Intermec Announces Second Quarter Fiscal Year 2007 Results

Intermec, Inc. (NYSE: IN): Q2 Revenues Reflect Strong Sequential Growth to $210.5M Gross Margin Improves 2.6 points from Q1’07 Earnings from Continuing Operations result in EPS of $0.13 Cash Equivalents and Short-Term Investments Increase $15.6M from Q1’07 Intermec, Inc. (NYSE: IN) today announced financial results for its second quarter ended July 1, 2007. Intermec reported 2007 second quarter revenues of $210.5 million and net earnings from continuing operations of $7.9 million, or $0.13 per diluted share, compared to 2006 second quarter revenues of $231.4 million and net earnings from continuing operations of $11.3 million, or $0.18 per diluted share. The second quarter 2006 operating results include a $2.3 million pre-tax gain, or $0.02 per diluted share, from the sale of an investment. Including discontinued operations, net earnings for the second quarter of 2007 was $6.6 million, or $0.11 per diluted share compared to net earnings of $10.4 million, or $0.16 per diluted share in the prior year’s second quarter. The Company’s effective tax rate for the second quarter of 2007 was 37 percent; this was consistent with the prior year’s quarter. Second quarter 2007 revenues decreased 9 percent compared to the prior year’s second quarter. On a sequential basis, second quarter 2007 revenues increased 17 percent over the first quarter of 2007. Geographically during the second quarter of 2007, North American revenues decreased 21 percent compared to the second quarter of 2006. Revenues in Europe, Mid-East and Africa (EMEA) increased 1 percent compared to the same prior-year period; and the rest of the world, consisting of Asia Pacific and Latin America, increased 26 percent. Selling, general and administrative expenses were $68.8 million for the second quarter of 2007, compared to $78.5 million in the prior year period. The decrease of $9.7 million, or 12%, reflects the impact of the prior year cost reduction initiatives as well as the benefit from other operating gains of $2.0 million. The Company’s cash equivalents and short-term investments position at the end of the second quarter was $188.9 million. The increase in cash equivalents and short-term investments of $15.6 million during the second quarter was primarily due to operating profit contribution and the decrease in inventory. As previously announced on July 19, 2007, Intermec Inc.’s Board of Directors elected Patrick J. Byrne as President and CEO, and as a Director of Intermec, Inc. "I am excited to be joining the strong team already in place at Intermec,” said Mr. Byrne. "The company is benefiting from the acceptance of its new product offerings, technology innovation and the global markets continuing trend toward supply chain efficiency and productivity. We are pleased with the recent RFID wins at Metro and Thailand’s Suvarnabhumi Airport; these are representative of the diverse product applications utilizing this technology.” During the quarter, Intermec introduced a number of new products: The rugged CK31ex mobile computer integrates the industry’s only near-far area imager. With the CK31ex, users can scan 1D, 2D, composite and postal codes, capture images for proof-of-delivery, and wirelessly connect to corporate networks, eliminating the need for multiple devices. The powerful CK32IS mobile computer is certified to meet the highest ratings from UL, ATEX and IECEx to deliver real-time information. The CK32IS is designed to provide double-fault, intrinsically safe computing in even the most hazardous environments. The EasyCoder PF2i RFID baggage tag printer is designed for meeting the demands of airline and transportation applications where space is limited and downtime is not an option. Exceptional throughput and print quality are maintained even with RFID labels. The Intermec IF61 Enterprise RFID Reader contains the combination of an Intel Celeron M 600MHz processor and up to 1 GB of optional memory. With ample storage and memory to run complex applications, the IF61 can also store tag data and operate peripheral devices -- all without a dedicated industrial computer. Third Quarter Outlook Intermec also reported today its GAAP basis outlook for the third quarter 2007. Revenues for the period are expected within a range of $203 million to $213 million. Diluted EPS from continuing operations are expected within a range of $0.06 to $0.12. Conference Call Information Intermec will hold a conference call on August 2, 2007 at 5 p.m. ET (2 p.m. PT). The call will be hosted by Intermec, Inc. President and Chief Executive Officer, Patrick J. Byrne, Chief Financial Officer and SVP, Lanny H. Michael, Intermec Technologies Corporation President and COO, Steven J. Winter, and Director of Investor Relations, Kevin P. McCarty. The dial-in numbers for participants are 1-(800) 857-8060 (US); 1-(210) 839-8066 (International); Passcode: ("Intermec”). The call will be broadcast on the Internet via a link from the investor’s Web page at the Intermec website at www.intermec.com/InvestorRelations About Intermec, Inc. Intermec, Inc. (NYSE:IN) develops, manufactures and integrates technologies that identify, track and manage supply chain assets. Core technologies include RFID, mobile computing and data collection systems, bar code printers and label media. 