-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WuJQghBfKkOYvRPygu3YKVQqrQ+F9Na97kdLZrl38yU2gNQ5bNfzHmBrzLSnJzcM ivpjA/n07wLWH2O2uMqZVw== 0000950137-96-001145.txt : 19960724 0000950137-96-001145.hdr.sgml : 19960724 ACCESSION NUMBER: 0000950137-96-001145 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19960601 FILED AS OF DATE: 19960712 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORAND CORP /DE/ CENTRAL INDEX KEY: 0000886034 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 421323151 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20060 FILM NUMBER: 96593911 BUSINESS ADDRESS: STREET 1: 550 SECOND ST S E CITY: CEDAR RAPIDS STATE: IA ZIP: 52401 BUSINESS PHONE: 3193693100 10-Q 1 FORM 10-Q DATED JUNE 1, 1996 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 1, 1996 or ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 0-20060 NORAND CORPORATION (Exact name of registrant as specified in its charter) Delaware 42-1323151 (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or organization) 550 Second Street S.E. Cedar Rapids, Iowa 52401 (Address of principal executive offices)(Zip Code) Telephone Number (319) 369-3100 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and, (2) has been subject to such filing requirements for the past 90 days: Yes X No ----- ----- As of June 28, 1996, there were 7,646,167 shares of the Registrant's Common Stock, $0.01 par value, outstanding. 2 On September 25, 1995, the Company announced that it had discovered irregularities during the course of the year-end audit of the Company's Italian subsidiary. As a result of the Company's investigation, it has restated its quarterly unaudited consolidated financial statements for the first three quarters of fiscal 1995 and its quarterly unaudited and year-end audited financial statements for fiscal 1994. See Note 4 to Consolidated Financial Statements for further discussion of the Italian subsidiary irregularities and restatement of financial statements. The restated items applicable to the third quarter of fiscal 1995 are set forth in this report. NORAND CORPORATION INDEX PART I. FINANCIAL INFORMATION Page No. -------- Item 1.Consolidated Financial Statements: Consolidated Balance Sheets June 1, 1996 and August 31, 1995 3 Consolidated Statements of Operations Three Months and Nine Months Ended June 1, 1996 and June 3, 1995 (As Restated) 4 Consolidated Statements of Stockholders' Equity June 1, 1996, August 31, 1995 and August 31, 1994 (As Restated) 5 Consolidated Statements of Cash Flows Nine Months Ended June 1, 1996 and June 3, 1995 (As Restated) 6-7 Notes to Consolidated Financial Statements 8-11 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 12-17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 18 Signatures 19 Index to Exhibits 20 3 PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS NORAND CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)
JUNE 1, AUGUST 31, 1996 1995 ---------- ---------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $2,929 $3,809 Accounts receivable, net of allowances for doubtful accounts and estimated sales returns of $7,945 (unaudited) and $6,423 62,820 68,609 Inventories 36,231 36,678 Deferred tax assets 12,471 6,355 Prepaid expenses and other current assets 4,182 4,643 -------- -------- Total current assets 118,633 120,094 Noncurrent assets: Property, plant and equipment, net 25,958 23,138 Deferred tax assets 3,266 3,266 Patents and intellectual properties, net 6,621 6,981 Goodwill, net 2,641 2,731 Other noncurrent assets 4,754 4,378 -------- -------- Total assets $161,873 $160,588 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $55,021 $39,876 Accounts payable 22,397 25,517 Accrued payroll and employee benefits 9,019 10,959 Other accrued liabilities 22,144 19,370 Deferred income 9,085 9,595 -------- -------- Total current liabilities 117,666 105,317 -------- -------- Stockholders' equity: Common stock, $.01 par value: Authorized 15,000,000 shares; issued and outstanding 7,636,196 shares (unaudited) and 7,534,846 76 75 Additional paid-in capital 74,754 73,150 Accumulated deficit (26,087) (14,312) Equity adjustment from foreign currency translation (4,536) (3,642) -------- -------- Total stockholders' equity 44,207 55,271 -------- -------- Total liabilities and stockholders' equity $161,873 $160,588 ======== ========
See accompanying notes to the consolidated financial statements - 3 - 4 NORAND CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------------- -------------------------- JUNE 1, JUNE 3, JUNE 1, JUNE 3, 1996 1995 1996 1995 (AS RESTATED) (AS RESTATED) ----------- ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Revenues: Product sales revenue $50,205 $47,938 $134,569 $130,553 Customer service revenue 10,011 9,758 31,485 28,193 --------- --------- --------- --------- Total revenues 60,216 57,696 166,054 158,746 Cost of products and services 34,315 30,644 100,370 86,049 --------- --------- --------- --------- Gross profit 25,901 27,052 65,684 72,697 Operating expenses: Product development and engineering expenses 4,208 5,252 16,792 15,637 Selling expenses 15,284 12,764 42,630 37,682 General and administrative expenses 3,586 3,307 13,405 9,903 Restructuring charge 0 0 5,192 0 --------- --------- --------- --------- Total operating expenses 23,078 21,323 78,019 63,222 --------- --------- --------- --------- Income (loss) from operations 2,823 5,729 (12,335) 9,475 Interest and other expenses 1,695 1,079 4,486 2,551 --------- --------- --------- --------- Income (loss) before income taxes 1,128 4,650 (16,821) 6,924 Provision (benefit) for income taxes 339 1,372 (5,046) 2,764 --------- --------- --------- --------- Net income (loss) $789 $3,278 ($11,775) $4,160 ========= ========= ========= ========= Net income (loss) per common share $0.10 $0.43 ($1.56) $0.54 ========= ========= ========= ========= Average number of common and common equivalent shares outstanding: Primary 7,726,070 7,698,939 7,570,381 7,656,653 ========= ========= ========= ========= Fully diluted 7,791,012 7,698,939 7,570,381 7,656,653 ========= ========= ========= =========
See accompanying notes to the consolidated financial statements - 4 - 5 NORAND CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Dollars in thousands, except share data)
