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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal quarter ended September 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________.
Commission file number 1-9802
Symbol Technologies, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2308681
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Symbol Plaza, Holtsville, New York 11742-1300
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (631) 738-2400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X ] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). YES [X] NO [ ]
The number of shares outstanding of the registrant's classes of common
stock, as of June 20, 2005, was as follows:
Class Number of Shares
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Common Stock, par value $0.01 242,911,689
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EXPLANATORY NOTE
Symbol Technologies, Inc. (collectively with its subsidiaries,
"Symbol," "we," "us" and "our") is filing this Amendment No. 1 on Form 10-Q/A
("Amendment No. 1") solely to amend its disclosures in Item 4 of Part I
contained in its Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2004 (the "Form 10-Q"), which was originally filed with the
Securities and Exchange Commission (the "SEC") on November 15, 2004. The purpose
of this Amendment No. 1 is to address comments that Symbol received from the
Staff of the Division of Corporation Finance of the SEC.
Pursuant to Rule 12b-15 under the Securities and Exchange Act of 1934,
as amended, this Amendment No. 1 contains the complete text of Item 4 of Part I,
as amended, and new certifications pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. The representations contained in the new certifications continue to
relate solely to our fiscal quarter ended September 30, 2004. This Amendment No.
1 contains only the sections and exhibits to the Form 10-Q which are being
amended and restated. The sections of and exhibits to the Form 10-Q as
originally filed which are not included herein are unchanged and continue in
full force and effect as originally filed. This Amendment No. 1 speaks as of the
date of the original filing of the Form 10-Q and has not been updated to reflect
events occurring subsequent to the original filing date.
PART I.
ITEM 4. CONTROLS AND PROCEDURES
Symbol is committed to maintaining disclosure controls and procedures
that are designed to ensure that information required to be disclosed in its
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Commission's rules and forms, and that such
information is accumulated and communicated to its management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
for timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives and are subject
to certain limitations, including the exercise of judgment by individuals, the
inability to identify unlikely future events, and the inability to eliminate
misconduct completely.
As of December 31, 2003, we identified a material weakness related to
the manner in which we process transactions to record our revenue as our current
processes and procedures to record revenue transactions requires substantial
manual intervention and are reliant on several departments in our sales and
finance organization. We also identified certain deficiencies which are
summarized as follows:
o inadequate systems and systems interfaces;
o inadequate and untimely account reconciliations;
o numerous manual journal entries; and
o informal worldwide policies and procedures.
Since the discovery of the material weakness and other deficiencies as
described above, during the three-month period ended September 30, 2004, we
believe we have finalized several actions undertaken that have improved the
effectiveness of our internal controls. These have included the following:
o centralized the responsibility of revenue under a revenue
controller's department, reporting directly to the Chief
Accounting Officer;
o formalized certain worldwide policies and procedures under a
worldwide policies and procedures group. To date, the policies
and procedures group has issued 79 policies, which have been
approved by the Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer and are posted on our
intranet site, and has 53 waiting executive approval. Included
in these policies are our revenue recognition, account
reconciliation, and manual journal entry policies;
o identified responsible associates for account reconciliations,
including approvals;
o implemented formal review processes of transactions where
manual intervention still exists; and
o developed a comprehensive business transformation strategy
intended to transform multiple legacy systems into one ERP
platform. Beginning in 2003, we have expended approximately
$48.5 million thus far and plan to expend an additional $68.5
million through 2006. This investment in software and
hardware system upgrades is designed to provide both
operational and financial control environment benefits. The
financial control environment benefits will include, but are
not limited to, reducing the risks associated with multiple
system interfaces and improving access controls within and
between multiple systems, improving the integration of our
sales, finance and accounting departments, improving the
accuracy of our revenue reporting, reducing the number of
manual transactions and increasing the transparency of
financial information.
As a result of these and other measures we have taken to date, we
believe this material weakness and other deficiencies described above have been
remediated.
