ZEBRA TECHNOLOGIES CORP - FORM 8-K - EX-99.1 - REGISTRANT'S PRESS RELEASE

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Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE


Contact:
Investors:		Media:
Douglas A. Fox, CFA		Orlando De Bruce
Vice President, Investor Relations		Director, Global Public Relations
and Treasurer		+1 510 267 5052
+1 847 793 6735		odebruce@zebra.com
dfox@zebra.com

Zebra Technologies Announces Record Sales and Earnings per Share

for the Second Quarter of 2011

Strong sales growth in international regions leads to margin improvement

and record earnings per share from continuing operations

Lincolnshire, IL, August 4, 2011—Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2011 second quarter income from continuing operations of $33,169,000, or a record $0.60 per diluted share, compared with $22,185,000, or $0.38 per diluted share, for the second quarter of 2010. Net sales for the quarter ended July 2, 2011, increased 12.3% to $245,541,000 from $218,558,000 for the corresponding period for 2010. Results for 2010 have been adjusted to account for the sale of Navis Holdings LLC, which was sold on March 18, 2011, and other immaterial operations which have been accounted for as discontinued operations.


Summary Financial Performance (Unaudited)
	2Q11			2Q10		Change
Net sales (in 000s)	$	245,541		$	218,558		12.3	%
Gross margin (%)		49.6			45.5		4.1 pts.
Operating margin (%)		19.0			14.6		4.4 pts.
Income from continuing operations (in 000s)	$	33,169		$	22,185		49.5	%
Income (loss) from discontinued operations, net of tax (in 000s)		(205	)		492		NM
Net income (in 000s)	$	32,964		$	22,677		45.4	%
Diluted earnings per share:
Income from continuing operations	$	0.60		$	0.38		57.9	%
Income from discontinued operations, net of tax		0.00			0.01		(100.0	)%
Net income	$	0.60		$	0.39		53.8	%

Note: Net sales and results for 2010 have been adjusted for the March 2011 sale of Navis and other immaterial operations which have been reflected as discontinued operations.

LOGO

“Our investments to extend geographic reach, accelerate the cadence of new product introductions and build more formidable go-to-market channels helped support Zebra’s second quarter results,” stated Anders Gustafsson, Zebra’s chief executive officer. “More Zebra sales representatives in emerging regions enabled us to meet more customers’ needs to identify, track and manage valued assets in complex supply chains. With its scale and multiple competitive advantages, Zebra is extending its global industry leadership. We are optimistic about our further success and capacity for creating greater shareholder value.”

As of July 2, 2011, Zebra had $342,878,000 in cash and investments, and no long-term debt. Net inventories were $118,109,000, and net accounts receivable were $145,991,000.

Discussion and Analysis

•

Net sales for the second quarter of 2011, compared with the same quarter for 2010, benefited from strong sales growth in all international geographic regions. The addition of Zebra sales representatives placed in high-growth countries and regions over the past twelve months, and other initiatives as part of the company’s growth strategy, complemented improved business conditions in these territories. Quarterly sales increased 8.0% on a constant-currency basis from a year ago.

•

Gross margin of 49.6%, versus 45.5% a year ago, reflects lower costs for raw materials, higher volumes, lower freight charges and favorable movements in foreign exchange rates.

•

Operating expense growth of 11.2% includes higher employee-related payroll and benefit costs, in part related to geographic expansion and other growth initiatives.

Stock Purchase Update

During the second quarter of 2011, Zebra repurchased 1,000,000 shares of Zebra Technologies Corporation Class A Common Stock. At July 2, 2011, the company had 2,750,000 shares remaining in its stock buyback authorization, and 54,170,138 shares of common stock were outstanding.

Third Quarter Outlook

Zebra announced its financial forecast for the third quarter of 2011. Net sales are expected within a range of $245,000,000 to $255,000,000. Diluted earnings per share from continuing operations are expected within a range of $0.57 to $0.64.

Conference Call Notification

Investors are invited to listen to a live webcast of Zebra’s conference call discussing the company’s financial results for the second quarter of 2011. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company’s website at http://www.zebra.com.

Forward-looking Statement

This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company’s financial forecast for the third quarter of 2011 stated in the paragraph above captioned “Third Quarter Outlook.” Actual results may differ from those expressed or implied in the company’s forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release.

These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra’s hardware and software products and competitors’ product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit, capital markets volatility, may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra’s ability to control manufacturing and operating costs. Because of a large investment portfolio, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. These and other factors could have an adverse effect on Zebra’s sales, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words “anticipate,” “believe,” “estimate,” and “expect” and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company’s future operations and results can be found in Zebra’s filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra’s Form 10-K for the year ended December 31, 2010.