EQUITY ADJUSTMENT ADDITIONAL FROM FOREIGN COMMON STOCK PAID-IN ACCUMULATED CURRENCY SHARES AMOUNT CAPITAL DEFICIT TRANSLATION ------ ------ ---------- ----------- ------------ Balances, August 31, 1993 7,000,984 $70 $68,542 ($16,980) ($1,864) Exercises of stock options 349,590 3 573 - - Additional expenses of initial public offering - - (37) - - Tax benefit from exercise of stock options - - 516 - - Foreign currency translation - - - - (220) Net income (as restated) - - - 6,374 - --------- --- ------- -------- ------- Balances, August 31, 1994 (as restated) 7,350,574 73 69,594 (10,606) (2,084) Exercises of stock options 174,455 2 2,737 - - Tax benefit from exercise of stock options - - 382 - - Acquisition of subsidiary 9,817 - 437 - - Foreign currency translation - - - - (1,558) Net loss - - - (3,706) - --------- --- ------- -------- ------- Balances, August 31, 1995 7,534,846 75 73,150 (14,312) (3,642) Exercises of stock options (unaudited) 101,350 1 1,604 - - Foreign currency translation (unaudited) - - - - (894) Net loss (unaudited) - - - (11,775) - --------- --- ------- -------- ------- Balances, June 1, 1996 (unaudited) 7,636,196 $76 $74,754 ($26,087) ($4,536) ========= === ======= ======== =======
See accompanying notes to the consolidated financial statements - 5 - 6 NORAND CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
NINE MONTH PERIOD ENDED --------------------------------- JUNE 1, JUNE 3, 1996 1995 (AS RESTATED) ---------- ----------------- (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Net income (loss) ($11,775) $4,160 -------- ------- Adjustments to reconcile net income to net cash used in operating activities: Depreciation 5,463 4,245 Amortization 3,020 1,548 Amortization of deferred royalty income (1,815) (1,711) Deferred tax assets (6,116) 0 Provision for doubtful accounts and sales returns 4,360 4,490 Changes in assets and liabilities: Accounts receivable 1,115 (11,519) Inventories 412 (5,038) Prepaid expenses and other assets 728 478 Deferred income 1,305 1,647 Accounts payable and accrued liabilities (6,301) (3,170) Accrued restructuring, net 3,512 0 -------- ------- Total adjustments 5,683 (9,030) -------- ------- Net cash used in operating activities (6,092) (4,870) -------- ------- Cash flows from investing activities: Additions to property, plant and equipment (8,282) (7,645) Additions to software, patents, and intellectual properties (2,494) (3,455) -------- ------- Net cash used in investing activities (10,776) (11,100) -------- ------- Cash flows from financing activities: Net borrowings under line of credit agreement 15,119 15,957 Issuances of common stock 1,605 2,500 Payments of refinancing expenses (642) (144) -------- ------- Net cash provided by financing activities 16,082 18,313 -------- ------- Effect of exchange rate changes on cash (94) (14) -------- ------- Net increase (decrease) in cash and cash equivalents (880) 2,329 Cash and cash equivalents: Beginning of period 3,809 2,987 -------- ------- End of period $2,929 $5,316 ======== =======
See accompanying notes to the consolidated financial statements - 6 - 7 NORAND CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED) (Dollars in thousands)
NINE MONTH PERIOD ENDED --------------------------------- JUNE 1, JUNE 3, 1996 1995 (AS RESTATED) ---------- ----------------- (UNAUDITED) (UNAUDITED) Supplemental disclosures of cash flow information: Interest paid on all debt obligations $3,897 $2,077 ======== ======= Income taxes paid (refunded), net ($1,197) $2,829 ======== =======
See accompanying notes to the consolidated financial statements - 7- 8 NORAND CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) 1. BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited consolidated financial statements include all necessary adjustments (consisting of normal recurring accruals and the restructuring charge recorded in the second quarter of fiscal 1996) to present fairly the Company's financial position as of June 1, 1996, and the results of its operations and cash flows for the nine months ended June 1, 1996 and June 3, 1995, in conformity with generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three months and nine months ended June 1, 1996, are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended August 31, 1995. 2. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or market, and consist of the following:
June 1, August 31, 1996 1995 ------- --------- Parts and materials $19,146 $13,572 Work in process 1,740 1,799 Finished goods 10,867 15,808 Field service and sales supplies 4,478 5,499 ------- ------- Total $36,231 $36,678 ======= =======
3. SHORT-TERM DEBT In October 1995, as a result of non-compliance with the Company's bank credit agreement (the "Agreement"), the Company amended and recollateralized the Agreement resulting in an increase in the effective interest rate by 1.0 percent on LIBOR borrowings and 0.5 percent on prime rate borrowings. As a result of the losses for the year ended August 31, 1995 and losses for the quarter ended December 2, 1995, the Company was not in compliance with certain covenants under the Agreement. Borrowings under the Agreement had increased from $39.5 million as of August 31, 1995 to $61.2 million on December 2, 1995 to fund operations and capital additions. Due to the covenant violations, on December 14, 1995, available borrowings under the Agreement were frozen at the balance then outstanding of $57.4 million. On January 25, 1996, the Company amended and restated the Agreement (the "Restated Agreement") with its lending group wherein the lending group agreed to waive any defaults under or - 8 - 9 violations of the Agreement occurring on or before January 25, 1996. The Restated Agreement provides for an amortizing term loan beginning at $52.0 million and amortizing by $1.0 million per month beginning September 15, 1996, to $48.0 million on December 15, 1996, and up to $11.5 million in a borrowing base revolving loan. The Restated Agreement is limited to $63.5 million in aggregate borrowings. Obligations under the Restated Agreement will mature on December 31, 1996. The Company's obligations under the Restated Agreement are secured by substantially all of the assets of the Company. No foreign currency borrowings are permitted under the Restated Agreement. The effective interest rate, effective January 25, 1996, under the Restated Agreement is the agent's alternate base rate plus 1.75% for all borrowings up to $57.4 million and the agent's alternate base rate plus 2.75% for borrowings above $57.4 million. The Restated Agreement contains financial covenants, measured at varying dates, relating to tangible net worth, capital additions, and cash flows. The Company was in compliance with all covenants under the Restated Agreement as of June 1, 1996. The Company paid a commitment fee at closing amounting to 0.5% of the total facility. An additional 0.5% fee will be payable on September 15, 1996 if the Company does not comply with certain terms of the Restated Agreement. The total amount outstanding under this facility was $54.6 million at June 1, 1996. 