UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





ý
            
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the quarterly period ended March 29, 2009ORo
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      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
      36th 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.


Yes ý
            No o


Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).


Yes o
            No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check
one):




Large
      accelerated filer ý
            
            
            
            Accelerated
      filer oNon-accelerated
      filer   o
            
            
            
            Smaller
      reporting company filer o(Do
      not check if a smaller reporting company)





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


Yes o
            No ý





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 26, 2009Common
      Stock, $0.01 par value per share
            
            62,027,577 shares











INTERMEC,
INC.


TABLE
OF CONTENTS


REPORT
ON FORM 10-Q


FOR
THE QUARTER ENDED MARCH 29, 2009





Page
                  NumberPART I.
      FINANCIAL INFORMATIONITEM
      1.
                Financial
      StatementsCondensed Consolidated
      Statements of Operations (unaudited) for the Quarters Ended March 29,
      2009, and March 30, 2008
                
                
                1Condensed Consolidated
      Balance Sheets (unaudited) as of March 29, 2009, and December 31,
      2008
                
                
                2Condensed Consolidated
      Statements of Cash Flows (unaudited) for the Quarters Ended March 29,
      2009, and March 30, 2008
                
                
                3Notes to Condensed
      Consolidated Financial Statements (unaudited)
                
                
                4 -
      11ITEM
      2.
                Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations
                
                
                12
      - 17ITEM
      3.
                Quantitative and Qualitative
      Disclosures about Market Risk
                
                
                18ITEM
      4.
                Controls and
      Procedures
                
                
                18PART
      II. OTHER INFORMATIONITEM
      1.
                Legal
      Proceedings
                
                
                19ITEM
      1A.
                Risk Factors
                
                
                19
      - 20ITEM
      2.
                Unregistered Sales of
      Equity Securities and Use of Proceeds
                
                
                20ITEM
      6.
                Exhibits
                
                
                20Signature









PART I.
FINANCIAL INFORMATION





ITEM
1. FINANCIAL STATEMENT


INTERMEC,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(In
thousands, except per share amounts)


(Unaudited)








Quarter
      EndedMarch
      29, 2009
                            
                            
                            March
      30, 2008Revenues:Product
                            
                            $
                            128,664
                            
                            
                            $
                            179,574Service
                            
                            
                            33,909
                            
                            
                            
                            37,205Total
      Revenues
                            
                            
                            162,573
                            
                            
                            
                            216,779Costs
      and expenses:Cost
      of product revenues
                            
                            
                            83,366
                            
                            
                            
                            107,705Cost
      of service revenues
                            
                            
                            20,136
                            
                            
                            
                            21,706Research
      and development
                            
                            
                            15,913
                            
                            
                            
                            17,192Selling,
      general and administrative
                            
                            
                            51,009
                            
                            
                            
                            57,966Restructuring
      charges
                            
                            
                            8,582
                            
                            
                            
                            -Total
      costs and expenses
                            
                            
                            179,006
                            
                            
                            
                            204,569Operating
      (loss) profit
                            
                            
                            (16,433
                            )
                            
                            
                            12,210Interest
      income
                            
                            
                            341
                            
                            
                            
                            1,675Interest
      expense
                            
                            
                            (226
                            )
                            
                            
                            (1,790
                            )(Loss)
      earnings before income taxes
                            
                            
                            (16,318
                            )
                            
                            
                            12,095Income
      tax (benefit) expense
                            
                            
                            (5,917
                            )
                            
                            
                            4,389Net
      (loss) earnings
                            
                            $
                            (10,401
                            )
                            
                            $
                            7,706Basic
      (loss) earnings per share
                            
                            $
                            (0.17
                            )
                            
                            $
                            0.13Diluted
      (loss) earnings per share
                            
                            $
                            (0.17
                            )
                            
                            $
                            0.13Shares
      used in computing basic (loss) earnings per share
                            
                            
                            61,455
                            
                            
                            
                            60,956Shares
      used in computing diluted (loss) earnings per share
                            
                            
                            61,455
                            
                            
                            
                            61,475














See
accompanying notes to condensed consolidated financial statements.











1


INTERMEC,
INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)


(Unaudited)





March
      29,
                          
                          
                          December
      31,2009
                          
                          
                          2008ASSETSCurrent
      assets:Cash
      and cash equivalents
                          
                          $
                          216,049
                          
                          
                          $
                          221,335Short-term
      investments
                          
                          
                          71
                          
                          
                          
                          156Accounts
      receivable, net of allowance for doubtful accountsand
      sales returns of $10,268 and $10,789
                          
                          
                          107,936
                          
                          
                          
                          138,549Inventories,
      net
                          
                          
                          107,541
                          
                          
                          
                          116,949Net
      current deferred tax assets
                          
                          
                          62,207
                          
                          
                          
                          56,295Other
      current assets
                          
                          
                          14,040
                          
                          
                          
                          14,405Total
      current assets
                          
                          
                          507,844
                          
                          
                          
                          547,689Property,
      plant and equipment, net
                          
                          
                          39,720
                          
                          
                          
                          41,348Intangibles,
      net
                          
                          
                          3,264
                          
                          
                          
                          3,521Net
      deferred tax assets
                          
                          
                          166,888
                          
                          
                          
                          167,834Other
      assets
                          
                          
                          29,166
                          
                          
                          
                          29,503Total
      assets
                          
                          $
                          746,882
                          
                          
                          $
                          789,895LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                          
                          $
                          82,078
                          
                          
                          $
                          112,772Payroll
      and related expenses
                          
                          
                          23,575
                          
                          
                          
                          24,799Deferred
      revenues
                          
                          
                          42,381
                          
                          
                          
                          38,712Total
      current liabilities
                          
                          
                          148,034
                          
                          
                          
                          176,283Long-term
      deferred revenues
                          
                          
                          23,538
                          
                          
                          
                          25,980Pension
      liability
                          
                          
                          91,922
                          
                          
                          
                          92,129Other
      long-term liabilities
                          
                          
                          13,109
                          
                          
                          
                          13,747CommitmentsShareholders’
      equity:Common
      stock (250,000 shares authorized, 61,957 and 61,766 shares issued
      andoutstanding)
                          
                          
                          619
                          
                          
                          
                          618Additional
      paid-in capital
                          
                          
                          696,136
                          
                          
                          
                          694,296Accumulated
      deficit
                          
                          
                          (172,803
                          )
                          
                          
                          (162,402
                          )Accumulated
      other comprehensive loss
                          
                          
                          (53,673
                          )
                          
                          
                          (50,756
                          )Total
      shareholders’ equity
                          
                          
                          470,279
                          
                          
                          
                          481,756Total
      liabilities and shareholders’ equity
                          
                          $
                          746,882
                          
                          
                          $
                          789,895












See
accompanying notes to condensed consolidated financial statements.








