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

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8-K - FORM 8-K - ZEBRA TECHNOLOGIES CORP	d251911d8k.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE


Contact:
Investors:		Media:
Douglas A. Fox, CFA		Drew Ferguson
Vice President, Investor Relations		Senior Vice President
and Treasurer		Ogilvy Public Relations Worldwide
+1 847 793 6735		+1 312 397 6033
dfox@zebra.com		drew.ferguson@ogilvy.com

Zebra Technologies Announces Record Sales and EPS

for the Third Quarter of 2011

Favorable shipments in North America and growth in all regions

lead to ninth consecutive sequential quarter of sales growth;

Board authorizes additional three million shares for stock buyback

Lincolnshire, IL, November 8, 2011—Zebra Technologies Corporation (NASDAQ: ZBRA) today announced record 2011 third quarter income from continuing operations of $34,187,000, or $0.64 per diluted share, compared with $27,247,000, or $0.48 per diluted share, for the third quarter of 2010. Net sales for the quarter ended October 1, 2011, increased 10.2% to a record $253,338,000 from $229,807,000 for the corresponding period for 2010. Quarterly net income of $45,001,000, or $0.84 per diluted share, for 2011 includes $0.20 per diluted share in income from discontinued operations. Third quarter 2011 income from discontinued operations relate to the sale of proveo AG.

Summary Financial Performance (Unaudited)


	3Q11		3Q10			Change
Net sales (in 000s)	$	253,338	$	229,807			10.2	%
Gross margin (%)		48.8		47.5			1.3	pts.
Operating margin (%)		19.3		17.5			1.8	pts.
Income from continuing operations (in 000s)	$	34,187	$	27,247			25.5	%
Income (loss) from discontinued operations, net of tax (in 000s)		10,814		(1,096	)		NM
Net income (in 000s)	$	45,001	$	26,151			72.1	%
Diluted earnings per share:
Income from continuing operations	$	0.64	$	0.48			33.3	%
Income from discontinued operations, net of tax	$	0.20	$	(0.02	)		NM
Net income	$	0.84	$	0.46			82.6	%

Note:

Net sales and results for 2010 have been adjusted for the sales of Navis, proveo AG and other immaterial operations.

“Excellent execution led to strong performance in all geographies and across our product lines to deliver another quarter of record results,” stated Anders Gustafsson, Zebra’s chief executive officer. “Increasingly, our

ongoing investments in better geographic coverage, new product development and building stronger go-to-market channels are paying off, making Zebra a more valued strategic business partner. Our broader range of products and solutions are helping our customers make smarter decisions by giving them greater visibility into their operations. Zebra remains well positioned to extend leadership in an attractive industry and build greater shareholder value.”

As of October 1, 2011, Zebra had $299,047,000 in cash and investments, and no long-term debt. Net inventories were $120,378,000, and net accounts receivable were $162,314,000.

Discussion and Analysis

•

Net sales for the third quarter of 2011 benefited from growth in all geographic regions, with the highest growth occurring in the company’s Asia Pacific region. The addition of Zebra sales representatives in high-growth countries and regions over the past twelve months, and other initiatives, complemented continued favorable business conditions in these territories. Quarterly sales increased 7.8% on a constant-currency basis from a year ago. On a sequential basis, North American sales benefited from higher shipments to retail customers.

•

Gross margin of 48.8%, versus 47.5% a year ago, reflects lower costs for raw materials, higher volumes and favorable movements in foreign exchange rates, partially offset by a less favorable product mix.

•

Operating expense growth of 8.4% includes higher employee-related payroll and benefit costs, in part related to geographic expansion and other growth initiatives. Operating profit margin increased from 17.6% to 19.3%.

•

During the third quarter, the company completed the sale of proveo AG, a discontinued operation. This sale generated a net gain of $10,814,000, or $0.20 per diluted share.

Stock Purchase Update

During the third quarter of 2011, Zebra repurchased 1,824,910 shares of Zebra Technologies Corporation Class A Common Stock. At October 1, 2011, the company had 925,090 shares remaining in its stock buyback authorization, and 52,388,510 shares of common stock were outstanding.

In addition, Zebra’s Board has authorized the purchase of up to an additional 3,000,000 shares of Zebra Technologies Corporation Class A Common Stock. These purchases can be made from time to time in the open market or in private transactions. There is no expiration date on the authorization.