4. ITALIAN SUBSIDIARY IRREGULARITIES AND RESTATEMENT OF FISCAL 1995 SECOND QUARTER UNAUDITED FINANCIAL STATEMENTS Irregularities Discovered On September 25, 1995, the Company announced that it had discovered irregularities during the course of the year-end audit at its Italian subsidiary. At that time the managing director of the Italian subsidiary was removed. The Company's investigation of the irregularities in its Italian subsidiary continued following the initial announcement. The investigation subsequently revealed a complex set of irregularities, which took place over a period of time. The irregularities were facilitated by third parties, certain of which were associated with the former managing director. As a result of the investigation attributable to the Italian subsidiary, the Company recorded in its 1995 and 1994 financial statements pretax charges and costs related to sales returns, inventory losses, certain local taxes which may not be recoverable, professional costs for the investigation, and the settlement or anticipated settlement of numerous third party claims against the Italian subsidiary. Included in the Company's restated results for the third quarter and nine months ended June 3, 1995, after restatement for irregular sales and costs, are pretax charges and costs totaling $0.1 million and $1.8 million, respectively, which result from certain local taxes which may not be recoverable and $0.5 million in the first quarter resulting from inventory losses. The Company believes that a thorough investigation has been completed in order to determine the aggregate losses due to the irregularities. The Company has continued to pursue potential further recoveries from third parties and insurance. Such potential recoveries have not been reflected in the accompanying financial statements. During the first nine months of fiscal 1996 the Company settled numerous previously identified third party claims for costs which approximated previous estimates. No new claims have been presented that would have a material adverse financial impact on the Company. Based upon the results of its investigation and claim settlements, the Company does not believe that the aggregate charges and operating losses relating to these known facts and circumstances will materially exceed the amount of losses and costs already recorded. However, there can be no assurance that additional third party claims will not be discovered in future - 9 - 10 periods which will result in further losses related to this matter. Such losses could be material to the consolidated results of operations in any future period. Management does not believe that any such losses will be material to the Company's consolidated financial position. Restatement of Financial Statements As discussed above, the previously reported results for the third quarter of fiscal 1995 have been restated by the Company in order to reflect the correction of the irregularities discovered at its Italian subsidiary. The effect of the restatement adjustments on results for the three months and nine months ended June 3, 1995 is as follows:
Three Month Nine Month Period Ended Period Ended June 3, 1995 June 3, 1995 --------------------- --------------------- Previously Previously Reported Restated Reported Restated ---------- --------- ---------- --------- Revenues: Product sales revenue $ 48,338 $ 47,938 $ 131,894 $ 130,553 Customer service revenue 9,759 9,758 28,193 28,193 ---------- --------- ---------- --------- Total revenue 58,097 57,696 160,087 158,746 Cost of products and services 30,524 30,644 85,838 86,049 ---------- --------- ---------- --------- Gross profit 27,573 27,052 74,249 72,697 Operating expenses: Product development and engineering expenses 5,252 5,252 15,637 15,637 Selling expenses 12,712 12,764 36,294 37,682 General and administrative expenses 3,307 3,307 9,903 9,903 ---------- --------- ---------- --------- Total operating expenses 21,271 21,323 61,834 63,222 ---------- --------- ---------- --------- Income from operations 6,302 5,729 12,415 9,475 Interest and other expenses 1,079 1,079 2,551 2,551 ---------- --------- ---------- --------- Income before income taxes 5,223 4,650 9,864 6,924 Provision for income taxes 1,567 1,372 2,959 2,764 ---------- --------- ---------- --------- Net income $ 3,656 $ 3,278 $ 6,905 $ 4,160 ========== ========= ========== ========= Net income per common share $ 0.47 $ 0.43 $ 0.90 $ 0.54 ========== ========= ========== ========= Average number of common and common equivalent shares outstanding 7,698,939 7,698,939 7,656,653 7,656,653 ========== ========= ========== =========
