Intermec, Inc. - FORM 8-K - EX-99.1

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8-K - FORM 8-K - Intermec, Inc.	d498506d8k.htm

Exhibit 99.1

Non-GAAP Financial Measures

This Exhibit 99.1 includes Non-GAAP financial measures for

•

operating profit (loss)

•

net earnings (loss)

•

earnings (loss) per diluted share

•

earnings before interest, taxes, depreciation, and amortization (“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: (i) the “Reconciliation of GAAP To Non-GAAP Operating Profit (Loss), Adjusted EBITDA, Net Earnings (Loss) and Earnings (Loss) Per Share”, (ii) the “Reconciliation of GAAP to Non-GAAP Operating Profit (Loss)”, and (iii) the “Reconciliation of GAAP to Non-GAAP Gross Margins”, each of which is included in this Exhibit 99.1.

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.

Supplemental Information about EBITDA and Adjusted EBITDA calculation

Intermec is providing disclosure of the reconciliation of certain Non-GAAP financial measures used in our financial reporting and within our press release, among other places, to our comparable financial measures on a U.S. GAAP basis. The Company believes that these Non-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-GAAP measure in the same manner.

INTERMEC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


	Three Months Ended						Twelve Months Ended
	(Unaudited)						(Audited)
	December 31, 2012			December 31, 2011			December 31, 2012			December 31, 2011
Revenues:
Product	$	172,327		$	192,209		$	617,369		$	676,991
Service		44,316			44,566			172,724			171,190

Total revenues		216,643			236,775			790,093			848,181
Costs and expenses:
Cost of product revenues		102,374			112,766			384,055			404,591
Cost of service revenues		23,335			24,738			89,998			96,853
Research and development		21,783			21,664			82,488			84,384
Selling, general and administrative		64,856			66,391			246,840			250,296
Impairment of property, plant and equipment		—			900			—			900
Capitalized legal fees charge		—			5,573			—			5,573
Impairment of goodwill		4,549			—			51,157			—
Gain on sale of assets		—			—			(5,189	)		—
Acquisition costs		—			208			—			5,974
Restructuring costs		(39	)		99			4,429			5,855

Total costs and expenses		216,858			232,339			853,778			854,426
Operating (loss) profit		(215	)		4,436			(63,685	)		(6,245	)
Interest income		41			58			349			624
Interest expense		(813	)		(903	)		(3,128	)		(2,868	)

(Loss) earnings before income taxes		(987	)		3,591			(66,464	)		(8,489	)
Income tax expense		3,814			25,179			216,039			22,268

Net loss	$	(4,801	)	$	(21,588	)	$	(282,503	)	$	(30,757	)

Loss per share:
Basic	$	(0.08	)	$	(0.36	)	$	(4.68	)	$	(0.51	)
Diluted	$	(0.08	)	$	(0.36	)	$	(4.68	)	$	(0.51	)
Shares used in computing loss per share:
Basic		60,564			59,931			60,324			60,098
Diluted		60,564			59,931			60,324			60,098

INTERMEC, INC.

CONSOLIDATED BALANCE SHEETS

(Audited)

(In thousands)


	December 31, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	85,169		$	95,108
Short-term investments		197			170
Accounts receivable, net		118,647			139,737
Inventories		110,168			103,622
Current deferred tax assets, net		7,225			84,541
Other current assets		24,592			24,226

Total current assets		345,998			447,404
Deferred tax assets, net		8,514			141,064
Goodwill		92,353			143,510
Intangibles, net		44,742			61,996
Property, plant and equipment, net		44,327			47,086
Other assets, net		20,336			28,230

Total assets	$	556,270		$	869,290

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	76,440		$	82,533
Payroll and related expenses		22,410			32,540
Accrued expenses		38,149			45,192
Deferred revenue		51,898			47,234
Finance lease obligation		2,460			—

Total current liabilities		191,357			207,499
Long-term debt		65,000			85,000
Long-term financing lease obligation		831			—
Pension and other postretirement benefits liabilities		125,546			124,058
Long-term deferred revenue		33,186			28,960
Other long-term liabilities		13,730			15,344
Commitments and contingencies
Shareholders’ equity:
Common stock (250,000 shares authorized, 63,453 and 62,956 shares issued and 60,354 and 59,717 outstanding)		639			636
Additional paid-in capital		705,755			697,597
Accumulated deficit		(492,830	)		(210,327	)
Accumulated other comprehensive loss		(86,944	)		(79,477	)

