ZEBRA TECHNOLOGIES CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - ZEBRA TECHNOLOGIES CORP	d580766d8k.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE


Contact:
Investors:		Media:
Douglas A. Fox, CFA		Robb Kristopher
Vice President, Investor Relations		Director, Corporate Communications
and Treasurer		and Public Relations
+ 1 847 793 6735		+ 1 847 793 5514
dfox@zebra.com		rkristopher@zebra.com

Zebra Technologies Announces Financial Results

for the 2013 Second Quarter

Sales up 2.5% from a year ago and 6.8% from the first quarter of 2013

Lincolnshire, IL, August 6, 2013—Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2013 second quarter diluted earnings per share from continuing operations of $0.60, including exit, restructuring and acquisition costs that reduced earnings by $0.03 per share. Income from continuing operations for the second quarter of 2012 totaled $0.58 per share. Net sales for the quarter ended June 29, 2013, increased 2.5% to $253,160,000 from $247,077,000 for the second quarter of 2012.

Summary Financial Performance (Unaudited)


	2Q13		2Q12		Change
Net sales (in 000s)	$	253,160	$	247,077		2.5	%
Gross margin (%)		47.8		48.7		(0.9	) pts.
Operating margin (%)		14.3		15.9		(1.7	) pts.
Income from continuing operations (in 000s)	$	37,716	$	39,719		(5.0	)%
Income (loss) from discontinued operations, net of tax (in 000s)	$	8	$	300		N/M
Net income (in 000s)	$	30,566	$	30,653		(0.3	)%
Diluted earnings per share:
Income from continuing operations	$	0.60	$	0.58		3.4	%
Income from discontinued operations	$	0.00	$	0.01		N/M
Net income	$	0.60	$	0.59		1.7	%

“In a quarter still challenged by uneven global business conditions, we won more business with strategic customers in targeted industries and delivered a broader range of products and solutions to a more diversified customer base,” stated Anders Gustafsson, Zebra’s chief executive officer. “During the quarter, the cadence of our product development activities remained high, with the recent introductions

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of our ZXP Series 1 and updated ZXP Series 3 card printers, and our EM220 II wireless mobile receipt printer. We also accelerated investments to introduce innovative Internet of Things products and solutions to serve customers in sports and entertainment. Our recently launched Zebra Commerce™ brand will help us to more effectively deliver the broad suite of Zebra products and services to customers in the retail and field service industries. We look to the second half of 2013 with optimism about making further progress on our strategic initiatives and building greater value for our sharesholders.”

As of June 29, 2013, Zebra had $454,038,000 in cash and investments, and no long-term debt. Net inventories were $109,149,000, and net accounts receivable were $170,856,000.

For the first six months of 2013, net sales were $490,097,000, compared with $490,952,000 for the first half of 2012. Net income for the six months that ended June 29, 2013, was $54,108,000, or $1.05 per diluted share, compared with $60,817,000, or $1.17 per diluted share, for the same period in 2012.

Discussion and Analysis – Second Quarter

•

Net sales growth of 2.5% included increased sales for the company in North America, Asia Pacific and the Europe, Middle East and Africa region. Organic growth of Zebra’s label and wristband business was supplemented with sales from the July 2012 acquisition of LaserBand.

•

Gross profit margin of 47.8%, versus 48.7% in 2012, reflects changes in product mix and selected pricing on certain large business opportunities with strategic customers in targeted markets.

•

Operating expense growth of 4.6% includes $1,101,000 for exit and restructuring costs and $618,000 for acquisition costs. Other increases in operating expenses principally relate to accelerated product development and sales and marketing activities supporting Zebra’s entry to serve customers in the sports industry. Amortization increased over 2012 levels primarily due to intangible assets acquired as part of the July 2012 LaserBand acquisition.

•

Other income includes a net $1,557,000 favorable litigation settlement, which is related to an investment loss that was recorded in prior years.

Stock Purchase Update

During the second quarter of 2013, Zebra returned $24,674,000 to shareholders through the repurchase of 539,788 shares of Zebra Technologies Corporation Class A Common Stock at a weighted average price of $45.71 per share. At June 29, 2013, the company had 1,395,294 shares remaining in its stock buyback authorization, and 50,782,000 shares of common stock were outstanding.

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Third Quarter Outlook

Zebra announced its financial forecast for the third quarter of 2013. Net sales are expected within a range of $253,000,000 to $263,000,000. Diluted earnings per share are expected within a range of $0.61 to $0.71.

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 2013. 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 2013 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. The success of integrating acquisitions could also affect profitability, reported results and the company’s competitive position in it industry. 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, 2012.

