UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal year ended December 31, 2005
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 1-9802
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
SYMBOL TECHNOLOGIES, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
SYMBOL TECHNOLOGIES, INC.
ONE SYMBOL PLAZA
HOLTSVILLE, NEW YORK 11742-1300
SYMBOL TECHNOLOGIES, INC.
1997 Employee Stock Purchase Plan
Index to Financial Statements
PAGES
-----
Reports of Independent Registered Public Accounting Firms ................ 3-4
Statements of Financial Condition as of December 31, 2005 and 2004 ....... 5
Statements of Operations and Changes in Participants' Equity for the
years ended December 31, 2005, 2004 and 2003 ............................. 6
Notes to Financial Statements ............................................ 7-11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Symbol Technologies, Inc.
and Participants of the Symbol Technologies, Inc.
1997 Employee Stock Purchase Plan.
We have audited the accompanying statements of financial condition of the Symbol
Technologies, Inc. 1997 Employee Stock Purchase Plan (the "Plan") as of December
31, 2005 and 2004, and the related statements of operations and changes in
participants' equity for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Plan at December 31, 2005
and 2004, and the results of its operations and changes in its participants'
equity for the years then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
March 27, 2006
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Symbol Technologies, Inc.
and Participants of the Symbol Technologies, Inc.
1997 Employee Stock Purchase Plan.
We have audited the accompanying statement of operations and changes in
participants' equity of the Symbol Technologies, Inc. 1997 Employee Stock
Purchase Plan (the "Plan") for the year ended December 31, 2003. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such statement of operations and changes in participants' equity
present fairly, in all material respects the results of operations and changes
in participants' equity of the Plan for the year ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 25, 2004
SYMBOL TECHNOLOGIES, INC.
1997 Employee Stock Purchase Plan
Statements of Financial Condition
December 31, December 31,
2005 2004
------------ ------------
ASSETS
Participants account receivable .............. $1,808,483 $2,077,804
Employer contribution receivable ............. 319,144 366,771
---------- ----------
Total assets ...................... $2,127,627 $2,444,575
========== ==========
LIABILITIES
Payable for stock purchases .................. $2,127,627 $2,444,575
---------- ----------
Total liabilities ................. 2,127,627 2,444,575
Participants' equity ......................... -- --
---------- ----------
Total liabilities and
participants' equity .............. $2,127,627 $2,444,575
========== ==========
See Notes to Financial Statements
SYMBOL TECHNOLOGIES, INC.
1997 Employee Stock Purchase Plan
Statements of Operations and Changes in Participants' Equity
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2005 2004 2003
------------ ------------ ------------
Participant contributions ....................... $4,553,587 $2,204,219 $4,848,695
Employer contributions .......................... 727,620 366,771 735,892
---------- ---------- ----------
Total additions ..................... 5,281,207 2,570,990 5,584,587
---------- ---------- ----------
Stock Purchases ................................. 2,723,173 -- --
Participant withdrawals ......................... 430,407 126,415 416,825
Amounts reserved for with-
holding taxes ................................. -- -- 261,815
Amounts reserved for future stock
purchases ..................................... 2,127,627 2,444,575 4,905,947
---------- ---------- ----------
Total deductions .................... 5,281,207 2,570,990 5,584,587
---------- ---------- ----------
Net additions ....................... -- -- --
Participants' equity, beginning
of period ..................................... -- -- --
---------- ---------- ----------
Participants' equity, end of
Period ........................................ $ -- $ -- $ --
========== ========== ==========
See Notes to Financial Statements
SYMBOL TECHNOLOGIES, INC.
1997 Employee Stock Purchase Plan
Notes to Financial Statements
Years Ended December 31, 2005, 2004, and 2003
1. DESCRIPTION OF THE PLAN:
The following description of the Symbol Technologies, Inc. (the "Company")
1997 Employee Stock Purchase Plan (the "Plan"), provides only general
information. References herein to "Symbol," "we," "us" and "our" refer to
Symbol Technologies, Inc. and its subsidiaries unless the context
specifically states or implies otherwise. Participants should refer to the
Plan document for a more complete statement of the Plan's provisions.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of additions and deductions during the reporting period. Actual
results could differ from those estimates.
a. General Description
The Plan is an employee stock purchase plan that allows participants to
purchase shares of Symbol Common Stock ("Stock") through payroll
deductions. The Plan's fiscal year is divided into two six-month periods
(each, a "Payment Period"). The Payment Periods are January 1 to June 30
(the "First Half Payment Period") and July 1 to December 31 (the "Second
Half Payment Period")and represent the periods during which participants'
payroll deductions are accumulated. At the end of each Payment Period, the
participants' accumulated payroll deductions are used to purchase shares
of Stock. Participants may purchase shares of Stock for an amount equal to
85% of the lesser of (1) the closing price of a share of Stock on the
first trading day of the Payment Period or (2) the closing price of a
share of Stock on the last trading day of the Payment Period (the "Option
Price").