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Fourth Quarter Outlook

Zebra announced its financial forecast for the fourth quarter of 2011. Net sales are expected within a range of $242,000,000 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 third 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 fourth quarter of 2011 stated in the paragraph above captioned “Fourth 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

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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

A global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) provides enabling technologies that allow customers to take smarter actions. Our extensive portfolio of bar code, receipt, card, kiosk and RFID printers and supplies, as well as real-time location solutions give a digital voice to assets, people and transactions that provides greater visibility into mission-critical information. For more information about Zebra’s solutions, visit http://www.zebra.com.

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ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)


	October 1, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	43,781		$	46,175
Restricted cash		65			1,378
Investments and marketable securities		147,115			125,567
Accounts receivable, net		162,314			130,143
Receivable from buyer		27,580			—
Inventories, net		120,378			112,970
Deferred income taxes		16,470			15,670
Income tax receivable		1,707			—
Prepaid expenses and other current assets		20,303			11,505
Assets of discontinued operations		—			148,169

Total current assets		539,713			591,577

Property and equipment at cost, less accumulated depreciation and amortization		94,726			87,093
Long-term deferred income taxes		18,241			21,254
Goodwill		79,703			79,703
Other intangibles, net		7,441			9,755
Long-term investments and marketable securities		108,086			85,478
Other assets		3,862			4,004

Total assets	$	851,772		$	878,864

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30,924		$	34,578
Accrued liabilities		53,236			65,163
Deferred revenue		10,276			8,966
Income taxes payable		—			5,900
Liabilities of discontinued operations		—			21,827

Total current liabilities		94,436			136,434
Deferred rent		1,695			2,207
Other long-term liabilities		9,693			10,191

Total liabilities		105,824			148,832

Stockholders’ equity:
Preferred Stock		—			—
Class A Common Stock		722			722
Additional paid-in capital		129,608			129,715
Treasury stock		(587,510	)		(462,029	)
Retained earnings		1,210,572			1,070,973
Accumulated other comprehensive income (loss)		(7,444	)		(9,349	)

Total stockholders’ equity		745,948			730,032

Total liabilities and stockholders’ equity	$	851,772		$	878,864

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ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended
	Oct. 1, 2011			Oct. 2, 2010			Oct 1, 2011			Oct. 2, 2010
Net sales:
Net sales of tangible products	$	241,686		$	218,271		$	700,568		$	627,482
Revenue from services and software		11,652			11,536			35,612			32,858

Total net sales		253,338			229,807			736,180			660,340

Cost of sales
Cost of sales of tangible products		122,529			114,924			351,042			338,080
Cost of services and software		7,256			5,636			19,889			15,841

Total cost of sales		129,785			120,560			370,931			353,921

Gross profit		123,553			109,247			365,249			306,419

Operating expenses:
Selling and marketing		31,942			28,068			91,420			80,423
Research and development		22,584			21,862			66,752			60,839
General and administrative		19,166			18,147			62,560			55,420
Amortization of intangible assets		843			839			2,514			2,320
Exit and restructuring costs		138			—			2,090			2,232

Total operating expenses		74,673			68,916			225,336			201,234

Operating income		48,880			40,331			139,913			105,185

Other income (expense):
Investment income		134			635			1,350			2,111
Foreign exchange gain (loss)		(173	)		(148	)		(1,300	)		444
Other, net		(859	)		(160	)		(1,356	)		(885	)

Total other income (expense)		(898	)		327			(1,306	)		1,670

Income from continuing operations before income taxes		47,982			40,658			138,607			106,855
Income taxes		13,795			13,411			41,123			31,876

Income from continuing operations		34,187			27,247			97,484			74,979
Income (loss) from discontinued operations, net of tax		10,814			(1,096	)		42,115			(1,418	)

Net income	$	45,001		$	26,151		$	139,599		$	73,561

Basic earnings per share:
Income from continuing operations	$	0.64		$	0.48		$	1.79		$	1.30
Income (loss) from discontinued operations		0.20			(0.02	)		0.77			(0.02	)

Net income	$	0.84		$	0.46		$	2.56		$	1.28

Diluted earnings per share:
Income from continuing operations	$	0.64		$	0.48		$	1.78		$	1.30
Income (loss) from discontinued operations		0.20			(0.02	)		0.77			(0.02	)

Net income	$	0.84		$	0.46		$	2.55		$	1.28

Basic weighted average shares outstanding		53,339			56,739			54,405			57,405
Diluted weighted average and equivalent shares outstanding		53,628			56,998			54,770			57,657

