| These statements include, without limitation, those relating to anticipated product plans, litigation matters, currency effects, profitability, and other commitments or goals |
| Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made |
| These risks and uncertainties include, but are not limited to, the following: If our customers do not continue to accept and demand bar code scanner technologies, the number of our customers and revenues would substantially decrease |
| Because our core business focuses on bar code scanner technologies, our success depends on the continued acceptance of and demand for bar code systems |
| Demand for our products could decline if businesses and organizations adopt alternative technologies, such as radio frequency identification, or RFID, or otherwise reduce their use of bar code scanners |
| The acceptance of and the demand for bar code scanner technologies may not continue or grow and if the market fails to develop as we anticipate, our business, financial condition and results of operations could suffer |
| Prolonged economic weakness in the information technology market may decrease our revenues and margins |
| The market for our products and services depends on economic conditions affecting the broader information technology market |
| Prolonged weakness in this market has caused in the past, and may cause in the future, customers to reduce their overall information technology budgets or reduce or cancel orders for our products |
| In this environment, our customers may experience financial difficulty, cease operations and fail to budget or reduce budgets for the purchase of our products and services |
| This, in turn, may lead to longer sales cycles, delays in purchase decisions, payment and collection, and may also result in downward price pressures, causing us to realize lower revenues and operating margins |
| In addition, general economic uncertainty and general declines in capital spending in the information technology sector make it difficult to predict changes in the purchasing requirements of our customers and the markets we serve |
| We believe that, in light of these events, some businesses have and may continue to curtail or suspend capital spending on information technology |
| These factors may cause our revenues and operating margins to decline |
| Our products are subject to government regulations and noncompliance with those regulations could have a material adverse effect on our results of operations and financial condition |
| Our products are subject to regulations by federal, state and local agencies in the United States and agencies in certain foreign countries where our products are manufactured or sold |
| There can be no assurance of continued compliance if these regulations were to change |
| Regulatory changes may require us to make modifications to certain of those products in order for us to continue to be able to manufacture and market our products |
| Noncompliance with respect to these regulations, or delays resulting from modifications in order to come into compliance, could have a material adverse effect on our results of operations and financial condition |
| Our research and development efforts may not be successful, which could negatively affect our business, results of operations and financial condition |
| Our customers demand innovative solutions and we must therefore be very active in the research and development of new products and technologies |
| Our research and development efforts require us to spend significant funds and may not lead to the successful introduction of new or improved products |
| We may encounter delays or problems in connection with our research and development efforts |
| New products often take longer to develop, have fewer features than originally considered desirable and may have higher costs than initially estimated |
| There may be delays in starting volume production of new products and new products may not be commercially successful |
| Products under development are often announced before introduction and these announcements may cause customers to delay purchases of existing products until the new or improved versions of those products are available |
| Delays or deficiencies in development, manufacturing, delivery of or demand for new products or higher costs could have a material adverse effect on our business, results of operations and financial condition |
| If we are unable to compete successfully against our current or future competitors, we could lose many of our customers and our revenues would decrease |
| We face significant competition in developing and selling our products |
| Some of our competitors have substantially greater marketing, financial, development and personnel resources than we do |
| Increased competition from manufacturers of products may result in price reductions, lower gross margins and loss of customer support |
| If any technology that competes with ours becomes more reliable, better performing, less expensive or has other advantages over our technology, then the demand for our products could decrease, which could have a material adverse effect on our financial condition and results of operations |
| If we cannot offset the decrease in the average selling prices of our products, our financial condition could be adversely affected |
| The average selling price of our products usually decreases over the life of the product |
| To lessen the effect of price decreases, we attempt to reduce manufacturing costs of existing products and to introduce new products, functions and other price/performance-enhancing features |
