Symbol Technologies Reports $0.07 Earnings Per Share For Third-Quarter 2005

HOLTSVILLE, N.Y., Nov. 2 /PRNewswire-FirstCall/ -- Symbol Technologies, Inc. , The Enterprise Mobility Company, today announced revenue of $441.5 million and net income of $16.7 million or $0.07 earnings per share for the third quarter, ended September 30, 2005. The Company has improved its operating performance and achieved its previously announced $170 million operating expense target one quarter ahead of schedule. Symbol has set a new operating expense target of $160 million for the second quarter of 2006.

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"Our overall quarterly results showed significant improvement in earnings as compared with second-quarter 2005. Our restructuring program has successfully realized cost savings ahead of schedule, and has enabled Symbol to realign resources on technology innovation and expanding market coverage," said Sal Iannuzzi, Symbol chief financial officer and interim president and chief executive officer. "The momentum of these initiatives, coupled with customer wins in retail and non-retail markets and new product introductions, gives us confidence in our ability to achieve our goal of a double-digit operating margin by the second half of 2006."

Third-Quarter 2005 Highlights - Revenue was $441.5 million, compared with $429.2 million for third- quarter 2004, and $427.8 million for second-quarter 2005. Revenue includes $9.3 million associated with the conversion of certain resellers from cash-basis accounting to accrual-basis accounting following a review of customer accounts, and in accordance with standard accounting practices. - Product revenue was $371.4 million. Exclusive of the aforementioned $9.3 million, product revenue was $362.1 million versus $353.9 million in third-quarter 2004, and $355.7 million for second-quarter 2005. Service revenue was $70.1 million versus $75.3 million in third-quarter 2004, and $72.1 million for second-quarter 2005. - Gross profit margins of 45.1 percent include the treatment of cash-basis resellers, restructuring and impairment charges. Exclusive of these items, gross margins were 45.4 percent, compared with 42.7 percent in second-quarter 2005. The sequential increase in margins was attributable to cost savings associated with the Company's focus on improving operational efficiencies in manufacturing and service. - Operating expenses of $169.7 million include restructuring and impairment charges and a benefit of legal settlements totaling a net benefit of $0.5 million. Exclusive of such items, operating expenses were $170.2 million. The Company achieved its previously announced $170 million target one quarter ahead of schedule. - Normalized operating margins were 6.0 percent, compared with 1.8 percent in second-quarter 2005. - The ending cash balance as of September 30, 2005, was $155.8 million, compared with $136.2 million as of June 30, 2005, representing an increase of $19.6 million. The sequential increase in cash is primarily attributable to $41.5 million generated from operations, offset by $12 million in capital investments and $18.2 million in debt repayment. Nine-Month Summary

Revenue for the first nine months of 2005 was $1,326.7 million, compared with revenue of $1,281.6 million for the first nine months of 2004. Net income for the first nine months of 2005 was $8.3 million or $0.03 per share, versus net income of $53.4 million or $0.22 per share for the same period in 2004.

Fourth-Quarter 2005 Outlook

The Company expects fourth-quarter 2005 revenue and gross margin to be approximately flat compared with third-quarter 2005 revenue of $432 million and gross margin of 45.4 percent, excluding pre-tax restructuring and asset impairment charges and other items. Operating expenses are expected to be in the range of $168 - $170 million. Earnings per share in the fourth quarter of 2005 are expected to be in the range of $0.06-$0.08.

$160 Million Operating Expense Target by Second-Quarter 2006 - The Company's ongoing restructuring program has identified further cost saving opportunities of approximately $15 million, two-thirds of which are associated with general and administrative functions, and one-third of which are associated with manufacturing efficiencies. In addition to these savings, the Company intends to use the anticipated elimination of nearly all legal expenses associated with the defense of prior management to offset anticipated increases in employee compensation expenses. - The total quarterly savings as a result of the Company's ongoing restructuring program will now be approximately $30 million, and will be realized by the second quarter of 2006. This compares with the original quarterly savings expectation of approximately $15 million by the end of 2005. - The total cost of the restructuring program will be in the range of $75 to $95 million, as previously provided on June 28, 2005, approximately two-thirds of which will consist of cash charges and one-third of which will consist of non-cash charges. Teleconference Information:

Investors are invited to listen to Symbol's conference call discussing the Company's financial results for the third quarter of 2005. The conference call will be held at 5:30 p.m. (ET) Eastern Time today. To listen to the call, visit the Company's Web site at http://www.symbol.com/investor or dial 866-770- 7051 (domestic) and 617-213-8064 (international) at least 10 minutes prior to commencement of the call.