2


INTERMEC,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)








Quarter
      EndedMarch
      29,
                
                
                March
      30,2009
                
                
                2008Cash
      and cash equivalents at beginning of period
                
                $
                221,335
                
                
                $
                237,247Cash
      flows from operating activities:Net
      (loss) earnings
                
                
                (10,401
                )
                
                
                7,706Adjustments
      to reconcile net (loss) earnings to net cash provided by operating
      activities:Depreciation
      and amortization
                
                
                3,974
                
                
                
                3,742Deferred
      taxes
                
                
                (6,183
                )
                
                
                3,804Excess
      tax shortfall (benefit) from stock-based payment
      arrangements
                
                
                557
                
                
                
                (581
                )Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                30,613
                
                
                
                25,454Inventories
                
                
                9,228
                
                
                
                (21,380
                )Accounts
      payable and accrued expenses
                
                
                (31,192
                )
                
                
                (372
                )Other
      operating activities
                
                
                3,495
                
                
                
                (857
                )Net
      cash provided by operating activities
                
                
                91
                
                
                
                17,516Cash
      flows from investing activities:Capital
      expenditures
                
                
                (2,385
                )
                
                
                (3,803
                )Proceeds
      from sale of property
                
                
                1,866
                
                
                
                -Purchases
      of investments
                
                
                -
                
                
                
                (760
                )Sale
      of investments
                
                
                -
                
                
                
                27,755Patent
      legal fees
                
                
                (1,096
                )
                
                
                (778
                )Net
      cash (used in) provided by investing activities
                
                
                (1,615
                )
                
                
                22,414Cash
      flows from financing activities:Repayment
      of debt
                
                
                -
                
                
                
                (100,000
                )Excess
      tax (shortfall) benefit from stock-based payment
      arrangements
                
                
                (557
                )
                
                
                581Stock
      options exercised
                
                
                142
                
                
                
                2,345Other
      financing activities
                
                
                220
                
                
                
                879Net
      cash used in financing activities
                
                
                (195
                )
                
                
                (96,195
                )Effect
      of exchange rate changes on cash and cash
equivalents
                
                
                (3,567
                )
                
                
                5,546Resulting
      decrease in cash and cash equivalents
                
                
                (5,286
                )
                
                
                (50,719
                )Cash
      and cash equivalents at end of period
                
                $
                216,049
                
                
                $
                186,528














See
accompanying notes to condensed consolidated financial statements.





3


INTERMEC,
INC.


NOTES
TO CONDENSED 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 Annual Report on Form 10-K for the year-ended December 31, 2008
(the “Annual Report on Form 10-K for the year ended December 31, 2008”). The
same accounting policies are followed for preparing quarterly and annual
financial information unless disclosed otherwise in the notes
below.




Recently
Adopted Accounting Pronouncements





In April
2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff
Position ("FSP") No. FAS 142-3, Determination of the Useful Life of
Intangible Assets. The final FSP amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under Statement of Financial
Accounting Standards ("SFAS") No.142, Goodwill and Other Intangible
Assets. We adopted this FSP effective January 1, 2009. The adoption of
this standard did not have material impact on our consolidated financial
statements.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No.
133("SFAS No. 161"), which requires
additional disclosures about the objectives of the derivative instruments and
hedging activities, the method of accounting for such instruments under SFAS No.
133, Accounting for Derivative
Instruments and Hedging Activities (as amended) ("SFAS No. 133") and its
related interpretations, and a tabular disclosure of the effects of such
instruments and related hedged items on our financial position, financial
performance, and cash flows. We adopted SFAS No. 161 effective January 1, 2009.
The adoption of SFAS No. 161 had no financial impact on our consolidated
financial statements and only required additional disclosures. We have applied
the requirements of SFAS No. 161 prospectively. Therefore, disclosures related
to comparative periods prior to the date of adoption have not been presented.
See note 3, Derivative
Instruments, for details.





In
February 2008, the FASB issued FSP 157-2, Effective Date of FASBStatementNo. 157, which delays the effective
date of SFAS 157,  Fair Value Measurements
("SFAS No.
157") for all nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the financial
statements on a recurring  basis (at least annually). In addition, the
FASB issued FSP 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active ("FSP 157-3"), which clarified
the application of how the fair value of a financial asset is determined when
the market for that financial asset is inactive. FSP 157-3 was effective upon
issuance. FSP 157-2 was effective for us beginning January 1, 2009. The adoption
of this standard did not have material impact on our consolidated financial
statements. See note 2, Fair
Value Measurements, for details.





In
December 2007, the FASB issued SFAS No. 160, NoncontrollingInterests in Consolidated Financial
Statements, an amendment of ARB No. 51 ("SFAS No.160"), which
establishes the accounting and reporting for noncontrolling
interests.  Noncontrolling interests should be reported as a component
of equity separate from the parent’s equity, and purchases or sales of equity
interests that do not result in a change in control will be accounted for as
equity transactions. The amount of consolidated net income attributable to the
parent and to the noncontrolling interests should be identified and presented on
the face of the consolidated statement of income. We adopted SFAS No. 160
effective January 1, 2009. The adoption of SFAS No. 160 did not have a material
impact on our consolidated financial statements.











4


INTERMEC,
INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)





Recent
Accounting Pronouncements Not Yet Adopted





In
December 2008, the FASB issued FSP No. FAS 132 (R) -1, Employers’ Disclosures about Postretirement Benefit
Plan Assets, an amendment of FASB Statement No. 132 (revised 2003)
("FSP
No.132
(R) -1").It provides guidance on an employer’s disclosures about plan assets,
including: how investment allocation decisions are made and factors that are
pertinent to an understanding of investment policies and strategies; the major
categories of plan assets; the inputs and valuation techniques used to measure
the fair value of plan assets; the effect of fair value measurements using
significant unobservable inputs (level 3) on changes in plan assets for the
period, and significant concentrations of risks within plan assets.FSP
132 (R) -1 is effective for fiscal years ending after December 15, 2009. We are
currently assessing the potential impact that adoption of this standard may have
on our financial statements.




In
April 2009, the FASB issued FSP FAS 107-1 and
APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments.  It
requires the fair value for all financial instruments within the scope of SFAS
No. 107, Disclosures
about Fair Value of Financial Instruments("SFAS
No. 107"), to be disclosed in the interim periods as well as in
annual financial statements.  This standard is effective for the
quarter ending after June 15, 2009.  We are currently assessing the
potential impact that adoption of this standard may have on our financial
statements.




In
April 2009, the FASB issued FSP FAS 157-4, Determing
Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not
Orderly. It clarifies the objective and method of fair value measurement
even when there has been a significant decrease in market activity for the asset
being measured. This standard is effective for the quarter ending after June 15,
2009. We are currently assessing the potential impact that adoption of this
standard may have on our financial statements.




Reclassification





Certain
amounts within the 2008 condensed consolidated financial statements have been
reclassified to conform to the 2009 presentation.





2.
Fair Value Measurements





Assets
and Liabilities Measured at Fair Value on a Recurring Basis





Our
financial assets and liabilities subject to these fair value measurement
provisions as of March 29, 2009 comprised the following (in
thousands):





Balance
      as ofLevel
      1
                
                
                Level
      2
                
                
                Level
      3
                
                
                March
      29, 2009Money
      market funds
                
                $
                138,556
                
                
                $
                -
                
                
                $
                -
                
                
                $
                138,556Certificates
      of deposit
                
                
                3,544
                
                
                
                -
                
                
                
                -
                
                
                
                3,544Stock
                
                
                71
                
                
                
                -
                
                
                
                -
                
                
                
                71Derivative
      instruments - assets
                
                
                -
                
                
                
                1,334
                
                
                
                -
                
                
                
                1,334Total
      assets at fair value
                
                $
                142,171
                
                
                $
                1,334
                
                
                $
                -
                
                
                $
                143,505Balance
      as ofLevel
      1
                
                
                Level
      2
                
                
                Level
      3
                
                
                March
      29, 2009Derivative
      instruments - liabilities
                
                $
                -
                
                
                $
                (1,952
                )
                