About Zebra Technologies

Zebra Technologies Corporation offers the broadest range of enabling solutions to identify, track, and manage critical assets, people and transactions for improved business efficiencies. Serving more than 90 percent of Global Fortune 500 companies in more than 100 countries around the world, our specialty on-demand printing, RFID and enterprise location solutions help customers create smarter and more connected infrastructures, resulting in significant improvements in visibility and business performance. For more information about Zebra’s solutions, visit http://www.zebra.com.

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)


	July 2, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	92,956		$	46,175
Restricted cash		65			1,378
Investments and marketable securities		163,509			125,567
Accounts receivable, net		145,991			130,143
Receivable from buyer		13,790			—
Inventories, net		118,109			112,970
Deferred income taxes		18,593			15,670
Prepaid expenses and other current assets		13,675			11,505
Assets of discontinued operations		1,157			148,169

Total current assets		567,845			591,577


Property and equipment at cost, less accumulated depreciation and amortization		93,462			87,093
Long-term deferred income taxes		17,926			21,254
Goodwill		79,703			79,703
Other intangibles, net		8,084			9,755
Long-term investments and marketable securities		86,348			85,478
Long-term receivable from buyer		13,790			—
Other assets		4,211			4,004

Total assets	$	871,369		$	878,864


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	35,728		$	34,578
Accrued liabilities		54,368			65,163
Deferred revenue		11,928			8,966
Income taxes payable		990			5,900
Liabilities of discontinued operations		801			21,827

Total current liabilities		103,815			136,434
Deferred rent		1,810			2,207
Other long-term liabilities		10,044			10,191

Total liabilities		115,669			148,832


Stockholders’ equity:
Preferred Stock		—			—
Class A Common Stock		722			722
Additional paid-in capital		127,004			129,715
Treasury stock		(525,002	)		(462,029	)
Retained earnings		1,165,571			1,070,973
Accumulated other comprehensive income (loss)		(12,595	)		(9,349	)

Total stockholders’ equity		755,700			730,032

Total liabilities and stockholders’ equity	$	871,369		$	878,864

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Net sales:
Net sales of tangible products	$	232,762		$	207,748		$	458,882		$	409,211
Revenue from services and software		12,779			10,810			23,960			21,322

Total net sales		245,541			218,558			482,842			430,533


Cost of sales
Cost of sales of tangible products		117,732			114,081			228,513			223,156
Cost of services and software		6,111			5,068			12,633			10,205

Total cost of sales		123,843			119,149			241,146			233,361


Gross profit		121,698			99,409			241,696			197,172


Operating expenses:
Selling and marketing		30,950			27,682			59,478			52,355
Research and development		22,487			20,653			44,168			38,977
General and administrative		20,688			17,955			43,394			37,273
Amortization of intangible assets		836			740			1,671			1,481
Exit and restructuring costs		66			466			1,952			2,232

Total operating expenses		75,027			67,496			150,663			132,318


Operating income		46,671			31,913			91,033			64,854


Other income (expense):
Investment income		656			634			1,216			1,476
Foreign exchange gain (loss)		(833	)		424			(1,127	)		592
Other, net		(243	)		(455	)		(497	)		(725	)

Total other income (expense)		(420	)		603			(408	)		1,343


Income from continuing operations before income taxes		46,251			32,516			90,625			66,197
Income taxes		13,082			10,331			27,328			18,465


Income from continuing operations		33,169			22,185			63,297			47,732
Income (loss) from discontinued operations, net of tax		(205	)		492			31,301			(322	)

Net income	$	32,964		$	22,677		$	94,598		$	47,410


Basic earnings per share:
Income from continuing operations	$	0.60		$	0.38		$	1.15		$	0.83
Income (loss) from discontinued operations		0.00			0.01			0.57			(0.01	)

Net income	$	0.60		$	0.39		$	1.72		$	0.82

Diluted earnings per share:
Income from continuing operations	$	0.60		$	0.38		$	1.14		$	0.83
Income (loss) from discontinued operations		0.00			0.01			0.57			(0.01	)

Net income	$	0.60		$	0.39		$	1.71		$	0.82


Basic weighted average shares outstanding		54,546			57,489			54,981			57,756
Diluted weighted average and equivalent shares outstanding		54,958			57,737			55,395			58,003

