**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





**ý**
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE****SECURITIES
                EXCHANGE ACT OF 1934****For
                the quarterly period ended April 1, 2007****OR****o**
            
            **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: 001-13279**





**INTERMEC,
      INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **95-4647021**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)**6001
                36****th****Avenue West, Everett, WA**
            
            **98203-1264**(Address
                of principal executive offices)
            
            (Zip
                Code)





**(425)
      265-2400**


(Registrant’s
      telephone number, including area code)





**[None]**


(Former
      name, former address and former fiscal year, if changed since last
      report)





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.


Yesý
            Noo





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


Large
                accelerated filerý
            
            Accelerated
                filero
            
            Non-accelerated
                filero





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yeso
            Noý





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.





**Class**
            
            **Outstanding
                at April 27, 2007**Common
                Stock, $0.01 par value per share
            
            60,594,132
                shares

































**INTERMEC,
      INC.**


TABLE
      OF
      CONTENTS


**REPORT
      ON FORM 10-Q**


**FOR
      THE QUARTER ENDED APRIL 1, 2007**





**Page**
              **Number****PART
                I. FINANCIAL INFORMATION****ITEM
                1.**
            Financial
                StatementsConsolidated
                Statements of Operations
                (unaudited)
              Quarters
                Ended April 1, 2007, and April
                2, 2006
            
            2Consolidated
                Balance Sheets
                (unaudited)
              April
                1, 2007, and December 31,
                2006
            
            3Consolidated
                Statements of Cash Flows
                (unaudited)
              Quarters
                Ended April 1, 2007, and April 2,
                2006
            
            4Notes
                to Consolidated Financial Statements
                (unaudited)
            
            5 -
                10**ITEM
                2.**
            Management’s
                Discussion and Analysis of Financial Condition
                and Results of Operations
            
            11 -
                15**ITEM
                3.**
            Quantitative
                and Qualitative Disclosures about Market
                Risk
            
            15**ITEM
                4.**
            Controls
                and Procedures
            
            15**PART
                II. OTHER INFORMATION****ITEM
                1.**
            Legal
                Proceedings
            
            16**ITEM
                1A.**
            Risk
                Factors
            
            16**ITEM
                2.**
            Unregistered
                Sales of Equity Securities and Use
                of Proceeds
            
            16**ITEM
                6.**
            Exhibits
            
            17Signature
































**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**








**INTERMEC,
      INC.**


**CONSOLIDATED
      STATEMENTS OF
      OPERATIONS**


**(thousands
      of dollars, except per share amounts)**


**(unaudited)**





**Quarter
                Ended**April
                1, 2007
            
            April
                2, 2006Revenues:Product
            
            $
            141,512
            
            $
            166,350Service
            
            
            37,806
            
            
            37,481Total
                revenues
            
            
            179,318
            
            
            203,831Costs
                and expenses:Cost
                of product revenues
            
            
            92,194
            
            
            100,614Cost
                of service revenues
            
            
            22,583
            
            
            22,861Selling,
                general and administrative
            
            
            69,561
            
            
            77,793Gain
                on intellectual property settlement
            
            
            -
            
            
            (16,538
            )Restructuring
                charge
            
            
            -
            
            
            1,107Total
                costs and expenses
            
            
            184,338
            
            
            185,837Operating
                profit (loss) from continuing operations
            
            
            (5,020
            )
            
            17,994Interest
                income
            
            
            2,553
            
            
            3,360Interest
                expense
            
            
            (2,295
            )
            
            (2,216
            )Earnings
                (loss) from continuing operations before income taxes
            
            
            (4,762
            )
            
            19,138Provision
                (benefit) for income taxes
            
            
            (330
            )
            
            4,069Earnings
                (loss) before discontinued operations
            
            
            (4,432
            )
            
            15,069Loss
                from discontinued operations, net of tax
            
            
            -
            
            
            (1,078
            )Net
                earnings (loss)
            
            $
            (4,432
            )
            $
            13,991Basic
                earnings (loss) per shareContinuing
                operations
            
            $
            (0.07
            )
            $
            0.24Discontinued
                operations
            
            
            -
            
            
            (0.02
            )Net
                earnings (loss) per share
            
            $
            (0.07
            )
            $
            0.22Diluted
                earnings (loss) per shareContinuing
                operations
            
            $
            (0.07
            )
            $
            0.23Discontinued
                operations
            
            
            -
            
            
            (0.01
            )Net
                earnings (loss) per share
            
            $
            (0.07
            )
            $
            0.22Shares
                used in computing basic earnings (loss) per share
            
            
            59,990
            
            
            63,025Shares
                used in computing diluted earnings (loss) per share
            
            
            59,990
            
            
            64,603























See
      accompanying notes to consolidated financial statements.








2








**INTERMEC,
      INC.**


**CONSOLIDATED
      BALANCE SHEETS**


**(amounts
      in thousands of dollars)**


**(unaudited)**





**April
                1, 2007**
            
            **December
                31, 2006****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            143,961
            
            $
            155,027Short-term
                investments
            
            
            29,268
            
            
            29,510Accounts
                receivable, net of allowance for doubtful accountsand
                sales returns of $7,158 and $7,796
            
            
            149,537
            
            
            158,369Inventories
            
            
            132,442
            
            
            119,027Net
                current deferred tax assets
            
            
            49,875
            
            
            49,623Assets
                held for sale
            
            
            8,598
            
            
            8,661Other
                current assets
            
            
            27,582
            
            
            28,913Total
                current assets
            
            
            541,263
            
            
            549,130Property,
                plant and equipment, net
            
            
            43,501
            
            
            43,453Intangibles,
                net
            
            
            4,413
            
            
            3,978Net
                deferred tax assets
            
            
            178,354
            
            
            190,683Other
                assets
            
            
            23,977
            
            
            23,096Total
                assets
            
            $
            791,508
            
            $
            810,340**LIABILITIES
                AND SHAREHOLDERS' INVESTMENT**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            112,847
            
            $
            113,207Payroll
                and related expenses
            
            
            22,522
            
            
            32,008Deferred
                revenue
            
            
            50,491
            
            
            45,021Current
                debt
            
            
            100,000
            
            
            -Total
                current liabilities
            
            
            285,860
            
            
            190,236Long-term
                deferred revenue
            
            
            16,290
            
            
            17,318Long-term
                debt
            
            
            -
            
            
            100,000Other
                long-term liabilities
            
            
            77,855
            
            
            85,184Shareholders'
                investment:Common
                stock
            
            
            601
            
            
            598Additional
                paid-in-capital
            
            
            661,701
            
            
            657,468Accumulated
                deficit
            
            
            (224,279
            )
            
            (212,903
            )Accumulated
                other comprehensive loss
            
            
            (26,520
            )
            
            (27,561
            )Total
                shareholders' investment
            
            
            411,503
            
            
            417,602Total
                liabilities and shareholders' investment
            
            $
            791,508
            
            $
            810,340
















See
      accompanying notes to consolidated financial statements.