                $
                -
                
                
                $
                (1,952
                )Total
      liabilities at fair value
                
                $
                -
                
                
                $
                (1,952
                )
                
                $
                -
                
                
                $
                (1,952
                )

















5


INTERMEC,
INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)








2.
Fair Value Measurements (continued)





Our
financial assets and liabilities subject to these fair value measurement
provisions as of December 31, 2008, comprised the following (in
thousands):





Balance
      as ofLevel
      1
                
                
                Level
      2
                
                
                Level
      3
                
                
                December
      31, 2008Money
      market funds
                
                $
                132,309
                
                
                $
                -
                
                
                $
                -
                
                
                $
                132,309Certificates
      of deposit
                
                
                3,709
                
                
                
                -
                
                
                
                -
                
                
                
                3,709Stock
                
                
                156
                
                
                
                -
                
                
                
                -
                
                
                
                156Derivative
      instruments - assets
                
                
                -
                
                
                
                3,712
                
                
                
                -
                
                
                
                3,712Total
      assets at fair value
                
                $
                136,174
                
                
                $
                3,712
                
                
                $
                -
                
                
                $
                139,886Balance
      as ofLevel
      1
                
                
                Level
      2
                
                
                Level
      3
                
                
                December
      31, 2008Derivative
      instruments - liabilities
                
                $
                -
                
                
                $
                (7,271
                )
                
                $
                -
                
                
                $
                (7,271
                )Total
      liabilities at fair value
                
                $
                -
                
                
                $
                (7,271
                )
                
                $
                -
                
                
                $
                (7,271
                )




Assets
and Liabilities Measured at Fair Value on a Nonrecurring Basis





Effective
January 1, 2009, all other nonfinancial assets and liabilities measured at fair
values in the financial statements on a nonrecurring basis are subject to SFAS
No. 157. Nonfinancial nonrecurring assets and liabilities included on our
condensed consolidated balance sheets include long lived assets that are
measured at fair value to test for and measure an impairment charge, when
necessary. No such nonfinancial assets or liabilities were subject to SFAS No.
157 for the quarter ended March 29, 2009.





3.
Derivative Instruments





Effective
January 1, 2009, we adopted the disclosure requirements of SFAS No. 161. Due to
our global operations, we are exposed to foreign currency exchange rate
fluctuations in the normal course of our businesses. Our treasury policies allow
us to offset the risks associated with the effects of certain foreign currency
exposures through the purchase of foreign exchange forward
contracts.  Our policy prohibits speculation in financial instruments
for profit on the exchange rate price fluctuation. We enter into foreign
exchange forward contracts to primarily hedge the impact of fluctuations of
foreign exchange arising from intercompany transactions, specifically for
inventory purchases made by our subsidiaries that are denominated in U.S.
dollars. Our foreign exchange forward contracts are not designated as hedging
instruments pursuant to SFAS No. 133. Accordingly, we record these contracts at
fair value, with changes in value recognized in earnings in the period of change
and the fair values of these contracts are recorded on the consolidated balance
sheets. As of March 29, 2009, the aggregate notional amounts of the forward
contracts we held for foreign currencies were $83.0 million.  These
contracts do not contain any credit-risk-related contingent
features.





We
attempt to manage the counterparty risk associated with these foreign forward
exchange contracts by limiting transactions to counterparties with which we have
an established banking relationship. In addition, these contracts generally
settle in approximately 30 days. See Note 2, Fair Value Measurements, for
information on the fair value of these contracts.





The fair
value of derivative assets was $1.3 million and the fair value of derivative
liabilities was $1.9 million at March 29, 2009.  We recorded a net of
$0.6 million in accounts payable and accrued expenses in the condensed
consolidated balance sheets as of March 29, 2009.





The
amount of net gain recorded in selling, general and administrative expense in
the condensed consolidated statements of operations was not material for the
quarter ended March 29, 2009.











6


INTERMEC,
INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)





4.
Inventories





Inventories
comprise the following (in thousands):





March
      29, 2009
                        
                        
                        December
      31, 2008Raw
      materials
                        
                        $
                        41,576
                        
                        
                        $
                        45,908Service
      parts
                        
                        
                        8,857
                        
                        
                        
                        8,772Work
      in process
                        
                        
                        633
                        
                        
                        
                        269Finished
      goods
                        
                        
                        56,475
                        
                        
                        
                        62,000Inventories,
      net
                        
                        $
                        107,541
                        
                        
                        $
                        116,949


In
addition to the inventories described above, service parts inventories totaling
$4.2 million and $4.0 million that are not expected to be sold within the next
12 months are classified as other assets as of March 29, 2009, and December 31,
2008, respectively.





5.
Income Tax (benefit) expense





The tax
benefit for the quarter ended March 29, 2009, reflects an effective tax rate for
continuing operations of 36.3% compared to a U.S. statutory rate of
35%.  The effective tax rate reflects our estimated annual effective
tax rate of approximately 37% for fiscal year 2009, which excludes the impact of
discrete items. The tax provision for the quarter ended March 30, 2008,
reflected an effective tax rate for continuing operations of 36.3% compared to a
U.S. statutory rate of 35%. The tax provision for the quarter ended March 30,
2008, included a 1.4% benefit related to the settlement of a foreign tax
dispute.





6.
Shares Used in Computing Earnings per Share





Basic
(loss) earnings per share is calculated using the weighted average number of
common shares outstanding and issuable for the applicable period. Diluted (loss)
earnings 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
      EndedMarch
      29, 2009
                    
                    March
      30, 2008Weighted
      average shares - basic
                    
                    
                    61,455,061
                    
                    60,956,467Dilutive
      effect of unvested restricted shares and stock options
                    
                    
                    -
                    
                    518,473Weighted
      average shares - diluted
                    
                    
                    61,455,061
                    
                    61,474,940





Our
employees and directors held options to purchase 2,709,667 and 1,532,065 shares
of our common stock for the quarters ended March 29, 2009 and March 30, 2008,
respectively, that were not included in weighted average shares diluted because
they were antidilutive to the diluted earnings per share computation. These
options would 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.








7


INTERMEC,
INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)




7.
Equity





A summary
of share-based compensation expense related to employee stock option, Restricted
Stock Units (“RSU”) and Performance Stock Units (‘PSU”) for the quarters ended
March 29, 2009, and March 30, 2008, (in thousands) was as follows:





Quarter
      EndedMarch
      29, 2009
                            
                            
                            March
      30, 2008Stock
      based compensation expense:Cost
      of revenues
                            
                            $
                            63
                            
                            
                            $
                            68Selling,
      general and administrative
                            
                            
                            1,818
                            
                            
                            
                            1,925Total
                            
                            $
                            1,881
                            
                            
                            $
                            1,993





For the
quarters ended March 29, 2009, and March 30, 2008, we granted 109,000 and
113,000 options, respectively, to employees with an average fair value of $4.93
and $9.32 a share, respectively, which will vest annually in even quantities
over the next four years. The Black-Scholes assumptions used for these
calculations were as follows:





Quarter
      EndedMarch
      29, 2009
                        
                        
                        March
      30, 2008Fair
      value assumptions:Expected
      life in years
                        
                        
                        4.7
                        
                        
                        
                        4.8Expected
      volatility
                        
                        
                        52.72
                        %
                        
                        
                        44.66
                        %Expected dividend
      yield
                        
                        
                        0.00
                        %
                        
                        
                        0.00
                        %Risk-free
      interest rate
                        
                        
                        1.74
                        %
                        
                        
                        2.94
                        %





Our
accumulated other comprehensive income comprised the following (in
thousands):





