e10vq

Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 24, 2005


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transaction period from to

Commission file number 0-9321

PRINTRONIX, INC.

(Exact name of registrant as specified in its charter)


Delaware (state or other jurisdiction of incorporation or organization)		95-2903992 (I.R.S. Employer Identification No.)


14600 Myford Road P.O. Box 19559, Irvine, California (Address of principal executive offices)		92623 (Zip Code)

(714) 368-2300
(Registrant’s telephone number, including area code)

Not Applicable
(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, and (2) has been subject to such filing requirements for the past 90 days.

YES þ NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b)-2 of the Exchange Act).

YES o NO þ

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


Class of Common Stock		Outstanding at July 22, 2005

$0.01 par value		6,528,670

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PRINTRONIX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
As of June 24, 2005 and March 25, 2005
(Unaudited)


	June 24,			March 25,
	2005			2005
	($ in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	27,656		$	35,405
Short-term investments		16,600			9,500
Accounts receivable, net of allowance for doubtful accounts of $1,114 as of June 25, 2005 and $1,481 as of March 25, 2005		17,104			18,207
Inventories:
Raw materials		7,356			7,354
Subassemblies		3,317			2,518
Work in process		190			261
Finished goods		3,128			2,960

Total inventory		13,991			13,093
Prepaid expenses and other current assets		2,494			1,791
Deferred income tax assets		2,550			2,590

Total current assets		80,395			80,586

Property, plant and equipment, at cost:
Machinery and equipment		28,168			28,141
Furniture and fixtures		25,344			24,996
Buildings and improvements		23,155			23,139
Land		8,100			8,100
Leasehold improvements		739			730

		85,506			85,106
Less: Accumulated depreciation and amortization		(52,398	)		(52,180	)

Property, plant and equipment, net		33,108			32,926
Long-term deferred income tax assets, net		1,756			1,646
Other assets		305			308

Total assets	$	115,564		$	115,466

The accompanying notes are an integral part of these consolidated financial statements.

PRINTRONIX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
As of June 24, 2005 and March 25, 2005 continued
(Unaudited)


	June 24,		March 25,
	2005		2005
	($ in thousands, except
	share and per share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	700	$	700
Accounts payable		7,623		7,162
Accrued liabilities:
Payroll and employee benefits		4,650		5,275
Warranty		860		863
Deferred revenue		2,784		3,306
Other		3,157		2,815
Income taxes		152		145

Total current liabilities		19,926		20,266


Long-term debt, net of current portion		13,300		13,475
Deferred revenue, net of current portion		1,133		1,021
Long-term deferred income tax liabilities		1,618		1,548
Commitments and contingencies (Note 9)		—		—
Stockholders’ equity:
Common stock, $0.01 par value (Authorized 30,000,000 shares; shares issued and outstanding 6,528,670 as of June 24, 2005 and 6,470,260 as of March 25, 2005)		65		65
Additional paid-in capital		36,090		35,537
Accumulated other comprehensive income		155		31
Retained earnings		43,277		43,523

Total stockholders’ equity		79,587		79,156

Total liabilities and stockholders’ equity	$	115,564	$	115,466

The accompanying notes are an integral part of these consolidated financial statements.

PRINTRONIX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended June 24, 2005 and June 25, 2004
(Unaudited)


	Three Months Ended
	June 24,			June 25,
	2005			2004
	($ in thousands)
Cash flows from operating activities:
Net income	$	210		$	449
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,129			1,578
Benefit for doubtful accounts receivable		(331	)		(30	)
Gain on disposal of property and equipment		(9	)		(15	)
Changes in operating assets and liabilities:
Accounts receivable		1,434			1,084
Inventories		(868	)		194
Prepaid expenses and other assets		(700	)		175
Accounts payable		461			658
Payroll and employee benefits		(625	)		(357	)
Deferred revenue		(410	)		(81	)
Other liabilities		463			(182	)
Income taxes		7			117

Net cash provided by operating activities		761			3,590


Cash flows from investing activities:
Purchases of short-term investments		(7,100	)		—
Purchases of plant and equipment		(1,358	)		(1,180	)
Proceeds from disposition of equipment		26			37

Net cash used in investing activities		(8,432	)		(1,143	)


Cash flows from financing activities:
Payments made on long-term note		(175	)		(175	)
Proceeds from employee stock incentive plans		554			31
Cash dividends declared and paid		(457	)		—

Net cash used in financing activities		(78	)		(144	)


Net (decrease) increase in cash and cash equivalents		(7,749	)		2,303

Cash and cash equivalents at beginning of period		35,405			36,671

Cash and cash equivalents at end of period	$	27,656		$	38,974


Supplementary disclosures of cash flow information:
Income tax paid	$	142		$	169
Interest paid	$	150		$	106

The accompanying notes are an integral part of these consolidated financial statements.

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 24, 2005 and March 25, 2005 and for the Three Months Ended
June 24, 2005 and June 25, 2004
(Unaudited)

Note 1 Basis of Presentation

The unaudited, consolidated financial statements included herein have been prepared by Printronix, Inc., pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the consolidated financial statements reflect all adjustments considered necessary for a fair statement of the financial position, results of operations and cash flows as of and for the periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our latest Annual Report on Form 10-K for the fiscal year ended March 25, 2005, as filed with the Securities and Exchange Commission. The consolidated balance sheet as of March 25, 2005, presented herein has been obtained from the audited consolidated balance sheet contained in our latest Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results for the full fiscal year.

Unless the context otherwise requires, the terms “we,” “our,” “us,” “company” and “Printronix” refer to Printronix, Inc. and its consolidated subsidiaries.

Stock-Based Compensation

We account for stock-based compensation issued to employees using the intrinsic-value-based method as prescribed by the Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Under the intrinsic-value-based method, compensation is the excess, if any, of the fair market value of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock. Compensation expense, if any, is recognized over the applicable service period, which is usually the vesting period. No stock-based employee compensation cost was recorded for the periods presented as all options granted under the stock-based compensation plan had an exercise price equal to the market value of the underlying common stock on the date of grant.

The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation and is provided in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.”


	Three Months Ended
	June 24,			June 25,
	2005			2004
	($ in thousands, except per share data)
Net income, as reported	$	210		$	449
Deduct total stock-based employee compensation expense determined under fair-value-based method for all awards, net of related tax effects		(56	)		(48	)

Pro forma net income	$	154		$	401


Earnings per share:
Basic — as reported	$	0.03		$	0.07
Basic — pro forma	$	0.02		$	0.06
Diluted — as reported	$	0.03		$	0.07
Diluted — pro forma	$	0.02		$	0.06

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2 Short-Term Investments

Marketable Debt Securities

The company evaluates its investments in marketable debt securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and has determined that all of its investments in marketable debt securities should be classified as available-for-sale and reported at fair value. The unrealized gains and losses on available-for-sale securities, net of taxes, are recorded in accumulated other comprehensive income. Realized gains and losses are included in interest and other (income) expense, net.

The fair value of the company’s investments in marketable debt securities are based on quoted market prices which approximate fair value due to the frequent resetting of interest rates. The company assesses its investments in marketable debt securities for other-than-temporary declines in value by considering various factors that include, among other things, any events that may affect the creditworthiness of a security’s issuer, the length of time the security has been in a loss position, and other factors. As of June 24, 2005, we assessed our portfolio and determined that none of our investments had experienced other-than-temporary declines.

At June 24, 2005, the company’s investments in marketable debt securities consisted of taxable corporate auction rate securities. At June 24, 2005, the estimated fair value of each investment approximated its amortized cost and, therefore, the company had no significant unrealized gains or losses or any non-temporary losses. There were no proceeds from sales or maturities of marketable debt securities in the first quarter of fiscal year 2006.

Although contractual maturities of the company’s debt securities are due after five years, the investments are classified as current assets in the Consolidated Balance Sheets due to the company’s expected holding period of less than one year.

Note 3 Inventories

We record a provision to value our inventory at the lower of the actual cost to purchase and/or manufacture the inventory, or the current estimated market value of the inventory, based upon assumptions about future demand and market conditions. We also perform regular reviews of our inventory and record a provision for estimated excess and obsolete items based upon forecasted demand, and any other known factors at the time. Inventories, which include material, labor and overhead costs, are valued at the lower of cost (first-in, first-out method) or market.