- 10 - 11 5. RESTRUCTURING During the second quarter of fiscal 1996, the Company recorded a charge of $5.2 million ($3.6 million after-tax) related to a company-wide restructuring of operations. The restructuring charge includes $4.7 million for severance and other costs related to a workforce reduction (substantially all of which occurred prior to March 2, 1996) and $0.5 million of lease exit costs associated with the closing or consolidating of certain facilities. The Company believes that annual cost savings resulting from the restructuring will be in excess of these charges. As of June 1, 1996, the Company had disbursed $1.7 million of the charge, primarily for severance and lease exit costs. The Company expects to expend the majority of the remaining balance of the charge by the end of the calendar year, except for amounts due in installments under longer-term severance and lease agreements. 6. LITIGATION In October 1995, two class action complaints were filed against the Company and certain of its officers in United States District Court in Cedar Rapids, Iowa, seeking unspecified damages on behalf of a purported class of purchasers of Norand stock on the ground that the defendants violated the federal securities laws by allegedly making materially false and misleading statements concerning the Company's results of operations and future prospects during the period from March 20, 1995 until September 25, 1995. On November 24, 1995, a third lawsuit was filed in the same court raising substantially the same claims on behalf of a broader purported class of purchasers of Norand stock. All three lawsuits were consolidated under the caption In re Norand Corporation Securities Litigation (Master File No. C 95-323). On December 23, 1995, a single amended and consolidated complaint was filed in the consolidated action, superseding all previous pleadings. The complaint was filed on behalf of a purported class consisting of purchasers of Norand stock from September 26, 1995 through November 17, 1995, and names as defendants the Company, five of its present or former senior officers, and Arthur Andersen LLP, the Company's independent public accountant. The consolidated complaint alleges, among other things, that the Norand defendants materially overstated the Company's revenues and earnings by improperly recording sales in its Italian subsidiary and misled the market by failing to disclose alleged problems with certain of its products that affected its revenues in the fourth quarter of fiscal 1995. The Company believes that all of the claims described above are without merit and intends to vigorously defend the lawsuits. However, there can be no assurance with respect to the outcome of the litigation. The Company is also subject to certain legal proceedings and claims which have arisen in the ordinary course of its business and have not been finally adjudicated. In management's opinion, the ultimate resolution of these matters will not be material to the Company's consolidated financial position or results of operations. - 11 - 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS AS A PERCENTAGE OF TOTAL REVENUES (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------------- --------------------------------------- JUNE 1, JUNE 3, JUNE 1, JUNE 3, 1996 1995 (AS RESTATED) 1996 1995 (AS RESTATED) ------------------ ------------------ ------------------ -------------------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Revenues: Product sales revenue $50,205 83.4% $47,938 83.1% $134,569 81.0% $130,553 82.2% Customer service revenue 10,011 16.6% 9,758 16.9% 31,485 19.0% 28,193 17.8% ------- ----- ------- ----- -------- ----- -------- ----- Total revenues 60,216 100.0% 57,696 100.0% 166,054 100.0% 158,746 100.0% Cost of products and services 34,315 57.0% 30,644 53.1% 100,370 60.4% 86,049 54.2% ------- ----- ------- ----- -------- ----- -------- ----- Gross profit 25,901 43.0% 27,052 46.9% 65,684 39.6% 72,697 45.8% ------- ----- ------- ----- -------- ----- -------- ----- Operating expenses: Product development and engineering expenses 4,208 7.0% 5,252 9.1% 16,792 10.1% 15,637 9.9% Selling expenses 15,284 25.3% 12,764 22.1% 42,630 25.7% 37,682 23.7% General and administrative expenses 3,586 6.0% 3,307 5.8% 13,405 8.1% 9,903 6.2% Restructuring charge 0 0.0% 0 0.0% 5,192 3.1% 0 0.0% ------- ----- ------- ----- -------- ----- -------- ----- Total operating expenses 23,078 38.3% 21,323 37.0% 78,019 47.0)% 63,222 39.8% ------- ----- ------- ----- -------- ----- -------- ----- Income (loss) from operations 2,823 4.7% 5,729 9.9% (12,335) (7.4)% 9,475 6.0% Interest and other expenses 1,695 2.8% 1,079 1.8% 4,486 2.7% 2,551 1.6% ------- ----- ------- ----- -------- ----- -------- ----- Income (loss) before income taxes 1,128 1.9% 4,650 8.1% (16,821) (10.1)% 6,924 4.4% Provision (benefit) for income taxes 339 0.6% 1,372 2.4% (5,046) (3.0)% 2,764 1.7% ------- ----- ------- ----- -------- ----- -------- ----- Net income (loss) $789 1.3% $3,278 5.7% ($11,775) (7.1)% $4,160 2.7% ======= ===== ======= ===== ======== ===== ======== =====
- 12 - 13 INTRODUCTION Norand designs, manufactures, and markets mobile computing systems and wireless data communication networks using radio frequency technology. These systems automate the collection, processing and communication of information related to product sales and distribution, inventory control and warehouse data management. Norand systems include hand-held computers and radio frequency terminals as well as a variety of other hardware devices; application-specific software; communication networks; systems integration and support services; and related peripheral items including portable printers and bar code scanning devices. The discussion of Norand's results of operations and financial condition should be read in conjunction with the consolidated financial statements of the Company and the notes thereto appearing elsewhere in this quarterly report. ITALIAN SUBSIDIARY IRREGULARITIES AND RESTATEMENT OF FINANCIAL STATEMENTS Irregularities Discovered On September 25, 1995, the Company announced that it had discovered irregularities during the course of the year-end audit at its Italian subsidiary. At that time the managing director of the Italian subsidiary was removed. The Company's investigation of the irregularities in its Italian subsidiary continued following the initial announcement. The investigation subsequently revealed a complex set of irregularities, which took place over a period of time. The irregularities were facilitated by third parties, certain of which were associated with the former managing director. As a result of the investigation attributable to the Italian subsidiary, the Company recorded in its 1995 and 1994 financial statements pretax charges and costs related to sales returns, inventory losses, certain local taxes which may not be recoverable, professional costs