March
      29, 2009
                      
                      
                      December
      31, 2008Foreign
      currency translation adjustment, net of tax
                      
                      $
                      (4,363
                      )
                      
                      $
                      (792
                      )Unamortized
      benefit plan costs, net of tax
                      
                      
                      (48,937
                      )
                      
                      
                      (49,645
                      )Unrealized
      loss on securities, net of tax
                      
                      
                      (373
                      )
                      
                      
                      (319
                      )Accumulated
      other comprehensive loss
                      
                      $
                      (53,673
                      )
                      
                      $
                      (50,756
                      )





Other
comprehensive income for the quarters ended March 29, 2009, and March 30, 2008,
was as follows (in thousands):





Quarter
      EndedMarch
      29, 2009
                            
                            
                            March
      30, 2008Net
      (loss) earnings
                            
                            $
                            (10,401
                            )
                            
                            $
                            7,706Other
      comprehensive (loss) incomeForeign
      currency translation adjustment, net of tax
                            
                            
                            (3,571
                            )
                            
                            
                            4,755Unrealized
      loss on securities, net of tax
                            
                            
                            (54
                            )
                            
                            
                            (98
                            )Amortization
      of benefit plan costs, net of tax
                            
                            
                            708
                            
                            
                            
                            (11
                            )Other
      comprehensive (loss) income
                            
                            $
                            (13,318
                            )
                            
                            $
                            12,352























8


INTERMEC, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)





8.
Segment Reporting





Our
reportable segments are comprised of products and services. The product segment
generates revenue from the design, development, manufacture, sale and resale of
wired and wireless automated identification and data collection (“AIDC”)
products, mobile computing products, wired and wireless bar code printers, label
media and radio frequency identification (“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 condensed consolidated financial statements. Performance and
resource allocations are primarily measured by sales and gross profit. All other
earnings, costs and expenses are aggregated and reported on a consolidated
basis.





For the
quarters ended March 29, 2009, and March 30, 2008, one distributor, ScanSource
Inc., accounted for more than 10% of our revenues. Total sales to this
distributor were $20.2 million and $26.6 million for the quarters ended March
29, 2009, and March 30, 2008, respectively.





The
following table sets forth our revenues and gross profit by reportable segment
(in thousands):





Quarter
      EndedMarch
      29, 2009
                
                
                March
      30, 2008Revenues:Product
                
                $
                128,664
                
                
                $
                179,574Service
                
                
                33,909
                
                
                
                37,205Total
                
                $
                162,573
                
                
                $
                216,779Gross
      profit:Product
                
                $
                45,298
                
                
                $
                71,868Service
                
                
                13,773
                
                
                
                15,500Total
                
                $
                59,071
                
                
                $
                87,368





The
following table sets forth our revenues by product lines (in
thousands):




Quarter
      EndedMarch
      29, 2009
                
                
                March
      30, 2008Revenues:Systems
      and solutions
                
                $
                93,138
                
                
                $
                125,966Printer
      and media
                
                
                35,526
                
                
                
                53,608Service
                
                
                33,909
                
                
                
                37,205Total
                
                $
                162,573
                
                
                $
                216,779























9


INTERMEC,
INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)





9.
Commitments and Contingencies





The
following table indicates the change in our warranty liability included in
current liabilities (in thousands):





Quarter
      EndedMarch
      29, 2009
                
                
                March
      30, 2008Beginning
      Balance
                
                $
                4,220
                
                
                $
                4,305Payments
                
                
                (689
                )
                
                
                (791
                )Additional
      provision
                
                
                557
                
                
                
                764Ending
      Balance
                
                $
                4,088
                
                
                $
                4,278





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 which
may be incurred by them.





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.





10.
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 (income) for the
quarters ended March 29, 2009, and March 30, 2008, are as follows (in
thousands):





U.S.
      Defined Benefit Plans
                                  
                                  Non
      U.S. Defined Benefit Plans
                                  
                                  Other
      Postretirement Benefit Plans2009
                                  
                                  
                                  2008
                                  
                                  
                                  
                                  2009
                                  
                                  
                                  
                                  2008
                                  
                                  
                                  
                                  2009
                                  
                                  
                                  
                                  2008Quarters
      Ended March 29, 2009 and March 30, 2008:Service
      cost
                                  
                                  $
                                  327
                                  
                                  
                                  $
                                  366
                                  
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  $
                                  -Interest
      cost
                                  
                                  
                                  2,937
                                  
                                  
                                  
                                  2,705
                                  
                                  
                                  
                                  
                                  426
                                  
                                  
                                  
                                  
                                  666
                                  
                                  
                                  
                                  
                                  64
                                  
                                  
                                  
                                  
                                  44Expected
      return on plan assets
                                  
                                  
                                  (2,694
                                  )
                                  
                                  
                                  (2,871
                                  )
                                  
                                  
                                  
                                  (407
                                  )
                                  
                                  
                                  
                                  (904
                                  )
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -Amortization
      and deferrals:Transition
      asset
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  (31
                                  )
                                  
                                  
                                  
                                  (42
                                  )
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -Actuarial
      loss
                                  
                                  
                                  952
                                  
                                  
                                  
                                  349
                                  
                                  
                                  
                                  
                                  9
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -Prior
      service cost
                                  
                                  
                                  144
                                  
                                  
                                  
                                  144
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  -Net
      pension and postretirement periodic benefit cost (income)
                                  
                                  $
                                  1,666
                                  
                                  
                                  $
                                  693
                                  
                                  
                                  
                                  $
                                  (3
                                  )
                                  
                                  
                                  $
                                  (280
                                  )
                                  
                                  
                                  $
                                  64
                                  
                                  
                                  
                                  $
                                  44




During
the quarter ended March 29, 2009, we contributed approximately $2.0 million to
our pension and other postretirement benefit plans, comprising $0.7 million in
benefits paid pertaining to unfunded U.S. defined benefit plans, $0.8 million in
matching contributions to our 401(k) plan, and $0.5 million in contributions to
our foreign pension plans. Benefits paid pertaining to our other postretirement
benefit plans were not material during the first quarter of 2009. We expect to
contribute an additional $6.2 million to these plans during the remainder of
2009, of which $2.1 million relates to benefit payments on our unfunded U.S.
defined benefit plans, $2.2 million in matching contributions to our 401(k)
plan, $1.5 million in contributions to our foreign pension plans and $0.4
million in benefit payments pertaining to our other postretirement benefit
plans.








10


INTERMEC,
INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)





11.
Restructuring Charges





2008
Restructuring Charges:





In July
2008, we committed to a business restructuring plan intended to reduce our cost
structure and streamline operations. Pursuant to this plan, we relocated
the final assembly of our current product lines from Everett, Washington, to
Venture Corporation Limited, a global electronics services
provider.  As part of the plan, we also consolidated two U.S. service
depots into existing locations in Charlotte, North Carolina and Monterey, Mexico
and transferred our on-site field service repair to a third party supplier. We
commenced implementation of the plan in the third quarter of 2008 and expect the
plan to be fully implemented by June 30, 2009.  All severance and
other periodic transitional costs will be cash expenditures. All the
restructuring costs were accrued in 2008.