3














**INTERMEC,
      INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(thousands
      of dollars)**


(unaudited)





**Quarter
                Ended****April
                1,**
            
            **April
                2,****2007**
            
            **2006**Cash
                and cash equivalents at beginning of year
            
            $
            155,027
            
            $
            256,782Cash
                flows from operating activities of continuing operations:Net
                earnings (loss) from continuing operations
            
            
            (4,432
            )
            
            15,069Adjustments
                to reconcile net earnings (loss) to net cash provided by operating
                activitiesof
                continuing operations:Depreciation
                and amortization
            
            
            3,093
            
            
            2,588Change
                in prepaid pension costs, net
            
            
            (990
            )
            
            3,868Deferred
                taxes
            
            
            210
            
            
            2,792Stock-based
                compensation and other
            
            
            1,654
            
            
            2,894Excess
                tax benefits from stock-based payment arrangements
            
            
            (649
            )
            
            (2,183
            )Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            9,057
            
            
            24,825Inventories
            
            
            (13,415
            )
            
            (6,794
            )Other
                current assets
            
            
            151
            
            
            5,655Accounts
                payable and accrued expenses
            
            
            450
            
            
            (6,178
            )Payroll
                and related expenses
            
            
            (9,486
            )
            
            (4,596
            )Other
                long-term liabilities
            
            
            3,753
            
            
            4,771Other
                operating activities
            
            
            (526
            )
            
            1,659Net
                cash provided by (used in) operating activities of continuing
                operations
            
            
            (11,130
            )
            
            44,370Cash
                flows from investing activities of continuing operations:Capital
                expenditures
            
            
            (2,160
            )
            
            (4,268
            )Purchases
                of investments
            
            
            (595
            )
            
            (19,695
            )Sale
                of investments
            
            
            837
            
            
            -Patent
                legal fees
            
            
            (535
            )
            
            -Other
                investing activities
            
            
            (42
            )
            
            73Net
                cash used in investing activities of continuing operations
            
            
            (2,495
            )
            
            (23,890
            )Cash
                flows from financing activities of continuing operations:Excess
                tax benefits from stock-based payment arrangements
            
            
            649
            
            
            2,183Stock
                options exercised
            
            
            1,389
            
            
            3,113Other
                financing activities
            
            
            521
            
            
            881Net
                cash provided by financing activities of continuing
                operations
            
            
            2,559
            
            
            6,177Net
                cash provided by (used in) continuing operations
            
            
            (11,066
            )
            
            26,657Net
                cash used in investing activities of discontinued
                operations
            
            
            -
            
            
            (651
            )Resulting
                increase (decrease) in cash and cash equivalents
            
            
            (11,066
            )
            
            26,006Cash
                and cash equivalents at end of period
            
            $
            143,961
            
            $
            282,788




**Supplemental
                  Information**Effect
                  of exchange rates on cash and cash equivalents
              
              $
              (401
              )
              $
              (876
              )





See
      accompanying notes to consolidated financial statements.





4








**INTERMEC,
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (unaudited)**





**1.**  **Basis
      of Presentation**





Our
      interim financial periods are based on a thirteen-week internal accounting
      calendar. In our opinion, the accompanying balance sheets, interim statements
      of
      operations and statements of cash flows include all adjustments, consisting
      only
      of normal recurring items, necessary for their fair presentation in conformity
      with accounting principles generally accepted in the United States of America
      (“U.S. GAAP”). The financial statements include the accounts of Intermec and our
      subsidiaries. Intercompany transactions and balances have been eliminated.
      Equity investments in which we exercise significant influence but do not
      exercise control and are not the primary beneficiary are accounted for using
      the
      equity method. Investments in which we are not able to exercise significant
      influence over the investee are accounted for under the cost method. Preparing
      our financial statements requires us to make estimates and assumptions that
      affect the reported amounts of assets, liabilities, revenue, expenses, and
      financial data included in the accompanying notes to the financial statements.
      Actual results and outcomes may differ from our estimates and
      assumptions.





Interim
      results are not necessarily indicative of results for a full year. The
      information included in this Form 10-Q should be read in conjunction with
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations and the Consolidated Financial Statements and notes thereto included
      in our 2006 Form 10-K.




**Reclassification**




Prior
      to
      the fourth quarter of 2006, we recognized certain amounts arising from IP
      settlements as revenue and direct costs related to the settlements as cost
      of
      revenue. We have determined that these IP settlements should more appropriately
      be recorded as “Gains on intellectual property settlement” in operations rather
      than as revenue and cost of revenue and accordingly have reclassified $23.0
      million previously recorded as IP settlement revenue and $6.5 million of IP
      settlement cost as a net Gain on intellectual property settlement of $16.5
      million within the Consolidated Statement of Operations for the quarter ended
      April 2, 2006.





**Accounting
      Changes**





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48 “Accounting for Uncertainty in Income Taxes - an
      interpretation of FASB Statement 109” (“FIN 48”). FIN 48 establishes a single
      model to address accounting for uncertain tax positions. FIN 48 clarifies the
      accounting for income taxes by prescribing a minimum recognition threshold
      a tax
      position is required to meet before being recognized in the financial
      statements. FIN 48 also provides guidance on derecognition, measurement,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition.





Upon
      adoption of FIN 48, as of January 1, 2007, we recognized a charge of
      approximately $6.9 million to accumulated deficit in shareholders’ investment.
      As of January 1, 2007, we had $21.3 million of unrecognized tax benefits, and
      if
      recognized, these amounts would be recorded as a component of income tax
      benefit. There have been no significant changes to these amounts during the
      quarter ended April 1, 2007.





We
      file
      our tax returns as prescribed by the tax laws of the jurisdictions in which
      we
      operate. In the United States, our tax years 1997 - 2006 remain open to
      examination by the Internal Revenue Service, as well as various state
      jurisdictions. In the normal course of business, we are subject to examination
      by taxing authorities throughout the world, including such major jurisdictions
      as Canada, France, Germany, Italy, Mexico, the Netherlands, Spain, Sweden and
      the United Kingdom. In many cases, our uncertain tax positions are related
      to
      tax years that remain subject to examination by the relevant taxing
      authorities.





Based
      on
      the outcome of relevant examinations, or as a result of the expiration of
      statute of limitations for specific jurisdictions, it is not reasonably possible
      that the related unrecognized tax benefits for tax positions taken regarding
      previously filed tax returns will materially change within the next twelve
      months from those recorded as liabilities for uncertain tax positions in our
      financial statements at January 1, 2007.




5
 **INTERMEC,
            INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**
 (continued)






Estimated
      interest and penalties related to the underpayment of income taxes are
      classified as a component of Tax Expense in the Consolidated Statement of
      Operations and accrued interest and penalties were $0.2 million as of January
      1,
      2007 and April 1, 2007.




