writing (or in such other manner prescribed by the General Corporation Law of the State of Delaware) by the stockholder, or by his duly authorized attorney in fact.

SECTION 2.7. Notice of Stockholder Business and Nominations.

A. Annual Meetings of Stockholders.

(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors, or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this By-Law, who is entitled to vote at the meeting, and who complies with the notice procedures set forth in this By-Law.

(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph A.(1) of this By-Law, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(3) Notwithstanding anything in the second sentence of paragraph A.(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the

Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

B. Special Meetings of Stockholders.

Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this By-Law. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph A.(2) of this By-Law shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder’s notice as described above.

C. General.

(1) Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal or nomination shall be disregarded.

(2) For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.

(3) Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) of the holders of any series of Preferred Stock to elect directors under specified circumstances.

SECTION 2.8. Procedure for Election of Directors; Required Vote.

Election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot. Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, each director to be elected by stockholders shall be elected by the vote of the majority of the votes cast at any meeting for the election of directors at which a quorum is present. For purposes of this Section 2.8, “a majority of the votes cast” shall mean that the number of shares voted “for” a director nominee’s election exceeds 50% of the number of votes cast with respect to that nominee’s election or, in the case where the number of nominees exceeds the number of directors to be elected, cast with respect to election of directors generally. “Votes cast” (a) shall include, as to each nominee, (i) votes cast “for” such nominee’s election and (ii) instructions to withhold authority to vote “for” such nominee’s election in all proxies submitted in connection with such election and (b) shall exclude abstentions with respect to that nominee’s election or, in the case where the number of nominees exceeds the number of directors to be elected, abstentions with respect to election of directors generally. Except as otherwise provided by law, the Certificate of Incorporation, or these By-Laws, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.

SECTION 2.9. Inspectors of Elections; Opening and Closing the Polls.

The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector(s) shall have the duties prescribed by law.

The Chairman or the Secretary of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

SECTION 2.10. No Stockholder Action by Written Consent.

Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

ARTICLE III
BOARD OF DIRECTORS

SECTION 3.1. General Powers.

The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. In addition to the powers and authorities by these By-Laws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders.

SECTION 3.2. Number, Tenure, and Qualifications.

Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board. Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, at each annual meeting of stockholders, (i) each director shall stand for election and shall be elected for a term of office to expire at the next succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified, and (ii) if authorized by a resolution of the Board of Directors, directors may be elected to fill any vacancy on the Board of Directors, regardless of how such vacancy shall have been created.

SECTION 3.3. Regular Meetings.

A regular meeting of the Board of Directors shall be held immediately after the annual meeting of stockholders without other notice than this By-Law. Regular meetings of the directors may be held without notice at such place and times as shall be determined from time to time by the Board of Directors.

SECTION 3.4. Special Meetings.

Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board, the President, or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.

SECTION 3.5. Notice.

Notice of any special meeting of directors shall be given to each director at his or her business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, electronic mail, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, overnight mail, or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph corporation or the notice is delivered to the overnight mail or courier service corporation at least twenty-four (24) hours before such meeting. If by facsimile transmission or electronic mail, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. If by telephone or by hand delivery, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these By-Laws, as provided under Section 8.1. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 7.4 of these By-Laws.

SECTION 3.6. Action by Consent of Board of Directors.

Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

SECTION 3.7. Conference Telephone Meetings.

Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

SECTION 3.8. Quorum.

Subject to Section 3.9, a whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any

meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

SECTION 3.9. Vacancies.

Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders and until any such director’s successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

SECTION 3.10. Executive and Other Committees.

The Board of Directors may, by resolution adopted by a majority of the Whole Board, designate an Executive Committee to exercise, subject to applicable provisions of law, all the powers of the Board in the management of the business and affairs of the Corporation when the Board is not in session, including without limitation the power to declare dividends, to authorize the issuance of the Corporation’s capital stock and to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of the State of Delaware, and may, by resolution similarly adopted, designate one or more other committees. The Executive Committee and each such other committee shall consist of two or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, other than the Executive Committee (the powers of which are expressly provided for herein), may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board when required.