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ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Nine Months Ended
	Oct. 1, 2011			Oct. 2, 2010
Cash flows from operating activities:
Net income	$	139,599		$	73,561
Adjustments to reconcile net income to net cash provided by (used in) Operating activities:
Depreciation and amortization		17,985			23,698
Equity-based compensation		11,060			8,155
Impairment of investments		326			—
Excess tax benefit from equity-based compensation		(1,265	)		(83	)
Loss (gain) on sale of fixed assets		53			(58	)
Gain on sale of business		(66,753	)		—
Deferred income taxes		5,703			3,208
Changes in assets and liabilities:
Accounts receivable, net		(10,112	)		(14,463	)
Inventories, net		(6,635	)		(15,972	)
Other assets		(10,150	)		(1,192	)
Accounts payable		(8,493	)		6,747
Accrued liabilities		(14,917	)		13,861
Deferred revenue		(16,707	)		(1,530	)
Income taxes		(7,087	)		9,197
Other operating activities		2,116			(3,391	)

Net cash provided by operating activities		34,723			101,738

Cash flows from investing activities:
Purchases of property and equipment		(17,829	)		(23,752	)
Payments for patents and licensing arrangements		(200	)		(2,882	)
Proceeds from the sale of businesses		161,206			—
Purchases of investments and marketable securities		(791,811	)		(312,201	)
Maturities of investments and marketable securities		493,649			230,715
Sales of investments and marketable securities		253,377			74,371

Net cash provided (used) by investing activities		98,392			(33,749	)

Cash flows from financing activities:
Purchase of treasury stock		(146,373	)		(67,384	)
Proceeds from exercise of stock options and stock purchase plan purchases		9,197			7,772
Excess tax benefit from equity-based compensation		1,265			83

Net cash (used) in financing activities		(135,911	)		(59,529	)

Effect of exchange rate changes on cash		(899	)		44

Net increase (decrease) in cash and cash equivalents		(3,695	)		8,504
Cash balance of discontinued operations at beginning of period		1,301			1,693
Less: Cash balance of discontinued operations at end of period		—			653

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

Cash and cash equivalents at end of period	$	43,781		$	46,794

Supplemental disclosures of cash flow information:
Income taxes paid	$	53,512		$	9,764

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ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY


	Three Months Ended
Product Category	Oct. 1, 2011		Oct. 2, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales – 2010
Hardware	$	193,214	$	175,489		10.1		76.3		76.4
Supplies		47,110		41,644		13.1		18.6		18.1
Service and software		11,652		11,536		1.0		4.6		5.0

Subtotal products		251,976		228,669		10.2		99.5		99.5
Shipping and handling		1,362		1,138		19.7		0.5		0.5

Total net sales	$	253,338	$	229,807		10.2		100.0		100.0


	Nine Months Ended
Product Category	Oct. 1, 2011		Oct. 2, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales – 2010
Hardware	$	555,108	$	497,806		11.5		75.4		75.4
Supplies		141,323		125,914		12.2		19.2		19.1
Service and software		35,612		32,858		8.4		4.8		4.9

Subtotal products		732,043		656,578		11.5		99.4		99.4
Shipping and handling		4,137		3,762		10.0		0.6		0.6

Total net sales	$	736,180	$	660,340		11.5		100.0		100.0

SALES BY GEOGRAPHIC REGION


	Three Months Ended
Geographic Region	Oct. 1, 2011		Oct. 2, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales - 2010
Europe, Middle East and Africa	$	84,597	$	73,573		15.0		33.4		32.0
Latin America		23,968		20,593		16.4		9.5		9.0
Asia-Pacific		38,723		32,088		20.7		15.3		14.0

Total International		147,288		126,254		16.7		58.2		55.0
North America		106,050		103,553		2.4		41.8		45.0

Total net sales	$	253,338	$	229,807		10.2		100.0		100.0


	Nine Months Ended
Geographic Region	Oct. 1, 2011		Oct. 2, 2010		Percent Change		Percent of Net Sales - 2011		Percent of Net Sales - 2010
Europe, Middle East and Africa	$	254,218	$	221,128		15.0		34.5		33.5
Latin America		68,137		59,300		14.9		9.3		9.0
Asia-Pacific		109,518		80,821		35.5		14.9		12.2

Total International		431,873		361,249		19.5		58.7		54.7
North America		304,307		299,091		1.7		41.3		45.3

Total net sales	$	736,180	$	660,340		11.5		100.0		100.0

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ZEBRA TECHNOLOGIES CORPORATION

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)


	Three Months Ended
	Oct. 1, 2011		Oct. 2, 2010		Percent Change
Total printers shipped		315,743		265,962		18.7
Average selling price of printers shipped	$	524	$	545		(3.9	)


	Nine Months Ended
	Oct. 1, 2011		Oct. 2, 2010		Percent Change
Total printers shipped		876,483		781,147		12.2
Average selling price of printers shipped	$	535	$	532		0.5

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