Web cast Information:

To listen to a live audio cast (listen only), access http://www.symbol.com/investor and click on the link next to the microphone icon.

Replay Information: An audio replay will be available on the Company's Web site on a 24-hour non-stop basis within two hours of the conclusion of the call. An audio replay of the teleconference will be available from 7:30 p.m. (ET) Wednesday, November 2, through midnight, November 30, by calling toll- free 888-286-8010 (domestic) and 617-801-6888 (international), and entering access code 27610926.

Non-GAAP Financial Measures

In addition to including results of operations data under accounting principles generally accepted in the United States of America (U.S. GAAP), Symbol Technologies disclosed adjusted results of operations data for the second and third quarters of 2005 and the third quarter of 2004, including the effects of the restructuring and certain other items, which the Securities and Exchange Commission defines as "non-GAAP financial measures." These non-GAAP financial measures should not be considered in isolation or as an alternative to results of operations data or any other measure of performance derived in accordance to U.S. GAAP. However, these non-GAAP financial measures are presented because Symbol believes they provide useful supplemental information for management and investors and allow them to perform meaningful comparisons for the Company's past and present results. For a reconciliation of these non-GAAP measures, see the table below with the heading "Non-GAAP Financial Measures."

About Symbol Technologies

Symbol Technologies, Inc., The Enterprise Mobility Company(TM), is a recognized worldwide leader in enterprise mobility, delivering products and solutions that capture, move and manage information in real time to and from the point of business activity. Symbol enterprise mobility solutions integrate advanced data capture products, radio frequency identification technology, mobile computing platforms, wireless infrastructure, mobility software and world-class services programs under the Symbol Enterprise Mobility Services brand. Symbol enterprise mobility products and solutions are proven to increase workforce productivity, reduce operating costs, drive operational efficiencies and realize competitive advantages for the world's leading companies. More information is available at http://www.symbol.com/.