A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.5 of these By-Laws. The Board shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Nothing herein shall be deemed to

prevent the Board from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committee shall have or may exercise any authority of the Board.

SECTION 3.11. Removal.

Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of Voting Stock, voting together as a single class.

SECTION 3.12. Records.

The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board and of the stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation.

SECTION 3.13. Advisory Directors.

The Board of Directors may elect one or more advisory directors who shall have such powers and shall perform such duties as the directors shall assign to them. Advisory directors shall, upon election, serve until the next annual meeting of stockholders. Advisory directors shall receive notices of all meetings of the Board of Directors in the same manner and at the same time as the directors. They shall attend said meetings referred to in said notices in an advisory capacity, but will not cast a vote or be counted to determine a quorum. Any advisory directors may be removed either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board of Directors.

Nothing herein contained shall be construed to preclude any advisory director from serving the Corporation in any other capacity as an officer, agent, or otherwise.

ARTICLE IV
OFFICERS

SECTION 4.1. Officers.

The officers of the Corporation shall consist of a Chairman of the Board, a Chief Executive Officer, a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of Directors, a President, a Vice Chairman of the Board, one or more Chief Operating Officers, one or more Vice Presidents (one or more of whom may be designated Executive or Senior Vice President), one or more Assistant Secretaries, and one or more Assistant Treasurers. Except as may otherwise be provided in the resolution of the Board of Directors choosing him or her, no officer other than the Chairman or Vice

Chairman of the Board, if any, need be a director. Except as may be limited by law, any number of offices may be held by the same person, as the directors may determine.

Unless otherwise provided for in the resolution choosing him or her, each officer shall be chosen for a term that shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his or her successor shall have been chosen and qualified.

All officers of the Corporation shall have such authority and perform such duties as shall be prescribed in the By-Laws or in the resolutions of the Board of Directors designating and choosing such officers and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy in any office may be filled by the Board of Directors.

SECTION 4.2. Other Officers and Agents.

The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The Chief Executive Officer may appoint key executives to the position of staff vice president. Such staff vice presidents shall not be corporate officers and shall exercise such powers and perform such duties as are assigned to them by the Chief Executive Officer or the President, if any, or by any other officer of the Corporation designated for such purpose by the Chief Executive Officer or President, if any.

ARTICLE V
CAPITAL STOCK

SECTION 5.1. Shares.

The shares of the capital stock of the Corporation shall be represented by certificates or shall be uncertificated. Each registered holder of shares of capital stock, upon request to the Corporation, shall be provided with a stock certificate, representing the number of shares owned by such holder. Absent specific request for such a certificate by the registered owner or transferee thereof, all shares shall be uncertificated upon the original issuance thereof by the Corporation or upon the surrender for transfer of the certificate representing such shares to the Corporation or its transfer agent.

SECTION 5.2. Certificates for Shares of Stock.

The certificates for shares of stock of the Corporation shall be in such form, not inconsistent with the Certificate of Incorporation, as shall be approved by the Board of Directors. All certificates shall be signed, countersigned, and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit any of all of the signatures on such certificates to be in facsimile.

In case any officer, transfer agent, or registrar who shall have signed or whose facsimile signature has been placed upon any such certificate or certificates shall cease to be such officer, transfer agent, or registrar of the Corporation, whether because of death, resignation, or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates had not ceased to be such officer, transfer agent, or registrar of the Corporation.

All certificates for shares of stock shall be consecutively numbered as the same are issued. The name of the person owning the shares represented thereby with the number of such shares and the date of issue thereof shall be entered on the books of the corporation.

Except as hereinafter provided, all certificates surrendered to the Corporation for transfer shall be canceled and no new certificates or uncertificated shares shall be issued until former certificates for the same number of shares have been surrendered and canceled.

SECTION 5.3. Lost, Stolen, or Destroyed Certificates.