About Zebra Technologies

A global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) offers technologies that give a virtual voice to an organization’s assets, people and transactions, enabling organizations to unlock greater business value. The company’s extensive portfolio of marking and printing technologies, including RFID and real-time location solutions, illuminates mission-critical information to help customers take smarter business actions. For more information about Zebra’s solutions, visit http://www.zebra.com.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)


	June 29, 2013			December 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	55,886		$	64,740
Investments and marketable securities		389,799			324,140
Accounts receivable, net		170,856			168,732
Inventories, net		109,149			123,357
Deferred income taxes		13,190			13,484
Income taxes receivable		7,481			—
Prepaid expenses and other current assets		16,246			16,410

Total current assets		762,607			710,863

Property and equipment at cost, less accumulated depreciation and amortization		101,737			101,349
Long-term deferred income taxes		—			2,602
Goodwill		94,942			94,942
Other intangibles, net		35,425			39,151
Long-term investments and marketable securities		8,353			5,195
Other assets		15,491			13,646

Total assets	$	1,018,555		$	967,748

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	31,945		$	23,045
Accrued liabilities		50,584			57,234
Deferred revenue		12,416			13,326
Income taxes payable		6,870			1,609

Total current liabilities		101,815			95,214
Long-term deferred tax liability		1,544			—
Deferred rent		1,332			1,303
Other long-term liabilities		17,285			14,229

Total liabilities		121,976			110,746

Stockholders’ equity:
Preferred Stock		—			—
Class A Common Stock		722			722
Additional paid-in capital		137,342			139,523
Treasury stock		(654,518	)		(641,438	)
Retained earnings		1,422,628			1,368,520
Accumulated other comprehensive loss		(9,595	)		(10,325	)

Total stockholders’ equity		896,579			857,002

Total liabilities and stockholders’ equity	$	1,018,555		$	967,748

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net sales:
Net sales of tangible products	$	239,909		$	234,708		$	465,030		$	467,184
Revenue from services and software		13,251			12,369			25,067			23,768

Total net sales		253,160			247,077			490,097			490,952

Cost of sales:
Cost of sales of tangible products		125,664			119,980			242,775			239,013
Cost of services and software		6,589			6,720			13,350			11,679

Total cost of sales		132,253			126,700			256,125			250,692

Gross profit		120,907			120,377			233,972			240,260

Operating expenses:
Selling and marketing		33,830			32,158			67,345			64,272
Research and development		23,201			22,336			45,059			42,752
General and administrative		24,053			24,402			49,329			48,722
Amortization of intangible assets		1,863			770			3,726			1,540
Acquisition costs		618			1,252			1,100			1,506
Exit and restructuring costs		1,101			0			2,996			0

Total operating expenses		84,666			80,918			169,555			158,792

Operating income		36,241			39,459			64,417			81,468

Other income (expense):
Investment income		473			826			1,150			1,418
Foreign exchange loss		(462	)		(80	)		(560	)		(422	)
Other, net		1,464			(486	)		1,473			(850	)

Total other income		1,475			260			2,063			146

Income from continuing operations before income taxes		37,716			39,719			66,480			81,614
Income taxes		7,158			9,366			12,380			21,097

Income from continuing operations		30,558			30,353			54,100			60,517
Income from discontinued operations, net of tax		8			300			8			300

Net income	$	30,566		$	30,653		$	54,108		$	60,817

Basic earnings per share:
Income from continuing operations	$	0.60		$	0.58		$	1.06		$	1.16
Income from discontinued operations		0.00			0.01			0.00			0.01

Net income	$	0.60		$	0.59		$	1.06		$	1.17

Diluted earnings per share:
Income from continuing operations	$	0.60		$	0.58		$	1.05		$	1.16
Income from discontinued operations		0.00			0.01			0.00			0.01

Net income	$	0.60		$	0.59		$	1.05		$	1.17

Basic weighted average shares outstanding		50,900			51,771			50,929			51,881
Diluted weighted average and equivalent shares outstanding		51,283			52,030			51,310			52,156

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net income	$	30,566		$	30,653		$	54,108		$	60,817
Other comprehensive income (loss):
Unrealized gains (losses) on hedging transactions, net of income taxes		(391	)		2,400			1,352			(2,246	)
Unrealized holding gains (losses) on investments, net of income taxes		(867	)		(46	)		(939	)		524
Foreign currency translation adjustment		223			105			317			188

