Fargo Electronics Announces Third Quarter 2001 Results.Business Editors & Technology Writers EDEN PRAIRIE Eden Prairie A city of eastern Minnesota, a residential suburb of Minneapolis. Population: 57,300. , Minn.--(BUSINESS WIRE)--Oct. 30, 2001 Fargo Fargo, city (1990 pop. 74,111), seat of Cass co., E N.Dak., at the head of navigation on the Red River, opposite Moorhead, Minn.; inc. 1875. A railroad hub and regional financial and medical center, Fargo is also the trade and distribution center of a spring-wheat Electronics, Inc. (Nasdaq:FRGO) today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the third quarter ended September September: see month. 30, 2001 of $15,471,000, compared with sales of $15,777,000 in the third quarter of 2000. Net income for the third quarter of 2001 was $1,455,000, or 12 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share, compared with $989,000, or 8 cents per diluted common share in the third quarter of 2000. Net income for the third quarter of 2001 includes charges of $893,000 (or five cents per common share after taxes) for legal, professional, and investment banking expense solely related to the previously announced and pending acquisition of Fargo by Zebra Technologies Zebra Technologies (NASDAQ: ZBRA) is a manufacturer of thermal bar code label and receipt printers, RFID smart label printer/encoders, and card printers, based in Vernon Hills, Illinois. Zebra has products in 100 countries around the world. Corporation (Nasdaq:ZBRA) of Vernon Hills Vernon Hill II (born circa 1946) is the founder and former chairman, president, and chief executive officer of Commerce Bancorp and Commerce Bank of Cherry Hill Township, New Jersey. , Ill. For the nine months ended September 30, 2001, net sales were $45,600,000, compared with $43,607,000 for the first nine months of 2000. Net income per common share (diluted) was 26 cents in the first nine months of 2001, compared with 19 cents per common share (diluted) in the same period a year earlier. Net income for the first nine months of 2001 includes charges of $956,000 (or five cents per common share after taxes) for expenses solely related to the pending acquisition.
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Fargo Electronics, Inc. Third Quarter Nine Months
(In thousands, except per Ended Ended
share amounts) Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
--------- --------- --------- ---------
Net sales $15,471 $15,777 $45,600 $43,607
Operating income(a) 2,578 2,449 5,959 6,737
Net income available to common 1,455 989 3,054 2,136
stockholders
Diluted net income per common
share $0.12 $0.08 $0.26 $0.19
Weighted average common shares
outstanding - diluted 11,998 11,988 11,926 11,205
(a)Includes charges of $893,000 (Third Quarter 2001) and $956,000
(Nine Months 2001) for expenses related to the pending acquisition of
Fargo by Zebra Technologies Corporation.
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"We are pleased with our performance for the third quarter, given the difficult economic conditions," said Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. R. Holland, Fargo's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . Holland noted that highlights of the Third Quarter included: -- Successful introduction of the Persona C11 card printer, which Fargo believes to be the most user-friendly printer in its class. -- Introduction of a new smart card station with encoding options, which Fargo believes makes the Fargo Professional Series the most advanced desktop solution for printing and encoding smart cards available in the marketplace. -- The addition of 10 new firms to the Fargo Technology Alliance, which will further enhance Fargo's smart card strategy and help promote advanced e-card solutions on a global basis. -- Repayment of $3,000,000 in bank debt. Receipt of two additional U.S. Patents for "I.D. Card Output Stacker" and "Card Laminator with Regulatory Control," as well as three additional "Notices of Allowance" from the U.S. Patent and Trademark Office, the final step prior to issuance of a patent. Because of the pending acquisition of Fargo by Zebra Technologies Corporation, Fargo declined to present an anticipated range of earnings for the fourth quarter of 2001. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements made in this release concerning the company's expectations about future results or events are "forward-looking statements." Such statements are subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created by the Private Securities Reform Act of 1995, and are necessarily subject to risks and uncertainties. Actual results may differ materially from those reflected in these forward-looking statements. These risks include product acceptance and customer demand for Fargo's card personalization Custom tailoring information to the individual. On the Web, personalization means returning a page that has been customized for the user, taking into consideration that person's habits and preferences. systems and proprietary supplies; actions taken and alternative products marketed by Fargo's competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; supplier relationships; domestic and international regulations and standards; adverse economic and business conditions, including conditions resulting from the terrorist attack on the U.S. on September 11, 2001 and the resulting hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. ; adverse changes in the Company's business as a result of the announcement of the pending acquisition of the Company by Zebra Technologies Corporation; and continuing legal, professional, and investment banking expenses related to this pending acquisition. For more detail, see the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Dec. 31, 2000, and 10-Q for the quarters ended March 31, 2001, and June June: see month. 30, 2001. Tender Offer for Fargo Zebra Technologies Corporation has extended its tender offer for all outstanding shares of common stock (including associated rights to purchase preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ) of Fargo for $7.25 per share in cash to 5:00 PM, New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. time, on November November: see month. 9th, 2001. The extension is necessary, because the applicable Hart-Scott-Rodino antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. review waiting period has yet to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. or be terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: . The tender offer commenced on August 3, 2001. Fargo and Zebra remain committed to bringing the transaction to a successful conclusion and continue to be responsive to the Federal Trade Commission in its antitrust review of the transaction. At this time, Fargo is unable to provide an expected date for completing the transaction, or any other details about the review process. This press release is neither an offer to purchase nor a solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of an offer to sell shares of Fargo common stock. All stockholders should read the tender offer statement, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. (including the offer to purchase, a related letter of transmittal Letter of Transmittal A document used by security holder to accompany certificates surrendered in an exchange or other corporate action. and other offer documents), that was filed with the SEC by Zebra, and the solicitation/recommendation statement, as amended, that was filed with the SEC by Fargo. These statements contain important information that stockholders should consider before making any decision regarding tendering their shares. Stockholders are able to obtain these statements, as well as other filings containing information about Zebra and Fargo, without charge, at the SEC's Web site www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Stockholders are also able to obtain copies of these documents, at no charge, by contacting Zebra's information agent, Mellon Investor Services LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , at (800) 261-8056. Copies of these documents may also be obtained, at no charge, by directing such requests to Zebra's Chief Financial Officer at (847) 793-6730. About Fargo Fargo Electronics, Inc. (Nasdaq:FRGO) is the world's leader in innovative technologies for desktop plastic card personalization systems. Based in Eden Prairie, Minnesota The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. , Fargo printing systems create personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. plastic identification cards complete with digital images and text, lamination lamination a laminar structure or arrangement. , and electronically encoded information. Personalized identification cards provide physical, information and transaction security for a wide variety of applications including retail stores, e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. , government installations, schools, sports and recreation facilities, clubs and associations, and correctional cor·rec·tion n. 1. The act or process of correcting. 2. Something offered or substituted for a mistake or fault: made corrections in the report. 3. a. facilities. More than 50,000 Fargo systems are currently installed throughout the U.S. and in over 100 other countries. For more information, visit Fargo's Web site at www.fargo.com.