No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed, or stolen, except on production of such evidence of such loss, destruction, or theft and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms, and secured by such surety, as the Board of Directors or the Secretary of the Corporation may in its, his, or her discretion require.

SECTION 5.4. Transfer of Shares.

Upon surrender to the Corporation or to the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation, or authority to transfer, the Corporation shall issue or cause to be issued uncertificated shares or, if requested by the appropriate person, a new certificate to the person entitled thereto, cancel the surrendered certificate, and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation.

SECTION 5.5. Regulations.

The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer, and registration of uncertificated shares or certificates for shares of stock of the Corporation.

SECTION 5.6. Statements Relating to Uncertificated Securities.

Within two business days after an issuance, transfer, pledge, or release from a pledge of uncertificated shares has been registered, the Corporation shall send to the registered

owner thereof and, if shares are or were subject to a registered pledge, to the registered pledgee, a written notice, signed in such manner as the Board of Directors may prescribe stating (a) that the Corporation shall furnish to such person(s) upon request and without charge a full statement of the designation, relative rights, preferences and limitations of the shares of each class of the Corporation’s stock authorized to be issued and the designation, relative rights, preferences and limitations of each series of preferred stock so far as the same has been fixed and the authority of the Board of Directors to designate and fix the relative rights, preferences and limitations of other series; (b) the number of shares and a description of the issue of which such shares are a part including the class of shares, and the designation of the series, if any, which have been issued, transferred, pledged or released from a pledge, as the case may be; (c) the name, address, and taxpayer identification number, if any, of the person or persons to which such shares have been issued or transferred, and, in the case of registration of a pledge or a release from a pledge, of the registered owner and the registered pledgee whose interest is being granted or released, (d) any liens or restrictions of the Corporation, and any adverse claims (i) which are embodied in a restraining order, injunction, or other legal process served upon the Corporation at a time and in a manner which afforded it a reasonable opportunity to act on it in accordance with applicable law, (ii) of which the Corporation has received written notification from the registered owner or the registered pledgee at a time and in a manner which afforded it a reasonable opportunity to act on it in accordance with applicable law, (iii) to which the registration of transfer to the present registered owner was subject and so noted in a statement sent to such person under this paragraph including restrictions on transfer not imposed by the Corporation, and (iv) of which the Corporation is charged with notice from a controlling instrument which the Corporation has elected to require as assurance that a necessary endorsement or instruction is genuine and effective, to which the shares are subject or a statement that there are no such liens, restrictions, or adverse claims; and (e) the date the issuance, transfer, pledge, or release from a pledge, as the case may be, was registered. The Corporation shall maintain a printed copy of the most recent statement sent to a person with respect to uncertificated shares pursuant to this paragraph.

Within two business days after a transfer of uncertificated shares has been registered, the Corporation shall send to the former registered owner and the former registered pledgee, if any, a written notice stating (a) the number of shares and a description of the issue of which such shares are a part, including the class of shares, and the designation of the series, if any, which have been transferred; (b) the name, address and taxpayer identification number, if any, of the former registered owner and of the former registered pledgee, if any; and (c) the date the transfer was registered.

The Corporation shall send to each registered holder and registered pledgee of uncertificated shares, no less frequently than annually, and at any time upon the written request of any such person, a dated written notice stating (a) if such notice is to the registered owner, the number of shares and a description of the issue of which such shares are a part, including the class of shares, and the designation of the series, if any, registered in the name of such registered owner on the date of the statement; (b) the name, address, and taxpayer identification number, if any, of the registered owner; (c) the name, address and taxpayer identification number, if any, of any registered pledgee and the number of

shares subject to the pledge; and (d) any liens or restrictions of the Corporation and any adverse claims (i) which are embodied in a restraining order, injunction, or other legal process served upon the Corporation at a time and in a manner which afforded it a reasonable opportunity to act on it in accordance with applicable law, (ii) of which the Corporation has received written notification from the registered owner or the registered pledgee at a time and in a manner which afforded it a reasonable opportunity to act on it in accordance with applicable law, (iii) to which the registration of transfer to the present registered owner was subject and so noted in a statement sent to such person under this paragraph, including restrictions on transfer not imposed by the Corporation, and (iv) of which the Corporation is charged with notice from a controlling instrument which the Corporation has elected to require as assurance that a necessary endorsement or instruction is genuine and effective, to which the shares are subject or a statement that there are no such liens, restrictions or adverse claims.