for the investigation, and the settlement or anticipated settlement of numerous third party claims against the Italian subsidiary. Included in the Company's restated results for the third quarter and nine months ended June 3, 1995, after restatement for irregular sales and costs, are pretax charges and costs totaling $0.1 million and $1.8 million, respectively, which result from certain local taxes which may not be recoverable and $0.5 million in the first quarter resulting from inventory losses. See Note 4 to Consolidated Financial Statements for a summary of the restatement. The Company believes that a thorough investigation has been completed in order to determine the aggregate losses due to the irregularities. The Company has engaged legal counsel to continue to investigate the irregularities and pursue potential further recoveries from third parties and insurance. Such potential recoveries have not been reflected in the accompanying financial statements. During the first nine months of fiscal 1996 the Company settled numerous previously identified third party claims for costs which approximated previous estimates. No new claims have been presented that would have a material adverse financial impact on the Company. Based upon the results of its investigation and claim settlements, the Company does not believe that the aggregate charges and operating losses relating to known facts and circumstances will materially exceed the amount of recorded losses and costs. However, there can be no assurances that additional third party claims will not be discovered in future periods which will result in further losses related to this matter. Such losses could be material to the consolidated results of operations in any future period. Management does not believe that any such losses will be material to the Company's consolidated financial position. - 13 - 14 RESTRUCTURING On January 25, 1996, the Company announced that it was reviewing its world-wide operations. As part of its review, the Company announced a company-wide restructuring of its operations and implemented actions designed to improve its financial performance in the short and long term. These actions are targeted at improving gross margins, significantly reducing operating expenses and enhancing the capability of launching and supporting new products and systems. The actions that the Company has taken resulted in a restructuring charge of $5.2 million ($3.6 million after-tax). The restructuring charge includes $4.7 million for severance and other costs related to reductions in the Company's domestic and international workforce (substantially all of which occurred prior to March 2, 1996) and $0.5 million for lease exit costs associated with the closing or consolidating of certain facilities. While this charge reduced second quarter net income, the Company believes that annual cost savings resulting from the restructuring will be in excess of these charges. In addition, the Company believes that it will be able to continue financing the cost of the restructuring from existing working capital and the borrowing capacity of its amended credit facility. The Company believes that the combination of increasing revenues along with the potential savings of the restructuring initiatives should continue to result in improved financial results. However, no assurances can be given as to the actual extent of any savings or improvements that might be realized or that additional actions and additional charges against earnings might not occur in the future. The restructuring of the Company's operations will aid its transition to an open systems mobile computing company delivering local wireless and remote business solutions. The transition has required changes in the organization's size, structure and skill sets required to profitably operate in this new environment. The Company will continue to make critical sales channel and R&D investments to support its vertical market solutions strategy. The objectives of the restructuring are to: * Reduce operating expenses * Increase efficiencies and coordination of development activities * Strengthen product and systems integration support through consolidation of resources * Strengthen the procurement and logistics functions * Complete the consolidation of world-wide sales and marketing * Provide increased financial control. The actions were taken to improve both the short and long term performance of the business by creating a more effective marketing, sales and support organization, with ongoing investment in new products and more efficient manufacturing, procurement and logistics capabilities. Except for the historical information contained herein, the matters discussed in this Form 10-Q are forward looking statements that involve risks and uncertainties and actual results could differ materially from expected results. Potential risks and uncertainties include, without limitation, continued pressures in - 14 - 15 the marketplace, the Company's ability to realize the benefits of the announced restructuring of the Company, the future need for additional restructuring, and the Company's ability to achieve increased revenues from new products and markets and lower operating expenses. RESULTS OF OPERATIONS Revenues Consolidated revenues for the quarter and nine months ended June 1, 1996, increased $2.5 million or 4.4% and $7.3 million or 4.6%, respectively, compared to revenues for the same periods in the prior fiscal year. Product revenues increased $2.3 million or 4.7% and $4.0 million or 3.1%, respectively, from the comparable prior periods. The modest growth in product revenues is due to slower than expected sales growth caused by component shortages and late-in-the-quarter product mix shifts. At the end of the quarter ended June 1, 1996, the Company began volume shipments of the new, small form factor RF terminal, the 6400 PEN*KEY(R) which was first shipped during the second quarter. Customer service revenues increased $0.2 million or 2.6% and $3.3 million or 11.7%, respectively, from the comparable prior periods due primarily to continued growth in the Company's installed world-wide customer base. The growth in customer service revenues in the third quarter