2009
Restructuring Charges:




In
January 2009, we committed to a business restructuring plan intended to
reorganize our sales function and to reduce our operating cost structure and
improve efficiency. We believe these actions are appropriate strategically and
are prudent adjustments in view of the generally weakened global economy and
uncertain market conditions expected in the foreseeable future. The total
restructuring costs are expected to be approximately $10.2 million, including
employee termination costs of approximately $9.4 million and $0.8 million of
other periodic transitional costs. We recorded $8.6 million of the
restructuring charge in the first quarter of 2009, and we expect the remainder
will be recorded in the second quarter of 2009. We anticipate that all of the
severance related and periodic transitional costs will be cash
expenditures. Our remaining future expected costs are $1.0 million for
employee termination and $0.6 million for other costs.




In April
2009, we committed to a business restructuring plan including a reduction of our
work force. We believe these actions are appropriate strategically and are
prudent adjustments in view of the generally weakened global economy and
uncertain market conditions expected in the foreseeable future. The total
restructuring costs are expected to be in a range of $15.0 to $17.0
million, including employee termination costs of approximately $12.5 to $13.5
million and $2.5 to $3.5 million of other periodic transitional costs. We
expect to record approximately $9.0 to $10.0 million in the second quarter
of 2009, and the remainder in the rest of 2009. We anticipate that all of
the severance related and periodic transitional costs will be cash
expenditures.


The
following table displays the restructuring charges incurred by business segment
(in millions):





Segment
                                      
                                      Total
      charges for 2008 and 2009 restructuring plans expected to be
      incurred(a)
                                      
                                      
                                      Amount
      of charges incurred in the quarter ended March 29, 2009
                                      
                                      
                                      Total
      Restructuring charges incurred to dateProduct
                                      
                                      $
                                      2.6
                                      
                                      
                                      $
                                      0.2
                                      
                                      
                                      $
                                      2.5Service
                                      
                                      
                                      2.2
                                      
                                      
                                      
                                      1.0
                                      
                                      
                                      
                                      2.2Unallocated
                                      
                                      
                                      12.0
                                      
                                      
                                      
                                      7.4
                                      
                                      
                                      
                                      9.7Total
                                      
                                      $
                                      16.8
                                      
                                      
                                      $
                                      8.6
                                      
                                      
                                      $
                                      14.4




The
reconciliation of accrued restructuring charges is summarized in the table below
(in millions):





SFAS
      No.112
                            
                            
                            SFAS
      No.146
                            
                            
                            Employee
      termination
                            
                            Other
      costs
                            
                            
                            Total
      restructuringBalance
      at December 31, 2008
                            
                            $
                            1.2
                            
                            
                            $
                            -
                            
                            
                            $
                            1.2
                            
                            
                            
                            $
                            0.1
                            
                            
                            $
                            1.32009
      restructuring charge
                            
                            
                            3.1
                            
                            
                            
                            5.3
                            
                            
                            
                            8.4
                            
                            
                            
                            
                            0.2
                            
                            
                            
                            8.6Utilization
      of 2008 restructuring plan
                            
                            
                            (0.6
                            )
                            
                            
                            -
                            
                            
                            
                            (0.6
                            )
                            
                            
                            
                            -
                            
                            
                            
                            (0.6
                            )Utilization
      of 2009 restructuring plan
                            
                            
                            (2.8
                            )
                            
                            
                            (0.5
                            )
                            
                            
                            (3.3
                            )
                            
                            
                            
                            (0.4
                            )
                            
                            
                            (3.7
                            )Balance
      at March 29, 2009 (a)
                            
                            $
                            0.9
                            
                            
                            $
                            4.8
                            
                            
                            $
                            5.7
                            
                            
                            
                            $
                            (0.1
                            )
                            
                            $
                            5.6







11


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. These factors include but are not
limited to our ability to maintain or to improve the revenues and profits of our
continuing operations, maintain or reduce expenses, maintain or improve
operational efficiency, use our investment in research and development to
generate future revenue, maintain or improve year-over-year growth in the
revenues and profits of our continuing operations and the other factors
described in Part I, “Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and in Part II, “Item 1A, Risk Factors,”
of this filing. 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 report
on Form 10-Q.





Such
forward-looking statements involve and are dependent upon certain risks and
uncertainties. When used in this document and in documents it refers to, the
words “anticipate,” “believe,” “will,” “intend,” “project” and “expect” and
similar expressions as they relate to us or our management are intended to
identify such forward-looking statements.





Forward-looking
statements 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 discussed 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, as well as the Risk
Factors set forth in Item 1A of our Annual Report on Form 10-K for the year
ended December 31, 2008, which discuss risk factors associated with our
business.





Overview





Intermec, Inc. (“Intermec”,
“us”, “we”, “our”) designs, develops, integrates, sells, resells and services
wired and wireless  automated identification and data collection (“AIDC”)
products and provides related services. Our products include mobile computing
products, bar code scanners, radio frequency identification (“RFID”) products,
wired and wireless bar code printers and label media products. These products
and services allow customers to identify, track and manage their assets and
other resources in ways that improve the efficiency and effectiveness of their
business operations.  Our products are designed to withstand mobile
use and rugged warehouse and field conditions.





Our
products are sold globally for field mobility applications such as asset
visibility and management, direct store delivery, maintenance and repair,
in-transit visibility, routing and navigation, and telematics. Our products are
also sold globally for in-premise applications such as asset visibility, freight
yard operations, inventory management, warehouse operations, and work-in-process
management.




The key
elements of our strategy are to target high growth opportunities in selected
application markets; focus on developing and selling differentiated new products
and services; emphasize channel fulfillment; pursue geographic expansion
opportunities; and continue the transformation of our supply chain and our other
efficiency initiatives.





Our
financial reporting currency is the U.S. Dollar, and changes in exchange
rates can significantly affect our financial trends and reported results. 
If the U.S. Dollar weakens year-over-year relative to currencies in our
international locations, our consolidated revenues, costs of revenues and
operating expenses will be higher than if currencies had remained constant.
If the U.S. Dollar strengthens year-over-year relative to currencies in our
international locations, our consolidated revenues, costs of revenues and
operating expenses will be lower than if currencies had remained constant. We
believe it is important to evaluate our operating results and growth rates
before and after the effect of currency changes.














12


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





Results
of Operations





The
following discussion compares our results of operations for the quarters ended
March 29, 2009, and March 30, 2008.





Results
of operations and percentage of revenues were as follows (in
millions):




Quarter
      EndedMarch
      29, 2009
                                                                            
                                                                            
                                                                            March
      30, 2008Amounts
                                                                            
                                                                            
                                                                            Percent
      of Revenues
                                                                            
                                                                            
                                                                            Amounts
                                                                            
                                                                            
                                                                            Percent
      of RevenuesRevenues
                                                                            
                                                                            $
                                                                            162.6
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            216.8Costs
      and expensesCost
      of revenues
                                                                            
                                                                            
                                                                            103.5
                                                                            
                                                                            
                                                                            
                                                                            63.7
                                                                            %
                                                                            
                                                                            
                                                                            129.4
                                                                            
                                                                            
                                                                            
                                                                            59.7
                                                                            %Research
      and development
                                                                            
                                                                            
                                                                            15.9
                                                                            
                                                                            
                                                                            
                                                                            9.8
                                                                            %
                                                                            
                                                                            
                                                                            17.2
                                                                            
                                                                            
                                                                            
                                                                            7.9
                                                                            %Selling,
      general and administrative
                                                                            
                                                                            
                                                                            51.0
                                                                            
                                                                            
                                                                            