This news release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include price and product competition, dependence on new product development, reliance on major customers, customer demand for our products and services, control of costs and expenses, international growth, general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. For a further list and description of such risks and uncertainties, see the reports filed by Symbol with the Securities and Exchange Commission. Symbol disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For Symbol Technologies: For media information: Patricia Hall Symbol Technologies, Inc. 631.738.5636 patricia.hall@symbol.com For financial information: Lori Chaitman Symbol Technologies, Inc. 631.738.5050 lori.chaitman@symbol.com Nancy Coco Symbol Technologies, Inc. 631.738.4104 nancy.coco@symbol.com Symbol Technologies, Inc. & Subsidiaries Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended * September 30, June 30, September 30, ($ Millions, except per share data) 2005 2005 2004 Product revenue $371.4 $355.7 $353.9 Services revenue 70.1 72.1 75.3 Net revenue 441.5 427.8 429.2 Cost of revenue 240.1 245.0 226.1 Restructuring & asset impairment 2.3 15.1 2.3 Total cost of revenue 242.4 260.1 228.4 Gross profit 199.1 167.6 200.7 Operating expenses: Engineering 38.8 39.6 42.6 S,G&A 131.5 135.5 125.1 IPR&D write off - - 12.8 Restructuring & asset impairment 4.9 27.7 4.0 Net recovery from legal settlements (5.5) (7.1) (12.4) Total operating expenses 169.7 195.7 172.1 Earnings / (loss) from operations 29.4 (28.0) 28.7 Other expense, net (12.2) (1.0) - Earnings / (loss) before taxes 17.3 (29.0) 28.7 Provision for income taxes 0.6 1.5 10.9 Net earnings / (loss) $16.7 $(30.5) $17.8 Earnings / (loss) per share $0.07 $(0.12) $0.07 Weighted average diluted shares outstanding (M) 250.4 249.6 241.4 PERCENTAGE OF REVENUE Net revenue 100.0% 100.0% 100.0% Cost of revenue 54.4% 57.3% 52.7% Restructuring & asset impairment 0.5% 3.5% 0.5% Total cost of revenue 54.9% 60.8% 53.2% Gross profit 45.1% 39.2% 46.8% Operating expenses: Engineering 8.8% 9.3% 9.9% S,G&A 29.8% 31.7% 29.2% IPR&D write off - - 3.0% Restructuring & asset impairment 1.1% 6.5% 0.9% Net recovery from legal settlements (1.2)% (1.7)% (2.9)% Total operating expenses 38.4% 45.7% 40.1% Earnings / (loss) from operations 6.7% (6.6)% 6.7% Other expense, net (2.8)% (0.2)% - Earnings / (loss) before taxes 3.9% (6.8)% 6.7% Provision for income taxes 0.1% 0.3% 2.5% Net earnings / (loss) 3.8% (7.1)% 4.1% * Certain numbers may differ slightly due to rounding Symbol Technologies, Inc. & Subsidiaries Condensed Consolidated Statement of Operations (Unaudited) Nine Months Ended * ($ Millions, except per share data) September 30, September 30, 2005 2004 Product revenue $1,111.3 $1,058.7 Services revenue 215.4 222.9 Net revenue 1,326.7 1,281.6 Cost of revenue 736.3 685.4 Restructuring & asset impairment 18.1 4.9 Total cost of revenue 754.4 690.3 Gross profit 572.3 591.3 Operating expenses: Engineering 120.7 126.4 S,G&A 406.0 367.3 IPR&D write off - 12.8 Restructuring & asset impairment 32.5 4.5 Net recovery from legal settlements (12.6) (21.4) Total operating expenses 546.6 489.5 Earnings from operations 25.7 101.8 Other expense, net (19.7) (6.9) Earnings before taxes 6.0 94.9 (Benefit from) provision for income taxes (2.3) 41.5 Net earnings $8.3 $53.4 Earnings per share $0.03 $0.22 Weighted average diluted shares outstanding (M) 251.2 239.5 PERCENTAGE OF REVENUE Net revenue 100.0% 100.0% Cost of revenue 55.5% 53.5% Restructuring & asset impairment 1.4% 0.4% Total cost of revenue 56.9% 53.9% Gross profit 43.1% 46.1% Operating expenses: Engineering 9.1% 9.9% S,G&A 30.6% 