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8-K - FORM 8-K - Intermec, Inc.d354267d8k.htm

Exhibit 99.1

 

LOGO

 

  

Intermec, Inc.

6001 36th Avenue West

Everett, WA 98203-1264

www.intermec.com

FOR IMMEDIATE RELEASE

INTERMEC REPORTS FINAL FIRST QUARTER 2012 RESULTS

 

   

GAAP Loss of $(242.1) and negative EPS of $(4.03) per fully diluted share

 

   

Revenue and Non-GAAP Results Unchanged

EVERETT, Wash. – May 16, 2012 – Intermec, Inc. (NYSE: IN), in its Form 10-Q filed today, issued final GAAP financial results for the quarter ended April 1, 2012 reflecting a GAAP loss of $(242.1) million, or $(4.03) per diluted share. Two non-cash adjustments, a valuation allowance for deferred tax assets and an impairment charge against the Company’s goodwill balance, caused the GAAP loss to be greater than the Company’s preliminary results announced earlier this month.

The Company increased its U.S. deferred tax assets valuation allowance by a net $206.9 million to offset the entire U.S. deferred tax assets balance. A valuation allowance is required by U.S. GAAP if it is more likely than not that all or part of a deferred tax asset cannot be realized in the future. After considering a number of factors, most significantly the Company’s historical cumulative GAAP losses for the three-year period preceding the quarter and its forecast for U.S. profitability for the remainder of the year, the Company recorded a non-cash charge for the balance of the U.S. deferred tax asset.

The Company also recognized a non-cash impairment charge of $14.9 million against goodwill related to its voice solutions business segment. The impairment was based on an analysis of a number of factors after a decline in its market capitalization following the Company’s first quarter 2012 earnings announcements. The impairment did not result from underperformance of its recent acquisition of Vocollect, which is performing in line with expectations. The impairment charge is an estimate based on completion of step one of the goodwill impairment test prescribed by GAAP. The Company expects to complete the second step of this analysis and adjust the impairment amount as needed when it prepares its financial results for the second fiscal quarter of 2012.

First quarter 2012 revenues of $179.7 million and our Adjusted Non-GAAP operating loss of $(12.7) million and Non-GAAP EPS of $(0.21) per diluted share were unchanged from the preliminary results reported on May 1st. Intermec believes it is appropriate to reflect both the deferred tax assets valuation allowance and the goodwill impairment charge as non-cash, non-operating adjustments to its GAAP results in presenting its adjusted, Non-GAAP results.

 

1


The following table presents the Company’s GAAP operating income (loss), net earnings (loss) and earnings (loss) per share reported for the first quarters of 2012 and 2011, and as adjusted excluding the impact of restructuring costs, acquisition-related costs and acquisition-related accounting adjustments:

INTERMEC, INC.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME,

NET EARNINGS AND EARNINGS PER SHARE

(In millions, except per share amounts)

(Unaudited)

 

     Quarter Ended April 1, 2012     Quarter Ended April 3, 2011  
     Operating Income
(loss)
    Net earnings
(loss)
    Earnings (loss) per
share
    Operating Income
(loss)
    Net earnings
(loss)
    Earnings (loss)
per share
 

Loss as reported

   $ (33.6   $ (242.1   $ (4.03   $ (8.6   $ (6.1   $ (0.10

Acquisition related adjustments

     4.9        3.0        0.05        7.8        5.7        0.09   

Impairment of goodwill

     14.9        14.9        0.25        —          —          —     

Income taxes—increase in valuation allowance

     —          211.5        3.52        —          0.3        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP loss as adjusted

   $ (13.8   $ (12.7   $ (0.21   $ (0.8   $ (0.1   $ (0.01
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The acquisition-related adjustments reflect amortization of acquisition intangibles of $4.9 million related to acquisitions closed in March 2011. Adjusted operating income for the first quarter of 2012 was $(13.8) million and adjusted net earnings was $(0.21) per share as described in the Non-GAAP Financial Measures section of this release.

About Intermec, Inc.

Intermec Inc. (NYSE:IN) develops and integrates products, services and technologies that identify, track and manage supply chain assets and information. Core technologies include rugged mobile computing and data collection systems, voice solutions that increase business performance, bar code printers, label media, and RFID. The Company’s products and services are used by customers in many industries worldwide to improve the productivity, quality and responsiveness of business operations. For more information about Intermec, visit www.intermec.com or call 800-347-2636.

