TELXON REVISES EXPECTATIONS FOR SECOND HALF AND YEAR; ANNOUNCES STOCK BUY-BACK PROGRAM
AKRON, Ohio, April 13 /PRNewswire/ -- Telxon Corporation (NASDAQ/NMS: TLXN), today announced a revision of the estimate for its second-half and full-year results. For the fourth quarter ending March 31, 1993, the company expects to reflect a net loss within a range of $9.5 million to $11.0 million ($.63 to $.73 per share), on revenues of approximately $55 million. For the year, the company expects revenues to be approximately $238 million and anticipates a net loss within a range of $10.7 million to $12.2 million ($.72 to $.82 per share). The previous expectation was for fourth-quarter earnings to be at or near break-even and for the full year to show a small net loss to break-even. The company expects to report its audited fiscal 1993 results by the end of May 1993. In a move underscoring its confidence in the company and its strategic plan, the board of directors has authorized the company to acquire up to two million shares of its common stock in open market transactions over the next six months depending on market conditions. Dan R. Wipff, president and chief operating officer, attributed the revised estimate primarily to an expanded corporate restructuring program that boosted non-recurring expenses. In addition, a weakened performance in Europe reflected unfavorable currency trends and the impact of deteriorating economic conditions in the European marketplace. The non-recurring charges related to corporate restructuring were generally in the following four categories: 1) inventory write-offs and other expenses associated with discontinuance of older products as part of a new product strategy; 2) expenses resulting from consolidating customer service into new facilities, which will allow the company to provide more on-site technical support; 3) costs related to accelerating the quality of customer support programs; and 4) special costs, including outside management consulting and severance expenses relating to the reorganization. The total one-time costs incurred in the quarter were approximately $10.8 million pre-tax ($.48 per share after tax). This estimate will be refined as the company completes closing its books for fiscal year (FY) 1993.
CHANGING CORPORATE STRATEGY
"Telxon has incurred substantial costs associated with a major corporate redirection, including a reorganization of North American sales and marketing with a focus on independent business units (IBUs), as well as a significant investment in new products and technologies," said Wipff. "A number of these were one-time charges that we have recognized in the fourth quarter, but we continue to make significant investments in Telxon's future on a going-forward basis." "The purpose of the reorganization to focused IBU marketing is to make the company more responsive to customers in different market segments," explained Robert F. Meyerson, chairman and CEO of Telxon. "At the same time, the company has embarked on a new product strategy built around advanced computing platforms, such as the new generation of microprocessors, ASIC designs, and other advanced interactive technologies, such as wireless pen-based and voice-technology systems. "Although these steps have an impact on short-term earnings, they give us the platforms to be better positioned for the marketplace of the future," said Meyerson,. "We're redirecting Telxon, through internal change and acquisitions, to be more strategically responsive to changing market needs by delivering the right products to the right markets at the right time. Our organization is focused to support our customers with high-level systems, based on our advanced Portable Tele- transaction Computers (PTCs) and wireless communication technology." "We're seeing a positive response to our new, strategic plans from the North American marketplace, and we expect this will be reflected in improved sales and profits worldwide, beginning in the second half of fiscal year 1994 and beyond," said Wipff. "We are moving out of the transition phase as we implement these changes progressively throughout fiscal year 1994." He said the company anticipates its FY 1994 revenues to increase 10 percent to 15 percent due to the acquisition of Itronix in the first quarter of FY 1994, and the projected roll-out of Telxon's new products in the third and fourth quarters of FY 1994. Accordingly, the company is anticipating a small loss for each of the first two quarters of FY 1994, and net profits in the range of $.30 to $.40 per share for the year, despite lower gross margins as the company increases penetration of new markets and seeks to increase market share.
Charges to implement the new product strategy are approximately $3.7 million pre-tax, or $.17 per share after tax in the fourth quarter, primarily reflecting write-offs of unique parts and components inventory for discontinued products. The consolidation of Telxon's spare parts facilities into a major facility resulted in one-time expenses of approximately $1.6 million pre-tax or $.07 per share after tax. This plan is part of a broader strategy to improve customer service and provide more resources for on- site technical services. The company will be able to efficiently support a complete inventory of parts, which will be available to more customers on an overnight basis. Expenses relating to the acceleration of Telxon's new customer quality support program total approximately $0.6 million pre-tax, or $.03 per share after tax. Telxon has adopted the precepts of total quality management (TQM) as an integral part of its strategy for the future. The various organizational costs of the restructuring are approximately $4.9 million pre-tax for the quarter, or $.21 per share after tax. These include severance payments, consulting, and other professional fees associated with the reorganization. This restructuring process makes Telxon a strongly positioned competitor, re- staffed and focused to capitalize on the key growth opportunities for the 1990s. Telxon Corporation, serving over 6,000 customers worldwide, is the leading provider of complete hand-held data collection systems and wireless data communications products worldwide. The company integrates advanced Portable Tele-transaction Computers (PTCs) and peripherals with real-time wireless and network systems. Telxon's executive and engineering offices are located in Akron, Ohio; its manufacturing facility is in Houston. -0- 4/13/93 /CONTACT: Julie L. Ganim, corporate development, Telxon Corporation, 216-867-3700; or Mark Metzger or Tom Breunig, both of Miller Communications, 617-536-0470, for Telxon Corporation/ (TLXN)
CO: Telxon Corporation ST: Ohio IN: CPR SU: ERP
BM -- CL004 -- 5067 04/13/93 08:49 EDT
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|Date:||Apr 13, 1993|
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