| If cost reductions, product enhancements and new product introductions do not occur in a timely manner or are not accepted in the marketplace, our results of operations and financial condition could be negatively affected |
| Our inability to adequately protect our intellectual property would have a material adverse effect on our results of operations and financial condition |
| Our success and ability to compete is dependent, in part, upon our ability to maintain the proprietary nature of our technologies |
| We rely on a combination of patent, trade secret, copyright and trademark law and nondisclosure agreements to protect our intellectual property |
| Patent protection and other methods on which we rely to protect our technology, trade secrets, proprietary information and rights may not be adequate to protect us |
| We have in the past and may in the future need to assert claims of infringement against third parties to protect our intellectual property |
| Litigation to defend and enforce our intellectual property rights could result in substantial costs and diversion of resources and could have a material adverse effect on our financial condition and results of operations regardless of the final outcome of such litigation |
| Despite our efforts to safeguard our intellectual property, we may not be successful in doing so or the steps taken by us in this regard may not be effective to deter misappropriation of our technology or prevent an unauthorized third party from copying or otherwise obtaining and using our products, technology or other information that we regard as proprietary |
| In addition, others may independently develop similar technologies or duplicate our technology |
| We may also be subject to additional risks as we enter into transactions in countries where intellectual property laws are not well developed or are poorly enforced |
| Legal protection of our rights may be ineffective in such countries, and technology developed in such countries may not be protected in jurisdictions where protection is ordinarily available |
| We may become subject to claims of infringement or misappropriation of the intellectual property or the proprietary rights of others, which could increase our costs and subject us to monetary damages |
| Third parties have in the past and could in the future, assert infringement or misappropriation claims against us with respect to current or future products |
| Although we perform investigations of the intellectual property rights of third parties, we cannot be certain that we have not infringed the proprietary rights of others |
| Any such infringement could cause third parties to bring claims against us, resulting in significant costs, possible damages and substantial uncertainty |
| We could also be forced to develop non-infringing alternatives, which could be costly and time-consuming |
| Our sales outside of North America, which in 2005 accounted for approximately 57prca of our net revenue, expose us to currency exchange fluctuations and other risks, which could adversely affect our results of operations and financial condition |
| A significant portion of our sales has been to customers located outside of North America |
| In 2005, sales outside of North America accounted for approximately 57prca of our net revenue |
| Most of our product sales in Europe and Asia are billed in foreign currencies and are subject to currency exchange fluctuations |
| In particular, we are subject to risk from fluctuations in the value the US dollar relative to the euro, the Brazilian real, the Singapore dollar, and the Chinese renminbi |
| Because most of our expenses are incurred in the United States, sales and results of operations could be affected by fluctuations in the US dollar |
| Changes in the value of the US dollar compared to foreign currencies have in the past had an impact on our sales and margins |
| We operate a significant portion of our business in, and plan to expand further into, markets outside the United States, which subjects us to additional business and regulatory risks |
| We expect that a significant portion of our revenues will continue to be derived from sales in foreign countries |
| Conducting business internationally subjects us to a number of risks and uncertainties including: o devaluation in foreign currencies, particularly the Chinese renminbi; o unexpected delays or changes in regulatory requirements; o delays and expenses associated with tariffs and other trade barriers; o restrictions on and impediments to repatriation of our funds and our customers &apos ability to make payments to us; o political and economic instability; o difficulties and costs associated with staffing and managing international operations and implementing, maintaining and improving financial controls; o uncertainty in shipping and receiving products and product components; o increased difficulty in collecting accounts receivable and longer accounts receivable cycles in certain foreign countries; and o adverse tax consequences or overlapping tax structures |
| If our manufacturing capability is interrupted, we could lose customers and our sales would decline |
| Many of our products are manufactured in our facility in Suzhou, China |
| We anticipate that an increased percentage of our products and subassemblies will be manufactured at our China facility |
| We may experience delays and difficulties as we increase manufacturing of certain products in our China facility |