28.7% IPR&D write off - 1.0% Restructuring & asset impairment 2.4% 0.3% Net recovery from legal settlements (0.9)% (1.7)% Total operating expenses 41.2% 38.2% Earnings from operations 1.9% 7.9% Other expense, net (1.5)% (0.5)% Earnings before taxes 0.5% 7.4% (Benefit from) provision for income taxes (0.2)% 3.2% Net earnings 0.6% 4.2% * Certain numbers may differ slightly due to rounding Symbol Technologies, Inc. & Subsidiaries Condensed Consolidated Statement of Operations (Unaudited) Non-GAAP Financial Measures Three Months Ended * Three Months Ended * September 30, 2005 September 30, 2004 Excluding Excluding Restruc Restruc Restruc Restruc turing turing & turing turing & ($ Millions, except per As & Other Other As & Other Other share data) Reported Items Items Reported Items Items Product revenue $371.4 $(9.3)(a) $362.1 $353.9 $- $353.9 Services revenue 70.1 - 70.1 75.3 - 75.3 Net revenue 441.5 (9.3) 432.2 429.2 - 429.2 Cost of revenue 240.1 (4.3)(a) 235.8 226.1 226.1 Restructuring & asset impairment 2.3 (2.3) - 2.3 (2.3) - Total cost of revenue 242.4 (6.6) 235.8 228.4 (2.3) 226.1 Gross profit 199.1 (2.8) 196.4 200.7 2.3 203.0 Operating expenses: Engineering 38.8 - 38.8 42.6 - 42.6 S,G&A 131.5 - 131.5 125.1 - 125.1 IPR&D write off - - - 12.8 (12.8)(d) - Restructuring & asset impairment 4.9 (4.9) - 4.0 (4.0) - Net recovery from legal settlements (5.5) 5.5(b) - (12.4) 12.4(e) - Total operating expenses 169.7 0.6 170.2 172.1 (4.4) 167.7 Earnings from operations 29.4 (3.3) 26.1 28.7 6.7 35.3 Other expense, net (12.2) 10.6 (c) (1.5) - - - Earnings before taxes 17.3 7.3 24.6 28.7 6.7 35.3 Provision for income taxes 0.6 6.9 7.5 10.9 (2.2) 8.7 Net earnings $16.7 $0.4 $17.1 $17.8 $8.9 $26.7 Earnings / (loss) per share $0.07 $0.00 $0.07 $0.07 $0.04 $0.11 Weighted average diluted shares outstanding (M) 250.4 250.4 250.4 241.4 241.4 241.4 PERCENTAGE OF REVENUE Net revenue 100.0% 100.0% 100.0% 100.0% Cost of revenue 54.4% 54.6% 52.7% 52.7% Restructuring & asset impairment 0.5% - 0.5% - Total cost of revenue 54.9% 54.6% 53.2% 52.7% Gross profit 45.1% 45.4% 46.8% 47.3% Operating expenses: Engineering 8.8% 9.0% 9.9% 9.9% S,G&A 29.8% 30.4% 29.2% 29.2% IPR&D write off - - 3.0% - Restructuring & asset impairment 1.1% - 0.9% - Net recovery from legal settlements (1.2)% - (2.9)% - Total operating expenses 38.4% 39.4% 40.1% 39.1% Earnings from operations 6.7% 6.0% 6.7% 8.2% Other expense, net (2.8)% (0.4)% - - Earnings before taxes 3.9% 5.7% 6.7% 8.2% Provision for income taxes 0.1% 1.7% 2.5% 2.0% Net earnings 3.8% 4.0% 4.1% 6.2% * Certain numbers may differ slightly due to rounding Notes: (a) Impact for converting certain resellers from cash-basis accounting to accrual-basis accounting. (b) Net recovery from PwC of $14.7M offset by adjustment to class action settlement shares of $9.2M. (c) Cisco SAILS termination. (d) Write off of In-Process Research and Development related to the Matrics acquisition. (e) Reimbursements associated with the class action settlement. Symbol Technologies, Inc. & Subsidiaries Condensed Consolidated Statement of Operations (Unaudited) Non-GAAP Financial Measures Three Months Ended * June 30, 2005 Excluding Restruc Restruc turing turing & ($ Millions, except per share data) As & Other Other Reported Items(a) Items Product revenue $355.7 $- $355.7 Services revenue 72.1 - 72.1 Net revenue 427.8 - 427.8 Cost of revenue 260.1 (15.1)(a) 245.0 Gross profit 167.6 15.1 182.8 Operating expenses: Engineering 39.6 - 39.6 S,G&A 135.5 - 135.5 Restructuring & asset impairment 27.7 (27.7) - Recovery from legal settlements (7.1) 7.1 - Total operating expenses 195.7 (20.6) 175.1 (Loss) / earnings from operations (28.0) 35.7 7.7 Other expense, net (1.0) - (1.0) (Loss) / earnings before taxes (29.0) 35.7 6.7 Provision for income taxes 1.5 0.6 2.1 Net (loss) / earnings $(30.5) $35.1 $4.6 (Loss) / earnings per share $(0.12) $0.14 $0.02 Weighted average diluted shares outstanding (M) 249.6 249.6 249.6 PERCENTAGE OF REVENUE Net revenue 100.0% 100.0% Cost of revenue 60.8% 57.3% Gross profit 39.2% 42.7% Operating expenses: Engineering 9.3% 9.3% S,G&A 31.7% 31.7% Restructuring & asset impairment 6.5% - Recovery from legal settlements (1.7)% - Total operating expenses 45.7% 40.9% (Loss) / earnings from operations (6.6)% 1.8% Other expense, net (0.2)% (0.2)% (Loss) / earnings before taxes (6.8)% 1.6% Provision for income taxes 0.3% 0.5% Net (loss) / earnings (7.1)% 1.1% * Certain numbers may differ slightly due to rounding (a) Excluding the $15.1M restructuring charge to COS, inventory turns would be 5.7 versus 6.0 (as reported). Symbol Technologies, Inc. & Subsidiaries Condensed Consolidated Balance Sheet Trend Balance Sheet at * September 30, June 30, December 31, ($ Millions) 2005(b) 2005(b) 2004 ASSETS Cash and cash equivalents $155.8 $136.2 $217.6 Accounts receivable, net (a) 190.7 192.4 164.2 Inventories, net 166.0 172.8 207.3 Deferred income taxes 126.5 136.8 179.8 Other current assets 27.8 108.8 24.3 Total current assets 666.9 747.0 793.3 Property, plant & equipment, net 246.7 250.1 241.5 Intangible and other assets, net 892.4 873.0 946.1 Total assets $1,805.9 $1,870.1 $1,980.9 LIABILITIES & STOCKHOLDERS' EQUITY Accounts payable & accrued expenses(a) $362.4 $455.5 $475.4 Current portion of debt 72.9 159.8 118.1 Income taxes payable 8.2 8.6 20.1 Deferred revenue 55.4 49.9 43.7 Total current liabilities 499.0 673.7 657.3 Debt, less current maturities 55.6 66.7 176.1 Other liabilities and deferred revenue 70.0 63.6 75.0 Total stockholders' equity 1,181.3 1,066.1 1,072.5 Total liabilities and stockholders' equity $1,805.9 $1,870.1 $1,980.9 Financial ratios: September 30, June 30, December 31, 2005(b) 2005(b) 2004 Days sales outstanding 39 41 33 Inventory turnover 5.8 6.0 4.5 Working capital % of revenue 9.5% 4.3% 7.5% Return on assets 3.6% (6.4)% 5.9% Return on equity 5.9% (11.3)% 10.9% * Certain numbers may differ slightly due to rounding Notes: (a) Certain reclassifications were made to previously disclosed amounts to conform to current presentations. The balance sheet above includes a reclassification to reflect net credit customer account receivable balances as a component of accounts payable and accrued expenses and not as a reduction of accounts receivable as was reflected in previous filings. (b) Unaudited. Symbol Technologies, Inc. & Subsidiaries Condensed Consolidated Cash Flow Trend (Unaudited) Three Months Ended * September 30, June 30, September 30, ($ Millions) 2005 2005 2004 Cash Flows from Operating Activities Net earnings / (loss) $16.7 $(30.5) $17.8 Depreciation & amortization 17.1 18.4 17.5 Other, net 9.6 17.9 60.6 Changes in Assets & Liabilities Accounts receivable - (22.3) 8.7 Inventories 4.3 (3.8) (12.1) Accounts payable & accrued expenses (4.7) (30.8) 4.6 Other, net (1.5) 23.6 4.8 Net Cash provided by / (used in) Operating Activities 41.5 (27.6) 102.0 Cash Flows from Investing Activities Expenditures for PP&E (12.0) (27.0) (30.2) Other, net (1.4) (2.5) (235.8) Net Cash used in Investing Activities (13.4) (29.5) (266.0) Cash Flows from Financing Activities Net changes in debt (18.2) (17.9) 243.3 Other, net 9.9 (7.1) 8.6 Net Cash (used in) / provided by Financing Activities (inc. FX) (8.4) (25.0) 251.8 Net Change in Cash 19.7 (82.1) 87.8 Beginning Cash Balance 136.2 218.2 143.7 Ending Cash Balance $155.8 $136.2 $231.5 * Certain numbers may differ slightly due to rounding