In
      May 2007, the FASB issued Staff Position No.
      FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48," which
      provides guidance on how a company should determine whether a tax position
      is
      effectively settled for purposes of recognizing previously unrecognized tax
      benefits.  We adopted this Staff Position during the quarter ended April 1,
      2007, and it had no effect on our Consolidated Financial
      Statements.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial
      Liabilities, Including an Amendment of FASB Statement No. 115,” which will
      become effective in 2008. SFAS No. 159 permits entities to measure eligible
      financial assets, financial liabilities and firm commitments at fair value,
      on
      an instrument-by-instrument basis, that are otherwise not permitted to be
      accounted for at fair value under other generally accepted accounting
      principles. The fair value measurement election is irrevocable and subsequent
      changes in fair value must be recorded in earnings. We will adopt this Statement
      in fiscal year 2008 and we are currently evaluating if we will elect the fair
      value option for any of our eligible financial instruments and other
      items.





In
      September 2006, the FASB finalized SFAS No. 157, “Fair Value Measurements” which
      will become effective in 2008. This Statement defines fair value, establishes
      a
      framework for measuring fair value and expands disclosures about fair value
      measurements; however, it does not require any new fair value measurements.
      The
      provisions of SFAS No. 157 will be applied prospectively to fair value
      measurements and disclosures beginning in the first quarter of
      2008.





In
      June
      2006, the FASB ratified the Emerging Issues Task Force (“EITF”) consensus on
      EITF Issue No. 06-03 “How Taxes Collected From Customers and Remitted to
      Governmental Authorities Should Be Presented in the Income Statement (“EITF
      06-03”). The scope of EITF 06-03 includes any tax assessed by a governmental
      authority that is directly imposed on a revenue-producing transaction between
      a
      seller and a customer, and provides that a company may adopt a policy of
      presenting taxes either gross within revenue or on a net basis. For any such
      taxes that are reported on a gross basis, a company should disclose the amounts
      of those taxes for each period for which an income statement is presented if
      those amounts are significant. This statement is effective to financial reports
      for interim and annual reporting periods beginning after December 15, 2006.
      We
      adopted EITF 06-03 on January 1, 2007. Various taxes and fees on the sale of
      products and services to customers are collected by us as an agent and remitted
      to the respective taxing authority. These taxes and fees have been presented
      on
      a net basis in the accompanying consolidated statement of operations and
      recorded as a liability until remitted to the respective taxing
      authority.




**2.**  **Inventories**





Inventories
      comprise the following (thousands of dollars):





**April
                1, 2007**
            
            **December
                31, 2006**Raw
                materials
            
            $
            75,217
            
            $
            69,769Work
                in process
            
            
            1,188
            
            
            450Finished
                goods
            
            
            56,037
            
            
            48,808Inventories
            
            $
            132,442
            
            $
            119,027




6
 **INTERMEC,
            INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**
 (continued)




**3.**  **Notes
      Receivable**





In
      connection with the sale of Cincinnati Lamb, we received a $12.5 million
      long-term note receivable bearing interest at an annual rate of LIBOR plus
      three
      percent (8.32% as of April 1, 2007) with interest payable quarterly. Principal
      payments on the note are due in six semiannual installments beginning April
      2007
      of $1.5 million, $2.0 million, $2.0 million, $2.5 million, $2.0 million and
      $2.5
      million. As of April 1, 2007, the estimated fair value of the note is $11.4
      million, based on the estimated cash flows from the note and a risk-adjusted
      discount rate equal to LIBOR plus eight percent. Our consolidated balance sheet
      as of April 1, 2007, classifies the $11.4 million note receivable as other
      current assets and other assets.





As
      part
      of the sale of Landis Grinding Systems, we received a $10.0 million two-year
      note at an interest rate of five percent per annum guaranteed by the buyer’s
      parent company, due December 2007. As of April 1, 2007, the estimated fair
      value
      of the note is $9.8 million, based on the estimated cash flows from the note
      and
      a risk-adjusted discount rate equal to LIBOR plus 2.25% (7.47% as of April
      1,
      2007). This note receivable is included in other current assets on our balance
      sheet.





**4.**  **Debt**





We
      have a
      secured Revolving Credit Facility (the “Revolving Facility”) with a maximum
      amount available under the Revolving Facility of $50.0 million. Net of
      outstanding letters of credit and limitations on availability, we had borrowing
      capacity at April 1, 2007, of $19.6 million under the Revolving Facility. We
      made no borrowings under the Revolving Facility during 2007, and as of April
      1,
      2007, no borrowings were outstanding under this facility. As of April 1, 2007,
      we were in compliance with all financial covenants of this agreement. The
      Revolving Facility matures in September 2007.





As
      of
      April 1, 2007, we have $100.0 million of current ten-year senior unsecured
      debt
      outstanding, due in March 2008. Interest payments at 7.0% are due semi-annually
      in March and September. Including underwriting fees, discounts and other
      issuance costs, the effective interest rate is 7.175%.





We
      also
      have letter-of-credit reimbursement agreements totaling $6.9 million at April
      1,
      2007, compared to $7.4 million at December 31, 2006. As of April 1, 2007, $5.9
      million of the agreements related to performance on contracts with current
      customers and vendors, $0.1 million of the agreements related to customer
      contracts assumed by the purchaser of the Cincinnati Lamb operations that were
      sold and $0.9 million of the agreements related to customer contracts assumed
      by
      the purchaser of the Landis operations that were sold. We are indemnified by
      the
      purchaser of the Cincinnati Lamb operation on the $0.1 million of
      letter-of-credit agreements related to Cincinnati Lamb. We are indemnified
      by
      the purchaser of the Landis operations on the $0.9 million of letter-of-credit
      agreement to Landis. No liability has been recorded as the risk of
      non-performance is remote.





**5.**  **Discontinued
      Operations**





We
      completed our divestiture of the IAS businesses with the sale of the Cincinnati
      Lamb business in the first quarter of 2005 and the sale of the Landis Grinding
      Systems business in the fourth quarter of 2005. There were no earnings or losses
      from discontinued operations for the quarter ended April 1, 2007.





The
      loss
      from discontinued operations for the quarter ended April 2, 2006, included
      period expenses relating to finalizing the sale of the Landis Grinding Systems
      and changes to the estimated sales price adjustment, net of tax
      benefits.





**6.**  **Restructuring
      Costs**





In
      March
      2006, we announced our plan to close our design centers in Goteborg and Lund,
      Sweden. The activities previously assigned to the design centers in Sweden
      have
      been reassigned to other parts of our business or moved to third-party vendors
      to improve efficiencies, benefit from reduced cost, and realign resources to
      increase new product development capacity. This restructuring resulted in
      charges of $1.1 million for the quarter ended April 2, 2006, and was
      substantially completed by the end of 2006.


In
      November 2006, we committed to a business restructuring plan intended to reduce
      costs, streamline operations and improve productivity. The restructuring
      includes headcount reductions and consolidation of certain facilities on a
      regional and/or global basis. During the fourth quarter of 2006, we recorded
      charges for severance of $6.8 million and $0.1 of other exit costs in accordance
      with SFAS 146. As of December 31, 2006, $1.6 million in severance costs had
      been
      paid. During the first quarter of 2007, we paid an additional $3.9 million
      in
      severance costs. The restructuring was substantially completed by the end of
      the
      first quarter of 2007. The restructuring accrual of $5.1 million as of December
      31, 2006, was reduced to $1.2 million as of April 1, 2007, as a result of the
      severance payments made during the current quarter.