Each notice sent pursuant to this Section 5.6 shall bear a legend substantially as follows: This statement is merely a record of the rights of the addressee as of the time of its issuance. Delivery of the statement, of itself, confers no rights upon the recipient. This statement is neither a negotiable instrument nor a security.

ARTICLE VI
INDEMNIFICATION; ADVANCE OF EXPENSES

SECTION 6.1. Right to Indemnification.

A. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a “proceeding”) by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability, and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that except as provided in Section 6.2.B. of this Article VI, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors.

B. Each person referred to in Section 6.1.A. of this Article VI shall be paid by the Corporation the expenses incurred in connection with any proceeding in advance of its final disposition, such advances to be paid by the Corporation within 20 days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the General Corporation Law of the State of Delaware requires, the advancement of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) prior to the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article VI or otherwise.

C. The right to indemnification conferred in this Article VI and the right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance of its final disposition conferred in this Article VI each shall be a contract right.

SECTION 6.2. Procedure to Obtain Indemnification.

A. To obtain indemnification under this Article VI, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this Section 6.2.A., a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined) or (2) if no request is made by the claimant for a determination by Independent Counsel, (a) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined) or (b) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (c) if a quorum of Disinterested Directors so directs, by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within six years prior to the date of the commencement of the action, suit, or proceeding for which indemnification is claimed a “Change of Control” as defined in the Corporation’s 1997 Stock Incentive Plan, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination.

B. If a claim under Section 6.1 of this Article VI is not paid in full by the Corporation within 30 days after a written claim pursuant to Section 6.2.A. of this Article VI has been received by the Corporation or, in the case of a claim pursuant to Section 6.1.B., within the 20-day period provided therein, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount of the claims, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel, or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel, or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

C. If a determination shall have been made pursuant to Section 6.2.A. of this Article VI that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to Section 6.2.B. of this Article VI.

D. The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to Section 6.2.B. of this Article VI that the procedures and presumptions of this Article VI are not valid, binding, and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article VI.

SECTION 6.3. No Diminution of Rights.

The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-Laws, agreement, vote of stockholders or Disinterested Directors, or otherwise. No repeal or modification of this Article VI shall in any way diminish or adversely affect the rights of any director, officer, employee, or agent of the Corporation hereunder in respect of any occurrence of matter arising prior to any such repeal or modification.

SECTION 6.4. Insurance.

The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of the Corporation or any person serving at the request of the

Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability, or loss under the General Corporation Law of the State of Delaware. To the extent that the Corporation maintains any policy or policies providing such insurance, each such director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in Section 6.5 of this Article VI, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such director, officer, employee, or agent.

SECTION 6.5. Discretionary Indemnification.

The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the Corporation and the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VI with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

SECTION 6.6. Enforceability.

If any provision or provisions of this Article VI shall be held to be invalid, illegal, or unenforceable for any reason whatsoever: (a) the validity, legality, and enforceability of the remaining provisions of this Article VI (including, without limitation, each portion of any section of this Article VI containing any such provision held to be invalid, illegal, or unenforceable, that is not itself held to be invalid, illegal, or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VI (including, without limitation, each such portion of any section of this Article VI containing any such provision held to be invalid, illegal, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal, or unenforceable.

SECTION 6.7. Certain Definitions.

For purposes of this Article VI:

(a) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

(b) “Independent Counsel” means a law firm that is nationally recognized for its experience in matters of Delaware corporation law and shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article VI.

SECTION 6.8. Notices.

Any notice, request, or other communication required or permitted to be given to the Corporation under this Article VI shall be in writing and either delivered in person or sent by telecopy, telex, telegram, electronic mail, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation.