Comprehensive income	$	29,531		$	33,112		$	54,838		$	59,283

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Six Months Ended
	June 29, 2013			June 30, 2012
Cash flows from operating activities:
Net income	$	54,108		$	60,817
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		15,412			11,964
Share-based compensation		6,504			8,045
Excess tax benefit from share-based compensation		(3,727	)		(1,358	)
Loss on sale of property and equipment		182			147
Gain on sale of business		0			(613	)
Deferred income taxes		4,439			367
Changes in assets and liabilities:
Accounts receivable, net		(1,976	)		(657	)
Inventories, net		14,190			16,599
Other assets		1,313			527
Accounts payable		3,263			(9,594	)
Accrued liabilities		(6,094	)		(11,422	)
Deferred revenue		1,585			1,460
Income taxes		476			10,714
Other operating activities		1,381			(2,341	)

Net cash provided by operating activities		91,056			84,655

Cash flows from investing activities:
Purchases of property and equipment		(8,547	)		(10,599	)
Proceeds from the sale of business		0			13,790
Acquisition of intangible assets		(500	)		0
Purchase of long-term equity investment		(604	)		(5,000	)
Purchases of investments and marketable securities		(231,174	)		(313,863	)
Maturities of investments and marketable securities		19,188			228,105
Proceeds from sales of investments and marketable securities		142,230			95,106

Net cash provided by (used in) investing activities		(79,407	)		7,539

Cash flows from financing activities:
Purchase of treasury stock		(28,563	)		(24,645	)
Proceeds from exercise of stock options and stock purchase plan purchases		4,104			142
Excess tax benefit from share-based compensation		3,727			1,358

Net cash used in financing activities		(20,732	)		(23,145	)

Effect of exchange rate changes on cash		229			(99	)

Net increase (decrease) in cash and cash equivalents		(8,854	)		68,950
Cash and cash equivalents at beginning of period		64,740			36,418

Cash and cash equivalents at end of period	$	55,886		$	105,368

Supplemental disclosures of cash flow information:
Income taxes paid	$	5,346		$	13,479

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY


	Three Months Ended
Product Category	June 29, 2013		June 30, 2012		Percent Change			Percent of Net Sales – 2013		Percent of Net Sales – 2012
Hardware	$	178,938	$	183,973		(2.7	)		70.8		74.5
Supplies		59,618		49,508		20.4			23.5		20.0
Service and software		13,251		12,369		7.1			5.2		5.0

Subtotal products		251,807		245,850		2.4			99.5		99.5
Shipping and handling		1,353		1,227		10.3			0.5		0.5

Total net sales	$	253,160	$	247,077		2.5			100.0		100.0


	Six Months Ended
Product Category	June 29, 2013		June 30, 2012		Percent Change			Percent of Net Sales – 2013		Percent of Net Sales – 2012
Hardware	$	345,630	$	365,169		(5.4	)		70.6		74.4
Supplies		116,741		99,470		17.4			23.8		20.3
Service and software		25,067		23,768		5.5			5.1		4.8

Subtotal products		487,438		488,407		(0.2	)		99.5		99.5
Shipping and handling		2,659		2,545		4.5			0.5		0.5

Total net sales	$	490,097	$	490,952		(0.2	)		100.0		100.0


SALES BY GEOGRAPHIC REGION

	Three Months Ended
Geographic Region	June 29, 2013		June 30, 2012		Percent Change			Percent of Net Sales – 2013		Percent of Net Sales – 2012
Europe, Middle East and Africa	$	80,913	$	77,857		3.9			32.0		31.5
Latin America		24,322		25,371		(4.1	)		9.6		10.3
Asia-Pacific		36,973		35,921		2.9			14.6		14.5

Total International		142,208		139,149		2.2			56.2		56.3
North America		110,952		107,928		2.8			43.8		43.7

Total net sales	$	253,160	$	247,077		2.5			100.0		100.0


	Six Months Ended
Geographic Region	June 29, 2013		June 30, 2012		Percent Change			Percent of Net Sales – 2013		Percent of Net Sales – 2012
Europe, Middle East and Africa	$	158,586	$	163,978		(3.3	)		32.4		33.4
Latin America		47,454		47,658		(0.4	)		9.7		9.7
Asia-Pacific		69,882		69,069		1.2			14.3		14.1

Total International		275,922		280,705		(1.7	)		56.4		57.2
North America		214,175		210,247		1.9			43.6		42.8

Total net sales	$	490,097	$	490,952		(0.2	)		100.0		100.0

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)


	Three Months Ended
	June 29,		June 30,		Percent
	2013		2012		Change
Total printers shipped		328,392		330,186		(0.5	)
Average selling price of printers shipped	$	462	$	471		(1.9	)

	Six Months Ended
	June 29,		June 30,		Percent
	2013		2012		Change
Total printers shipped		628,025		627,855		N/M
Average selling price of printers shipped	$	466	$	486		(4.1	)

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