In November 2004, during our inventory testing (including a planned
physical inventory at a company-owned distribution center), two unrelated errors
were discovered. These errors were the result of two discrete events. One event
involved inaccurate inventory levels reported to us by a large distribution
partner. The underreported inventory levels resulted in us inaccurately
reporting $3.3 million in revenues in our earnings release on October 26, 2004
for the three and nine-month period ended September 30, 2004. No previous
periods were affected. This was an oversight on the part of the distribution
partner, which made us aware of the reporting error as soon as it was
discovered. The second discrepancy was the result of errors that occurred at a
company-owned distribution facility that serves one of our large retail
customers. The distribution center relies on its own internal reporting system
and misreported inventory. As a result of this second discrepancy, we over
reported revenue by $10.3 million for the three and nine month period ended
September 30, 2004 in our earnings release on October 26, 2004. Based on these
findings, management believes it has significant deficiencies relating to the
controls for receiving, shipping and ultimately reporting the amount of
inventory. The errors reported as described above led to the delay in filing
this report on Form 10-Q as of and for the three and nine month period ended
September 30, 2004.
Since the discovery of the significant deficiencies in November 2004 as
described above, we have taken the following steps to ensure the financial
results as of and for the three and nine month period ended September 30, 2004
as filed in this Form 10-Q are fairly presented in all material respects:
o re-performed a physical inventory at this distribution
center;
o performed a roll back of inventory amounts from the results
of our physical counts to each quarter end;
o re-performed cut-off procedures at March 31, 2004, June 30,
2004 and September 30, 2004 to determine proper inventory
amounts; and
o re-confirmed inventory amounts with the distributor.
Additionally, we have taken various measures to improve the
effectiveness of our internal controls, including:
o placed qualified individuals in the distribution center to
manage the movement of inventory within the distribution
center; and
o developed prospective physical inventory procedures to be
performed for the year ending December 31, 2004 and quarterly
thereafter at certain of our distributors and our
company-owned distribution center to ensure the value of
consigned inventory at our distributors and our company-owned
distribution center are accurately recorded.
As required by Rule 13a-15(b) of the Exchange Act, Symbol has carried
out an evaluation, under the supervision and with the participation of its
management, including its Chief Executive Officer and its Chief Financial
Officer, of the effectiveness of the design and operation of its disclosure
controls and procedures. The evaluation examined those disclosure controls and
procedures as of September 30, 2004, the end of the period
covered by this report. Based upon the evaluation, Symbol's management,
including its Chief Executive Officer and its Chief Financial Officer, concluded
that, as of September 30, 2004, Symbol's disclosure controls and procedures were
ineffective.
However, based upon the work performed to the date of this filing,
management believes there are no material inaccuracies or omissions of material
fact in this filing on Form 10-Q. Management, to the best of its knowledge,
believes that the financial statements presented herein are fairly stated in all
material respects.
The process and control improvements described in the third paragraph
of this Item 4 are the only changes in our internal controls over financial
reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting. We will continue to assess our disclosure controls and
procedures and will take any further actions that we deem necessary.
PART II.
ITEM 6. EXHIBITS
Note: Item 6 in the Form 10-Q, as originally filed, is unchanged except for the
filing of additional certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
(a) Exhibits
See "Exhibit Index" on the page following the Signature Page.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
SYMBOL TECHNOLOGIES, INC.
(Registrant)
June 24, 2005 By: /s/ William R. Nuti
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William R. Nuti
Chief Executive Officer, President
and Director
(principal executive officer)
June 24, 2005 By: /s/ Mark T. Greenquist
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Mark T. Greenquist
Senior Vice President--Finance
and Chief Financial Officer
(principal financial officer)
June 24, 2005 By: /s/ James M. Langrock
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James M. Langrock
Vice President--Controller and
Chief Accounting Officer
(principal accounting officer)
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EXHIBIT INDEX
31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002