**7.**  **Gains
      on Intellectual Property Settlements**




In
      March
      2006, we settled an intellectual property lawsuit relating to our battery
      power-management patents. The terms of this settlement are confidential. We
      recorded a gain on intellectual property settlement of $16.5 million, which
      is
      net of $6.5 million of intellectual property settlement cost, within our
      Consolidated Statement of Operations for the quarter ended April 2, 2006. There
      were no IP settlements for the quarter ended April 1, 2007.




7
 **INTERMEC,
            INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**
 (continued)




**8.**  **Provision
      (Benefit) for Income Taxes**





The
      tax
      benefit for the quarter ended April 1, 2007, reflects an effective tax benefit
      for continuing operations of (6.9%) compared to a U.S. statutory rate of 35%.
      The tax benefit was reduced primarily due to a reduction of foreign deferred
      tax
      assets as a result of recording a valuation allowance and the impact of changes
      in tax rates. Our expected effective tax rate for fiscal year 2007 is
      37.4%.





The
      tax
      provision for the quarter ended April 2, 2006, reflects an effective tax rate
      for continuing operations of 21.3% compared to a U.S. statutory rate of 35%.
      The
      tax provision for the 2006 first quarter was reduced by $2.2 million due to
      the
      favorable conclusion of a Canadian tax audit.




**9.**  **Shares
      Used in Computing Earnings (Loss) per Share**





Basic
      earnings (loss) per share is calculated using the weighted average number of
      common shares outstanding and issuable for the applicable period. Diluted
      earnings (loss) per share is computed using basic weighted average shares plus
      the dilutive effect of unvested restricted stock and outstanding stock options
      using the “treasury stock” method.





**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006**Weighted
                average shares - basic
            
            
            59,990,018
            
            
            63,025,006Dilutive
                effect of unvested restricted shares and stock options
            
            
            -
            
            
            1,578,367Weighted
                average shares - diluted
            
            
            59,990,018
            
            
            64,603,373


Our
      employees and directors held options to purchase 93,151 shares of our common
      stock for the quarter ended April 2, 2006, that were not included in weighted
      average shares diluted because they were antidilutive to the diluted earnings
      per share computation. These options could become dilutive in future periods
      if
      the average market price of our common stock exceeds the exercise price of
      the
      outstanding options and we report net earnings. For the quarter ended April
      1,
      2007, diluted weighted average shares excludes 918,171 weighted average unvested
      stock options and restricted shares, because they would have been anti-dilutive,
      due to our reported net loss.




**10.**  **Accumulated
      Other Comprehensive Loss**





Our
      accumulated other comprehensive loss comprised the following (thousands of
      dollars):





**April
                1, 2007**
            
            **December
                31, 2006**Currency
                translation adjustment, net
            
            $
            3,004
            
            $
            2,933Unamortized
                benefit plan costs, net of tax benefit of $18,204
            
            
            (29,580
            )
            
            (30,543
            )Unrealized
                gain on securities, net
            
            
            56
            
            
            49Accumulated
                other comprehensive loss
            
            $
            (26,520
            )
            $
            (27,561
            )




8
 **INTERMEC,
            INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**
 (continued)




**11.**  **Segment
      Reporting**


We
      design, develop, manufacture, integrate, sell, resell and service wired and
      wireless automated identification and data collection (“AIDC”) products
      including radio frequency identification (“RFID”) products, mobile computing
      products, wired and wireless bar code printers and label media products. Our
      reportable segments comprise products and services. The product segment
      generates revenue from the design, development, manufacture, sale and resale
      of
      AIDC products, including RFID products and license fees. The service segment
      generates revenue from customer support, product maintenance and other services
      related to the products and systems integration.





The
      accounting policies of our two reportable segments are the same as those used
      to
      prepare our consolidated financial statements. Performance and resource
      allocation are primarily measured by sales and standard gross profit. All other
      earnings, costs and expenses are aggregated and reported on a consolidated
      basis.





For
      the
      quarter ended April 1, 2007, one customer accounted for more than 10% of our
      revenues. Total sales to this customer were $18.3 million as of April 1, 2007.
      No single customer accounted for more than 10% of our revenues for the quarter
      ended April 2, 2006.





As
      described in Note 1, c ertain
      amounts in our prior-year consolidated financial statements related to IP
      settlements have been reclassified to conform to the current-year presentation.
      The effect of such reclassification on segment amounts for the quarter ended
      April 2, 2006, was to reduce product revenue by $23.0 million and reduce product
      gross profit by $16.5 million.





The
      following table sets forth our operations by reportable segment (millions of
      dollars):





**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006**Revenues:Product
            
            $
            141.5
            
            $
            166.3Service
            
            
            37.8
            
            
            37.5Total
            
            $
            179.3
            
            $
            203.8Gross
                Profit:Product
            
            
            49.3
            
            
            65.7Service
            
            
            15.2
            
            
            14.6Total
            
            $
            64.5
            
            $
            80.3





The
      following table sets forth our revenues by product lines (millions of
      dollars):




**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006**Revenues:Systems
                and Solutions
            
            $
            93.5
            
            $
            116.3Printer
                and Media
            
            
            48.0
            
            
            50.0Service
            
            
            37.8
            
            
            37.5Total
            
            $
            179.3
            
            $
            203.8





**12.**  **Commitments
      and Contingencies**





Provisions
      for estimated expenses related to product warranties are made at the time
      products are sold. These estimates are established using historical information
      on the nature, frequency, and average cost of warranty claims. We actively
      study
      trends of warranty claims and take action to improve product quality and
      minimize warranty claims. The following table indicates the change in our
      warranty accrual included in current liabilities (thousands of
      dollars):





**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006**Beginning
                Balance
            
            $
            6,800
            
            $
            5,542Payments
            
            
            (693
            )
            
            (1,892
            )Increase
                in liability (new warranties issued)
            
            
            261
            
            
            1,864Ending
                Balance
            
            $
            6,368
            
            $
            5,514








9
 **INTERMEC,
            INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**
 (continued)




We
      have
      entered into a variety of agreements with third parties that include
      indemnification clauses, both in the ordinary course of business and in
      connection with our divestitures of certain product lines. These clauses require
      us to compensate these third parties for certain liabilities and damages
      incurred by them.


FASB
      Interpretation No. 45, “Guarantors’ Accounting and Disclosure Requirements for
      Guarantees, Including Indirect Guarantees of Indebtedness of Others” requires
      that we estimate and record the fair value of guarantees as a liability. We
      do
      not believe that we have any significant exposure related to such guarantees
      and
      therefore have not recorded a liability as of April 1, 2007, or December 31,
      2006. We have not made any significant indemnification payments as a result
      of
      these clauses, nor do we believe the fair value of any of these guarantees
      has a
      material effect on our financial position or results of operations.





We
      currently, and from time to time, are subject to claims and lawsuits arising
      in
      the ordinary course of business. The ultimate resolution of currently pending
      proceedings is not expected to have a material adverse effect on our business,
      financial condition, results of operations or liquidity.