of 1996 was slowed as a result of the expiration of certain long-term maintenance contracts for the Company's legacy products. Gross Profit Norand's gross profit for the quarter and nine months ended June 1, 1996, decreased $1.2 million or 4.2% and $7.0 million or 9.6%, respectively, from the comparable prior periods. Gross profit as a percent of total revenues decreased from 46.9% to 43.0% for the quarter and from 45.8% to 39.6% for the nine months ended June 1, 1996. The decrease in gross profits is due primarily to $2.4 million of inventory write-offs in the second quarter of fiscal 1996, a continued shift in product mix to the new PEN*KEY family of products which carry a lower margin than the products they replace, higher costs associated with shipments of new products, and lower margins in all markets due to competitive pricing pressures. The Company expects fourth quarter gross margins to remain in the range of gross margin percentages recorded in the three and nine month periods ended June 1, 1996. The Company expects the margins to be lower in the fourth quarter of fiscal 1996 compared to the same period in fiscal 1995 due to the continued shift in product mix and competitive pricing pressures, as discussed above. Operating Expenses Product Development and Engineering. Product development and engineering expenses for the quarter and nine months ended June 1, 1996, decreased $1.0 million or 19.9% and increased $1.2 million or 7.4%, respectively, from the comparable prior periods due primarily to the timing of costs incurred in the completion of development projects related to the PEN*KEY family of products combined with continued development and enhancement of other new and existing product lines. Product development and engineering expenses as a percent of total revenue were 7.0% and 10.1% for the quarter and nine months ended June 1, 1996, respectively, compared with 9.1% and 9.9% for the comparable prior periods. - 15 - 16 Selling. Selling expenses for the quarter and nine months ended June 1, 1996, increased $2.5 million or 19.7% and $4.9 million or 13.1%, respectively, from the comparable prior periods due primarily to $1.7 million of incremental bad debt reserves recorded in the third quarter of 1996 and higher sales commissions on increased revenues. Selling expenses as a percent of total revenues were 25.3% and 25.7% for the quarter and nine months ended June 1, 1996, respectively, compared to 22.1% and 23.7% for the comparable periods in the prior year. General and Administrative. General and administrative expenses for the quarter and nine months ended June 1, 1996, increased $0.3 million or 8.4% and $3.5 million or 35.4%, respectively, from the comparable prior periods. General and administrative expenses as a percent of total revenues were 6.0% and 8.1% for the quarter and nine months ended June 1, 1996, respectively, compared to 5.8% and 6.2% for the comparable periods in the prior year. The increase for the quarter ended June 1, 1996 is due primarily to increased patent amortization compared to the third quarter in 1995. The increase for the nine months ended June 1, 1996 is primarily due to an additional $1.0 million of professional fees related to the completion of the Company's Italian investigation and certain other costs, $1.1 million of costs relative to the development, maintenance and defense of the Company's intellectual properties, $1.2 million of depreciation, telecommunication costs and personnel related expenses, and $0.3 million of legal costs recorded in the first quarter of fiscal 1996 relative to shareholder class action lawsuits. Interest and Other Expenses Interest and other expenses for the quarter and nine months ended June 1, 1996, increased $0.6 million and $1.9 million, respectively, due primarily to increased short-term debt for financing the continued growth in the Company's foreign and domestic operations, and higher interest rates. Income Taxes The Company's effective tax rate was 30.0% for the quarter and nine months ended June 1, 1996. The effective tax rate for the quarter and nine months ended June 1, 1996 is comparable to the same periods in fiscal 1995, exclusive of the effect of the costs and losses for the irregularities in Italy, which were not tax benefited. Net Income Net income of $0.8 million and the net loss of $11.8 million for the quarter and nine months ended June 1, 1996, respectively, compared to net income of $3.3 million and $4.2 million for the comparable periods in fiscal 1995. The decrease in net income for the quarter compared to the third quarter of 1995 is due primarily to decreased margins, increased operating expenses and increased interest and other expenses offset by a decrease in the provision for income taxes. The net loss for the nine months ended June 1, 1996 compared to the net income for the prior year is due to decreased margins, increased operating expenses (which include the restructuring charge recorded in the second quarter of 1996), and increased interest and other expenses, offset by an income tax benefit. - 16 - 17 LIQUIDITY AND CAPITAL RESOURCES Cash flows used in operations were $6.1 million and $4.9 million for the nine months ended June 1, 1996, and June 3, 1995, respectively. The cash outflows from operations resulted primarily from the net loss of $11.8 million and decreases in accounts payable and other current liabilities offset by reduced accounts receivable and inventories. The Company invested $10.8 million and $11.1 million in capital equipment and intellectual properties in the nine month periods ended June 1, 1996 and June 3, 1995, respectively. Capital equipment investments were primarily concentrated in production machinery, tooling and equipment, office automation tools, continued investment in the implementation of SAP business systems software, and sales and product development equipment to support continued business growth. The Company believes that capital equipment and systems additions as well as working capital requirements can be funded from operations or by existing borrowing capacity under the Company's current credit facility which matures on December 31, 1996. The Company fully expects to be able to obtain financing to