Note 4 Bank Borrowings And Debt Arrangements

Secured Note

As of June 24, 2005, we have a $14.0 million long-term note with a United States bank secured by our Irvine facility. The note contains customary default provisions, no restrictive covenants and requires monthly principal and interest payments, with a balloon payment of $12.6 million due June 1, 2007. Interest on the note is at variable rates based upon the London Interbank Offered Rate (“LIBOR”) plus 1.25 percent, and is reset for periods from one month up to one year, at our discretion. The interest rate on the note at June 24, 2005 was 4.6 percent and the weighted average interest rate on the note for the current quarter was 4.4 percent. Total interest expense on the note was $0.2 million and $0.1 million for the current and prior year quarters, respectively. The note consisted of $13.3 million long-term debt and $0.7 million for the current portion of long-term debt, as of June 24, 2005.

Lines of Credit

At June 24, 2005, one of our foreign subsidiaries maintained unsecured lines of credit for $2.1 million with major foreign banks, which included a standby letter of credit of $1.5 million. These credit facilities are subject to certain standard financial covenants. We were in compliance with these financial covenants for all fiscal periods presented. The parent company guarantees any amounts outstanding on these lines of credit. There were no cash borrowings against these lines of credit for the fiscal periods presented. No fees are charged for the unused portion of the lines of

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

credit. Any borrowings on the lines of credit would be subject to interest rates at approximately 0.25 percent to 1.0 percent above the prime-lending rate.

The company maintains a standby letter of credit related to its workers’ compensation insurance program for $0.4 million. The standby letter of credit is secured by a cash deposit and is automatically renewed annually. There were no cash borrowings against this letter of credit for the fiscal periods presented. Any borrowings would be subject to interest rates at 2.0 percent above the prime-lending rate, subject to certain maximum limits.

Credit Agreement For Hedging Activity

We have a commitment facility for $2.4 million with a major foreign bank to support our hedging activities. This commitment facility has no restrictive covenants and is available to fund any forward currency contracts should we be unable to satisfy our obligations. The agreement automatically renews annually, subject to certain compliance requirements. There are no annual fees under this agreement. Any borrowings under this agreement would be subject to interest rates available at that time. No amounts were borrowed under this credit agreement for the fiscal periods presented.

Interest and Other (Income) Expense, Net

The components of interest and other (income) expense, net, in the consolidated statement of operations for the three months ended June 24, 2005 and June 25, 2004 were as follows:


	Three Months Ended
	June 24,			June 25,
	2005			2004
	($ in thousands)
Interest income	$	(287	)	$	(83	)
Interest expense		155			108
Other income		(13	)		(14	)

Interest and other (income) expense, net	$	(145	)	$	11

Note 5 Net Income Per Share

Basic net income per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted average number of shares of common stock outstanding and potential shares outstanding during the period, if dilutive.

Net income per share for the three months ended June 24, 2005 and June 25, 2004, is as follows:


	Three Months Ended
	June 24,		June 25,
	2005		2004
	($ in thousands, except
	share and per share data)
Net income	$	210	$	449
Basic weighted average shares outstanding		6,492,516		6,280,643
Basic net income per share	$	0.03	$	0.07

Effect of dilutive securities:
Basic weighted average shares outstanding		6,492,516		6,280,643
Dilutive effect of stock options		143,728		166,317

Dilutive weighted average shares outstanding		6,636,244		6,446,960
Diluted net income per share	$	0.03	$	0.07

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The dilutive weighted average shares outstanding does not include the antidilutive impact of 121,503 and 38,250 shares for the three months ended June 24, 2005 and June 25, 2004, respectively, because the exercise price of the stock options exceeded the average market value of the stock for the periods presented.

Note 6 Common Stock

In the fourth quarter of fiscal year 2002, the Board of Directors authorized the company to purchase up to 500,000 shares of the company’s outstanding common stock. Purchases may be made from time-to-time in the open market. During fiscal years 2002 and 2003, 165,905 shares of common stock were repurchased at prices ranging from $9.03 to $11.87 for a total cost of $1.7 million. We repurchased 106,700 shares of common stock at prices ranging from $9.70 to $10.61 per share for a total cost of $1.1 million during fiscal year 2004. No shares of common stock were repurchased during fiscal year 2005 or the first quarter of fiscal year 2006. Future purchases of 227,395 shares of common stock may be made at our discretion.

Stock options exercised totaled 58,410 and 4,787 for the three months ended June 24, 2005 and June 25, 2004, respectively.

Cash Dividends

During the fourth quarter of fiscal year 2005, the company announced its first quarterly cash dividend totaling $0.05 per share, or $0.3 million. On June 15, 2005, the company paid a second cash dividend of $0.07 per share, or $0.5 million based on 6.5 million shares outstanding.

Note 7 Stock Incentive Plan

Under our 1994 Stock Incentive Plan, options may be granted to purchase shares of our common stock. As of June 24, 2005, there were 556,338 stock options outstanding and 417,570 stock options available to grant.

During the first quarter of fiscal year 2005, the company reserved 56,722 and 310,000 shares under the Stock Incentive Plan for future issuance as restricted stock. The 56,722 shares were reserved for future issuance to the non-employee Board of Directors members and key employees. As of June 24, 2005, none of the 56,722 shares were issued and outstanding.

During the first quarter of fiscal year 2005, 290,000 of the 310,000 reserved shares were granted to certain officers of the company and other employees. These shares granted are issued and outstanding and are performance based and vest only if the company achieves certain financial targets over a total of 6 fiscal years. As of June 24, 2005, we have not met, nor is there any indication that we will meet, any of the performance targets. Accordingly, no compensation expense has been recorded as of June 24, 2005. In addition, 20,000 shares are not issued or outstanding but may be purchased by an employee if the performance criteria are met.

Note 8 Product Warranties and Guarantees

Product Warranties

We maintain an accrual for warranty obligations based upon our claims experience. A provision for estimated warranty obligation is charged to cost of sales when the product is sold. We evaluate our warranty reserve requirements on a quarterly basis. Printronix generally offers either a 90-day on-site or a 12-month return-to-factory standard parts-and-labor warranty on printer and verifier products to most customers. Defective printers and verifiers can be returned to us for repairs or replacement in the applicable warranty period at no cost to the customer. Supplies are warranted for the shelf life of the products, which can be up to two years.

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of our accrued warranty obligation for the periods presented is as follows:


	Three Months Ended
	June 24,			June 25,
	2005			2004
	($ in thousands)
Beginning balance, warranty reserves	$	863		$	1,033
Add warranty expense		276			268
Accrual adjustments to reflect actual experience		(33	)		(83	)
Deduct warranty charges incurred		(246	)		(271	)

Ending balance, warranty reserves	$	860		$	947

Guarantees

In the normal course of business to facilitate sales of its products, the company may indemnify customers and hold them harmless against losses arising from intellectual property infringement claims. The term of these indemnification agreements is generally perpetual any time after execution of the agreement subject to statute of limitations restrictions. The maximum potential amount of future payments we could be required to make under these agreements is unlimited. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal and have not recorded a liability for these agreements.

In addition, in connection with the standby letter of credit agreement obtained for our workers’ compensation insurance program, we have agreed to indemnify the bank from any third party claims related to its performance on our behalf. The term of this indemnification agreement extends beyond the term of the standby letter of credit agreement. We believe the fair value of this indemnification agreement is minimal and have not recorded a liability for it.

Note 9 Commitments And Contingencies

Contractual Obligations And Commercial Commitments

We are obligated under certain borrowing and lease commitments. Additional information on our borrowing obligations can be found in Note 4. There were no material changes in our borrowing and operating lease agreements as of June 24, 2005 from those reported in our Annual Report on Form 10-K.

Operating Leases

With the exception of Singapore, we conduct our foreign operations and United States sales offices using leased facilities under non-cancelable operating leases that expire at various dates from fiscal year 2006 through fiscal year 2009. We own the building in Singapore and have a land lease that expires in fiscal year 2057.