Fargo Electronics, Inc.
Condensed Statement of Operations
(In thousands, except per share data)
(Unaudited)
3 Months Ended 9 Months Ended
Sept. 30, Sept. 30,
2001 2000 2001 2000
---------------- ----------------
Net sales (Note 1) $15,471 $15,777 $45,600 $43,607
Cost of sales 8,911 9,409 27,822 25,790
------- ------- ------- -------
Gross profit 6,560 6,368 17,778 17,817
------- ------- ------- -------
Operating expenses:
Research and development 961 1,347 2,973 3,760
Selling, general and
administrative (Note 1) 2,128 2,572 7,890 7,320
Acquisition related costs 893 -- 956 --
------- ------- ------- -------
Total operating expenses 3,982 3,919 11,819 11,080
------- ------- ------- -------
Operating income 2,578 2,449 5,959 6,737
------- ------- ------- -------
Other income (expense):
Interest expense (309) (643) (1,186) (2,292)
Other, net 23 17 37 76
------- ------- ------- -------
Total other expense (286) (626) (1,149) (2,216)
------- ------- ------- -------
Income before provision for
income taxes and Extraordinary
loss 2,292 1,823 4,810 4,521
Provision for income taxes 837 655 1,756 1,650
------- ------- ------- -------
Income before extraordinary loss 1,455 1,168 3,054 2,871
Extraordinary loss, net of
applicable Income taxes -- 179 -- 385
------- ------- ------- -------
Net income 1,455 989 3,054 2,486
Accrued dividends on Series B,
8% redeemable preferred stock -- -- -- 350
------- ------- ------- -------
Net income available to common
stockholders $1,455 $989 $3,054 $2,136
------- ------- ------- -------
Net income per common share:
Basic earnings:
Income before extraordinary
loss $.12 $.10 $.26 $.25
Extraordinary loss -- (0.02) -- (0.04)
------- ------- ------- -------
Net income $.12 $.08 $.26 $.21
------- ------- ------- -------
Diluted earnings:
Income before extraordinary
loss $.12 $.10 $.26 $.23
Extraordinary loss -- (0.02) -- (0.04)
------- ------- ------- -------
Net income $.12 $.08 $.26 $.19
------- ------- ------- -------
Weighted average common shares
outstanding:
Basic 11,757 11,749 11,754 10,264
Diluted 11,998 11,988 11,926 11,205
Note 1 - Effective April 1, 2001, the Company adopted EITF 00-14,
Accounting for Certain Sales Incentives. In accordance with the EITF,
the Company has reclassified certain sales incentives totaling $408K
for the three months ended September 30, 2000, and $1.26M for the nine
months ended September 30, 2000, from selling, general and
administrative expenses and shown them as a reduction of net sales.
Fargo Electronics, Inc.
Condensed Balance Sheets
(Amounts in thousands, except per share data)
Sept. 30, Dec. 31,
ASSETS 2001 2000
(Unaudited)
----------- ---------
Current assets:
Cash and cash equivalents $2,634 $1,223
Accounts receivable, net 7,990 6,754
Inventories 6,077 8,118
Prepaid expenses 260 248
Deferred income taxes 3,063 3,063
----------- ---------
Total current assets 20,024 19,406
----------- ---------
Equipment and leasehold improvements, net 1,552 2,079
Other assets:
Deferred income taxes 25,444 27,200
Other assets, net 97 130
----------- ---------
Total assets $47,117 $48,815
----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable, bank $16,500 $ -
Accounts payable and accrued liabilities 6,058 4,556
----------- ---------
Total current liabilities 22,558 4,556
----------- ---------
Revolving credit facility - 22,900
Commitments
Stockholders' equity:
Common stock, $.01 par value; 50,000 shares
authorized, 11,759 and 11,746 shares issued
and outstanding at September 30, 2001 and
December 31, 2000, respectively 118 117
Additional paid-in capital 145,179 145,155
Accumulated deficit (120,062) (123,116)
Deferred compensation (51) (72)
Stock subscription receivable (625) (725)
----------- ---------
Total stockholders' equity 24,559 21,359
----------- ---------
Total liabilities and stockholders' equity $47,117 $48,815
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