replace the existing credit facility when it matures. - 17 - 18 NORAND CORPORATION PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K See Exhibit Index which is incorporated herein by reference. - 18 - 19 SIGNATURES: Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NORAND CORPORATION (Registrant) Dated: July 12, 1996 N. Robert Hammer -------------------------------- N. Robert Hammer Chairman, President and Chief Executive Officer Dated: July 12, 1996 Robert A. Hurd -------------------------------- Robert A. Hurd Controller, Chief Accounting Officer and Assistant Treasurer - 19 - 20 NORAND CORPORATION EXHIBIT INDEX Exhibit No. Description - - ----------- ----------- 10(uuuu) Incentive Stock Option Agreement dated March 29, 1996, between Norand Corporation and Thomas O. Miller 10(vvvv) Incentive Stock Option Agreement dated February 6, 1996, between Norand Corporation and Thomas O. Miller 10(wwww) Incentive Stock Option Agreement dated March 29, 1996, between Norand Corporation and Robert A. Hurd 10(xxxx) Incentive Stock Option Agreement dated February 6, 1996, between Norand Corporation and Robert A. Hurd 10(yyyy) Incentive Stock Option Agreement dated January 25, 1996, between Norand Corporation and John A. Niemzyk 10(zzzz) Incentive Stock Option Agreement dated March 29, 1996, between Norand Corporation and John A. Niemzyk 10(aaaaa) Incentive Stock Option Agreement dated March 29, 1996, between Norand Corporation and N. Robert Hammer 10(bbbbb) Incentive Stock Option Agreement dated March 29, 1996, between Norand Corporation and Alan G. Bunte 10(ccccc) Incentive Stock Option Agreement dated February 6, 1996, between Norand Corporation and Alan G. Bunte 11 Computation of Per-Share Income 27 Financial Data Schedule - 20 - EX-10.UUUU 2 INCENTIVE STOCK OPT. AGR-3/29/96 THOMAS O. MILLER 1 Exhibit 10 (uuuu) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: Thomas O. MILLER THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 03/29/1996 Per share option price: $16.50 Shares granted: 15,475 Grant number: 126
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 03/29/2001 15,475 Quarterly 03/28/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on June 29, 1996, and thereafter on each September 29, December 29, March 29 and June 29 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on March 29, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 5/27/96 Thomas O. Miller - - -------------------- ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-10.VVVV 3 INCENTIVE STOCK OPT. AGR-2/6/96 THOMAS O. MILLER 1 Exhibit 10 (vvvv) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: Thomas O. MILLER THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 02/06/1996 Per share option price: $18.00 Shares granted: 7,500 Grant number: 321
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 02/06/2001 7,500 Quarterly 02/05/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on May 6, 1996, and thereafter on each August 6, November 6, February 6 and May 6 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on February 6, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 5/27/96 Thomas O. Miller - - ---------------------- ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-10.WWWW 4 INCENTIVE STOCK OPT. AGR-3/29/96 ROBERT A. HURD 1 Exhibit 10 (wwww) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: Robert A. HURD THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 03/29/1996 Per share option price: $16.50 Shares granted: 4,235 Grant number: 252
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 03/29/2001 4,235 Quarterly 03/28/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on June 29, 1996, and thereafter on each September 29, December 29, March 29 and June 29 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on March 29, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 4/23/96 Robert A. Hurd - - ------------------- ------------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington ---------------------------- EX-10.XXXX 5 INCENTIVE STOCK OPT. AGR-2/6/96 ROBERT A. HURD 1 Exhibit 10 (xxxx) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: Robert A. HURD THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 02/06/1996 Per share option price: $18.00 Shares granted: 750 Grant number: 311
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 02/06/2001 750 Quarterly 02/05/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on May 6, 1996, and thereafter on each August 6, November 6, February 6 and May 6 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on February 6, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 4/23/96 Robert A. Hurd - - --------------------- ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-10.YYYY 6 INCENTIVE STOCK OPT. AGR-1/25/96 JOHN A. NIEMZYK 1 Exhibit 10 (yyyy) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: John A. Niemzyk THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: January 25, 1996 Per share option price: $13.25 Shares granted: 20,000 Grant number: 343
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ------- ------ --------- ----------- 07/25/1996 2,000 End of Period 01/24/2006 01/25/2001 18,000 Quarterly 01/24/2006
The Option shall, therefore, first become exercisable as to one-tenth of the total shares on July 25, 1996, and thereafter on each October 25, January 25, April 25 and July 25 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on January 25, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 5/24/96 John A. Niemzyk - - ------------------ ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-10.ZZZZ 7 INCENTIVE STOCK OPT. AGR-3/29/96 JOHN A. NIEMZYK 1 Exhibit 10 (zzzz) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: John A. NIEMZYK THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 03/29/1996 Per share option price: $16.50 Shares granted: 5,415 Grant number: 224