Contact:

Dan Evans

Investor Relations

425-267-2975

dan.evans@intermec.com

Non-GAAP Financial Measures

This press release includes Non-GAAP financial measures for operating income (loss), net earnings (loss), earnings (loss) per diluted share, EBITDA, Adjusted EBITDA and gross margins. Reconciliations of each of these Non-GAAP financial measures to the most directly comparable GAAP financial measures are detailed in the Reconciliation of GAAP to Non-GAAP operating (loss) and adjusted EBITDA, Reconciliation of GAAP to Non-GAAP Gross Margins, for the Quarter Ending April 1, 2012, attached to this press release.

 

2


Our Non-GAAP measures should be read in conjunction with the corresponding GAAP measures. The Non-GAAP measures should be considered in addition to and not as an alternative or substitute for the measures prepared in accordance with generally accepted accounting principles.

We believe that excluding items such as, but not limited to, allowances for deferred tax assets, impairment charges, restructuring charges (principally related to severance costs in connection with distinct organizational initiatives to reduce costs and improve operational efficiency), costs related to completion of acquisitions and certain opening accounting adjustments, goodwill impairments, amortization of intangibles and non-cash stock based compensation expenses provides supplemental information useful to investors’ and management’s understanding of Intermec’s core operating results, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods.

Statements made in this release and related statements that express Intermec’s or our management’s intentions, hopes, indications, beliefs, expectations, guidance, estimates, forecasts or predictions of the future constitute forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, and relate to matters that are not historical facts. The forward-looking statements contained herein include, without limitation, statements regarding: our view of general economic and market conditions, our revenue, expenses, earnings or financial outlook for the first two quarters of 2012, the full-year of 2012, the current period or any other period, our impairment analysis for goodwill and long-lived assets, our deferred tax valuation allowances, the applicability and results of accounting policies and analyses used in our financial reporting, the necessity to update information in our periodic or other required reports, our cost reduction plans, and our ability to develop, produce, market or sell our products, either directly or through third parties, to reduce or control expenses, to improve efficiency, to realign resources, or to continue operational improvement and year-over-year or sequential growth. They also include, without limitation, statements about future financial and operating results of our Company after the acquisition of other businesses and the benefits of such acquisitions. When used in this document and in documents it refers to, the words “anticipate,” “believe,” “will,” “intend,” “project” and “expect” and similar expressions as they relate to us or our management are intended to identify such forward-looking statements. These statements represent beliefs and expectations only as of the date they were made. We may elect to update forward-looking statements, but we expressly disclaim any obligation to do so, even if our beliefs and expectations change.

Actual results may differ from those expressed or implied in our forward-looking statements. Such forward-looking statements involve and are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those discussed in a forward-looking statement. These risk factors include, but are not limited to, risks and uncertainties described more fully in our reports filed or to be filed with the Securities and Exchange Commission including, but not limited to, our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, which are available, among other places, on our website at www.intermec.com.

 

3


INTERMEC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     April 1,
2012
    April 3,
2011
 

Revenues:

    

Product

   $ 136,471      $ 141,736   

Service

     43,207        36,782   
  

 

 

   

 

 

 

Total revenues

     179,678        178,518   

Costs and expenses:

    

Cost of product revenues

     91,339        87,797   

Cost of service revenues

     22,414        22,427   

Research and development

     20,009        17,815   

Selling, general and administrative

     66,007        54,242   

Acquisition costs

     —          4,839   

Gain on intellectual property sales

     (1,400     —     

Impairment of goodwill

     14,925        —     
  

 

 

   

 

 

 

Total costs and expenses

     213,294        187,120   
  

 

 

   

 

 

 

Operating loss

     (33,616     (8,602

Interest income

     121        98   

Interest expense

     (750     (511
  

 

 

   

 

 

 

Loss before income taxes

     (34,245     (9,015

Income tax expense (benefit)

     207,845        (2,938
  

 

 

   

 

 

 

Net loss

     (242,090     (6,077
  

 

 

   

 

 

 

Basic loss per share

   $ (4.03   $ (0.10

Diluted loss per share

   $ (4.03   $ (0.10

Shares used in computing basic loss per share

     60,030        60,367   

Shares used in computing diluted loss per share

     60,030        60,367   

 

4


INTERMEC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

     April 1,
2012
    December 31,
2011
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 85,321      $ 95,108   

Short-term investments

     203        170   

Accounts receivable, net

     112,837        139,737   

Inventories

     107,745        103,622   

Current deferred tax assets, net

     8,422        84,541   

Other current assets

     29,117        24,226   
  

 

 

   

 

 

 