Total shareholders’ equity		126,620			408,429

Total liabilities and shareholders’ equity	$	556,270		$	869,290

INTERMEC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Audited)

(In thousands)


	Twelve Months Ended
	December 31, 2012			December 31, 2011
Cash and cash equivalents at beginning of the period	$	95,108		$	221,467

Cash flows from operating activities:
Net loss		(282,503	)		(30,757	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		35,474			28,252
Deferred taxes		212,363			11,354
Stock-based compensation		6,784			11,296
Capitalized legal fees charges		—			5,573
Impairment of property, plant and equipment		—			900
Impairment of goodwill		51,157			—
Gain on sale of assets		(5,189	)		—
Gain on company owned life insurance		(2,414	)		—
Change in pension and other postretirement plans, net		(7,908	)		(2,391	)
Changes in operating assets and liabilities:
Accounts receivable		22,498			(10,345	)
Inventories		(13,447	)		(15,714	)
Other current assets		(300	)		1,224
Accounts payable		(5,680	)		3,452
Payroll and related expenses		(10,332	)		3,263
Accrued expenses		(7,422	)		10,121
Deferred revenue		8,336			(948	)
Other long-term liabilities		(2,924	)		(457	)
Other operating activities		(883	)		(488	)

Net cash (used in) provided by operating activities		(2,390	)		14,335

Cash flows from investing activities:
Acquisitions, net of cash acquired		—			(200,810	)
Additions to property, plant and equipment		(9,510	)		(19,559	)
Maturities of investments		—			6,564
Proceeds from sale of assets		6,359			—
Proceeds from company owned life insurance		10,238			—
Capitalized legal fees		—			(613	)
Other investing activities		(400	)		(1,397	)

Net cash provided by (used in) investing activities		6,687			(215,815	)

Cash flows from financing activities:
Proceeds from issuance of debt		27,000			139,000
Repayment of debt		(47,000	)		(54,000	)
Stock repurchase		—			(10,019	)
Financing lease obligation		3,291			—
Stock options exercised and other		1,971			2,225

Net cash (used in) provided by financing activities		(14,738	)		77,206

Effect of exchange rate changes on cash and cash equivalents		502			(2,085	)

Resulting (decrease) increase in cash and cash equivalents		(9,939	)		(126,359	)

Cash and cash equivalents at end of the period	$	85,169		$	95,108

INTERMEC, INC.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING PROFIT (LOSS), ADJUSTED EBITDA,

NET EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended December 31, 2012									Three Months Ended December 31, 2011
	Operating Profit (loss)			Net earnings (loss)			Earnings (loss) per share			Operating Profit (loss)			Net earnings (loss)			Earnings (loss) per share
Operating profit (loss) as reported	$	(0.2	)	$	(4.8	)	$	(0.08	)	$	4.4		$	(21.6	)	$	(0.36	)
Acquisition related adjustments		3.2			3.2			0.05			5.8			3.6			0.06
Capitalized legal fees charge		—			—			—			5.6			3.4			0.06
Restructuring costs		—			—			—			0.1			0.1			—
Impairment of property, plant and equipment		—			—			—			0.9			0.6			0.01
Impairment of goodwill		4.5			4.5			0.08			—			—			—
Merger related costs		2.6			2.6			0.04			—			—			—
Deferred taxes and valuation allowance		—			0.3			—			—			21.4			0.36

Non-GAAP profit as adjusted	$	10.1		$	5.8		$	0.09		$	16.8		$	7.5		$	0.13

Depreciation and other amortization		5.1									4.0
Stock-based compensation		1.9									3.8

Adjusted EBITDA	$	17.1								$	24.6


	Twelve Months Ended December 31, 2012									Twelve Months Ended December 31, 2011
	Operating Profit (loss)			Net earnings (loss)			Earnings (loss) per share			Operating Profit (loss)			Net earnings (loss)			Earnings (loss) per share
Operating loss as reported	$	(63.7	)	$	(282.5	)	$	(4.68	)	$	(6.2	)	$	(30.7	)	$	(0.51	)
Acquisition related adjustments		17.1			17.1			0.28			27.4			17.8			0.29
Capitalized legal fees charge		—			—			—			5.6			3.4			0.06
Restructuring costs		4.4			4.4			0.07			5.8			5.8			0.10
Impairment of property, plant and equipment		—			—			—			0.9			0.6			0.01
Executive severance		1.9			1.9			0.03			—			—			—
Forfeited executive stock awards		(1.2	)		(1.2	)		(0.02	)		—			—			—
Impairment of goodwill		51.2			51.2			0.85			—			—			—
Merger related costs		2.6			2.6			0.04			—			—			—
Deferred taxes and valuation allowance		—			208.8			3.46						22.5			0.38