The purchase of shares by the Plan requires, under Securities and Exchange
Commission (the "Commission" or the "SEC") regulations, that the Company
have an effective registration statement covering the shares on file with
the SEC. As of June 30, 2003 the Company had not filed its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2003 or its Annual
Report on Form 10-K for the year ended December 31, 2002. Consequently,
the Company was deemed not to have an effective registration statement. As
a result, for the Plan year ending December 31, 2003, the Company was
unable to purchase and distribute shares for the First Half Payment
Period, and could not start the Second Half Payment Period, and extended
the First Half Payment Period until December 31, 2003 (the "Extended
Payment Period"). During the Extended Payment Period, normal Eligibility,
Participant Contribution, Employer Contribution and Participant Refund
Plan rules applied. As of December 31, 2003 the Company had not filed its
Quarterly Reports on Forms 10-Q for quarters ended September 30, 2003,
June 30, 2003 and March 31, 2003, with the SEC. Consequently, the Plan no
longer satisfied the requirements of an "employee stock purchase plan" as
defined in Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code"). As a result, effective January 1, 2004, the Company
suspended the withholding of Participant payroll deductions. On February
25, 2004, the Company filed the delinquent Quarterly Reports on Forms 10-Q
with the SEC, thereby curing the deficiency. The Company has since
remained current with the filing of all of its Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q. Thereafter, the participants'
accumulated amounts for the extended payment period were used to purchase
shares of stock at 85% of the closing price on January 1, 2003, which
represented the lesser of the closing prices at the beginning and end of
the extended payment period. The Company completed an open enrollment for
eligible employees and resumed withholding of participant payroll
deductions as of July 1, 2004.
The Plan conducted the Second Half Payment Period for 2004 and for all of
2005 on the basis described above.
The Plan was approved by the Company's stockholders at the annual meeting
of Shareholders held on May 5, 1997. On May 6, 2002 the Shareholders
approved an amendment to the plan to increase the authorized number of
shares covered by the plan by 3 million shares to 4,898,438 shares. The
Stock subject to the options under the Plan shall be authorized but
unissued common stock, treasury shares or shares purchased on the open
market. The aggregate number of shares which may be issued pursuant to the
Plan is 4,898,438. At December 31, 2005, participants in the Plan had
purchased 3,535,699 shares of Stock since the Plan's inception and had
accumulated payroll deductions during the current Payment Period
sufficient to purchase 212,338 shares of Stock subsequent to December 31,
2005, leaving 1,150,401 shares of Stock available for future purchases by
Plan participants.
The Plan is neither qualified under Section 401(a) of the code nor subject
to any of the provisions of the Employee Retirement Income Security Act of
1974 (commonly known as "ERISA").
b. Eligibility
All full-time employees of the Company or any of its participating
subsidiaries who have completed 90 days of continuous employment on or
before the first day of any Payment Period and all part-time employees of
the Company or its participating subsidiaries who satisfy certain service
requirements and who have completed 90 days of continuous employment on or
before the first day of any Payment Period are eligible to participate in
the Plan. Eligible employees may only enroll in the Plan at the beginning
of a Payment Period.
c. Stock Purchases
Following the last trading day of each Payment Period, the amount of each
participant's accumulated payroll deductions is applied towards the
purchase of the maximum number of whole and fractional shares of Stock
possible, determined by dividing the participant's total contribution by
the per share Option Price applicable for that Payment Period. The maximum
number of shares of Stock a participant can purchase is 2,500 shares per
Payment Period. Purchased shares of Stock are transferred to a brokerage
account in the name of the participant at a securities brokerage firm
approved by a committee appointed by the Board of Directors of the
Company.
d. Participant Contributions
Participants may elect to have 2% to 10% of their "Base Salary" (as
defined in the Plan) deducted on an after-tax basis for the purchase of
Stock. Participants may only increase their deduction percentages at the
beginning of a Payment Period and may not decrease their deduction more
often than once during any Payment Period. No interest accrues or is paid
on participants' accumulated payroll deductions. Once made, the Company
may use the payroll deductions for any corporate purpose, and the Company
has no obligation to segregate employees' payroll deductions from any
other funds of the Company or to hold funds representing the same pending
the application thereof to the purchase of shares at the end of each
Payment Period in accordance with the Plan.
e. Employer Contributions
The 15% discount from market value granted to Plan participants on the
purchase of shares of Stock at the end of each Payment Period represents
the Company's non-cash contribution to the Plan. These non-cash
contributions amounted to $727,620, $366,771, and $735,892 for the years
ended December 31, 2005, 2004 and 2003, respectively.
f. Participant Refunds
Plan participants may withdraw from the Plan (in whole but not in part) at
any time prior to the last day of a Payment Period by properly notifying
the Company. A participant's accumulated payroll deductions for the
Payment Period prior to withdrawal from the Plan will be promptly refunded
to the participant without interest (unless required by law).