Environmental Assessment

Barranca Parkway Sites

In January 1994 and March 1996, we were notified by the California Regional Water Quality Control Board — Santa Ana Region (the “Board”) that ground under one of our former production plants and ground adjacent to property previously occupied by us was thought to be contaminated with various chlorinated volatile organic compounds

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(“VOCs”). Evidence adduced from site studies undertaken to date indicates that compounds containing the VOCs were not used by Printronix during its tenancy, but were used by the prior tenant during its long-term occupancy of the site.

In August 2002, we responded to an inquiry from the California Department of Toxic Substance Control (the “Department”) regarding our operations at the site of our former production plant. In February 2004, the Department submitted a proposed Corrective Action Consent Agreement to Printronix, which would require Printronix to perform an investigation of the site that would be used as a basis to determine what, if any, remediation activities would be required of Printronix. During fiscal year 2006, the Department has agreed to include the prior tenant of the site in the ongoing inquiry. We have agreed to perform an initial environmental test, which we believe will further support our claim that we did not use the VOCs in question. We are convinced that we bear no responsibility for any contamination at the site and we intend to defend vigorously any action that might be brought against us with respect thereto.

As of June 24, 2005, we maintained an accrual for $0.2 million, included in accrued liabilities other, which we believe is a reasonable estimate to cover any additional expenses for environmental tests the Board may request.

Denova Site

In August 2004, Printronix was notified by the Environmental Protection Agency (the “EPA”) that clean up costs had been incurred at an authorized facility used by Printronix and approximately 2,000 other companies for the disposal of certain toxic wastes. Printronix has joined with a group of the companies contacted by the EPA and the group and the EPA are in negotiation. We estimate Printronix’s liability to be $0.1 million and have an accrual for such amount included in accrued liabilities other as of June 24, 2005.

We believe that we have adequately accrued for any future expenditures in connection with environmental matters and that such expenditures will not have a material adverse effect upon our consolidated results of operations or financial condition.

Legal Matters

We are involved in various claims and legal matters in the ordinary course of business. We do not believe that these matters will have a material adverse effect upon our results of operations or financial condition.

Note 10 Other Comprehensive Income (Loss)

Other comprehensive income (loss) represents unrealized gains and losses on our Euro foreign currency forward exchange contracts that qualify for hedge accounting. The aggregate amount of such gains or losses that have not yet been recognized in net income is reported in the equity portion of the consolidated balance sheets as accumulated other comprehensive income (loss).

Under our foreign currency-hedging program, we can enter into foreign currency forward exchange contracts with maturities from 30 to 180 days with a major financial institution. We do not use the contracts for speculative or trading purposes. As of June 24, 2005, we had outstanding forward exchange contracts with an aggregate notional amount of $5.1 million. Based on the fair value of these contracts at June 24, 2005, we recorded a net asset of $0.3 million.

The following table reconciles net income to comprehensive income for the fiscal periods presented:


	Three Months Ended
	June 24,		June 25,
	2005		2004
	($ in thousands)
Net income	$	210	$	449
Other comprehensive income (loss), net of tax		124		(157	)

Comprehensive income	$	334	$	292

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 11 Segment And Customer Data

We manufacture and sell a variety of printers and associated products that have similar economic characteristics as well as similar customers, production processes and distribution methods. We therefore have aggregated similar products and report one segment.

Sales By Customer

Percent of total sales by customer for the fiscal periods presented were as follows:


	Three Months Ended
	June 24,			June 25,
	2005			2004
Largest customer — IBM		24.0	%		21.6	%
Second largest customer		8.2	%		7.8	%
Top ten customers		50.6	%		52.6	%

Note 12 Income Taxes

We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the use of the asset-and-liability method for financial accounting and reporting for income taxes, and further prescribes that current and deferred tax balances be determined based upon the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse.

We periodically review our deferred tax assets for realization based upon historical taxable income, prudent and reasonable tax strategies, the expected timing of the reversals of existing temporary differences and future taxable income. We record a valuation allowance to reduce our deferred tax assets to the amount management believes will be realized.

We have subsidiaries in various countries and are therefore subject to varying income tax rates. We have a favorable pioneer tax status in Singapore which exempts income generated from the manufacture and sale of the Printronix P5000 Series line matrix and T5000 thermal products by our Singapore subsidiary from income tax liability. The tax provision for the three months ended June 24, 2005, reflects the income tax rates in foreign countries in which we operate and income tax benefits and refunds of $0.1 million generated from foreign net operating losses. The tax provision for the three months ended June 25, 2004, reflects the tax provision of our foreign operations and a full valuation allowance against net operating loss carryforwards generated in the United States, and a tax charge on profits from our Singapore subsidiary as at that time we had not been awarded the pioneer tax status.

Congress passed the American Jobs Creation Act of 2004 on October 22, 2004 (“the Act”). The Act contains numerous changes to existing tax laws including, but not limited to, incentives to repatriate foreign accumulated earnings and other international tax provisions regarding foreign tax credits. We have not completed our evaluation of the effects of the Act and have not reached a conclusion that it is probable that foreign earnings will be repatriated, but would like to take advantage of this opportunity if it is beneficial to the company. Therefore, as a result, we cannot conclude on what the associated tax effects may be and have not recorded any such tax effects in our financial results for the first quarter of fiscal year 2006. The company expects to complete its analysis of this repatriation incentive during fiscal year 2006, after the expected issuance of additional regulatory guidance.

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 13 New Pronouncements

In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs – an Amendment of ARB 43, Chapter 4,” (“SFAS 151”). SFAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005, and will be adopted by the company in the first quarter of fiscal year 2007. The company is currently evaluating the financial statement impact of the implementation of SFAS 151. We do not expect the adoption of SFAS 151 to have a material impact on our consolidated financial position or results of operations.

In December 2004, the FASB issued FASB Staff Position (“FSP”) No. FAS 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) and FSP No. FAS 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”). Both FSP 109-1 and FSP 109-2 are effective upon issuance.

FSP 109-1 clarifies the application of SFAS 109 to this new Deduction for Qualified Production Activities by stating the deduction should be accounted for as a special deduction under SFAS No. 109, rather than as a tax-rate deduction, and should be reported no earlier than the year in which it is reported on the tax return. We believe it is probable that this deduction will not be available to Printronix because of our existing domestic net operating losses.

FSP 109-2 addresses the impact of the Act’s one-time 85 percent dividends received deduction for repatriated foreign earnings, provided they are reinvested in the permitted uses specified in the Act. FSP No. 109-2 allows companies additional time to determine whether any foreign earnings will be repatriated under the Act and evaluate how the law affects whether undistributed earnings continue to qualify for SFAS No. 109’s exception from recognizing deferred tax liabilities. The company has not yet completed its evaluation of the repatriation provision.

In December 2004, the FASB issued SFAS 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS 123, “Accounting for Stock-Based Compensation,” and supercedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires that all share-based payments to employees, including grants of stock options, be recognized in the financial statements based on their fair value beginning with the first interim or annual reporting period that begins after June 15, 2005. In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC Staff’s interpretation of SFAS 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. In April 2005, the SEC amended Regulation S-X to amend the date for compliance with SFAS 123R beginning with the first interim or annual period of the registrant’s first fiscal year beginning on or after June 15, 2005. Printronix will be required to adopt SFAS 123R and SAB 107 at the beginning of the first quarter of fiscal year 2007. We are currently evaluating the requirements of SFAS 123R, including the determination of the fair value method to measure compensation expense, the appropriate assumptions to include in the fair market value model and the transition method to use upon adoption. The company believes the adoption of SFAS 123R may have a material unfavorable impact on its consolidated results of operations and earnings per share.

In December 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets – an Amendment of Accounting Principles Board Opinion No. 29 (“APB 29”), Accounting for Nonmonetary Transactions.” The guidance in APB 29 is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in APB 29; however, included certain exceptions to that principle. SFAS 153 amends APB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS 153 are applicable for nonmonetary asset exchanges occurring in fiscal periods

PRINTRONIX, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

beginning after June 15, 2005. The adoption of SFAS 153 did not have an impact on the company’s consolidated results of operations and financial condition.