Non-GAAP profit as adjusted	$	12.3		$	2.3		$	0.03		$	33.5		$	19.4		$	0.33

Depreciation and other amortization		18.8									17.5
Stock-based compensation		7.9									11.3

Adjusted EBITDA	$	39.0								$	62.3

INTERMEC, INC.

RECONCILIATION OF GAAP TO NON-GAAP OPERATING PROFIT (LOSS)

(Unaudited)

(In thousands)


	Three Months Ended December 31, 2012									Three Months Ended December 31, 2011
	GAAP Operating Results			Non-GAAP Adjustments			Non-GAAP Operating Results			GAAP Operating Results			Non-GAAP Adjustments			Non-GAAP Operating Results
Total revenues	$	216,643		$	—		$	216,643		$	236,775		$	1,744		$	238,519
Costs and expenses:
Cost of revenues		125,709			(2,367	)		123,342			137,504			(2,882	)		134,622
Research and development		21,783			—			21,783			21,664			(18	)		21,646
Selling, general and administrative		64,856			(3,496	)		61,360			66,391			(987	)		65,404
Impairment of property, plant and equipment		—			—			—			900			(900	)		—
Capitalized legal fees charge		—			—			—			5,573			(5,573	)		—
Impairment of goodwill		4,549			(4,549	)		—			—			—			—
Gain on sale of assets		—			—			—			—			—			—
Acquisition costs		—			—			—			208			(208	)		—
Restructuring costs		(39	)		39			—			99			(99	)		—

Total costs and expenses		216,858			(10,373	)		206,485			232,339			(10,667	)		221,672

Operating profit (loss)	$	(215	)	$	(10,373	)	$	10,158		$	4,436		$	12,411		$	16,847


	Twelve Months Ended December 31, 2012									Twelve Months Ended December 31, 2011
	GAAP Operating Results			Non-GAAP Adjustments			Non-GAAP Operating Results			GAAP Operating Results			Non-GAAP Adjustments			Non-GAAP Operating Results
Total revenues	$	790,093		$	—		$	790,093		$	848,181		$	6,826		$	855,007
Costs and expenses:
Cost of revenues		474,053			(13,306	)		460,747			501,444			(11,422	)		490,022
Research and development		82,488			—			82,488			84,384			(53	)		84,331
Selling, general and administrative		246,840			(7,105	)		239,735			250,296			(3,146	)		247,150
Impairment of property, plant and equipment		—			—			—			900			(900	)		—
Capitalized legal fees charge		—			—			—			5,573			(5,573	)		—
Impairment of goodwill		51,157			(51,157	)		—			—			—			—
Gain on sale of assets		(5,189	)		—			(5,189	)		—			—			—
Acquisition costs		—			—			—			5,974			(5,974	)		—
Restructuring costs		4,429			(4,429	)		—			5,855			(5,855	)		—

Total costs and expenses		853,778			75,997			777,781			854,426			(32,923	)		821,503

Operating profit (loss)	$	(63,685	)	$	75,997		$	12,312		$	(6,245	)	$	39,749		$	33,504

RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGINS

(Unaudited)

(In thousands)


	Three Months Ended December 31, 2012									Three Months Ended December 31, 2011
	As Reported			Non-GAAP Adjustments			Non-GAAP as Adjusted			As Reported			Non-GAAP Adjustments			Non-GAAP as Adjusted
Revenues:
Product	$	172,327		$	—		$	172,327		$	192,209		$	—		$	192,209
Service		44,316			—			44,316			44,566			1,744			46,310

Total revenues	$	216,643		$	—		$	216,643		$	236,775		$	1,744		$	238,519

Cost of revenues:
Product	$	102,374		$	(2,367	)	$	100,007		$	112,766		$	(2,882	)	$	109,884
Service		23,335			—			23,335			24,738			—			24,738

Total cost of revenues	$	125,709		$	(2,367	)	$	123,342		$	137,504		$	(2,882	)	$	134,622

Gross margins:
Product		40.6	%					42.0	%		41.3	%					42.8	%
Service		47.3	%					47.3	%		44.5	%					46.6	%
Total		42.0	%					43.1	%		41.9	%					43.6	%

	Twelve Months Ended December 31, 2012									Twelve Months Ended December 31, 2011
	As Reported			Non-GAAP Adjustments			Non-GAAP as Adjusted			As Reported			Non-GAAP Adjustments			Non-GAAP as Adjusted
Revenues:
Product	$	617,369		$	—		$	617,369		$	676,991		$	—		$	676,991
Service		172,724			—			172,724			171,190			6,827			178,017

Total revenues	$	790,093		$	—		$	790,093		$	848,181		$	6,827		$	855,008

Cost of revenues:
Product	$	384,055		$	(13,306	)	$	370,749		$	404,591		$	(10,212	)	$	394,379
Service		89,998			—			89,998			96,853			—			96,853

Total cost of revenues	$	474,053		$	(13,306	)	$	460,747		$	501,444		$	(10,212	)	$	491,232

Gross margins:
Product		37.8	%					39.9	%		40.2	%					41.7	%
Service		47.9	%					47.9	%		43.4	%					45.6	%
Total		40.0	%					41.7	%		40.9	%					42.5	%

SUPPLEMENTAL SALES INFORMATION BY CATEGORY

(Unaudited)

(Amounts in millions)


	Three Months Ended
	December 31, 2012		Percent of Revenues			December 31, 2011		Percent of Revenues			Percent Change in Revenues
Revenues by category:
Intermec-branded:
Systems and solutions	$	109.3		50.5	%	$	122.2		51.6	%		(10.6	)%
Printer and media		37.3		17.2	%		43.6		18.4	%		(14.4	)%
Service		34.9		16.1	%		35.8		15.1	%		(2.5	)%
Voice solutions		35.1		16.2	%		35.2		14.9	%		(0.3	)%

Total revenues	$	216.6		100.0	%	$	236.8		100.0	%		(8.5	)%


	Twelve Months Ended
	December 31, 2012		Percent of Revenues			December 31, 2011		Percent of Revenues			Percent Change in Revenues
Revenues by category:
Intermec-branded:
Systems and solutions	$	380.7		48.2	%	$	423.5		49.9	%		(10.1	)%
Printer and media		148.9		18.8	%		175.4		20.7	%		(15.1	)%
Service		138.3		17.5	%		143.1		16.9	%		(3.4	)%
Voice solutions		122.2		15.5	%		106.2		12.5	%		15.1	%

Total revenues	$	790.1		100.0	%	$	848.2		100.0	%		(6.8	)%

INTERMEC, INC.

SUPPLEMENTAL SALES INFORMATION BY GEOGRAPHICAL REGION

(Unaudited)

(Amounts in millions)


	Three Months Ended
	December 31, 2012		Percent of Revenues			December 31, 2011		Percent of Revenues			Percent Change in Revenues
Revenues by geographic region:
North America	$	102.9		47.4	%	$	115.7		48.9	%		(11.1	)%
Europe, Middle East and Africa (EMEA)		70.3		32.5	%		74.7		31.5	%		(5.9	)%
Latin America (LATAM)		27.2		12.6	%		32.6		13.8	%		(16.6	)%
Asia Pacific (ASIAPAC)		16.2		7.5	%		13.8		5.8	%		17.4	%

Total revenues	$	216.6		100.0	%	$	236.8		100.0	%		(8.5	)%


	Twelve Months Ended
	December 31, 2012		Percent of Revenues			December 31, 2011		Percent of Revenues			Percent Change in Revenues
Revenues by geographic region:
North America	$	399.7		50.6	%	$	408.3		48.1	%		(2.1	)%
Europe, Middle East and Africa (EMEA)		231.0		29.2	%		275.4		32.5	%		(16.1	)%
Latin America (LATAM)		101.1		12.8	%		102.6		12.1	%		(1.5	)%
Asia Pacific (ASIAPAC)		58.3		7.4	%		61.9		7.3	%		(5.8	)%

Total revenues	$	790.1		100.0	%	$	848.2		100.0	%		(6.8	)%

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