                                                                            31.3
                                                                            %
                                                                            
                                                                            
                                                                            58.0
                                                                            
                                                                            
                                                                            
                                                                            26.8
                                                                            %Restructuring
      charges
                                                                            
                                                                            
                                                                            8.6
                                                                            
                                                                            
                                                                            
                                                                            5.3
                                                                            %
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Total
      costs and expenses
                                                                            
                                                                            
                                                                            179.0
                                                                            
                                                                            
                                                                            
                                                                            110.1
                                                                            %
                                                                            
                                                                            
                                                                            204.6
                                                                            
                                                                            
                                                                            
                                                                            94.4
                                                                            %Operating
      (loss)  profit
                                                                            
                                                                            
                                                                            (16.4
                                                                            )
                                                                            
                                                                            
                                                                            -10.1
                                                                            %
                                                                            
                                                                            
                                                                            12.2
                                                                            
                                                                            
                                                                            
                                                                            5.6
                                                                            %Interest,
      net
                                                                            
                                                                            
                                                                            0.1
                                                                            
                                                                            
                                                                            
                                                                            0.1
                                                                            %
                                                                            
                                                                            
                                                                            (0.1
                                                                            )
                                                                            
                                                                            
                                                                            -0.1
                                                                            %(Loss)
      earnings before income taxes
                                                                            
                                                                            
                                                                            (16.3
                                                                            )
                                                                            
                                                                            
                                                                            -10.0
                                                                            %
                                                                            
                                                                            
                                                                            12.1
                                                                            
                                                                            
                                                                            
                                                                            5.6
                                                                            %Income
      tax (benefit) expense
                                                                            
                                                                            
                                                                            (5.9
                                                                            )
                                                                            
                                                                            
                                                                            -3.6
                                                                            %
                                                                            
                                                                            
                                                                            4.4
                                                                            
                                                                            
                                                                            
                                                                            2.0
                                                                            %Net
      (loss) earnings
                                                                            
                                                                            $
                                                                            (10.4
                                                                            )
                                                                            
                                                                            
                                                                            -6.4
                                                                            %
                                                                            
                                                                            $
                                                                            7.7
                                                                            
                                                                            
                                                                            
                                                                            3.6
                                                                            %Basis
      (loss) earnings per share
                                                                            
                                                                            $
                                                                            (0.17
                                                                            )
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            0.13Diluted
      (loss) earnings per share
                                                                            
                                                                            $
                                                                            (0.17
                                                                            )
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            $
                                                                            0.13













13


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





Revenues





Revenues
by category and as a percentage of total revenues from operations for the
quarters ended March 29, 2009, and March 30, 2008, were as follows (in
millions):





Quarter
      EndedMarch
      29, 2009
                        
                        March
      30, 2008Amount
                        
                        Percent
      of Revenues
                        
                        Amount
                        Percent
      of Revenues
                        
                        Change
                        Percentage
      ChangeRevenues
      by category:Systems
      and solutions
                        
                        $
                        93.1
                        
                        57.3
                        %
                        $
                        126.0
                        58.1
                        %
                        $
                        (32.9)
                        (26.1)
                        %Printer
      and media
                        
                        
                        35.6
                        
                        21.9
                        %
                        
                        53.6
                        24.7
                        %
                        
                        (18.0)
                        (33.6)
                        %Service
                        
                        
                        33.9
                        
                        20.8
                        %
                        
                        37.2
                        17.2
                        %
                        
                        (3.3)
                        (8.9)
                        %Total
      revenues
                        
                        $
                        162.6
                        
                        100.0
                        %
                        $
                        216.8
                        100.0
                        %
                        $
                        (54.2)
                        (25.0)
                        %




Revenues
by geographic region and as a percentage of total revenues from operations for
the quarters ended March 29, 2009, and March 30, 2008, were as follows (in
millions):





Quarter
      EndedMarch
      29, 2009
                        
                        March
      30, 2008Amount
                        
                        Percent
      of Revenues
                        
                        Amount
                        Percent
      of Revenues
                        
                        Change
                        Percentage
      ChangeRevenues
      by geographic region:North
      America
                        
                        $
                        103.6
                        
                        63.7
                        %
                        $
                        114.1
                        52.6
                        %
                        $
                        (10.5)
                        (9.2)
                        %Europe,
      Middle East and Africa(EMEA)
                        
                        
                        39.0
                        
                        24.0
                        %
                        
                        78.0
                        36.0
                        %
                        
                        (39.0)
                        (50.0)
                        %All
      others
                        
                        
                        20.0
                        
                        12.3
                        %
                        
                        24.7
                        11.4
                        %
                        
                        (4.7)
                        (19.0)
                        %Total
      revenues
                        
                        $
                        162.6
                        
                        100.0
                        %
                        $
                        216.8
                        100.0
                        %
                        $
                        (54.2)
                        (25.0)
                        %





The
decrease in quarterly revenue of $54.2 million, or 25.0%, was attributable to a
$50.9 million decrease in product revenue, and a $3.3 million decrease in
service revenue. The decrease in product revenue was attributable to a $32.9
million decrease in systems and solution products and an $18.0 million decrease
in printer and media products. The $32.9 million, or 26.1% decline by
systems and solutions, and the decline of $18.0 million, or 33.6%, in our
printer and media business were attributable to an overall downturn in the
global economy and the deferral of purchasing decisions by some of our
customers.





Service
revenues decreased $3.3 million, or 8.9%, over the corresponding prior-year
period. This was due to a decrease in time and materials revenue in the mix of
total service revenue.





Geographically,
revenues in all regions decreased: North America, $10.5 million or 9.2%, EMEA,
$39.0 million or 50.0%, and the rest of the world was down $4.7 million or
19.0%, respectively, over the corresponding prior-year period.  The
changes in foreign currency conversion rates unfavorably impacted EMEA revenue
by $7.7 million, or 10.2%, as compared to the prior year period. Across all
regions the unfavorable impact of foreign currency rates was $10.3 million, or
4.8%, as compared to the prior year period.





14


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





Gross
Profit





Gross
profit and gross margin by revenue category for the quarters ended March 29,
2009, and March 30, 2008, were as follows (in millions):





Quarter
      EndedMarch
      29, 2009
                
                March
      30, 2008Gross
      Profit
                
                Gross
      Margin
                
                Gross
      Profit
                Gross
      MarginProduct
                
                $
                45.3
                
                35.2
                %
                $
                71.9
                40.0
                %Service
                
                
                13.8
                
                40.6
                %
                
                15.5
                41.7
                %Total
      Gross Profit and Gross Margin
                
                $
                59.1
                
                36.3
                %
                $
                87.4
                40.3
                %




The total
gross profit for the quarter ended March 29, 2009, decreased $28.3 million, or
32.4%, compared to the corresponding prior-year period. The decrease in total
gross profit primarily resulted from a $26.6 million decrease in product gross
profit due to the product revenue decline and pressure on related gross
margins.





Product
gross margin for the quarter ended March 29, 2009, decreased 4.8% as compared to
the quarter ended March 30, 2008. The decrease in product gross margin was
primarily due to lower unit volume, unfavorable absorption of fixed costs on
lower volumes and unfavorable impact of foreign currency. Service gross margins
decreased 1.1 percentage points for the quarter ended March 29, 2009, over the
corresponding prior-year period due to lower absorption of fixed costs because
of lower volume.