Participants who terminate their employment relationship with the Company
are not eligible to continue in the Plan. All payroll deductions
accumulated during the Payment Period through the date of such cessation
of employment are refunded to the employee or, in the event of the
employee's death, to his or her estate.
g. Administrative Expenses
The Company bears all costs in connection with the Plan including
administrative fees and all fees associated with the issuance of Stock.
Administrative expenses related to the Plan amounted to approximately
$122,000, $91,000, and $87,000, for the years ended December 31, 2005,
2004, and 2003, respectively.
h. Plan Termination
The Plan may be terminated at any time by the Company's Board of
Directors, but such termination shall not affect shares of Stock then
outstanding under the Plan. If at any time shares of Stock reserved for
the purpose of the Plan remain available for purchase but not in
sufficient number to satisfy all then unfilled purchase requirements, the
available shares shall be apportioned among participants in proportion to
the amount of payroll deductions accumulated on behalf of each participant
that would otherwise be used to purchase Stock, and the Plan shall
terminate. Upon such termination or any other termination of the Plan, all
payroll deductions not used to purchase stock will be refunded, without
interest (unless required by law).
2. INCOME TAX STATUS:
As of December 31, 2003 the Company had not filed its Quarterly Reports on
Forms 10-Q for the quarters ended September 30, 2003, June 30, 2003, and
March 31, 2003 with the SEC. Consequently, the Plan no longer satisfied
the requirements of an "employee stock purchase plan" as defined in
Section 423 of the Code. As a result, effective January 1, 2004, the
Company suspended the withholding of Participant payroll deductions. On
February 25, 2004, the Company filed the delinquent Quarterly Reports on
Forms 10-Q with the SEC, thereby curing the deficiency, enabling the Plan
to fulfill the requirements of Section 423. The Company resumed
withholding of Participant payroll deductions as of July 1, 2004.
For 2003 the Plan did not fulfill the requirements of an "employee stock
purchase plan" as defined in Section 423 of the Code. As such, the
participating employees recognized taxable income upon the purchase of
shares, and the Company is entitled to a tax deduction for income tax
purposes in connection with the purchases by participants of shares of
Stock under the Plan during the period of January 1, 2003 through December
31, 2003. In order to assist participating United States based employees
with the unforeseen tax liabilities associated with the Plan's 2003
disqualification, the Company provided such participants with payments
estimated to represent a portion of this liability.
3. GOVERNMENT INVESTIGATIONS AND SETTLEMENTS:
On June 3, 2004, we announced that we resolved the investigation by the
United States Attorney's Office for the Eastern District of New York
("Eastern District") relating to our past accounting practices by
entering into a non-prosecution agreement with the Eastern District. As a
result of this non-prosecution agreement, no criminal complaint will be
filed against us. In addition, on June 3, 2004, we announced an agreement
with the SEC to resolve allegations against us relating to our past
accounting practices that were under investigation by the SEC. Pursuant
to the agreements with the Eastern District and the SEC, the Company paid
a total of $37 million in cash to a restitution fund for members of the
class consisting of purchasers of our common stock from February 15, 2000
to October 17, 2002, and $3 million to the United States Postal
Inspection Service Consumer Fraud Fund. In addition to these payments,
the non-prosecution agreement included an acknowledgement by us that
between 1999 and 2002, as a result of the actions of
certain of our former employees, we (a) violated federal criminal law in
connection with accounting practices involving improper sales
transactions, unsupported and fictitious accounting entries and the
manipulation of our accounting reserves and expenses; and (b) filed and
caused to be filed materially false and misleading financial statements
and other documents with the SEC. As part of the non-prosecution
agreement, we agreed to continue our cooperation with the Eastern
District and the SEC, and to implement remedial measures, including, but
not limited to, retaining an independent, government-approved examiner to
review our internal controls, financial reporting practices and our
compliance with the settlement agreements and establishing and
maintaining an annual training and education program designed to diminish
the possibility of future violations of the federal securities laws. If
we violate the injunction issued in connection with the settlement with
the SEC, the agreement with the Eastern District or commit or attempt to
commit other violations, such as accounting offenses that were not the
subject of the investigations, we will be subject to federal criminal
charges. Pursuant to the non-prosecution agreement we have waived certain
defenses that may have otherwise been available to us in the event of a
federal criminal charge, including the statute of limitations, and will
be subject to prosecution for any offense, including any offense related
to our past accounting practices. In addition, in the event of a
violation of the agreement and a federal criminal charge, statements that
were made by or on behalf of us to the Eastern District, SEC and the
Postal Inspection Service, including the acknowledgments of
responsibility described above, will be deemed admissible in evidence and
certain evidentiary rules will not be available to us. Pursuant to the
agreement with the SEC, the SEC filed, and the court has approved, a
Final Consent Judgment in the Eastern District of New York providing for
injunctive relief, enjoining us from further violations of the antifraud,
reporting, books and records and internal control provisions of the
federal securities laws, and a civil penalty in the amount of $37 million
as described above. We paid both the $37 million and the $3 million to
the United States Postal Inspection Service Consumer Fraud Fund prior to
June 30, 2004.
