Intermec Reports Fourth Quarter and Full Year 2009 Results

Intermec, Inc. (NYSE: IN) today announced financial results for its fourth quarter, which ended December 31, 2009.

Fourth quarter 2009 revenues were $179.1 million and net earnings from continuing operations were $6.0 million, or $0.10 per diluted share, compared to 2008 fourth quarter revenues of $221.5 million and net earnings from continuing operations of $9.3 million, or $0.15 per diluted share.

"Intermec delivered sequential growth with fourth quarter revenue and earnings above our guidance,” said Patrick J. Byrne, Intermec President and CEO, "With our lowered break-even point, new products and expanded channel we are well positioned for the market recovery.”

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

Excluding these charges the non-GAAP adjusted net earnings from continuing operations for the fourth quarter of 2009 were $7.6 million, or $0.12 per diluted share, as described in the Non-GAAP (Adjusted) Financial Measures section of this release.

Operating profits from continuing operations for the fourth quarter of 2009 were $7.3 million, or 4.1% of total revenue compared with $7.6 million, or 3.4% of total revenue, in the fourth quarter of 2008. Excluding the impact of restructuring charges the non-GAAP adjusted operating profits from continuing operations were $9.3 million, or 5.2% of total revenue compared with $10.0 million, or 4.5% of total revenue, in the fourth quarter of 2008.

Full year 2009 revenues were $658.2 million and net loss from continuing operations was ($10.9) million or ($0.17) per diluted share. Full year 2009 results included pre-tax restructuring charges of $20.6 million or $0.22 per diluted share.

Full year 2008 revenues were $890.9 million and net earnings from continuing operations were $35.7 million, or $0.58 per diluted share. Full year 2008 results included pre-tax restructuring charges of $5.7 million or $0.06 per diluted share.

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

Excluding these charges the non-GAAP adjusted net earnings from continuing operations for full year 2009 were $2.6 million, or $0.05 per diluted share, as described in the Non-GAAP (Adjusted) Financial Measures section of this release.

Fourth Quarter 2009 Operating Performance

• Total revenues of $179.1 million were down 19% from the prior-year quarter, down 22% when adjusting for currency translation. Sequentially, total revenues increased by 13%.
• Geographically, compared to the prior-year quarter, revenues in North America declined 33%. In Europe, Middle East and Africa (EMEA) revenues declined 8%, down 16% when adjusting for currency translation. Latin America increased 43%, while Asia Pacific (APAC) was virtually flat.
  
  Sequentially, revenues in North America increased 4%, EMEA increased 17%, Latin American increased 78%, and APAC decreased 12%.

• From a product line perspective, compared to the prior-year quarter, Systems and Solutions revenue decreased 28%, Printer and Media revenue declined 5% and Service revenue was down 4%.
  
  Sequentially, Systems and Solutions revenue increased 14%, Printer and Media revenue increased 9% and Service revenue improved by 13%.

• Gross profit margins of 39.7% increased 0.5 percentage points over the prior-year period. Product gross margins of 38.3% decreased 0.2 percentage points compared to the fourth quarter of 2008. Service gross margins of 45.3% increased 2.6 percentage points over the fourth quarter of 2008.
  
  Sequentially, total gross profit margins increased 1.1 percentage points, product gross margins increased 1.3 percentage points and service gross margins increased 0.6 percentage points.

• Operating expenses excluding restructuring charges of $1.9 million were $61.9 million in the quarter, lower by 19% compared to $76.8 million in the fourth quarter 2008 excluding comparable restructuring charges of $2.4 million. Total operating expenses for these same periods were $63.8 million and $79.2 million, respectively.
• During the quarter, the company recorded a favorable resolution of a federal tax audit. This adjustment was the primary factor which reduced our normalized tax provision to $1.4 million for the quarter. In the fourth quarter of 2008, the company recorded favorable tax adjustments of approximately $4.0 million as a result of the company’s new manufacturing structure and future foreign income expectations. This adjustment more than offset our normalized tax provision which resulted in a tax benefit of $0.8 million for the prior year quarter.
• Operating cash flow was $3.3 million for the quarter and $21.4 million for the full year, including restructuring payment impacts of $19.0 million. The Company’s cash, cash equivalents, and short-term investments remained essentially flat at $238.2 million for the quarter. The Company has no debt.

Outlook – First Quarter 2010

Intermec announced its financial guidance for the first quarter of 2010.

• Q1’10 Revenues are expected to be within a range of $155 to $165 million, compared to Q1’09 Revenues of $163 million.
• Q1’10 Earnings per share are expected to be within a range of ($0.01) to $0.03 per diluted share from continuing operations on a GAAP basis, compared to Q1’09 GAAP EPS loss of ($0.17).
• Excluding restructuring charges of approximately $2 million, Q1’10 earnings per share on a Non-GAAP basis are expected to be $0.01 to $0.05, compared to Q1’09 Non-GAAP basis an EPS loss of ($0.08).

Conference Call Information

Intermec will hold its conference call on February 4, 2010 at 5 p.m. ET (2 p.m. PT). The dial-in number for participants is (517) 308-9381 (US and International); 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 continuing operations before taxes, net (loss) earnings, and earnings (loss) per diluted share. It also includes an outlook for the first quarter 2010 non-GAAP (adjusted) earnings from continuing operations 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, 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 first quarter of 2010 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.