| Additionally, our manufacturing operations in China may be adversely affected by transportation delays and interruptions, political and economic disturbances and the outbreak of health-related problems |
| In addition, both of our manufacturing facilities are subject to risks associated with fire and other natural disasters, which could interrupt our manufacturing operations |
| Any delay or interruption in our manufacturing operations could have a material adverse effect on our results of operations and financial condition |
| We rely on third parties to sell many of our products, and if there is a shortfall in demand from these distribution sources, our results of operations could be negatively affected |
| We sell a majority of our products through distributors, VARs and OEMs |
| Reliance upon third-party distribution sources subjects us to risks of business failure by these individual distributors, VARs and OEMs, as well as credit, inventory and business concentration risks |
| If there is a lessening in demand from third-party distribution sources, our results of operations may be negatively affected |
| If our suppliers do not perform adequately or are replaced, we could experience delays in manufacturing and shipping our products, which could have a material adverse effect on our operations |
| We currently use single source suppliers for certain key components used in our products |
| If we experience quality problems with these vendors or if it becomes necessary to replace these vendors, we could experience delays in manufacturing and shipping our products, which could have a material adverse effect on our results of operations |
| The complex design of our products could result in manufacturing delays and other problems that cause us to fail to meet the demand for our products on a timely basis, increase the cost of our products, or both |
| We may, in the future, experience manufacturing problems with some of our products that could lead to production delays that could cause our distribution network to choose to sell competing products |
| If we experience problems in increasing the production of new products from pilot production to volume production, or in transferring the manufacture of existing products from our facility in Blackwood, New Jersey to our facility in Suzhou, China, such problems could result in production delays that may have a material adverse effect on our results of operations |
| In addition, manufacturing problems could result in higher material, labor and other costs, which could increase the total cost of our products and could decrease our profit margins and, thus, have a material adverse effect on our results of operations |
| Our products may have manufacturing or design defects that we discover after shipment, which could negatively affect our revenues, increase our costs and harm our reputation |
| Our products are complex and may contain undetected and unexpected defects, errors or failures |
| If these product defects are substantial, the result could be product recalls, an increased amount of product returns, loss of market acceptance and damage to our reputation, all of which could increase our costs, cause us to lose sales and have a material adverse effect on our results of operations |
| Additionally, most of our products are warranted for a period of three to five years |
| Accordingly, in the event of product defects or malfunctions we may be required to send our representative to customers &apos locations to repair the products at our expense |
| While we carry general commercial liability insurance, including product liability, with a coverage limit of dlra1 million per occurrence plus an umbrella policy with a dlra20 million limit and maintain warranty claim reserves on our balance sheet, our insurance and our warranty reserves may be insufficient to cover losses caused by our products, and, therefore, if we were required to cover losses caused by our products it could have a material adverse effect on our financial condition |
| In addition, while historically we have not been materially affected by product recalls, there is no assurance that we will not experience such product recalls in the future |
| Inability to attract, develop or retain quality employees could adversely impact our ability to achieve our objectives |
| We have objectives in our businesses and regions to sustain and grow the company |
| Continued success in achieving these objectives depends on the recruitment, development and retention of qualified employees |
| Without these employees, we may not be able to achieve these objectives |
| Approximately 44prca of our issued and outstanding common stock as of December 31, 2005 was controlled by our Chairman of the Board, who has significant influence over the ability to determine the outcome of all corporate actions requiring shareholder approval |
| C Harry Knowles, our Chairman of the Board of Directors and his spouse, Janet H Knowles our Vice President, Administration, Treasurer and Director beneficially own approximately 44prca of our outstanding common stock as of December 31, 2005 |
| Accordingly, Mr |
| Knowles currently have, and will continue to have, a significant influence over the ability to determine the outcome of all corporate actions requiring shareholder approval, including the election of the entire Board of Directors |
| There are no provisions for cumulative voting by shareholders and, accordingly, holders of a majority of the outstanding shares can elect all of our directors |