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 03/29/2001 5,415 Quarterly 03/28/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on June 29, 1996, and thereafter on each September 29, December 29, March 29 and June 29 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on March 29, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 4/26/96 John A. Niemzyk - - ----------------- ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-10.AAAAA 8 INCENTIVE STOCK OPT. AGR-3/29/96 NEIL HAMMER 1 Exhibit 10 (aaaaa) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: NEIL HAMMER THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 03/29/1996 Per share option price: $16.50 Shares granted: 35,100 Grant number: 6
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 03/29/2001 35,100 Quarterly 03/28/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on June 29, 1996, and thereafter on each September 29, December 29, March 29 and June 29 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on March 29, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 7/9/96 Neil Hammer - - ----------------- --------------------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington ---------------------------- EX-10.BBBBB 9 INCENTIVE STOCK OPT. AGR-3/29/96 ALAN G. BUNTE 1 Exhibit 10 (bbbbb) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: Alan G. BUNTE THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 03/29/1996 Per share option price: $16.50 Shares granted: 9,285 Grant number: 161
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 03/29/2001 9,285 Quarterly 03/28/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on June 29, 1996, and thereafter on each September 29, December 29, March 29 and June 29 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on March 29, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 7/9/96 Alan G. Bunte - - ----------------- ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-10.CCCCC 10 INCENTIVE STOCK OPT. AGR-2/6/96 ALAN G. BUNTE 1 Exhibit 10 (ccccc) NORAND CORPORATION INCENTIVE STOCK OPTION AGREEMENT Name: Alan G. BUNTE THIS AGREEMENT sets forth the terms of a stock option granted under the Norand Corporation Long-Term Performance Program (the "Plan"). In consideration of the continuing services of Optionee and the covenants set forth in this Agreement, the Company has granted to Optionee an option (the "Option") to purchase shares of the Company's Common Stock, $.01 par value, subject to the restrictions and conditions of this Agreement and the terms of the Plan, which are hereby incorporated by reference herein. Each such shares shall be purchased at the per share option price set forth on the face of this Agreement (the "Option Price"). The Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code; provided, however, that to the extent that the terms of this Option do not satisfy the requirements of Section 422, the Option shall be a non qualified option. Date of grant: 02/06/1996 Per share option price: $18.00 Shares granted: 5,000 Grant number: 303
Your vesting schedule and term of exercisability for this stock option grant are as follows: VESTING SCHEDULE
Vesting Shares Vesting Last Day Date Vested Occurs at to Exercise ---------- ------ --------- ------------- 02/06/2001 5,000 Quarterly 02/05/2006
The Option shall, therefore, first become exercisable as to one-twentieth of the total shares on May 6, 1996, and thereafter on each August 6, November 6, February 6 and May 6 shall become exercisable as to one-twentieth of the total shares, with the last one-twentieth being exercisable on February 6, 2001. Any fractional share shall be added to the number of shares which first become exercisable in the following quarter. Optionee hereby agrees that the Option to acquire shares of the Company's common stock is granted pursuant to and in accordance with the terms of the Company's Long-Term Performance Program and the Stock Option Grant Agreement (such Stock Option Grant Agreement being attached hereto as Exhibit A) (the "Agreement"), both of which are incorporated herein and made an integral part of this Agreement, Optionee further acknowledges receipt of a copy of the Company's Long-Term Incentive Program Prospectus and the Company's Stock Option Agreement. This Agreement consists of the face page and the terms and conditions attached hereto. IN WITNESS WHEREOF, this Agreement has been executed by Optionee, and for the Company by its duly authorized officer, on the dates indicated below. 7/9/96 Alan G. Bunte - - ----------------- ----------------------------- DATE OPTIONEE Norand Corporation: By: James B. Harrington -------------------------- EX-11 11 COMPUTATION OF PER SHARE INCOME 1 Exhibit 11 NORAND CORPORATION COMPUTATION OF PER SHARE INCOME
Three Months Ended Nine Months Ended --------------------------------------------- ------------------------------------------ June 1, 1996 June 3, 1995 June 1, 1996 June 3, 1995 (as restated) (as restated) --------------------- --------------------- -------------------- -------------------- Fully Fully Fully Fully Primary Diluted Primary Diluted Primary Diluted Primary Diluted --------- --------- --------- --------- --------- --------- --------- --------- Net income (loss) to common shareholders (in thousands) $789 $789 $3,278 $3,278 ($11,775) ($11,775) $4,160 $4,160 ========= ========= ========= ========= ========= ========= ========= ========= Earnings Per Share Pursuant to APB 15 Weighted average common shares outstanding 7,624,476 7,624,476 7,498,468 7,498,468 7,570,381 7,570,381 7,439,253 7,439,253 Incremental shares outstanding assuming exercise of weighted average common stock options granted pursuant to APB 101,594 166,536 198,471 198,471 0* 0* 217,400 217,400 --------- --------- --------- --------- --------- --------- --------- --------- Average common and common equivalent shares outstanding pursuant to APB 15 7,726,070 7,791,012 7,696,939 7,696,939 7,570,381 7,570,381 7,656,653 7,656,653 ========= ========= ========= ========= ========= ========= ========= ========= Earnings (loss) per common share pursuant to APB 15 $0.10 $0.10 $0.43 $0.43 ($1.56) ($1.56) $0.54 $0.54 ========= ========= ========= ========= ========= ========= ========= =========
* Anti-dilutive EX-27 12 FINANCIAL DATA SCHEDLE
5 1,000 9-MOS AUG-31-1996 SEP-01-1995 JUN-01-1996 2,929 0 70,765 7,945 36,231 118,633 60,520 34,562 161,873 117,666 0 0 0 76 44,131 161,873 166,054 166,054 100,370 100,370 0 2,043 4,486 (16,821) (5,046) (11,775) 0 0 0 (11,775) (1.56) (1.56)
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