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Six Months Ended
	July 2, 2011			July 3, 2010
Cash flows from operating activities:
Net income	$	94,598		$	47,410
Adjustments to reconcile net income to net cash provided by (used in)
Operating activities:
Depreciation and amortization		12,151			16,021
Equity-based compensation		8,013			5,155
Excess tax benefit from equity-based compensation		(1,234	)		(16	)
Loss (gain) on sale of fixed assets		5			(58	)
Gain on sale of business		(68,001	)		—
Deferred income taxes		3,899			2,961
Changes in assets and liabilities:
Accounts receivable, net		5,862			(1,956	)
Inventories, net		(4,704	)		(5,383	)
Other assets		(2,319	)		(8,664	)
Accounts payable		(4,695	)		6,672
Accrued liabilities		(13,614	)		779
Deferred revenue		(14,738	)		(337	)
Income taxes		(4,333	)		5,429
Other operating activities		(3,402	)		(683	)

Net cash provided by operating activities		7,488			67,330


Cash flows from investing activities:
Purchases of property and equipment		(11,232	)		(15,053	)
Payments for patents and licensing arrangements		—			(1,634	)
Proceeds from the sale of business		161,008			—
Purchases of investments and marketable securities		(573,686	)		(200,939	)
Maturities of investments and marketable securities		351,722			149,929
Sales of investments and marketable securities		183,485			44,567

Net cash provided (used) by investing activities		111,297			(23,130	)


Cash flows from financing activities:
Purchase of treasury stock		(82,388	)		(46,767	)
Proceeds from exercise of stock options and stock purchase plan purchases		8,096			5,033
Excess tax benefit from equity-based compensation		1,234			16

Net cash (used) in financing activities		(73,058	)		(41,718	)


Effect of exchange rate changes on cash		239			(143	)


Net increase (decrease) in cash and cash equivalents		45,966			2,339
Cash balance of discontinued operations at beginning of period		1,301			1,693
Cash balance of discontinued operations at end of period		(486	)		(412	)

Cash and cash equivalents at beginning of period		46,175			37,250

Cash and cash equivalents at end of period	$	92,956		$	40,870


Supplemental disclosures of cash flow information:
Income taxes paid	$	52,819		$	9,472

ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY


	Three Months Ended
Product Category	July 2, 2011		July 3, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales - 2010
Hardware	$	181,758	$	162,908		11.6		74.0		74.6
Supplies		49,578		43,573		13.8		20.2		19.9
Service and software		12,779		10,810		18.2		5.2		4.9

Subtotal products		244,115		217,291		12.3		99.4		99.4
Shipping and handling		1,426		1,267		12.5		0.6		0.6

Total net sales	$	245,541	$	218,558		12.3		100.0		100.0


	Six Months Ended
Product Category	July 2, 2011		July 3, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales - 2010
Hardware	$	361,895	$	322,317		12.3		75.0		74.8
Supplies		94,213		84,270		11.8		19.5		19.6
Service and software		23,960		21,322		12.4		4.9		5.0

Subtotal products		480,068		427,909		12.2		99.4		99.4
Shipping and handling		2,774		2,624		5.7		0.6		0.6

Total net sales	$	482,842	$	430,533		12.1		100.0		100.0

SALES BY GEOGRAPHIC REGION


	Three Months Ended
Geographic Region	July 2, 2011		July 3, 2010		Percent Change			Percent of Net Sales - 2011		Percent of Net Sales - 2010
Europe, Middle East and Africa	$	85,391	$	71,238		19.9			34.8		32.6
Latin America		24,065		19,224		25.2			9.8		8.8
Asia-Pacific		38,299		25,614		49.5			15.6		11.7

Total International		147,755		116,076		27.3			60.2		53.1
North America		97,786		102,482		(4.6	)		39.8		46.9

Total net sales	$	245,541	$	218,558		12.3			100.0		100.0


	Six Months Ended
Geographic Region	July 2, 2011		July 3, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales - 2010
Europe, Middle East and Africa	$	169,621	$	147,555		15.0		35.1		34.3
Latin America		44,169		38,706		14.1		9.1		9.0
Asia-Pacific		70,794		48,734		45.3		14.7		11.3

Total International		284,584		234,995		21.1		58.9		54.6
North America		198,258		195,538		1.4		41.1		45.4

Total net sales	$	482,842	$	430,533		12.1		100.0		100.0

ZEBRA TECHNOLOGIES CORPORATION

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)


	Three Months Ended
	July 2, 2011		July 3, 2010		Percent Change
Total printers shipped		276,563		270,799		2.1
Average selling price of printers shipped	$	558	$	506		10.4


	Six Months Ended
	July 2, 2011		July 3, 2010		Percent Change
Total printers shipped		560,740		515,185		8.8
Average selling price of printers shipped	$	541	$	525		3.0

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