**13.**  **Pension
      and Other Postretirement Benefit Plans**





The
      information in this note represents the net periodic pension and post-retirement
      benefit costs and related components in accordance with SFAS 132(R),
“ Employers’
      Disclosures about Pensions and Other Postretirement Benefits (as
      amended) .”
The
      components of net pension and postretirement periodic benefit cost (credit)
      for
      the quarters ended April 1, 2007, and April 2, 2006, are as follows (thousands
      of dollars):





**Quarter Ended April 1, 2007,**
            
            **U.S. Defined Benefit Plans**
            
            **Non-U.S. Defined Benefit**
              **Plans**
            
            **Other Postretirement**
              **Benefit Plans****and April 2, 2006:**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**Service
                Cost
            
            $
            452
            
            $
            1,741
            
            $
            —
            
            $
            263
            
            $
            —
            
            $
            4Interest
                Cost
            
            2,678
            
            2,988
            
            644
            
            531
            
            44
            
            66Expected
                return on plan assets
            
            (2,611
            )
            (2,508
            )
            (836
            )
            (727
            )
            —
            
            —Amortization
                and deferrals:Transition
                asset
            
            —
            
            —
            
            (42
            )
            (38
            )
            —
            
            —Actuarial
                loss
            
            942
            
            1,239
            
            102
            
            108
            
            —
            
            27Prior
                service cost
            
            145
            
            177
            
            —
            
            —
            
            —
            
            —Special
                termination benefits
            
            —
            
            675
            
            —
            
            —
            
            —
            
            —Net
                pension and postretirement periodic benefit cost (gain)
            
            $
            1,606
            
            $
            4,312
            
            $
            (132
            )
            $
            137
            
            $
            44
            
            $
            97








During
      the quarter ended April 1, 2007, we contributed approximately $1.9 million
      to
      our pension and other postretirement benefit plans, comprising $0.8 million
      in
      benefits paid pertaining to unfunded U.S. defined benefit plans, $0.8 million
      in
      matching contributions to our 401(k) plan, and $0.3 million in contributions
      to
      our foreign pension plans. Benefits paid pertaining to our other postretirement
      benefits plans were not material during the first quarter of 2007. We expect
      to
      contribute an additional $4.4 million to these plans during the remainder of
      2007, of which $1.8 million relates to benefit payments on our unfunded U.S.
      defined benefit plans, $1.9 million in matching contributions to our 401(k)
      plan, $0.4 million in contributions to our foreign pension plans and $0.3
      million in benefit payments pertaining to our other postretirement benefit
      plans.











10





**ITEM
      2.********MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF****OPERATIONS**





**Forward-Looking
      Statements and Risk Factors**




Forward-looking
          statements contained in this filing are subject to the safe harbor created
          by
          the Private Securities Litigation Reform Act of 1995 (alternatively: Section
          27A
          of the Securities Act of 1933 and Section 21E of the Securities Exchange
          Act of
          1934) and are dependent upon a variety of important factors that could
          cause
          actual results to differ materially from those reflected in such forward-looking
          statements.
 
 Forward-looking
          statements include but are not limited to statements about: maintaining
          or
          improving our revenues, gross margins or profits of our continuing operations,
          for the current period or any future period; competing effectively with
          our
          current products and planned products, and introducing new products; effectively
          completing restructuring activities, including the closure of certain facilities
          and redeployment of related functions; maintaining or reducing expenses;
          maintaining or improving operational efficiency; increasing product development
          capacity; using our investment in research and development to generate
          future
          revenue; and the applicability of accounting policies used in our financial
          reporting. When used in this document and in documents it references, the
          words
“anticipate,” “believe,” “will,” “intend,” “project” and “expect” and similar
          expressions as they relate to Intermec or our management are intended to
          identify such forward-looking statements. We undertake no obligation to
          publicly
          update or revise any forward-looking statements, whether as a result of
          new
          information, future events, changed circumstances or any other reason after
          the
          date of this quarterly report.
 
 Forward-looking
          statements involve and are dependent upon certain risks and uncertainties
          and
          are not guarantees of future performance. A number of factors can impact
          our
          business and determine whether we can or will achieve any forward-looking
          statement made in this report. Any one of these factors could cause our
          actual
          results to differ materially from those expressed or implied in a
          forward-looking statement. We outline these risk factors in reports that
          we file
          with the SEC, in press releases and on our website, www.intermec.com. You
          are
          encouraged to review the discussion below in Part I, “Item 2, Management’s
          Discussion and Analysis of Financial Condition and Results of Operations,” and
          Part II, “Item 1A Risk Factors,” of this filing, which discuss risk factors
          associated with our business.


**Results
      of Operations**





The
      following discussion compares our results of operations for the quarters ended
      April 1, 2007, and April 2, 2006. Results of operations and percentage of
      revenues were as follows (millions of dollars):





**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006****Amounts**
            
            **Percent
                of Revenues**
            
            **Amounts**
            
            **Percent
                of Revenues**Revenues
            
            $
            179.3
            
            
            
            
            $
            203.8Costs
                and Expenses:Cost
                of revenues
            
            
            114.7
            
            
            64.0
            %
            
            123.4
            
            
            60.6
            %Selling,
                general and administrative
            
            
            69.6
            
            
            38.8
            %
            
            77.8
            
            
            38.2
            %Gains
                on intellectual property settlements
            
            
            -
            
            
            0.0
            %
            
            (16.5
            )
            
            -8.1
            %Restructuring
                charge
            
            
            -
            
            
            0.0
            %
            
            1.1
            
            
            0.5
            %Total
                Costs and Expenses
            
            
            184.3
            
            
            102.8
            %
            
            185.8
            
            
            91.2
            %Operating
                Profit (Loss) from Continuing Operations
            
            
            (5.0
            )
            
            -2.8
            %
            
            18.0
            
            
            8.8
            %Interest,
                net
            
            
            0.3
            
            
            0.1
            %
            
            1.1
            
            
            0.6
            %Earnings
                (Loss) from Continuing Operations before Income Taxes
            
            
            (4.7
            )
            
            -2.7
            %
            
            19.1
            
            
            9.4
            %Provision
                (Benefit) for Income Taxes
            
            
            (0.3
            )
            
            -0.2
            %
            
            4.0
            
            
            2.0
            %Earnings
                (Loss) from Continuing Operations, net of tax
            
            
            (4.4
            )
            
            -2.5
            %
            
            15.1
            
            
            7.4
            %Loss
                from Discontinued Operations, net of tax
            
            
            -
            
            
            0.0
            %
            
            (1.1
            )
            
            -0.5
            %Net
                Earnings (Loss)
            
            $
            (4.4
            )
            
            -2.5
            %
            $
            14.0
            
            
            6.9
            %




11
 **ITEM
          2.MANAGEMENT’S
          DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
          (continued)**




*Revenues*





Revenues
      by category and as a percentage of total revenues from continuing operations
      for
      the quarters ended April 1, 2007, and April 2, 2006, as well as
      quarter-over-quarter product and service revenue growth were as follows
      (millions of dollars):