In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). FIN 47 clarifies that an entity must record a liability for a “conditional” asset retirement obligation if the fair value of the obligation can be reasonably estimated. The types of asset retirement obligations that are covered by this interpretation are those for which an entity has a legal obligation to perform an asset retirement activity; however, the timing and/or method of settling the obligation are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provisions of FIN 47 are effective no later than the end of fiscal years ending after December 15, 2005, although early adoption is encouraged. FIN 47 is required to be adopted by Printronix by the end of fiscal year 2006 and the company is currently evaluating the provisions of this standard.

In May 2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections” which replaces Accounting Principles Board Opinions No. 20 “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements—An Amendment of APB Opinion No. 28.” SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and is required to be adopted by Printronix in the first quarter of fiscal 2007. Printronix is currently evaluating the effect that the adoption of SFAS 154 will have on its consolidated results of operations and financial condition but does not expect it to have a material impact.

In June 2005, the FASB issued FSP FAS 143-1, “Accounting for Electronic Equipment Waste Obligations,” which addresses the accounting for obligations associated with Directive 2002/96/EC, Waste Electrical and Electronic Equipment (the “Directive”) adopted by the European Union. FSP FAS 143-1 provides guidance on accounting for the effects of the Directive with respect to historical waste, and waste associated with products placed on the market on or before August 13, 2005. FSP FAS 143-1 is required to be applied to the later of the first reporting period ending after June 8, 2005 or the date of the adoption of the law by the applicable European Union member country. The company will adopt the provisions of FSP FAS 143-1 in the second quarter of fiscal 2006 and is currently evaluating the effect that the adoption of FSP FAS 143-1 will have on its consolidated results of operations and financial condition.

PART I. FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Unaudited)

PRINTRONIX, INC. AND SUBSIDIARIES

Forward-Looking Statements

Except for historical information, this Form 10-Q contains “forward-looking statements” about Printronix, within the meaning of the Private Securities Litigation Reform Act of 1995. Terms such as “objectives,” “believes,” “expects,” “plans,” “intends,” “should,” “estimates,” “anticipates,” “forecasts,” “projections,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including: adverse business conditions and a failure to achieve growth in the computer peripheral industry and in the economy in general; the ability of the company to achieve growth in the Asia Pacific market; adverse political and economic events in the company’s markets; a worsening of the global economy due to general conditions; a worsening of the global economy resulting from terrorist attacks or risk of war; a worsening of the global economy resulting from a resurgence of SARS (Severe Acute Respiratory Syndrome); the ability of the company to maintain its production capability in its Singapore plant or obtain product from its Asia Pacific suppliers should a resurgence of SARS occur; the ability of the company to hold or increase market share with respect to line matrix printers; the ability of the company to successfully compete against entrenched competition in the thermal printer market; the ability of the company to adapt to changes in the requirements for radio frequency identification (“RFID”) products by Wal-Mart and/or the Department of Defense (the “DOD”) and others; the ability of the company to attract and to retain key personnel; the ability of the company’s customers to achieve their sales projections, upon which the company has in part based its sales and marketing plans; the ability of the company to retain its customer base and channel; the ability of the company to compete against alternate technologies for applications in its markets; and the ability of the company to continue to develop and market new and innovative products superior to those of the competition and to keep pace with technological change. The company does not undertake to publicly update or revise any of its forward-looking statements, even if experience or new information shows that the indicated results or events will not be realized.

Message from the President

The first quarter of fiscal year 2006 resulted in a profit of $0.03 per share on sales of $31.8 million. This compares with a profit of $0.07 per share on sales of $33.3 million in the year ago quarter, and a profit of $0.10 per share on sales of $32.7 million in the prior quarter. First quarter sales were down due partly to lower sales in the United Kingdom, Germany and France, primarily due to a slowing economy and partly due to lower sales to a major direct account in the retail business. Our teaming efforts with IBM continue to drive sales growth. IBM sales grew 17% over the prior quarter and 6% over the prior year. RFID revenue during the quarter was $0.9 million compared to $0.8 million in the prior quarter and $0.2 million in the same quarter last year, representing the highest quarterly RFID sales for Printronix to date.

The primary event of the first quarter of fiscal year 2006 was the introduction of our new T5000r line of high-performance thermal printers. These printers set a new standard for high performance, fit seamlessly into any enterprise network, and provide the platform for future capabilities such as an upgrade in the field to RFID when the user requires that capability. These features and capabilities provide the user with barcode printers that are RFID ready.

RFID deployment, as expected, has continued to be slow while many users wait for final EPC Global standards and the next stages of retailer requirements. Printronix intends to stay in the forefront of this deployment by providing new RFID solutions as these issues are resolved, while continuing to provide users with RFID ready barcode label printers. The new Scansource channel to market will enable us to reach the multitude of value-added-resellers supported by Scansource, as they become more involved in RFID deployment for a growing list of retail suppliers.

Three significant events for our thermal product line occurred in July 2005. IBM announced their OEM version of our T5000r RFID ready thermal printers, labled the IBM 6700 series, including an IBM Global Services initiative to support these printers in their major commitment to RFID. We also had a joint announcement with Microsoft, outlining Printronix compatibility with the Microsoft RFID initiative. We are pleased to be associated with these two leaders in

RFID. In addition, Printronix was the first printer company to demonstrate interoperability with the new EPC Global standard Gen 2 chip, using the new Impinj Gen 2 chip.

Another subsequent event was the announcement of a North American alliance with label manufacturer Nashua Corp., for Printronix to provide the user with RFID labels that assure the interoperability and quality management of RFID labels in Printronix RFID printers. When a customer purchases Printronix certified RFID labels we remove the burden of determining the source and responsibility of any media and printer interoperability problems. Printronix provides a single point of contact to resolve any issues in reading, encoding or printing Printronix branded RFID labels when used in any Printronix RFID printer. All Printronix logo labels shipped by Printronix will ship with a “100% Tested Good” declaration to indicate their interoperability with any Printronix RFID printer. Printronix offers an RFID Label Assurance Program, giving Printronix certified RFID label users the ability to call Printronix to resolve any printing and encoding issues.

For line matrix printers, both Printronix and IBM had major new product announcements and launched go-to-market plans for the latest generation of line matrix printers that offer substantial user benefits. Labeled the IBM 6500 series and the Printronix P7000 series, these new printers provide improved print quality, up to three times more ribbon life, greater operator convenience, enhanced print management, and one-tenth the cost of laser printers for back office printing. We have an opportunity to upgrade the large installed base of line matrix printers, the majority of which carry the Printronix and IBM brand names. This opportunity is being addressed by a demand generation program to replenish the installed base through direct marketing programs to users we know while presenting the compelling case for lower cost back office printing.

Taken together, line matrix printers and thermal printing solutions fulfill mission critical user needs in industrial and supply chain printing. Operating in the same user environments with compatible network management and printing protocols, they fulfill applications such as label printing, transaction documents and information reports, providing operating efficiency to the user and one number to call for support. That is why Printronix and IBM are focused on user requirements for industrial printers. In fiscal year 2005, Printronix and IBM introduced a sales/marketing teaming program in the United States that was effective in turning around the decline of line matrix printer sales in the IBM channel as well as growing IBM thermal printer sales. In fiscal year 2006 we are expanding this program to EMEA, Canada, Latin America and Asia Pacific, with the long-term goal of a strong global partnership in this important channel to reach and support end users with mission critical printing solutions. This is strengthening our largest channel to market.

RESULTS OF OPERATIONS

Revenue

Compared with the Prior Year Quarter

Consolidated revenue for the current quarter was $31.8 million, a decrease of $1.5 million, or 4.5 percent, from the same period last year. We attribute the decrease partly to lower sales in Western Europe as a result of a slowing economy and partly to lower sales to a major direct account in the retail business. Decreases in EMEA sales were partially offset by an increase in Americas sales. Sales to IBM in America increased $0.9 million, or 23.4 percent, over the year ago quarter attributable to our sales/marketing teaming program that was launched in the United States in the previous fiscal year. Thermal sales increased $0.8 million, or 15.2 percent. Our RFID initiatives allow us to gain access to leading consumer packaged goods companies, which is generating increased revenue for both RFID and non-RFID thermal products. The effects of changes in the value of the Euro contributed $0.2 million to revenue.