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 Intermec Investor Relations Director Kevin McCarty at kevin.mccarty@intermec.com, 425-265-2472. (Forward-looking Statements) Statements made in this release and related statements that express Intermec’s or our management’s intentions, hopes, indications, beliefs, expectations, 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 potential increases in sales or product volumes, potential easing of price competition or price erosion, and our ability to launch new products as planned, improve gross margins or profits of our business segments, our cost reduction and restructuring plans, our revenue, expense or financial outlook for the third quarter of 2007 or any future period, and the applicability of accounting policies used in our financial reporting. They also include statements about our ability to compete effectively with our current products and newly launched products, reduce expenses, improve efficiency, realign resources, increase product development capacity, leverage our research and development investment to drive significant future revenue, and continue operational improvement and year-over-year growth. Actual results may differ from those expressed or implied in our 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. Such forward-looking statements involve and are subject to certain risks and uncertainties. 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. INTERMEC, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, amounts in thousands except per share amounts)   Three Months Ended Six Months Ended July 1, July 2, July 1, July 2,   2007     2006     2007     2006     Revenues Product $ 169,939 $ 192,440 $ 311,451 $ 358,790 Service   40,584     38,997     78,390     76,478   Total revenues 210,523 231,437 389,841 435,268   Costs and expenses Cost of product revenues 108,726 116,401 200,920 217,015 Cost of service revenues 20,623 21,413 43,206 44,274 Selling, general and administrative 68,772 78,496 138,334 156,289 Gain on intellectual property settlement - - - (16,538 ) Restructuring charge   -     1,135     -     2,242   Total costs and expenses   198,121     217,445     382,460     403,282   Operating profit from continuing operations 12,402 13,992 7,381 31,986 Gain on sale of investments - 2,305 - 2,305 Interest income, net   119     1,766     378     2,910   Earnings from continuing operations before taxes 12,521 18,063 7,759 37,201 Provision for income taxes   4,591     6,767     4,261     10,835   Earnings from continuing operations 7,930 11,296 3,498 26,366 Loss from discontinued operations, net of tax   (1,283 )   (940 )   (1,283 )   (2,019 ) Net earnings $ 6,647   $ 10,356   $ 2,215   $ 24,347     Basic earnings (loss) per share Continuing operations $ 0.13 $ 0.18 $ 0.06 $ 0.42 Loss from discontinued operations     (0.02 )   (0.02 )   (0.02 )   (0.03 ) Net earnings per share $ 0.11   $ 0.16   $ 0.04   $ 0.39     Diluted earnings (loss) per share Continuing operations $ 0.13 $ 0.18 $ 0.06 $ 0.41 Loss from discontinued operations   (0.02 )   (0.02 )   (0.02 )   (0.03 ) Net earnings per share $ 0.11   $ 0.16   $ 0.04   $ 0.38     Shares used in computing earnings (loss) per share Basic 60,251 63,252 60,121 63,138 Diluted 61,065 64,529 60,987 64,565 INTERMEC, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, amounts in thousands)     July 1, December 31,   2007     2006   ASSETS   Current assets: Cash and cash equivalents $ 159,535 $ 155,027 Short-term investments 29,372 29,510 Accounts receivable, net of allowance for doubtful accounts and sales returns of $9,437 and $7,796 156,236 158,369 Inventories 115,593 119,027 Net current deferred tax assets 49,875 49,623 Assets held for sale 8,393 8,661 Other current assets   27,658     28,913   Total current assets 546,662 549,130   Property, plant and equipment, net 43,455 43,453 Intangibles, net 6,097 3,978 Net deferred tax assets 175,836 190,683 Other assets   21,807     23,096   Total assets $ 793,857   $ 810,340     LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Accounts payable and accrued expenses $ 101,606 $ 113,207 Payroll and related expenses 25,616 32,008 Deferred revenue 50,392 45,021 Current portion of long-term debt   100,000     -   Total current liabilities 277,614 190,236   Long-term deferred revenue 14,862 17,318 Long-term debt - 100,000 Other long-term liabilities 76,684 85,184   Shareholders' investment: Common stock 602 598 Additional paid-in-capital 665,754 657,468 Accumulated deficit (217,632 ) (212,903 ) Accumulated other comprehensive loss   (24,027 )   (27,561 ) Total shareholders' investment   424,697     417,602   Total liabilities and shareholders' investment $ 793,857   $ 810,340   INTERMEC, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, amounts in thousands of dollars)   Three Months Ended July 1, 2007 July 2, 2006   Cash and cash equivalents at beginning of year $ 155,027   $ 256,782     Cash flows from operating activities of continuing operations: Net earnings from continuing operations 3,498 24,347 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:   Depreciation and amortization 6,190 5,186 Deferred taxes 3,531 10,097 Excess tax benefits from stock-based payment arrangements (1,181 ) (3,076 ) Changes in working capital and other operating activities   (7,862 )   25,832   Net cash provided by operating activities of continuing operations 4,176 62,386   Cash flows from investing activities of continuing operations: Capital expenditures (5,474 ) (12,304 ) Purchases of investments (1,355 ) (19,695 ) Sale of investments 1,493 565 Note receivable 1,500 - Other investing activities   (1,313 )   5   Net cash used in investing activities of continuing operations (5,149 ) (31,429 )   Cash flows from financing activities of continuing operations: Excess tax benefits from stock-based payment arrangements 1,181 3,076 Stock options exercised 3,042 4,340 Other financing activities   1,008     1,616   Net cash provided by financing activities of continuing operations 5,231 9,032   Net cash provided by continuing operations 4,258 39,989 Net cash provided by operating activities of discontinued operations   250     6,912   Resulting increase in cash and cash equivalents   4,508     46,901     Cash and cash equivalents at end of period $ 159,535   $ 303,683