**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006**
            
            **Change**
            
            **Percentage
                Change****Amount**
            
            **Percent
                of Revenues**
            
            **Amount**
            
            **Percent
                of Revenues**Revenues
                by Category:Product
            
            $
            141.5
            
            
            78.9
            %
            $
            166.3
            
            
            81.6
            %
            $
            (24.8
            )
            
            -14.9
            %Service
            
            
            37.8
            
            
            21.1
            %
            
            37.5
            
            
            18.4
            %
            
            0.3
            
            
            0.8
            %Total
                Revenues
            
            $
            179.3
            
            
            100.0
            %
            $
            203.8
            
            
            100.0
            %
            $
            (24.5
            )
            
            -12.0
            %




Revenues
      by geographic region and as a percentage of total revenues from continuing
      operations for the quarters ended April 1, 2007, and April 2, 2006, were as
      follows (millions of dollars):


**Quarter
                    Ended****April
                    1, 2007**
                
                **April
                    2, 2006****Amount**
                
                **Percent
                    of Revenues**
                
                **Amount**
                
                **Percent
                    of Revenues**Revenues
                    by Geographic Region:North
                    America
                
                $
                91.1
                
                
                50.8
                %
                $
                128.5
                
                
                63.1
                %Europe,
                    Middle East and Africa(EMEA)
                
                
                62.9
                
                
                35.1
                %
                
                54.1
                
                
                26.5
                %All
                    Others
                
                
                25.3
                
                
                14.1
                %
                
                21.2
                
                
                10.4
                %Total
                    Revenues
                
                $
                179.3
                
                
                100.0
                %
                $
                203.8
                
                
                100.0
                %




The
      decline in quarterly revenue of $24.5 million, or 12.0%, was primarily
      attributable to a $24.8 million decline in product revenue, slightly offset
      by a
      $0.3 million increase in service revenue. The decrease in product revenue was
      attributable to a $22.8 million decrease in systems and solution products and
      a
      $2.0 million decline in printer and media products. Our analysis of the causal
      factors for the decline in product revenue suggests that the most significant
      factor was the impact on business of delayed rollouts of the availability of
      new
      products in North America. We introduced three new major products. We believe
      that certain customers delayed orders while awaiting the availability of the
      new
      products. We believe that another factor contributing to the product revenue
      decline is a continuing intensity in competitive programs and
      pricing.





The
      increase in quarterly service revenues of $0.3 million, or 0.8%, was primarily
      attributable to a $1.6 million increase in EMEA revenues and a $0.3 million
      increase in the rest of world revenues, offset by a decrease in North America
      revenues of $1.6 million.




Geographically,
      product and service revenue in North America declined $37.4 million, or 29.1%,
      over the corresponding prior-year period. The decline in North America was
      partially offset by an increases of $8.8 million, or 16.3%, and $4.1 million,
      or
      19.3%, in EMEA and the rest of the world, respectively. This marked difference
      in performance by regions was driven in part by the earlier availability of
      our
      next generation mobile computer, the CN3.





*Gross
      Profit*


Gross
      profit and gross margin by revenue category for the quarters ended April 1,
      2007
      and April 2, 2006, were as follows (millions of dollars):





**Quarter
                Ended****April
                1, 2007**
            
            **April
                2, 2006****Gross
                Profit**
            
            **Gross
                Margin**
            
            **Gross
                Profit**
            
            **Gross
                Margin**Product
            
            $
            49.3
            
            
            34.9
            %
            $
            65.7
            
            
            39.5
            %Service
            
            
            15.2
            
            
            40.3
            %
            
            14.6
            
            
            39.0
            %Total
                Gross Profit and Gross Margin
            
            $
            64.5
            
            
            36.0
            %
            $
            80.3
            
            
            39.4
            %




The
      total
      gross profit for the quarter ended April 1, 2007, decreased $15.8 million,
      or
      19.7%, compared to the corresponding prior-year period. The decrease in total
      gross profit primarily resulted from a $16.4 million decrease in product gross
      profit, partially offset by a $0.6 million increase in service gross profit.





Product
      gross margin for the quarter ended April 1, 2007, decreased 4.6 percentage
      points as compared to the quarter ended April 2, 2006. The reduction in product
      gross margin is primarily due to lower unit volume, lower average selling prices
      and lower absorption on lower volumes. Service gross margins increased 1.3
      percentage points for the quarter ended April 1, 2007, over the corresponding
      prior-year period.





12
 **ITEM
          2.MANAGEMENT’S
          DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
          (continued)**




*Selling,
      General and Administrative*





The
      total
      selling, general and administrative (“SG&A”) expenses were $69.6 million and
      $77.8 million for the quarters ended April 1, 2007 and April 2, 2006,
      respectively. The $8.2 million decrease in SG&A expense is primarily due to
      the restructuring activities aimed at cost reductions initiated in 2006, the
      pension freeze in the U.S. effective June 30, 2006, and a $1.1 million decrease
      in legal expense.





*Gains
      on Intellectual Property Settlements*




In
      March
      2006, we settled an intellectual property lawsuit relating to our battery
      power-management patents. The terms of this settlement are confidential. We
      recorded a gain on intellectual property settlement of $16.5 million, which
      is
      net of $6.5 million of intellectual property settlement cost, within our
      Consolidated Statement of Operations for the quarter ended April 2, 2006. There
      were no IP settlements for the quarter ended April 1, 2007.




*Restructuring
      Charge*




In
      March
      2006, we announced our plan to close our design centers in Goteborg and Lund,
      Sweden. The activities previously assigned to the design centers in Sweden
      have
      been reassigned to other parts of our business or moved to third-party vendors
      to improve efficiencies, benefit from reduced cost, and realign resources to
      increase new product development capacity. This restructuring resulted in
      charges of $1.1 million for the quarter ended April 2, 2006, and was
      substantially completed by the end of 2006.




*Interest,
      Net*





Net
      interest income was $0.3 million for the quarter ended April 1, 2007, compared
      to interest income of $1.1 million for the corresponding prior-year period.
      The
      $0.8 million decrease in net interest income reflects the reduction in average
      cash and cash equivalent balances.





*Provision
      (Benefit) for Income Taxes*





The
      tax
      benefit for the quarter ended April 1, 2007, reflects an effective tax benefit
      for continuing operations of (6.9%) compared to a U.S. statutory rate of 35%.
      The tax benefit was reduced primarily due to a reduction of foreign deferred
      tax
      assets as a result of recording a valuation allowance and the impact of changes
      in tax rates. Our expected effective tax rate for fiscal year 2007 is
      37.4%.





The
      tax
      provision for the quarter ended April 2, 2006, reflects an effective tax rate
      for continuing operations of 21.3% compared to a U.S. statutory rate of 35%.
      The
      tax provision for the 2006 first quarter was reduced by $2.2 million due to
      the
      favorable conclusion of a Canadian tax audit.





*Loss
      from Discontinued Operations*





The
      loss
      from discontinued operations for the quarter ended April 2, 2006, includes
      period expenses related to finalizing the sale of the Landis Grinding Systems
      and changes to the estimated sales price adjustment, net of tax
      benefits.





13
 **ITEM
          2.MANAGEMENT’S
          DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
          (continued)**


**Liquidity
        and Capital Resources**





Cash,
      cash equivalents and short-term investments as of April 1, 2007, totaled $173.2
      million, compared to $184.5 million as of December 31, 2006. Operating
      activities of continuing operations for the first quarter of 2007 used $11.1
      million of cash flow, primarily resulting from the $13.4 million increase in
      inventory, offset by the net other changes in operating activities. Investing
      activities of continuing operations for the first quarter of 2007, used $2.5
      million related primarily to $2.2 million of net capital expenditures. Financing
      activities of continuing operations of $2.6 million is primarily due to $1.4
      million of proceeds from stock option exercises and other related stock awards
      during the first quarter of 2007.


Net
      of
      outstanding letters of credit and limitations on minimum availability, we had
      borrowing capacity at April 1, 2007, of $19.6 million under the Revolving
      Facility. We made no borrowings under the Revolving Facility during the first
      quarter of 2007, and as of April 1, 2007, no borrowings were outstanding under
      the Revolving Facility. As of April 1, 2007, we were in compliance with the
      financial covenants of the Revolving Facility.




The
      key
      terms of the Revolving Facility are as follows:





•
            Our
                obligations under the Revolving Facility are secured by substantially
                all
                of our U.S. assets and our U.S. subsidiaries and a pledge of 65%
                of the
                stock of certain of foreign
                subsidiaries.





•
            Borrowings
                under the Revolving Facility bear interest at a variable rate equal
                to (at
                our option) (i) LIBOR plus an applicable margin ranging from 1.5%
                to 2.5%
                based on consolidated leverage, or (ii) the greater of the
              federalfunds
                rate plus 0.50% or the bank’s prime rate, plus an applicable margin
                ranging from 0.5% to 1.5% based on consolidated
                leverage.





•
            The
                Revolving Facility places certain restrictions on our ability and
                our
                subsidiaries’ ability to consolidate or merge, make acquisitions, create
                liens, incur additional indebtedness or dispose of
                assets.





•
            Financial
                covenants include a Consolidated Leverage test, a Consolidated Interest
                Coverage test and a Consolidated Net Worth test, each as defined
                in the
                agreement.





Management
      is considering options for renewing the Revolving Facility, which matures
      September 2007.





As
      of
      April 1, 2007, we had $100.0 million of current ten-year senior unsecured debt
      outstanding, due March 2008. Interest payments at 7.0% are due semi-annually
      in
      March and September. Including underwriting fees, discounts and other issuance
      costs, the effective interest rate is 7.175%.





Management
      believes that cash and cash equivalents on hand, combined with projected cash
      flow from operations, assets held for sale and available borrowings under our
      Revolving Facility will be sufficient to fund our operations, research and
      development efforts, anticipated capital expenditures, liabilities, commitments,
      and other capital requirements, for at least the next twelve
      months.





**Contractual
      Obligations**





Our
      contractual commitments as of April 1, 2007, have not changed materially from
      those disclosed in Item 7 of our annual report on Form 10-K for the year ended
      December 31, 2006, other than the uncertain tax positions totaling $21.3
      million, which are described in Note 1.




**Critical
      Accounting Policies**





“Management’s
      Discussion and Analysis of Financial Condition and Results of Operations”
(“MD&A”) discusses our consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, the disclosure of contingent assets and liabilities, and the
      reported amounts of revenues and expenses. Actual amounts could differ from
      those estimates under different assumptions or conditions. Management’s beliefs
      regarding significant accounting policies have not changed significantly from
      those disclosed in Item 7 of our Annual Report on Form 10-K for the year ended
      December 31, 2006.




Significant
      estimates and assumptions were used to determine the provisions for
      uncollectible accounts receivable, excess and obsolete inventory, tax valuation
      allowances, recoverability of intangible assets, warranty costs, retiree medical
      and pension obligations, estimated net realizable value of assets held for
      sale
      and litigation loss contingencies.


14
 **ITEM
          2.MANAGEMENT’S
          DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
          (continued)**




**New
      Accounting Pronouncements**





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48 “Accounting for Uncertainty in Income Taxes - an
      interpretation of FASB Statement 109” (“FIN 48”). FIN 48 establishes a single
      model to address accounting for uncertain tax positions. FIN 48 clarifies the
      accounting for income taxes by prescribing a minimum recognition threshold
      a tax
      position is required to meet before being recognized in the financial
      statements. FIN 48 also provides guidance on derecognition, measurement
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition.





Upon
      adoption of FIN 48, as of January 1, 2007, we recognized a charge of
      approximately $6.9 million to accumulated deficit. As of January 1, 2007, we
      had
      $21.3 million of unrecognized tax benefits, and if recognized, these amounts
      would be recorded as a component of income tax benefit. There have been no
      significant changes to these amounts during the quarter ended April 1,
      2007.





We
      file
      our tax returns as prescribed by the tax laws of the jurisdictions in which
      we
      operate. In the United States our tax years 1997 - 2006 remain open to
      examination by the Internal Revenue Service, as well as various state
      jurisdictions. In the normal course of business, we are subject to examination
      by taxing authorities throughout the world, including such major jurisdictions
      as Canada, France, Germany, Italy, Mexico, the Netherlands, Spain, Sweden and
      the United Kingdom. In many cases, our uncertain tax positions are related
      to
      tax years that remain subject to examination by the relevant taxing authorities.





Based
      on
      the outcome of relevant examinations, or as a result of the expiration of
      statute of limitations for specific jurisdictions, it is not reasonably possible
      that the related unrecognized tax benefits for tax positions taken regarding
      previously filed tax returns will materially change within the next twelve
      months from those recorded as liabilities for uncertain tax positions in our
      financial statements at January 1, 2007.


Estimated
      interest and penalties related to the underpayment of income taxes are
      classified as a component of Tax Expense in the Consolidated Statement of
      Operations and accrued interest and penalties were $0.2 million as of January
      1,
      2007 and April 1, 2007.




In
      May 2007, the FASB issued Staff Position No.
      FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48," which
      provides guidance on how a company should determine whether a tax position
      is
      effectively settled for purposes of recognizing previously unrecognized tax
      benefits.  We adopted this Staff Position during the quarter ended April 1,
      2007, and it had no effect on our Consolidated Financial
      Statements.





In
        February 2007, the FASB issued Statement of Financial Accounting Standards
        (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial
        Liabilities, Including an Amendment of FASB Statement No. 115,” which will
        become effective in 2008. SFAS No. 159 permits entities to measure eligible
        financial assets, financial liabilities and firm commitments at fair value,
        on
        an instrument-by-instrument basis, that are otherwise not permitted to be
        accounted for at fair value under other generally accepted accounting
        principles. The fair value measurement election is irrevocable and subsequent
        changes in fair value must be recorded in earnings. We will adopt this Statement
        in fiscal year 2008 and are currently evaluating if we will elect the fair
        value
        option for any of our eligible financial instruments and other
        items.