Sales by Geographic Region

Sales by geographic region, related percent changes and percent of total sales for the first quarter of fiscal year 2006 and 2005 were as follows:


	Three Months Ended							Percent of Total Sales
	June 24,		June 25,		Percent			June 24,			June 25,
Geographic Region	2005		2004		Change			2005			2004
	($ in thousands)
Americas	$	16,186	$	14,916		8.5	%		50.9	%		44.8	%
EMEA		10,417		12,714		(18.1	)		32.8			38.1
Asia Pacific		5,184		5,648		(8.2	)		16.3			17.1

	$	31,787	$	33,278		(4.5	)%		100.0	%		100.0	%

Americas sales increased principally due to an increase in Americas distribution sales partly arising from RFID revenue of $0.9 million compared to $0.2 million in the year ago quarter. EMEA sales were down over the year ago quarter mostly due to lower sales through the OEM and distribution channels reflecting lower sales into the United Kingdom, France and Germany, and partly to lower sales to a direct account. Asia Pacific sales decreased principally due to lower direct sales in the current quarter to a direct account in the retail business.

Sales by Product Technology

Sales by product technology, related percent changes and percent of total sales for the first quarter of fiscal year 2006 and 2005 were as follows:


	Three Months Ended							Percent of Total Sales
	June 24,		June 25,		Percent			June 24,			June 25,
Product Technology	2005		2004		Change			2005			2004
	($ in thousands)
Line matrix	$	22,204	$	24,004		(7.5	)%		69.9	%		72.1	%
Thermal*		6,147		5,338		15.2			19.3			16.2
Laser		2,799		3,337		(16.1	)		8.8			9.9
Verification products		637		599		6.3			2.0			1.8

	$	31,787	$	33,278		(4.5	)%		100.0	%		100.0	%


*RFID	$	943	$	159		493.1	%		3.0	%		0.5	%

Line matrix revenue declined in the current quarter. We recently announced our new P7000 line matrix print platform with its lower total cost of ownership, improved print quality, improved ribbon capacity and greatly improved ease of use. Line matrix printers offer a lower cost, more reliable and robust alternative to laser, thermal and serial matrix printing as they are more cost effective in higher volume applications. Thermal printer sales growth reflects our growing market share of the high-performance thermal market and our continued early successes in RFID printing primarily in the Americas and EMEA.

Sales by Channel

Sales by channel, related percent changes, and percent of total sales for the first quarter of fiscal year 2006 and 2005 were as follows:


	Three Months Ended							Percent of Total Sales
	June 24,		June 25,		Percent			June 24,			June 25,
Channel	2005		2004		Change			2005			2004
	($ in thousands)
OEM	$	9,492	$	10,517		(9.7	)%		29.9	%		31.5	%
Distribution		20,824		20,258		2.8			65.5			61.0
Direct		1,471		2,503		(41.2	)		4.6			7.5

	$	31,787	$	33,278		(4.5	)%		100.0	%		100.0	%

OEM sales decreased from the year ago period due to lower OEM sales in EMEA due to attrition in the channel. Distribution sales increased from the year ago period primarily due to increases in the Americas and Asia Pacific regions. Direct sales were down compared with the same period a year ago primarily due to decreases in EMEA and Asia Pacific sales to the same worldwide direct account in the retail business. We also added a new channel to market, ScanSource, Inc., late in the previous fiscal year which contributed revenue in the current quarter.

Sales by Customer

Sales by customer, related percent changes and percent of total sales for the first quarter of fiscal year 2006 and 2005 were as follows:


	Three Months Ended							Percent of Total Sales
	June 24,		June 25,		Percent			June 24,			June 25,
Customer	2005		2004		Change			2005			2004
	($ in thousands)
Largest customer — IBM	$	7,640	$	7,222		5.8	%		24.0	%		21.6	%
Second largest customer		2,596		2,585		0.4			8.2			7.8
Top ten customers		16,076		17,528		(8.3	)		50.6			52.6

Sales to IBM in the Americas were up 23.4 percent as a result of our sales growth programs and teaming with IBM. We are expanding these programs into EMEA in the current fiscal year where IBM sales were down 14.8 percent in the current quarter from the same period a year ago.

Recurring Revenue

Recurring revenue from the installed base was $12.4 million in the current quarter, down from $12.9 million a year ago. As a percentage of sales, recurring revenue from the installed base increased to 39.2 percent for the current quarter from 38.9 percent for the same quarter last year. Recurring revenue includes line matrix ribbons, laser consumables, spares, sales under the advance exchange program, printer maintenance and depot repair services. We will continue to focus on this strategic growth initiative by marketing to our installed based of customers and adding channels to market.

Impact of the Euro

Revenue increased by $0.2 million from changes in the Euro’s value in the current quarter compared with the year ago quarter.

Gross Margin

Gross margin for the current quarter was 38.7 percent, down from 40.0 percent for the same quarter last year. The decline from the prior year quarter is primarily due to lower volumes and product mix offset by a stronger Euro and a $0.2 million reduction in our inventory provision. Changes in the value of the Euro improved gross margin by $0.1 million, or 0.3 percent, over the prior year quarter.

Operating Expenses

Engineering and development, sales and marketing and general and administrative expenses, related percent changes and percent of total sales are as follows:


	Three Months Ended							Three Months Ended
	June 24,		June 25,		Percent			June 24,			June 25,
	2005		2004		Change			2005			2004
	($ in millions)							Percent of Total Sales
Engineering and development	$	3,868	$	3,998		(3.3	)%		12.2	%		12.0	%
Sales and marketing		6,116		6,280		(2.6	)		19.2			18.9
General and administrative		2,250		2,183		3.1			7.1			6.6

Total operating expenses	$	12,234	$	12,461		(1.8	)%		38.5	%		37.5	%

Engineering and development expenses for the current quarter, which included severance costs of $0.3 million, decreased due to lower labor costs and cost containment initiatives.

Sales and marketing expenses for the current quarter decreased compared with the same period last year mainly due to a ramp up in expenses in the year ago quarter attributable to RFID launch programs.

General and administrative expenses for the current quarter increased compared with the same period last year due primarily to higher consulting costs associated with satisfying Sarbanes-Oxley requirements partially offset by a reduction in the company’s allowance for doubtful accounts requirement of $0.3 million.

Foreign Currency (Gains) Losses, Net

Current quarter foreign currency transactions and remeasurements were gains of $0.1 million versus losses of $0.1 million a year ago, principally due to the effect of changes in the value of the Euro.

Interest and Other (Income) Expense, Net

Interest income increased to $0.3 million in the current quarter, up from $0.1 million a year ago, due to higher cash and short-term investment balances and higher interest rates in the current quarter.


	Three Months Ended
	June 24,			June 25,
	2005			2004
	($ in thousands)
Interest income	$	(287	)	$	(83	)
Interest expense		155			108
Other income		(13	)		(14	)

Interest and other (income) expense, net	$	(145	)	$	11

Income Taxes

We have subsidiaries in various countries and are therefore subject to varying income tax rates. The tax provision for the three months ended June 24, 2005, reflects the income tax rates in foreign countries in which we operate and income tax benefits and refunds of $0.1 million generated from foreign net operating losses. The tax provision for the

three months ended June 25, 2004, reflects the tax provision of our foreign operations and a full valuation allowance against net operating loss carryforwards generated in the United States, and a tax charge on profits from our Singapore subsidiary as at that time we had not been awarded the pioneer tax status. The current quarter effective tax rate of 25 percent is consistent with our estimate for fiscal year 2006.

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity has historically been cash generated from operations. We ended the quarter with cash and cash equivalents and short-term investments of $44.3 million, a decrease of $0.6 million from the beginning of the fiscal year. Approximately $0.8 million was provided by operations. The major uses of funds for the quarter were capital expenditures totaling $1.4 million and cash dividends declared and paid of $0.5 million. During the quarter, we completed the transfer of the hammer bank machining capability from Irvine to Singapore. As part of that process, we took the opportunity to upgrade several of the machines, which resulted in capital expenditures being higher than normal in this quarter.