On October 26, 2004, we issued a press release announcing our financial
results for the third quarter 2004. On November 8, 2004, we issued a
second press release revising certain of the previously reported numbers.
The revised numbers included a reduction of approximately $13.6 million
in revenue for the nine months ending September 30, 2004, as compared to
the results previously reported in the press release of October 26, 2004.
The November 8, 2004 press release stated that we had discovered certain
discrepancies in the amount of inventory at a distributor as well as
inventory on hand that affected our previously-announced results. On
November 15, 2004, we filed our Quarterly Report on Form 10-Q for the
third quarter of 2004.
The non-prosecution agreement between us and the United States Attorney's
Office for the Eastern District of New York, described previously,
provides that should we violate the agreement or commit a crime in the
future, we would be subject to prosecution for any offense, including any
offense related to our past accounting practices. We have retained
outside counsel to investigate the facts and circumstances surrounding
the erroneous numbers included in the October 26, 2004 press release. We
have been cooperating with the informal requests made by the Eastern
District and by the SEC regarding this matter, including whether we have
complied with the injunction issued in connection with the June 2004
settlement with the SEC and non-prosecution agreement with the Eastern
District. There can be no assurance that these events will not give rise
to an enforcement action or other proceeding, or to the imposition of
fines or other penalties, by the SEC or the Eastern District.
4. SUBSEQUENT EVENTS:
Plan participants' net accumulated payroll deductions for the Second Half
Payment Period ended December 31, 2005, amounted to $1,808,483 and have
been recorded as an amount receivable from the Company at December 31,
2005. Subsequent to December 31, 2005, $1,808,483 of these net accumulated
deductions as well as $319,144 of employer contributions were used to
purchase 212,338 shares of Stock which were issued to participants by the
Company in March 2006. The 212,338 shares of Stock purchased subsequent to
December 31, 2005 had a market value of $2,127,627 as of the option price
date which has been recorded as the liability "Payable for stock
purchases" at December 31, 2005.
On December 16, 2004, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 123 (revised 2004), Share-Based Payment
("Statement 123(R)"), which is a revision of FASB Statement No. 123,
Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB
Statement No. 95, Statement of Cash Flows. Based on the release of
Statement 123(R), the Company amended the Plan to conform with the
requirements necessary to render the Plan non-compensatory. Accordingly,
effective January 1, 2006, the Plan was amended as follows: the Payment
Periods were increased to four per year beginning January 1, April 1, July
1 and October 1 and ending March 31, June 30, September 30 and December
31, respectively (each, a "New Payment Period"); the maximum number of
shares of Stock a participant can purchase was decreased to 1,250 shares
per New Payment Period; the discount price of the shares purchased by
employees in the Plan decreased from its current discount of 15% to a
discount of 5%; and the look-back period currently utilized to determine
the price of the shares purchased was eliminated. These changes will allow
the Plan to continue to be non-compensatory to the Company in future
periods.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement (Form S-8
No. 333-26593) pertaining to the 1997 Employee Stock Purchase Plan of Symbol
Technologies, Inc. of our report dated March 27, 2006, with respect to the
financial statements of the Symbol Technologies, Inc. 1997 Employee Stock
Purchase Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 2005.
/s/ ERNST & YOUNG LLP
New York, New York
March 27, 2006
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No.
333-26593 on Form S-8 of our report dated March 25, 2004, appearing in this
Annual Report on Form 11-K of the Symbol Technologies, Inc. 1997 Employee Stock
Purchase Plan for the year ended December 31, 2005.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 27, 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Stock
Option and Restricted Stock Committee, the administrator of the Symbol
Technologies, Inc. 1997 Employee Stock Purchase Plan, has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
SYMBOL TECHNOLOGIES, INC.
1997 Employee Stock Purchase Plan
March 30, 2006
By: /s/ Mary S. McLeod
-----------------------------
Mary S. McLeod
Senior Vice President
Global Human Resources
SYMBOL TECHNOLOGIES, INC.