Operating
Expenses and Interest Income/Expense (in millions)





Quarter EndedMarch
      29, 2009
                
                
                March
      30, 2008
                
                
                ChangeResearch
      and development expense
                
                $
                15.9
                
                
                $
                17.2
                
                
                $
                (1.3
                )Selling,
      general and administrative expense
                
                
                51.0
                
                
                
                58.0
                
                
                
                (7.0
                )Restructuring
      charges
                
                
                8.6
                
                
                
                -
                
                
                
                8.6Interest,
      net
                
                
                0.1
                
                
                
                (0.1
                )
                
                
                0.2





The total
research and development expense was $15.9 and $17.2 million for the quarters
ended March 29, 2009 and March 30, 2008, respectively. The decrease was due to
the timing of projects within our research and development group.




The total
selling, general and administrative (“SG&A”) expenses were $51.0 million and
$58.0 million for the quarters ended March 29, 2009, and March 30, 2008,
respectively. The decrease in SG&A expense for the three months ended March
29, 2009, of $7.0 million, compared to the three month period ended March 30,
2008, was primarily related to sales expense. The reduction in selling expense
is primarily due to the restructuring activities announced in January, 2009, and
the favorable conversion of foreign denominated costs. Higher postretirement
expense and foreign currency translation losses offset some of our cost
reduction activities.





Net
interest income was $0.1 million for the quarter ended March 29, 2009, compared
to net interest expense of $0.1 million for the corresponding prior-year period.
The $0.2 million increase in net interest income reflects the reduction in
interest expense from the repayment of the final $100 million of our debt during
the quarter ended March 30, 2008, offset by a lower average cash balance and
significantly lower average interest rates.





15


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





2008
Restructuring Charges: 
 In
July 2008, we committed to a business restructuring plan intended to reduce our
cost structure and streamline operations. Pursuant to this plan, we
relocated the final assembly of our current product lines from Everett,
Washington, to Venture Corporation Limited, a global electronics services
provider.  As part of the plan, we also consolidated two U.S. service
depots into existing locations in Charlotte, North Carolina and Monterey, Mexico
and transferred our on-site field service repair to a third party supplier.We
commenced implementation of the plan in the third quarter of 2008 and expect the
plan to be fully implemented by June 30, 2009.  All severance and
other periodic transitional costs will be cash expenditures. All the
restructuring costs were accrued in 2008.


2009
Restructuring Charges:  In
January 2009, we committed to a business restructuring plan intended to
reorganize our sales function and to reduce our operating cost structure and
improve efficiency. We believe these actions are appropriate strategically and
are prudent adjustments in view of the generally weakened global economy and
uncertain market conditions expected in the foreseeable future.The
total restructuring costs are expected to be approximately $10.2 million,
including employee termination costs of approximately $9.4 million and $0.8
million of other periodic transitional costs. We recorded $8.6
million of the restructuring charge in the first quarter of 2009, and we
expect the remainder will be recorded in the second quarter of 2009. We
anticipate that all of the severance related and periodic transitional costs
will be cash expenditures. Our remaining future expected costs are $1.0
million for employee termination and $0.6 million for other costs. We expect to achieve an annual labor-related
savings of approximately $14.0 million to $16.0 million upon completion of this
restructuring plan.




In April
2009, we committed to a business restructuring plan including a reduction of our
work force. We believe these actions are appropriate strategically and are
prudent adjustments in view of the generally weakened global economy and
uncertain market conditions expected in the foreseeable future. The total
restructuring costs are expected to be in a range of $15.0 to $17.0
million, including employee termination costs of approximately $12.5 to $13.5
million and $2.5 to $3.5 million of other periodic transitional costs. We
expect to record approximately $9.0 to $10.0 million in the second quarter
of 2009, and the remainder in the rest of 2009. We anticipate that all of
the severance related and periodic transitional costs will be cash
expenditures.
 Income
Tax (Benefit) Expense (in millions)




Quarter
      EndedMarch
      29, 2009
                
                March
      30, 2008
                
                ChangeIncome
      tax (benefit) expense
                
                $
                (5.9
                )
                
                $
                4.4
                
                
                $
                (10.3
                )




The
tax benefit for the quarter ended March 29, 2009 reflects an effective
tax rate for continuing operations of 36.3% compared to a U.S. statutory rate of
35%. The effective tax rate reflects our estimated annual effective tax rate of
approximately 37% for fiscal year 2009, which excludes the impact of discrete
items.  The tax provision for the quarter ended March 30, 2008, reflected
an effective tax rate for continuing operations of 36.3% compared to a U.S.
statutory rate of 35%. The tax provision for the quarter ended March 30, 2008,
included a 1.4% benefit related to settlement of a foreign tax
dispute.








16


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





Liquidity
and Capital Resources





Our
principal sources of liquidity are cash flows generated from operations and our
cash, cash equivalents and short-term investments balances, which, at fair
value, were $216.1 million and $221.5 million at March 29, 2009, and December
31, 2008, respectively. Operating activities for the first quarter of
2009 provided lower cash flows compared to the first quarter of 2008 due to
a net loss of $10.4 million and cash payment of approximately $4.3 million for
restructuring activities. Cash used in investing activities for the first
quarter of 2009 was $1.6 million. This was related to capital expenditures of
$2.4 million and capitalized patent legal fees of $1.1 million, offset by
proceeds from sale of property of $1.9 million. Cash used in financing
activities for the first quarter of 2009 was $0.2 million, related
primarily to the tax effect on stock based payment arrangement.





Under our
2007 Revolving Credit Facility ('Revolving Facility"), we have a maximum amount
available of $50.0 million. As of March 29, 2009, net of outstanding letters of
credit and limitations on minimum availability, we had borrowing
capacity of $47.6 million under the Revolving Facility. We made no
borrowings under the Revolving Facility during the first quarter of 2009 and, as
of March 29, 2009, no borrowings were outstanding. As of March 29, 2009, we were
in compliance with the covenants of the Revolving Facility.





There
have been no changes to key terms of the Revolving Facility as previously
disclosed on the Annual Report of Form 10-K for the year ended December 31,
2008.





We
believe that cash and cash equivalents combined with projected cash flows
from operations, will provide adequate funding to meet our expected working
capital, restructuring cost requirements and capital expenditure for the
foreseeable future. In the current economic environment, we may hold more cash
than is required to fund our future investment in working capital, changing our
cost structure and capital expenditures. Projected cash flows from operations
are largely based on our revenue estimates, cost estimates, and the related
timing of cash receipts and cash disbursements. If actual performance differs
from estimated performance, cash flows from operations could be positively or
negatively impacted. An additional source of liquidity includes our Revolving
Credit Facility.





Contractual
Obligations





Our
contractual commitments as of March 29, 2009, have not changed materially from
those disclosed in Item 7 of our Annual Report on Form 10-K for the year ended
December 31, 2008.




Critical
Accounting Policies and Estimates




Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States (“US GAAP”). 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. Our critical accounting policies and
estimates are discussed in Item 7, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008. There have been no
material changes to the critical accounting policies and estimates previously
disclosed in that report.





17


ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Due to
our global operations, our cash flows and earnings are exposed to risk based on
movements in foreign exchange rates.  We conduct business in approximately
90 countries throughout the world and generally invoice customers in their local
currency and have a resulting foreign currency denominated revenue transaction
and accounts receivable balance. We also purchase certain raw materials and
other items in foreign currencies.