A subsidiary of the company maintains unsecured lines of credit with major foreign banks totaling $2.1 million. The company also maintains a credit agreement in the amount of $2.4 million with a foreign bank to support its hedging activities. The company has a letter of credit related to its workers’ compensation program for $0.4 million, which renews automatically and is secured by cash. During and as of the periods presented, no amounts were borrowed under these agreements. The company also has a long-term note, secured by its Irvine facility. This note has scheduled principal repayments of $0.7 million annually through fiscal year 2007 a balloon payment of $12.6 million in fiscal year 2008. We ended the current fiscal quarter with long-term debt of $13.3 million and $0.7 million for the current portion on the note.

Under our stock buyback program, the remaining shares that can be repurchased at the discretion of management totaled 227,395 shares at June 24, 2005.

We do not anticipate any significant changes to our capital expenditure needs in the foreseeable future, which we expect to fund from cash from operations.

As of June 24, 2005, there have been no material changes in the company’s significant contractual obligations and commercial commitments as disclosed in its Annual Report on Form 10-K.

If demand for our products decreased, there could be a risk that cash provided from operations would diminish. We believe we could obtain bank financing secured by collateral. However, we can offer no assurances that such financing would be available on favorable terms, or at all. We believe that our cash and cash equivalents and our internally-generated funds are sufficient to finance anticipated working capital, capital expenditure requirements and cash dividend needs for the foreseeable future.

OFF-BALANCE SHEET ARRANGEMENTS

The company’s off-balance sheet arrangements consist of operating leases, credit facilities and guarantees. There were no material changes in our operating lease agreements as of June 24, 2005 from that reported in our Annual Report on Form 10-K. Information regarding our credit facilities can be found in the preceding section and in Note 4. We have not recorded a liability for the fair value of the guarantees made by the company as we believe that value to be minimal.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare the consolidated financial statements of Printronix in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available to us at the time. These estimates and assumptions affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures of contingent assets and liabilities for the periods presented. We continuously evaluate our estimates, judgments and assumptions, including those related to product returns, customer programs and incentives, doubtful accounts, inventories, warranty obligations, intangible assets, other long-lived assets, income taxes, contingencies and litigation. Actual results may differ from these estimates under different assumptions or conditions.

We believe the most critical accounting policies used to prepare the accompanying consolidated financial statements are the following:

Revenue Recognition

We recognize revenue in accordance with various authoritative guidance including, but not limited to, Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition.” The application of the authoritative guidance requires judgment to determine whether revenue has been realized or is realizable and earned. Judgment is required to record provisions for future product returns, customer programs and incentive offerings, including special pricing, rebates or other programs. Judgment is also required to determine the appropriate period to recognize previously deferred revenue related to service agreements. Any significant change in estimates or circumstances could have a material adverse impact upon our operating results for the period or periods in which such information is known.

Allowance for Doubtful Accounts

We use judgment based upon historical experience, overall economic conditions, and any specific customer collection issues we have identified to determine our allowance for estimated doubtful accounts. Although bad debt losses historically have been within our expectations and the allowance we have established, we cannot guarantee that we will continue to experience the same bad debt loss rates that we have in the past. Any significant change in estimates or circumstances could have a material adverse impact upon our operating results for the period or periods in which such information is known. Our accounts receivable balance includes substantial receivables from a few large resellers, and a significant change in the liquidity or financial position of any one of these resellers, or other significant changes in estimates or circumstances with other customers, could result in an additional allowance that could have a material adverse effect upon our operating results and financial condition for the period or periods in which such information is known.

Inventories

Each quarter, we record a provision to value our inventory at the lower of the actual cost to purchase and/or manufacture the inventory using the first-in, first-out method, or the current estimated market value of the inventory, based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Estimated future demand could prove to be inaccurate, in which case the company may experience product shortages, or may only be able to obtain the necessary components at a higher cost. Conversely, an inaccurate estimate of future demand may also result in additional charges for excess and obsolete inventories. Unanticipated changes in demand or changes in technology could have a material adverse effect upon our results of operation and financial condition for the period or periods in which such information is known.

Warranties

We maintain an accrual for warranty obligations and provisions for estimated warranty obligations are charged to cost of sales. Each quarter, we determine the provision for warranty charges by applying the estimated repair cost and estimated return rates to the outstanding units under warranty. Although our warranty costs historically have been within our expectations and the provisions we have established, we cannot guarantee that we will continue to experience the same warranty return rates or repair costs that we have in the past. A significant increase in product

failure rates, product return rates, or a significant increase in the cost to repair our products, could have a material adverse impact upon our operating results and financial condition in the period or periods in which such information is known.

Long-Lived Assets

Long-lived assets are assessed in accordance with accounting guidance under Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” (“SFAS 144”). Judgment is required in the application of the authoritative guidance and in determining the recoverability of assets. Any major unanticipated change in estimates or circumstances could have a material adverse effect upon the recoverability of long-lived assets and upon our operating results and financial condition.

Income Taxes

SFAS 109, “Accounting for Income Taxes” establishes financial accounting and reporting standards for the effect of income taxes. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Judgment is also required to determine if deferred tax assets will be realized and to determine the expected timing of the reversals of existing temporary differences. If the provision for income tax is inadequate, or if we are unable to realize deferred tax assets, or if the tax laws change unfavorably, we could experience income tax charges in excess of the reserves established. Likewise, if the provisions for current and deferred taxes are in excess of those eventually needed, or if we are able to realize additional deferred tax assets, or if tax laws change favorably, we could experience reduced income tax charges or an actual tax benefit.

We have operations in multiple international taxing jurisdictions and are subject to audit in those jurisdictions. These audits can involve complex issues. While we believe we have made adequate provision for any such issues, an unfavorable resolution of such issues could have an adverse effect upon our consolidated results of operations and financial condition.

We have not completed the process of evaluating our position with respect to the indefinite reinvestment of foreign earnings taking into account the possible election of the repatriation provisions contained in the American Jobs Creation Act of 2004. Accordingly, the company has not adjusted its income tax expense or deferred tax liability to reflect the possible effect of the new repatriation provision. Income tax expense, if any, related to the possible election of the repatriation provision will be recorded in the quarter when the company completes its evaluation and obtains the necessary management and board approvals for action, if any.

The company has not adjusted its deferred tax assets and liabilities to reflect the impact of the special deduction as discussed in FASB Staff Position (“FSP”) No. FAS 109-1, “Application on FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004.” The impact of this deduction, if any, will be reported in the period in which the deduction is claimed on its U.S. federal income tax return. We believe it is probable that this deduction will not be available to Printronix because of its existing domestic net operating losses.

Contingencies

We account for contingencies in accordance with various accounting guidance, including, but not limited to, SFAS No. 5 “Accounting for Contingencies” and Financial Accounting Standards Board Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of the Indebtedness of Others,” (“FIN 45”). Judgment is required to evaluate the degree of probability of an unfavorable outcome and our ability to reasonably estimate the loss related to legal claims, tax related audits, guarantees, including indirect guarantees of the indebtedness of others, and other known issues, and we will record a charge to earnings if appropriate. Any significant change in estimates or circumstances could have a material adverse impact upon our operating results for the period or periods in which such information is known.

NEW ACCOUNTING STANDARDS

In December 2004, the FASB issued FSP No. FAS 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) and FSP No. FAS 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”). Both FSP 109-1 and FSP 109-2 are effective upon issuance.

are covered by this interpretation are those for which an entity has a legal obligation to perform an asset retirement activity; however, the timing and/or method of settling the obligation are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provisions of FIN 47 are effective no later than the end of fiscal years ending after December 15, 2005, although early adoption is encouraged. FIN 47 is required to be adopted by Printronix by the end of fiscal year 2006 and the company is currently evaluating the provisions of this standard.