Total current assets

     343,645        447,404   

Deferred tax assets, net

     7,889        141,064   

Goodwill

     128,585        143,510   

Intangibles, net

     57,303        61,996   

Property, plant and equipment, net

     44,821        47,086   

Other assets, net

     27,786        28,230   
  

 

 

   

 

 

 

Total assets

   $ 610,029      $ 869,290   
  

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 75,818      $ 92,607   

Payroll and related expenses

     23,872        32,540   

Deferred revenue

     54,598        47,234   

Accrued expenses

     28,928        35,118   
  

 

 

   

 

 

 

Total current liabilities

     183,216        207,499   

Long-term debt

     85,000        85,000   

Pension and other postretirement benefits liabilities

     125,901        124,058   

Long-term deferred revenue

     28,567        28,960   

Other long-term liabilities

     16,298        15,344   

Commitments and contingencies

    

Shareholders' equity:

    

Common stock (250,000 shares authorized, 63,096 and 62,956 shares issued and 59,847 and 59,717 outstanding)

     636        636   

Additional paid-in capital

     700,912        697,597   

Accumulated deficit

     (452,417     (210,327

Accumulated other comprehensive loss

     (78,084     (79,477
  

 

 

   

 

 

 

Total shareholders’ equity

     171,047        408,429   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 610,029      $ 869,290   
  

 

 

   

 

 

 

 

5


INTERMEC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Three Months Ended  
     April 1,     April 3,  
     2012     2011  

Cash and cash equivalents at beginning of the period

   $ 95,108      $ 221,467   

Cash flows from operating activities:

    

Net loss

     (242,090     (6,077

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     8,808        4,907   

Impairment of goodwill

     14,925     

Deferred taxes

     210,804        (4,383

Stock-based compensation

     2,641        2,328   

Gain on intellectual property sales

     (1,400     —     

Change in pension and other postretirement plans, net

     (302     (159

Changes in operating assets and liabilities:

    

Accounts receivable

     29,899        13,152   

Inventories

     (3,916     2,357   

Accounts payable

     (17,113     (2,128

Accrued expenses

     (6,134     (14,454

Payroll and related expenses

     (8,964     4,409   

Deferred revenue

     6,099        6,705   

Other operating activities

     (5,276     (4,310
  

 

 

   

 

 

 

Net cash provided by (used in)operating activities

     (12,019     2,347   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions, net of cash acquired

     —          (199,018

Additions to property, plant and equipment

     (1,792     (4,115

Proceeds from intellectual property sales

     1,650        —     

Other investing activities

     (11     (371
  

 

 

   

 

 

 

Net cash used in investing activities

     (153     (203,504
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of debt

     —          97,000   

Stock repurchase

     —          (4,535

Stock options exercised and other

     674        524   
  

 

 

   

 

 

 

Net cash provided by financing activities

     674        92,989   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     1,711        3,818   
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (9,787     (104,350
  

 

 

   

 

 

 

Cash and cash equivalents at end of the period

   $ 85,321      $ 117,117   
  

 

 

   

 

 

 

 

6


INTERMEC, INC.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended April 1, 2012     Three Months Ended April 3, 2011  
     GAAP
Operating
Results
    Non-GAAP
Adjustments
    Non-GAAP
Operating
Results
    EBITDA
Adjustments
    Adjusted
EBITDA
    GAAP
Operating
Results
    Non-GAAP
Adjustments
    Non-GAAP
Operating
Results
    EBITDA
Adjustments
    Adjusted
EBITDA
 

Total revenues

   $ 179,678      $ —        $ 179,678      $ —        $ 179,678      $ 178,518      $ 726      $ 179,244      $ —        $ 179,244   

Costs and expenses:

                    

Cost of revenues

     113,753        (3,648     110,105        (1,774     108,331        110,224        (2,265     107,959        (1,858     106,101   

Research and development

     20,009        —          20,009        (297     19,712        17,815        —          17,815        (277     17,538   

Selling, general and administrative

     66,007        (1,201     64,806        (4,882     59,924        54,242        —          54,242        (3,998     50,244   

Acquisition costs

     —          —          —          —          —          4,839        (4,839     —          —          —     

Gain on intellectual property sales

     (1,400     —          (1,400     —          (1,400     —          —          —          —          —     

Impairment of goodwill

     14,925        (14,925     —          —          —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     213,294        (19,774     193,520        (6,953     186,567        187,120        (7,104     180,016        (6,133     173,883   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ (33,616   $ 19,774      $ (13,842   $ 6,953      $ (6,889   $ (8,602   $ 7,830      $ (772   $ 6,133      $ 5,361   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

7


INTERMEC, INC.

RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGINS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended April 1, 2012     Three Months Ended April 3, 2011  
     As Reported     Non-GAAP
Adjustments
    Non-GAAP as
Adjusted
    As Reported     Non-GAAP
Adjustments
    Non-GAAP as
Adjusted
 

Revenues:

            

Product

   $ 136,471      $ —        $ 136,471      $ 141,736      $ —        $ 141,736   

Service

     43,207        —          43,207        36,782        726     37,508   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

   $ 179,678      $ —        $ 179,678      $ 178,518      $ 726.00      $ 179,244   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Product

   $ 91,339      $ (3,648 )a    $ 87,691      $ 87,797      $ (2,265 )c    $ 85,532   

Service

     22,414        —          22,414        22,427          22,427   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

   $ 113,753      $ (3,648   $ 110,105      $ 110,224        (2,265   $ 107,959   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margins:

            

Product

     33.1       35.7     38.1       39.7

Service

     48.1       48.1     39.0       40.2

Total

     36.7       38.7     38.3       39.8

a - Acquisition related intangible amortization

b - Acquisition fair value of service revenue.

c - $1,102 of acquisition related intangible amortization, $1,163 of acquisition fair value of inventory

 

8


INTERMEC, INC.

SUPPLEMENTAL INFORMATION: EBITDA AND ADJUSTED EBITDA CALCULATION

(In thousands, except per share amounts)

 

     Three Months Ended  
     April 1, 2012     April 3, 2011  

Operating loss, as reported

   $ (33,616   $ (8,602

Acquisition adjustments

    

Acquisition fair-value adjustments

     —          1,889   

Intangible amortization

     4,496        1,102   

Acquisition costs

     —          4,839   

Impairment of goodwill

     14,925        —     

Other

     353        —     
  

 

 

   

 

 

 

Total adjustments

     19,774        7,830   
  

 

 

   

 

 

 

Non-GAAP operating loss

   $ (13,842   $ (772

Adjusted EBITDA calculation

    

Add: depreciation and amortization (excluding acquisition related)

   $ 4,312      $ 3,805   

Add: stock-based compensation

     2,641        2,328   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ (6,889   $ 5,361   
  

 

 

   

 

 

 

Intermec is providing disclosure of the reconciliation of certain Non-US GAAP financial measures used in our financial reporting and within our press release, among other places, to our comparable financial measures on a US GAAP basis. The Company believes that these Non-US GAAP financial measures provide investors the additional information to evaluate financial performance in a way that is comparable to measures reported by other technology companies.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is net income/loss before provisions for income taxes, net interest expense, and depreciation and amortization. EBITDA should not be considered an alternative to, or more meaningful than, income before income taxes, cash flow from operations, or other traditional indicators of operating performance. Rather, EBITDA is presented because it is a widely accepted supplemental financial measure that we believe provides relevant and useful information. Our calculation of adjusted EBITDA adds back the non-cash effect of stock-based compensation as accounted for under ACS 718 as we believe this is a meaningful view of our true cash earnings. Adjusted EBITDA may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate this non-US GAAP measure in the same manner.

 

9


INTERMEC, INC.

SUPPLEMENTAL SALES INFORMATION BY CATEGORY

(Amounts in millions)

(Unaudited)

 

     Three Months Ended  
     April 1, 2012      Percent of
Revenues
    April 3, 2011      Percent of
Revenues
    Percent
Change in
Revenues
 

Revenues by category:

            

Intermec-branded:

            

Systems and solutions

   $ 81.8         45.5   $ 90.4         50.6     -9.5

Printer and media

     35.5         19.8     43.4         24.3     -18.2

Service

     35.0         19.5     34.9         19.6     0.3

Voice solutions

     27.4         15.2     9.8         5.5     179.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

   $ 179.7         100.0   $ 178.5         100.0     0.7
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

SUPPLEMENTAL SALES INFORMATION BY GEOGRAPHICAL REGION

(Amounts in millions)

(Unaudited)

 

     Three Months Ended  
     April 1, 2012      Percent of
Revenues
    April 3, 2011      Percent of
Revenues
    Percent
Change in
Revenues
 

Revenues by geographic region:

            

North America

   $ 91.7         51.0   $ 78.4         43.9     17.0

Europe, Middle East and Africa (EMEA)

     54.6         30.4     65.9         36.9     -17.1

Latin America

     19.9         11.1     19.9         11.2     0.0

Asia Pacific

     13.5         7.5     14.3         8.0     -5.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

   $ 179.7         100.0   $ 178.5         100.0     0.7
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

10