In
      September 2006, the FASB finalized SFAS No. 157, “Fair Value Measurements” which
      will become effective in 2008. This Statement defines fair value, establishes
      a
      framework for measuring fair value and expands disclosures about fair value
      measurements; however, it does not require any new fair value measurements.
      The
      provisions of SFAS No. 157 will be applied prospectively to fair value
      measurements and disclosures beginning in the first quarter of 2008 and is
      not
      expected to have a material effect on our Consolidated Financial
      Statements.


In
      June
      2006, the FASB ratified the Emerging Issues Task Force (“EITF”) consensus on
      EITF Issue No. 06-03 “How Taxes Collected From Customers and Remitted to
      Governmental Authorities Should Be Presented in the Income Statement (“EITF
      06-03”). The scope of EITF 06-03 includes any tax assessed by a governmental
      authority that is directly imposed on a revenue-producing transaction between
      a
      seller and a customer, and provides that a company may adopt a policy of
      presenting taxes either gross within revenue or on a net basis. For any such
      taxes that are reported on a gross basis, a company should disclose the amounts
      of those taxes for each period for which an income statement is presented if
      those amounts are significant. This statement is effective to financial reports
      for interim and annual reporting periods beginning after December 15, 2006.
      We
      adopted EITF 06-03 on January 1, 2007. Various taxes and fees on the sale of
      products and services to customers are collected by us as an agent and remitted
      to the respective taxing authority. These taxes and fees have been presented
      on
      a net basis in the accompanying consolidated statement of operations and
      recorded as a liability until remitted to the respective taxing
      authority.








**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





We
      are
      exposed to interest rate risk primarily from our short-term and long-term
      borrowings and to foreign exchange rate risk with respect to our foreign
      operations and from foreign currency transactions.





Due
      to
      our global operations, our cash flows and earnings are exposed to foreign
      exchange rate fluctuations. When appropriate, we may attempt to limit our
      exposure to changing foreign exchange rates by entering into short-term foreign
      currency exchange contracts. As of April 1, 2007, we held short-term contracts
      for the purpose of hedging foreign currency cash flows with an aggregate
      notional amount of $174.5 million.





Except
      as
      noted in the preceding paragraph, as of April 1, 2007, there have been no
      material changes in information provided in Item 7A of our annual report on
      Form
      10-K for the year ended December 31, 2006, which contains a complete discussion
      of our material exposures to interest rate and foreign exchange rate
      risks.





**ITEM
      4. CONTROLS AND PROCEDURES**





We
      maintain disclosure controls and procedures, which are designed to ensure that
      information required to be disclosed in the reports we file or submit under
      the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the Securities and Exchange
      Commission’s rules and forms, and that such information is accumulated and
      communicated to management, including the Chief Executive Officer, or CEO,
      and
      Chief Financial Officer, or CFO, as appropriate to allow timely decisions
      regarding required disclosure.





Under
      the
      supervision and with the participation of management, including the CEO and
      CFO,
      an evaluation was performed on the effectiveness of the design and operation
      of
      our disclosure controls and procedures as of the end of the period covered
      by
      this quarterly report. Based on that evaluation, management, including the
      CEO
      and CFO, concluded that our disclosure controls and procedures were effective
      as
      of April 1, 2007.





An
      evaluation was also performed under the supervision and with the participation
      of management, including the CEO and CFO, of any change in our internal controls
      over financial reporting that occurred during the last fiscal quarter and that
      has materially affected, or is reasonably likely to materially affect, our
      internal controls over financial reporting. That evaluation did not identify
      any
      change in our internal controls over financial reporting that occurred during
      the latest fiscal quarter and that has materially affected, or is reasonably
      likely to materially affect, our internal controls over financial
      reporting.




15





**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





We
      currently, and from time to time, are subject to claims and suits arising in
      the
      ordinary course of business. The ultimate resolution of currently pending
      proceedings is not expected to have a material adverse effect on our business,
      financial condition, results of operations or liquidity.





**ITEM
      1A. RISK FACTORS**





You
      are
      encouraged to review the discussion of Forward Looking Statements and Risk
      Factors appearing in this report at Part I, “Item 2. Management’s Discussion and
      Analysis of Financial Condition and Results of Operations.”




In
      addition to the other information set forth in this Report, you should carefully
      consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual
      Report on Form 10-K for
      the
      year ended December 31, 2006 ,
      which
      could materially affect our business, financial condition or operating results.
      The risks described in our Annual Report on Form 10-K for the year ended
      December 31, 2006, are not the only risks facing our Company. Additional risks
      and uncertainties not currently known to us or that we currently deem to be
      immaterial also may materially adversely affect our business, financial
      condition or operating results.




**ITEM
      2.****UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





(c)
            Issuer
                Purchases of Equity Securities





**Total
                Number of Shares Purchased**
            
            **Average
                Price Paid per Share**
            
            **Total
                Number of Shares Purchased as Part of Publicly Announced Plans or
                Programs**
            
            **Maximum
                Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased
                Under the Plans or Programs**January
                1 to January 28, 2007
            
            
            -
            
            
            -
            
            
            -
            
            
            -January
                29 to February 25, 2007
            
            
            7,897
            
            $
            23.85
            
            
            -
            
            
            -February
                26 to April 1, 2007
            
            
            6,630
            
            
            22.02
            
            
            -
            
            
            -Total
            
            
            14,527
            
            $
            23.01
            
            
            -
            
            
            -





The
      purchased shares indicated in the above table were surrendered to satisfy
      tax withholding obligations in connection with the vesting of restricted
      stock.














16






**ITEM
      6.****EXHIBITS**








10.1
            
            Amended
                and Restated 2004 Omnibus Incentive Compensation Plan, as of March
                30,
                200710.2
            
            2001
                Stock Incentive Plan, as amended March 30, 200710.3
            
            1999
                Stock Incentive Plan, as amended March 30, 200710.4
            
            1997
                Stock Incentive Plan, as amended March 30, 200710.5
            
            Restoration
                Plan, as amended March 30, 200710.6
            
            Supplemental
                Executive Retirement Plan, as amended March 30, 200710.7
            
            Form of
                Amended and Restated Change of Control Employment Agreement applicable
                to
                Chief Executive Officer,
                as amended March 30, 200710.8
            
            Form of
                Amended and Restated Change of Control and Employment Agreement applicable
                to named executive officers other than the Chief Executive
                Officer,
                as amended March 30, 200710.9
            
            Executive
                Severance Plan - Chief Executive Officer, as amended March 30,
                200710.10
            
            Executive
                Severance Plan - Senior Vice Presidents and Elected Vice Presidents,
                amended March 30, 200710.11
            
            Management
                Incentive Compensation Plan, as amended March 30, 200731.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002, dated as of May 7, 200731.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002, dated as of May 7, 200732.1
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002, dated as of May 7, 200732.2
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002, dated as of May 7,
                2007














**SIGNATURE**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.








Intermec,
                Inc.(Registrant)By
            /s/
                Lanny H. MichaelLanny
                H. Michael*Chief
                Financial Officer*May
                7, 2007




















17