FACTORS THAT MAY AFFECT FUTURE RESULTS

There can be no assurance that future developments affecting the company will be those anticipated by management, and there are a number of factors that could adversely affect the company’s future operating results or cause the company’s actual results to differ materially from the estimates or expectations reflected in forward-looking statements, including without limitation, the factors set forth below:

We Operate in an Industry Influenced by Worldwide Capital Spending.

Our products are used for mission-critical applications in industrial settings such as manufacturing plants and distribution centers and also in information technology and back office operations. Our revenue is impacted by the worldwide level of spending for capital expenditures related to manufacturing plant expansion or refurbishment. In addition, our revenue is impacted by the level of activity in the worldwide supply-chain processes.

We Operate in an Industry Affected by Competing Technologies.

The industrial printing market utilizes varying technologies including line matrix, thermal transfer, laser, inkjet, serial and band printing technologies. Across all technologies, the printers are characterized as high-, medium- or low-end depending upon their range of features, including functionality and durability. Products made by Printronix utilize line matrix, high-end thermal transfer and high-end laser printing technologies.

We cannot offer assurance that we can successfully develop the needed products and compete against current competitors or future competitors for band printers and mid-range laser printers. Even if we are able to maintain or increase market share for a product, line matrix in particular, revenue could still decline as the market for the product matures.

We Operate in an Industry Characterized by Technological Change and Evolving Industry Standards.

The printing-solutions industry is extremely competitive and is characterized by technological change, frequent new product developments, periodic product obsolescence, evolving industry standards, particularly for RFID, changing

information technologies and evolving distribution-channels. We must adapt quickly to changing technological, application and solutions needs, and the introduction of new technologies and products offering improved features and functionality. We could incur substantial cost to keep pace with the technological changes, and may not be able to adapt to these changes.

Although we believe that we currently compete favorably with respect to these characteristics, this may change in the future. Our future success largely depends upon our ability to continuously develop new products with the quality levels customers demand, and develop new services and solutions. We spend a greater amount on research and development than the industry average because we believe that providing innovative products and solutions is important to our future operations. In spite of our efforts, we may fail to develop new products. Additionally, the new products we develop may not achieve market acceptance or may not be manufactured at competitive costs or in sufficient volumes. If we cannot proportionately decrease our cost structure in a timely manner in response to competitive pressures, our consolidated results of operations could be affected. We cannot guarantee the success of our research and development efforts.

Any delay in the development, production or marketing of a new RFID product could result in our not being the first to market, which could harm our competitive position. We must adapt quickly to changes mandated by the RFID industry standard setting group, EPC Global, and customers to maintain market share in this growing opportunity.

Our failure to enhance our existing products, services and solutions or to develop and introduce new products, services and solutions that meet changing customer requirements and evolving technological standards would adversely impact our ability to sell our products.

We Operate in a Highly Competitive Market.

The market for medium- and high-speed computer printers, printer/encoders and the related post-sale supplies is highly competitive, subject to change, and is likely to become even more competitive.

We compete directly with several companies of various sizes, including some of the largest businesses in the United States and Japan. Our competitors include privately held companies, publicly held companies and subsidiaries of multinational corporations. Some of our competitors may enter into strategic business relationships with other companies. We cannot offer assurance that we can successfully compete against these current competitors or future competitors.

Some competitors have significantly greater financial, technical, manufacturing, sales, marketing and other resources than we do and have achieved greater name recognition for their products and technologies than we have. We may not be able to successfully increase our market penetration or our overall share of the printer market.

Increased competition may result in price reductions, increased sales incentive offerings, lower gross margins, loss of market share and could require increased investment in inventory, research and development, sales expenses, marketing programs and expenditures to expand channels to market. Our competitors may offer products with superior market acceptance, superior price or superior performance. The company may be adversely affected if we are unable to maintain current product cost reductions, or achieve future product cost reductions, including warranty costs.

Customers may defer their purchasing decisions in anticipation of the introduction of new products or the actual introduction of new products by the company or its competitors.

If we fail to address our competitive challenges, there could be a material adverse effect upon our business, consolidated results of operations and financial condition.

We Compete in the Rapidly Evolving Market for RFID for the Supply-Chain.

We cannot guarantee that we can successfully compete against competitors in the RFID market, nor can we provide assurances that we will be successful in maintaining our market leadership or improving our market share.

While we believe the interest in RFID remains high, we can offer no assurance that the speed of RFID deployment will increase.

Standards for the emerging RFID market continue to evolve. The EPC Standards Committee is currently driving the design of a second-generation chip that is expected to become the standard going forward. We cannot guarantee that we can successfully meet the evolving standards in the future or evolving product designs, or will continue to develop products to address user needs effectively in an industry characterized by rapid technological change.

We have entered into several key strategic alliances with the leaders in RFID labels, software and integration services. We cannot guarantee that these strategic alliances will be successful.

We Rely on Resellers to Sell Our Products and Services.

We use a variety of distribution channels, including OEMs and distributors, to get most of our products to market. We may be adversely impacted by any conflicts that could arise between and among our sales channels.

We believe that our future success depends upon our ability to provide industrial-strength printing solutions to a broader customer base and to maintain good relationships with our major OEMs and distributors. We believe that continued purchase of our products by OEMs is dependent upon many factors, including OEMs’ desire to use outside suppliers rather than investing the capital resources necessary to develop their own products.

Our dependence upon a small number of major resellers exposes us to numerous risks, including:

•		channel conflicts;

•		loss of channel and the ability to bring our products to market;

•		concentration of credit risk, including disruption in distribution should our resellers’ financial condition deteriorate;

•		reduced visibility to end user demand and pricing issues which makes forecasting more difficult;

•		resellers leveraging their buying power to change the terms of pricing, payment and product delivery schedules; and

•		direct competition should a reseller decide to manufacture printers internally.

We cannot guarantee that resellers will not reduce, delay or eliminate purchases from us, which could have a material adverse effect upon our business, consolidated results of operations and financial condition. The loss of any one of these resellers would have a material adverse effect upon our business, consolidated results of operations and financial condition.

We Operate in an Environment of Unpredictable Demand.

We rely upon our ability to successfully manage our worldwide inventory supply-chain and inventory levels to support uncertain demand in a cost-effective manner.

Our sales to resellers are made under purchase orders that typically have short delivery requirements. Although we receive periodic order forecasts from our major reseller, they have no obligation to purchase the forecasted amounts and may cancel orders, change delivery schedules or change the mix of products ordered with minimal notice. Significant increases in demand could result in inventory shortages, higher costs to obtain expedited materials and components, higher costs to expedite shipment to our customers, and/or lost revenue opportunities. Significant decreases in demand could result in increased inventory levels, higher production costs, higher material and component procurement costs and reduced profitability.

Our quarterly sales patterns have historically reflected a slightly higher than normal level of sales in the last few weeks of each quarter, making forecasting more difficult. In addition, seasonality in sales also affects our business to some degree. Typically sales are low in the EMEA region during the summer months as the region generally takes extended holidays. Sales are also typically higher in our third fiscal quarter, which ends in December, as many of our customers are on a calendar year. We cannot guarantee that these trends will continue.

We Have International Customers, Suppliers and Operations.

We expect that international revenue will continue to grow and account for a significant percentage of our revenue for the foreseeable future. Our products are sold in eighty countries around the world that subjects us to risks that may be unique to a particular country, but also to risk factors that may affect the global economy.

Our products are manufactured using raw materials and components that are acquired from sources around the world. We use a large number of suppliers and regularly evaluate the availability of potential alternate suppliers should circumstances change with existing suppliers. We rely on a single or limited number of sources for certain raw materials and components, although we attempt to have alternate sources where possible. We internally develop most of the software used in our printer products. Certain software is purchased from suppliers through royalty agreements. If we were to experience a sudden loss of availability of purchased raw materials and components or purchased software, we are unable to guarantee that we could quickly obtain the needed items from alternate sources. Our ability to ship our products in desired quantities and in a timely, cost-effective manner could be adversely affected, thus affecting our business, consolidated results of operations and financial condition.

We rely heavily upon our international facilities to maintain appropriate inventory levels, manufacture products, and complete configuration of printers in a timely and cost-efficient manner. Should we fail to successfully predict demand, we may not have sufficient inventory levels available to address customer requirements, or may need to use costly distribution methods, such as air freighting, to meet sales requirements.