ARTICLE VII
MISCELLANEOUS PROVISIONS

SECTION 7.1. Fiscal Year.

The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of December of each year.

SECTION 7.2. Dividends.

The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.

SECTION 7.3. Seal.

The corporate seal shall have inscribed thereon the words “Corporate Seal,” the year of incorporation and around the margin thereof the words “Intermec, Inc. - Delaware.”

SECTION 7.4. Waiver of Notice.

Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the General Corporation Law of the State of Delaware or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.

SECTION 7.5. Audits.

The accounts, books, and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually.

SECTION 7.6. Resignations.

Any director of any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President, if any, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the President, if any, or the Secretary, or at such later time as is specified therein. No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.

SECTION 7.7. Proxies.

Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the President, if any, or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he or she may deem necessary or proper in the premises.

ARTICLE VIII
AMENDMENTS

SECTION 8.1. Amendments.

These By-Laws may be altered, amended, or repealed at any meeting of the Board of Directors or of the stockholders, provided notice of the proposed change was given in the notice of the meeting and, in the case of a meeting of the Board of Directors, in a notice given not less than two days prior to the meeting; provided, however, that, in the case of amendments by stockholders, notwithstanding any other provisions of these By-Laws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law, the Certificate of Incorporation or these By-Laws, the affirmative vote of the holders of at least 80 percent of the voting power of all the then outstanding shares of the Voting Stock, voting together as a single class, shall be required to alter, amend, or repeal any provision of these By-Laws.

EX-10.1 3 a06-22102_1ex10d1.htm EX-10

Exhibit 10.1

Intermec, Inc.

Summary Sheet – Employment Arrangement with Lanny H. Michael

The following summarizes the principal terms of Intermec, Inc.’s employment of Lanny H. Michael as our Senior Vice President and Chief Financial Officer:

· Term. None specified – employment at will.

· Base Salary. Base salary of $350,000 per annum.

· Bonus.

1. Targeted bonus equal to 70% of base salary, pro rated for calendar year 2006.

2. Payment to be made in 2007 equal to the positive difference, if any, between $73,164 and the amount of actual bonus paid with respect to 2006 pursuant to Intermec Inc.’s applicable incentive bonus plan.

· Equity Compensation.

1. 36,000 stock options, with five-year vesting and a ten-year term.

2. 12,000 “Performance Share Units” which entitle Mr. Michael to receive up to three shares of our common stock for each PSU upon the achievement of certain financial performance measurements over a three-year period.

3. 20,000 “Restricted Stock Units” which vest on the five-year anniversary of the date of grant.

· Change of Control Agreement. Eligible for change of control agreement.

· Benefits. 401(k) plan and other standard benefits.

EX-31.1 4 a06-22102_1ex31d1.htm EX-31

Exhibit 31.1

CERTIFICATION

I, Larry D. Brady, 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(s) 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.

November 9, 2006

/s/ Larry D. Brady
Larry D. Brady

Chief Executive Officer

EX-31.2 5 a06-22102_1ex31d2.htm EX-31

Exhibit 31.2

CERTIFICATION

I, Lanny H. Michael, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intermec, Inc.;

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.

November 9, 2006

/s/ Lanny H. Michael
Lanny H. Michael

Senior Vice President and
Chief Financial Officer

EX-32.1 6 a06-22102_1ex32d1.htm EX-32

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 October 1, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Larry D. Brady, 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/ Larry D. Brady
Larry D. Brady
Chief Executive Officer
November 9, 2006

EX-32.2 7 a06-22102_1ex32d2.htm EX-32

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 October 1, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lanny H. Michael, 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/ Lanny H. Michael
Lanny H. Michael
Senior Vice President and Chief Financial Officer
November 9, 2006

INTERMEC, INC. CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share amounts)

(unaudited)

INTERMEC, INC. CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

INTERMEC, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

SIGNATURE

CERTIFICATION

CERTIFICATION

INTERMEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

INTERMEC, INC.
CONSOLIDATED BALANCE SHEETS

INTERMEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS