Intermec Reports Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091029006302/en

* Revenue of $159 Million
* Gross Margin of 38.6% down 0.5 Percentage Points Y/Y, up 2.4 Percentage Points
Q/Q
* GAAP EPS of $0.00, Adjusted EPS of $0.03, excluding Restructuring

EVERETT, Wash.--(Business Wire)--
Intermec, Inc. (NYSE:IN) today announced financial results for its third
quarter, which ended September 27, 2009.

Third quarter 2009 revenues were $159 million and net earnings of $0.1 million,
or $0.00 per diluted share, compared to 2008 third quarter revenues of $234
million and net earnings of $11.0 million, or $0.18 per diluted share.

"Intermec delivered above guidance on earnings and strong cash flow in the
quarter," said Patrick J. Byrne, Intermec President and CEO, "With our recently
introduced new products, expanded channel, and lower break even point, we
believe we are well positioned for strong operating leverage when the markets
recover more fully."

The following table presents our GAAP earnings from operations before taxes, net
earnings, and diluted earnings per share as reported for the third quarters of
2009 and 2008, and as adjusted by excluding the impact of restructuring
charges.

Quarter Ended September 27, 2009 Quarter Ended September 28, 2008
($ in millions, except per share amounts) Earnings from operations before taxes Net earnings Diluted earnings per share Earnings from operations before taxes Net earnings Diluted earnings per share

Earnings as Reported $ 0.1 $ 0.1 $ 0.00 $ 16.8 $ 11.0 $ 0.18
Restructuring charges 2.7 1.7 0.03 3.3 2.1 0.03

Earnings as Adjusted $ 2.8 $ 1.8 $ 0.03 $ 20.1 $ 13.1 $ 0.21

Excluding these charges the non-GAAP adjusted net earnings for the third quarter
of 2009 were $1.8 million, or $0.03 per diluted share, as described in the
Non-GAAP (Adjusted) Financial Measures section of this release.

Third Quarter 2009 Operating Performance

* Total revenues of $159 million were down 32% from the prior-year quarter.
Approximately 2 percentage points of the year-over-year decline was due to
currency translation.
* Geographically, compared to the prior-year quarter, revenues in North America
declined 31%. In Europe, Middle East and Africa (EMEA) revenues declined 41%
with approximately 5 percentage points of the year-over-year decline due to
currency translation. Latin America declined 23% and Asia Pacific (APAC)
increased 8%.

Sequentially, revenues in North America increased 1%, EMEA decreased 5%, Latin
American increased 4%, and APAC increased 33%.

* From a product line perspective, compared to the prior-year quarter, Systems
and Solutions revenue decreased 39%, Printer and Media revenue declined 25% and
Service revenue was down 15%.
* Gross profit margins of 38.6% declined 0.5 percentage points over the
prior-year period. Product gross margins of 37.0% decreased 1.7 percentage
points compared to the third quarter of 2008. Service gross margins of 44.7%
increased 3.6 percentage points over the third quarter of 2008. Sequentially,
product gross margins increased 2.6 percentage points and service gross margins
increased 2.0 percentage points.
* Operating expenses excluding restructuring charges of $2.7 million were $58.5
million in the quarter, lower by 19% compared to $72.2 million in the third
quarter 2008 which excluded restructuring charges of $3.3 million. Total
operating expenses for these same periods were $61.2 million and $75.6 million,
respectively.

* Included in third quarter 2009 results are restructuring charges of $2.7
million or ($0.03) per diluted share relating to business restructuring plans
announced in 2009. This compares to restructuring charges of $3.3 million or
($0.03) in the comparable period of 2008.
* The Company`s third quarter 2009 effective tax rate was approximately 35.4%,
consistent with the prior-year comparable quarter.
* Operating cash flow was positive $10 million in the quarter and $18 million
year-to-date.
* The Company`s cash, cash equivalents, and short-term investments increased
during the quarter to $239 million. The Company has no debt.
* During the quarter the CN50 rugged mobile computer, equipped with Qualcomm
technology, began shipping to customers worldwide. Intermec collaborated with
Qualcomm to develop the 3G wireless WAN Flexible Network radio. The combination
of the computer`s quad band radio and multi-processor architecture provides
superior computing performance, communication speeds and low battery
consumption.
* Frost & Sullivan awarded the CN50 with the North American Product Innovation
Award in the North American Mobile Resource Management (MRM) Market.
* Intermec`s CN3 rugged mobile computer was selected as a Best Channel Product
by Business Solutions Magazine, citing the product`s richness of features,
functionality, product reliability and durability.

Outlook - Fourth Quarter 2009

Intermec announced its financial guidance for the fourth quarter of 2009.

* Revenues are expected to be within a range of $160 to $170 million.
* Earnings per share are expected to be within a range of $0.00 to $0.05 per
diluted share, including the expected impact of approximately $0.02 for the
restructuring plans announced in 2009. Excluding these restructuring charges the
non-GAAP adjusted earnings per share are expected to be within a range of $0.02
to $0.07 per diluted share.

Conference Call Information

Intermec will hold its conference call on October 29, 2009 at 5 p.m. ET (2 p.m.
PT). The dial-in numbers for participants are (212) 547-0282 (US and
International) (800) 621-8495 (Toll free); Passcode: ("Intermec"). The call will
be broadcast on the Internet via a link from the investor`s Web page at
www.intermec.com/InvestorRelations

Non-GAAP (Adjusted) Financial Measures

This press release includes non-GAAP (adjusted) financial measures for earnings
(loss) from operations before taxes, net (loss) earnings, and earnings (loss)
per diluted share. It also includes an outlook for the fourth quarter 2009
non-GAAP (adjusted) earnings (loss) per diluted share. 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 Net
Earnings attached to this press release.

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 restructuring charges (principally related to
severance costs in connection with distinct organizational initiatives to reduce
costs and improve operational efficiency) provides supplemental information
useful to investors` and management`s understanding of the company`s core
operating results, especially when comparing those results on a consistent basis
to results for previous periods and anticipated results for future periods.

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, 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.

(Forward-looking Statements)

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. They
include, without limitation, statements regarding: our cost reduction plans; our
view of general economic and market conditions; and our revenue, expense,
earnings or financial outlook for the fourth quarter of 2009 or any current or
future period. They also include statements about our ability to develop,
produce, market or sell our products, either directly or through third parties,
reduce or control expenses, improve efficiency, realign resources, continue
operational improvement and year-over-year or sequential growth, and about the
applicability of accounting policies used in our financial reporting. 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 the discussed in a forward looking statement. These include, but are not
limited to, risks and uncertainties described more fully in our reports filed or
to be filed with the Securities and Exchange Commission including, but not
limited to, our annual reports on Form 10-K and quarterly reports on Form 10-Q,
which are available on our website at www.intermec.com.

INTERMEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, amounts in thousands except per share amounts)

Three Months Ended Nine Months Ended
September September September September
27, 2009 28, 2008 27, 2009 28, 2008

Revenues
Product $ 125,822 $ 195,727 $ 377,824 $ 555,756
Service 32,969 38,656 101,255 113,667
Total revenues 158,791 234,383 479,079 669,423

Costs and expenses
Cost of product revenues 79,289 119,948 243,583 335,842
Cost of service revenues 18,239 22,783 58,089 65,642
Research and development 14,065 15,673 45,353 50,687
Selling, general and administrative 44,460 56,598 140,178 173,393
Restructuring 2,703 3,337 18,631 3,337
Flood related charge - - - 1,122
Total costs and expenses 158,756 218,339 505,834 630,023

Operating profit (loss) 35 16,044 (26,755 ) 39,400
Interest income 325 874 927 3,720
Interest expense (261 ) (156 ) (713 ) (2,291 )
Earnings (loss) before taxes 99 16,762 (26,541 ) 40,829
Income tax expense (benefit) 35 5,784 (9,663 ) 14,423
Net earnings (loss) $ 64 $ 10,978 $ (16,878 ) $ 26,406

Basic earnings (loss) per share $ 0.00 $ 0.18 $ (0.27 ) $ 0.43

Diluted earnings (loss) per share $ 0.00 $ 0.18 $ (0.27 ) $ 0.43

Shares used in computing basic earnings (loss) per share 61,714 61,238 61,593 61,121
Shares used in computing diluted earnings (loss) per share 62,062 61,644 61,593 61,599

INTERMEC, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)

September December
27, 2009 31, 2008
ASSETS

Current assets:
Cash and cash equivalents $ 202,869 $ 221,335
Short-term investments 35,949 156
Accounts receivable, net of allowance for doubtful accounts
and sales returns of $11,284 and $10,789 106,972 138,549
Inventories 89,939 116,949
Net current deferred tax assets 67,595 56,295
Other current assets 16,493 14,405
Total current assets 519,817 547,689

Property, plant and equipment, net 38,801 41,348
Intangibles, net 2,745 3,521
Net deferred tax assets 154,515 167,834
Other assets 33,406 29,503
Total assets $ 749,284 $ 789,895

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 92,200 $ 112,772
Payroll and related expenses 27,088 24,799
Deferred revenue 40,030 38,712
Total current liabilities 159,318 176,283

Long-term deferred revenue 19,621 25,980
Pension liability 52,702 92,129
Other long-term liabilities 13,502 13,747

Commitments

Shareholders' equity
Common stock (250,000 shares authorized, 62,159 and 61,766 shares issued and outstanding) 622 618
Additional paid-in-capital 701,256 694,296
Accumulated deficit (179,280 ) (162,402 )
Accumulated other comprehensive loss (18,457 ) (50,756 )
Total shareholders' equity 504,141 481,756
Total liabilities and shareholders' equity $ 749,284 $ 789,895

INTERMEC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine months ended
September 27, September 28,
2009 2008

Cash and cash equivalents at beginning of the period $ 221,335 $ 237,247

Cash flows from operating activities:
Net (loss) earnings (16,878 ) 26,406
Adjustments to reconcile net (loss) earnings to net cash
provided by operating activities:
Depreciation and amortization 11,879 11,770
Deferred taxes (12,022 ) 12,099
Stock-based compensation and other 5,922 7,729
Excess tax shortfall (benefit) from stock-based payment arrangements 640 (937 )
Change in operating assets and liabilities:
Accounts receivable 31,157 42,783
Inventories 26,838 (11,974 )
Accounts payable and accrued expenses (22,030 ) (38,320 )
Other long-term liabilities (5,630 ) (2,167 )
Other operating activities (1,768 ) (9,108 )
Net cash provided by operating activities 18,108 38,281

Cash flows from investing activities:
Capital expenditures (7,617 ) (9,880 )
Proceeds from sale of property 1,867 5,497
Purchases of investments (35,645 ) (760 )
Sale of investments - 28,515
Capitalized patent legal fees (3,709 ) (2,827 )
Net cash (used in) provided by investing activities (45,104 ) 20,545

Cash flows from financing activities:
Repayment of debt - (100,000 )
Excess tax (shortfall) benefit from stock-based payment arrangements (640 ) 937
Other financing activities 1,682 6,332
Net cash provided by (used in) financing activities 1,042 (92,731 )

Effect of exchange rate changes on cash and cash equivalents 7,488 (1,488 )

Resulting decrease in cash and cash equivalents (18,466 ) (35,393 )

Cash and cash equivalents at end of the period $ 202,869 $ 201,854

INTERMEC, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET EARNINGS
(Unaudited, amounts in thousands except per share amounts)

Three Months Ended Three Months Ended
September Non GAAP Adjusted September September Non GAAP Adjusted September June Non GAAP Adjusted June
27, 2009 Adjustments 27, 2009 28, 2008 Adjustments 28, 2008 28, 2009 Adjustments 28, 2009

Revenues
Product $ 125,822 $ 125,822 $ 195,727 $ 195,727 $ 123,339 $ 123,339
Service 32,969 32,969 38,656 38,656 34,376 34,376
Total revenues 158,791 158,791 234,383 234,383 157,715 157,715

Costs and Expenses
Cost of product revenues 79,289 79,289 119,948 119,948 80,927 80,927
Cost of service revenues 18,239 18,239 22,783 22,783 19,714 19,714
Research and development 14,065 14,065 15,673 15,673 15,375 15,375
Selling, general and administrative 44,460 44,460 56,598 56,598 44,711 44,711
Flood related charge - - - - - -
Restructuring 2,703 $ (2,703 ) - 3,337 $ (3,337 ) - 7,345 $ (7,345 ) -
Total costs and expenses 158,756 (2,703 ) 156,053 218,339 (3,337 ) 215,002 168,072 (7,345 ) 160,727

Operating profit (loss) 35 2,703 2,738 16,044 3,337 19,381 (10,357 ) 7,345 (3,012 )
Interest income 325 325 874 874 261 261
Interest expense (261 ) (261 ) (156 ) (156 ) (227 ) (227 )
Earnings (loss) before taxes 99 2,703 2,802 16,762 3,337 20,099 (10,323 ) 7,345 (2,978 )
Income tax expense (benefit) 35 963 998 5,784 1,225 7,009 (3,781 ) 2,697 (1,084 )
Net earnings (loss) $ 64 $ 1,740 $ 1,804 $ 10,978 $ 2,112 $ 13,090 $ (6,542 ) $ 4,648 $ (1,894 )

Basic earnings (loss) per share $ 0.00 $ 0.03 $ 0.03 $ 0.18 $ 0.03 $ 0.21 $ (0.11 ) $ 0.08 $ (0.03 )

Diluted earnings (loss) per share $ 0.00 $ 0.03 $ 0.03 $ 0.18 $ 0.03 $ 0.21 $ (0.11 ) $ 0.08 $ (0.03 )

Shares used in computing:
Basic earnings (loss) per share 61,714 61,714 61,714 61,238 61,238 61,238 61,606 61,606 61,606
Diluted earnings (loss) per share 62,062 62,062 62,062 61,644 61,644 61,644 61,606 61,606 61,606

Nine Months Ended
September Non GAAP Adjusted September September Non GAAP Adjusted September
27, 2009 Adjustments 27, 2009 28, 2008 Adjustments 28, 2008

Revenues
Product $ 377,824 $ 377,824 $ 555,756 $ 555,756
Service 101,255 101,255 113,667 113,667
Total revenues 479,079 479,079 669,423 669,423

Costs and Expenses
Cost of product revenues 243,583 243,583 335,842 335,842
Cost of service revenues 58,089 58,089 65,642 65,642
Research and development 45,353 45,353 50,687 50,687
Selling, general and administrative 140,178 140,178 173,393 173,393
Flood related charge - - 1,122 1,122
Restructuring 18,631 $ (18,631 ) - 3,337 $ (3,337 ) -
Total costs and expenses 505,834 (18,631 ) 487,203 630,023 (3,337 ) 626,686

Operating (loss) profit (26,755 ) 18,631 (8,124 ) 39,400 3,337 42,737
Interest income 927 927 3,720 3,720
Interest expense (713 ) (713 ) (2,291 ) (2,291 )
(Loss) earnings before taxes (26,541 ) 18,631 (7,910 ) 40,829 3,337 44,166
Income tax (benefit) expense (9,663 ) 6,733 (2,930 ) 14,423 1,234 15,657
Net (loss) earnings $ (16,878 ) $ 11,898 $ (4,980 ) $ 26,406 $ 2,103 $ 28,509

Basic (loss) earnings per share $ (0.27 ) $ 0.19 $ (0.08 ) $ 0.43 $ 0.03 $ 0.46

Diluted (loss) earnings per share $ (0.27 ) $ 0.19 $ (0.08 ) $ 0.43 $ 0.03 $ 0.46

Shares used in computing:
Basic (loss) earnings per share 61,593 61,593 61,593 61,121 61,121 61,121
Diluted (loss) earnings per share 61,593 61,880 61,880 61,599 61,599 61,599

INTERMEC, INC.
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK FOR THE QUARTER ENDED DECEMBER 31, 2009
(Unaudited)

Diluted (loss) earnings per share

As Reported $ 0.00 to 0.05
Restructuring charge 0.02

As Adjusted $ 0.02 to 0.07

INTERMEC, INC.
SUPPLEMENTAL SALES INFORMATION
(Unaudited, amounts in thousands)

Three Months Ended Three Months Ended
September 27, 2009 Percent of Revenues September 27, 2008 Percent of Revenues Percent Change in Revenues June 28, 2009 Percent of Revenues Percent Change in Revenues
Revenues by category:
Systems and solutions $ 88.1 55.5 % $ 145.5 62.1 % -39.5 % $ 86.2 54.7 % 2.2 %
Printer and media 37.7 23.7 % 50.2 21.4 % -24.9 % 37.1 23.5 % 1.6 %
Total product 125.8 79.2 % 195.7 83.5 % -35.7 % 123.3 78.2 % 2.0 %
Service 33.0 20.8 % 38.7 16.5 % -14.7 % 34.4 21.8 % -4.1 %
Total revenues $ 158.8 100.0 % $ 234.4 100.0 % -32.3 % $ 157.7 100.0 % 0.7 %

Nine Months Ended
September 27, 2009 Percent of Revenues September 27, 2008 Percent of Revenues Percent Change in Revenues
Revenues by category:
Systems and solutions $ 267.5 55.8 % $ 400.7 59.8 % -33.2 %
Printer and media 110.3 23.1 % 155.0 23.2 % -28.8 %
Total product 377.8 78.9 % 555.7 83.0 % -32.0 %
Service 101.3 21.1 % 113.7 17.0 % -10.9 %
Total revenues $ 479.1 100.0 % $ 669.4 100.0 % -28.4 %

Three Months Ended Three Months Ended
September 27, 2009 Percent of Revenues September 27, 2008 Percent of Revenues Percent Change in Revenues June 28, 2009 Percent of Revenues Percent Change in Revenues
Revenues by geographic region:
North America $ 89.0 56.0 % $ 129.1 55.1 % -31.1 % $ 88.3 56.0 % 0.8 %
Europe, Middle East and Africa 45.9 28.9 % 78.1 33.3 % -41.2 % 48.5 30.8 % -5.4 %
All others 23.9 15.1 % 27.2 11.6 % -12.1 % 20.9 13.2 % 14.4 %
Total revenues $ 158.8 100.0 % $ 234.4 100.0 % -32.3 % $ 157.7 100.0 % 0.7 %

Nine Months Ended
September 27, 2009 Percent of Revenues September 27, 2008 Percent of Revenues Percent Change in Revenues
Revenues by geographic region:
North America $ 280.9 58.7 % $ 355.8 53.1 % -21.1 %
Europe, Middle East and Africa 133.4 27.8 % 232.0 34.7 % -42.5 %
All others 64.8 13.5 % 81.6 12.2 % -20.6 %
Total revenues $ 479.1 100.0 % $ 669.4 100.0 % -28.4 %

Intermec, Inc.
Kevin P. McCarty, 425-265-2472
Director, Investor Relations
kevin.mccarty@intermec.com

Copyright Business Wire 2009