There are many risks associated with international customers, suppliers and operations, including, but not limited to, the following:

•		compliance with multiple and potentially conflicting regulations, including export requirements, tariffs, import duties, health and safety requirements and other barriers;

•		fluctuations in freight and duty costs and disruptions at important geographic points of exit and entry;

•		differences in intellectual property protection;

•		differences in technology standards or customer requirements;

•		the possibility of defective parts from suppliers;

•		difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws;

•		currency fluctuations and restrictions on currency movements;

•		economic instability, including inflation, recession and interest rate fluctuations;

•		longer accounts receivable cycles and financial instability;

•		local labor regulations;

•		trade protection measures and regulations;

•		risk of loss of our international assets due to political or economic instability;

•		political or civil turmoil;

•		war or conflict abroad or in the United States;

•		difficulties associated with environmental regulations under various federal, state, and international laws, including restrictions imposed in the European Union, the Restriction of Hazardous Substance Directive (“RoHS”) and European Union Waste Electrical and Electronic Equipment Directive (“WEEE”) which makes producers of

			electrical goods, including computers and printers, responsible for collection, recycling, treatment and disposal of recovered products, and other similar legislation, including similar legislation currently proposed for China;

	•		natural disasters, such as earthquakes, floods, tsunamis and typhoons;

	•		consequences resulting from our armed military conflict in Iraq;

	•		terrorist attacks or other armed hostilities abroad or in the United States and

	•		outbreaks of infectious disease such as Severe Acute Respiratory Syndrome (SARS) or other public health issues.

We are substantially self-insured for losses and business interruptions stemming from terrorist attacks, armed conflicts, war, power shortages and natural disasters. California and other parts of the United States have experienced major power shortages and blackouts and could experience them in the future, which could disrupt our business or that of our suppliers or customers. Our corporate headquarters and research and development activities are located in California, near known earthquake faults. It is impossible to predict the ultimate impact on us, but our business, consolidated results of operations and financial condition could suffer in the event of a major earthquake.

We could incur substantial costs, including clean up costs, fines, sanctions, property damage claims and personal injury claims, if we were to violate or become liable under environmental laws or if our products become non-compliant with environmental laws.

The company operates in many countries with differing and sometimes conflicting income tax requirements. The company’s effective tax rate could be adversely affected by:

•		overlapping or differing tax laws;

•		changes in the mix of earnings in countries with differing income tax rates and

•		unfavorable outcomes of future audits by taxing authorities in various jurisdictions.

In particular, the realization of deferred tax assets, which are predominately in the Unites States, depends on our ability to generate future taxable income in the United States. Further, our effective tax rate may be impacted if we elect to repatriate cash held outside the United States under the terms outlined in the American Jobs Creation Act of 2004.

Failure to manage the risks posed by our international customers, suppliers and operations could have a material adverse effect upon our business, consolidated results of operations and financial condition.

We Depend on Our Ability to Attract and Retain Key Personnel and Future Changes in Equity Compensation Accounting Could Adversely Affect Earnings.

The ability to attract and to retain key, highly-qualified personnel, both technical and managerial, is critical to our success.

Developing, manufacturing and marketing our products is a complex process and requires significant expertise to meet customers’ specifications. Competition for personnel, particularly qualified engineers and employees with expertise in RFID applications, is keen. The loss of a significant number of key personnel, as well as the failure to recruit and train additional key personnel in a timely manner could have a material adverse effect upon our business, consolidated results of operations and financial condition.

In the future, the company will be required to record a charge to earnings for employee stock option grants. As a result, we may incur increased compensation costs and may need to change our equity compensation structure, and find it difficult to attract, retain and motivate employees, all of which could impact our business.

Intellectual Property is Important to Our Success.

We rely upon patents to protect our intellectual property. We execute confidentiality and non-disclosure agreements as needed and limit access to, and distribution of, our proprietary information; however, we cannot guarantee that our efforts to protect our intellectual property will be successful.

Our ability to compete successfully and to achieve future revenue growth depends, in part, upon our ability to protect our proprietary technology and to operate without infringing upon the rights of others. We may fail to do so. Such infringement claims, whether or not valid, could result in substantial costs, diversion of management’s attention and resources from our ongoing business. Claims of intellectual property infringement also might require us to redesign products, enter into costly settlement or licensing agreements or pay costly damage awards. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual agreement to us.

A third party may assert that we, or customers indemnified by us, violate their intellectual property. A third party claiming infringement also may obtain an injunction or other equitable relief, which effectively could block the distribution or sale of allegedly infringing products. The departure of any of our key management and technical personnel, or breach of non-disclosure obligations, or the failure to achieve our intellectual property objectives may have a material adverse effect upon our business, consolidated results of operations and financial condition.

Our Stock Price is Volatile.

Our stock price has fluctuated and we expect that it will continue to do so. Many factors can influence our stock price, including but not limited to:

•		the announcement of new products or innovations by us or our competitors;

•		changes in the levels of quarterly revenue or net income; and

•		speculation in the press or investment community about the company, in particular as it relates to RFID.

Investors should not rely on recent trends to predict future stock prices, consolidated financial condition, or results of operations or cash flows.

PART I. FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

PRINTRONIX, INC. AND SUBSIDIARIES

MARKET RISK

The company operates on a global basis and may be impacted by foreign currency exchange rate fluctuations. We have a foreign currency-hedging program to mitigate currency rate fluctuation exposure related to foreign currency cash inflows. Under the program, we may enter into foreign currency forward exchange contracts with maturities from 30 to 180 days with a major financial institution. We do not use the contracts for speculative or trading purposes. As of June 24, 2005, we had outstanding forward exchange contracts with a notional amount of $5.1 million. Based on the fair value of these contracts at June 24, 2005, we recorded a net asset of $0.3 million.

We have financial instruments that are subject to interest rate risk, principally debt obligations. Long-term borrowings, consisting of a note secured by our Irvine facility, are at variable rates based on London Interbank Offered Rate (“LIBOR”), and are reset at our discretion for periods not exceeding one year. During the current quarter, the weighted average interest rate on the note was 4.4 percent. If interest rates were to increase by 10 percent (44 basis points on the note), the impact on our pre-tax earnings would not be material.

PART I. FINANCIAL INFORMATION

Item 4. Controls and Procedures

PRINTRONIX, INC. AND SUBSIDIARIES

CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and principal accounting and financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q. Based on their evaluation, our principal executive officer and principal accounting and financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic reports filed with the Securities and Exchange Commission. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

There have been no significant changes, including corrective actions with regard to significant deficiencies or material weaknesses, in our internal controls or in other factors that could significantly affect these controls during the fiscal quarter covered by this report or subsequent to the date of the evaluation referenced in the paragraph above.


	PAGE
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 24, 2005 and March 25, 2005		3
Consolidated Statements of Operations for the Three Months Ended June 24, 2005 and June 25, 2004		5
Consolidated Statements of Cash Flows for the Three Months Ended June 24, 2005 and June 25, 2004		6
Condensed Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		32
PART II: OTHER INFORMATION
Item 1. Legal Proceedings		33
Item 6. Exhibits		33
SIGNATURES		34
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

	31.1		Certification Pursuant to Rule 13a-14(a) and 15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2		Certification Pursuant to Rule 13a-14(a) and15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


Date:	August 8, 2005	PRINTRONIX, INC.
		(Registrant)

		By:	/s/ George L. Harwood


			George L. Harwood

			Senior Vice President, Finance and Information Systems (IS), Chief Financial Officer and Corporate Secretary (Principal Accounting and Financial Officer)

	31.1		Certification Pursuant to Rule 13a-14(a) and15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2		Certification Pursuant to Rule 13a-14(a) and15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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	1.		I have reviewed this report on Form 10-Q of Printronix, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	/s/ ROBERT A. KLEIST
	Robert A. Kleist
	President and Chief Executive Officer



	/s/ GEORGE L. HARWOOD
	George L. Harwood
	Sr. Vice President, Finance, Chief Financial Officer and Secretary (Principal Financial Officer and Duly Authorized Officer)