Our
treasury policies allow us to offset the risks associated with the effects of
certain foreign currency exposures through the purchase of foreign exchange
forward contracts. Our policy prohibits speculation in financial instruments for
profit on the exchange rate price fluctuation. We enter into foreign exchange
forward contracts to primarily hedge the impact of fluctuations of foreign
exchange arising from intercompany transactions, specifically for inventory
purchases made by our subsidiaries that are denominated in U.S. dollars. Our
foreign exchange forward contracts are not designated as hedging instruments
pursuant to SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities (as amended). Accordingly, we record
these contracts at fair value, with changes in value recognized in earnings in
the period of change and the fair values of these contracts are recorded on the
consolidated balance sheets. These contracts do not contain any
credit-risk-related contingent features.





We
attempt to manage the counterparty risk associated with these forward foreign
exchange contracts by limiting transactions to counterparties with which we have
an established banking relationship. In addition, these contracts generally
settle in approximately 30 days. See Note 2, Fair Value Measurements, and
Note 3, Derivative
Instruments, for additional information related to these
contracts.





Except as
noted in the preceding paragraph, as of March 29, 2009, 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, 2008, 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, are 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 March 29, 2009.





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.




18


PART
II. OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS





We
currently, and from time to time, are subject to claims and lawsuits arising in
the ordinary course of business. Such claims and lawsuits may take the form of
counter claims in lawsuits we bring to enforce our rights. 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, 2008, 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, 2008
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.




The risk
factor included in the Annual Report on Form 10-K for the year ended December
31, 2008 under the caption  “Macroeconomic conditions beyond our
control could lead to decreases in demand for our products, reduced
profitability or deterioration in the quality of our accounts
receivable” is
restated in its entirety as follows:
 
 Ÿ
              Macroeconomic
      conditions beyond our control could lead to decreases in demand for our
      products, reduced profitability or deterioration in the quality of our
      accounts receivable. Domestic and international economic,
      political and social conditions are uncertain due to a variety of factors,
      including
 
 ·
              global,
      regional and national economic
downturns;
 ·
              the
      availability and cost of credit;
 ·
              volatility
      in stock and credit markets;
 ·
              energy
      costs;
 ·
              fluctuations
      in currency exchange rates
 ·
              the
      risk of global conflict;
 ·
              the
      risk of terrorism and war in a given country or region;
  and
 ·
              public
      health issues.
 
 Our
business depends on our customers’ demand for our products and services, the
general economic health of current and prospective customers, and their desire
or ability to make investments in technology.  A
deterioration of global, regional or local political, economic or social
conditions could affect potential customers in a way that reduces demand for our
products and disrupts our manufacturing and sales plans and
efforts.  These global, regional or local conditions also could
disrupt commerce in ways that could interrupt our supply chain and our ability
to get products to our customers.  These conditions may also affect
our ability to conduct business as usual.  Changes in foreign currency
exchange rates may negatively impact reported revenue and
expenses.  In addition, our sales are typically made on unsecured
credit terms that are generally consistent with the prevailing business
practices in the country in which the customer is located. A deterioration of
political, economic or social conditions in a given country or region could
reduce or eliminate our ability to collect accounts receivable in that country
or region. In any of these events, our results of operations could be materially
and adversely affected.


The risk
factor included in the Annual Report on Form 10-K for the year ended December
31, 2008 under the caption  “Fluctuations in currency exchange
rates may adversely impact our cash flows and earnings” is restated in
its entirety as follows:





Ÿ
              Fluctuations
      in currency exchange rates may adversely impact our cash flows and
      earnings.Due to our global
      operations, our cash flows, revenue and earnings are exposed to currency
      exchange rate fluctuations.  Our international sales are
      typically quoted, billed and collected in the customer’s local currency,
      but our product costs are largely denominated in U.S.
      dollars.  Therefore, our product margins are exposed to changes
      in exchange rates.  In addition, exchange rate fluctuations may
      also affect the cost of goods and services that we purchase and personnel
      that we employ outside of the United States.  When appropriate,
      we may attempt to limit our exposure to exchange rate changes by entering
      into short-term currency exchange contracts. There is no assurance that we
      will hedge or will be able to hedge such foreign currency exchange risk or
      that our hedges will be
successful.





Our
currency exchange gains or losses (net of hedges) may materially and adversely
impact our cash flows and earnings.  Additionally, adverse movements
in currency exchange rates could result in increases in our cost of goods sold
or reduction in growth in international orders, materially impacting our cash
flows and earnings.





The risk
factor included in the Annual Report on Form 10-K for the year ended December
31, 2008 under the caption “We are dependent on Venture
Corporation Limited for the manufacture of substantially all of our products and
any failure or inability of Venture to provide its manufacturing services to us
would adversely affect our business” is restated in its entirety as
follows:





Ÿ
              We are
      dependent on Venture Corporation Limited for the manufacture of
      substantially all of ourcurrentproducts
      and any failure or inability of Venture to provide its manufacturing
      services to us would adversely affect our business.In relying on
      Venture to assemble our current products, we no longer have direct
      physical control over the manufacturing process and
      operations.  This might adversely affect our ability to control
      the quality of our current products and the timeliness of their delivery
      to our customers.  Either of those potential consequences could
      adversely affect our customer relationships and our
      revenues.  Furthermore, Venture’s access to our intellectual
      property could possibly increase the risk of infringement or
      misappropriation of our
assets.




If
Venture were unable to manufacture our current products at one or more of its
facilities for any extended period, we would be required to obtain alternative
sources of manufacturing.  There is no assurance that any such sources
would be available in a timely manner or at comparable cost.  Any such
interruption of Venture’s manufacturing capabilities could increase our costs,
impair our ability to provide our customers with our products in a timely and
efficient manner and adversely affect our customer relationships and our
financial results.














19


ITEM
1A. RISK FACTORS (continued)





The risk
factor included in the Annual Report on Form 10-K for the year ended December
31, 2008 under the caption  “Our business may be adversely
affected if we do not continue to transform our supply chain, improve our
business processes and systems and attract and retain skilled managers and
employees”is restated in its entirety as follows:





Ÿ
              Our
      business may be adversely affected if we do not continue to transform our
      supply chain, improve our business processes and systems and attract and
      retain skilled managers and employees. In order to increase sales
      and profits, we must continue to expand our operations into new product
      and geographic markets and deepen our penetration of the markets we
      currently serve, and do so in efficient and cost effective ways. To
      achieve our objectives, we need to continue to streamline our supply chain
      and our business processes and continue to improve our financial,
      information technology and enterprise resource planning
      systems.  To accomplish this, there may be times when we must
      significantly restructure our business and recognize the anticipated costs
      of such restructurings.  Such restructuring charges could have a
      material adverse impact on our results of
      operations.  Furthermore, there can be no assurance that such
      restructurings will accomplish their intended goals or will be cost
      effective if they do.  Reorganizations or restructurings may
      also adversely affect our workforce.  Competition for skilled
      employees is high in our industry, and we must remain competitive in terms
      of compensation and other employee benefits to retain key
      employees.  If we are unsuccessful in hiring and retaining
      skilled managers and employees, we will be unable to achieve the
      objectives of our restructuring programs or to maintain and expand our
      business.








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





None





ITEM
6. EXHIBITS





31.1
                
                Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002, dated as of May 1, 200931.2
                
                Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002, dated as of May 1, 200932.1
                
                Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002, dated as of May 1, 200932.2
                
                Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002, dated as of May 1,
2009

















20


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)/s/
      Robert J. DriessnackRobert
      J. DriessnackChief
      Financial OfficerMay
      1, 2009