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

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8-K - FORM 8-K - ZEBRA TECHNOLOGIES CORP	d622729d8k.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 Record Sales and Earnings

for the 2013 Third Quarter

Improving business conditions lead to record sales in North America and Asia Pacific;

Profitability increases for second consecutive quarter

Lincolnshire, IL, November 5, 2013—Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2013 third quarter diluted earnings per share from continuing operations of a record $0.76, including exit, restructuring and acquisition costs that reduced earnings by $0.01 per share. Income from continuing operations for the third quarter of 2012 totaled $0.51 per share, which included acquisition costs and a non-cash asset impairment charge that reduced earnings by $0.19 per share. Net sales for the quarter ended September 28, 2013, increased 4.6% to a record $263,523,000 from $252,037,000 for the third quarter of 2012.


Summary Financial Performance (Unaudited)
	3Q13		3Q12		Change
Net sales (in 000s)	$	263,523	$	252,037		4.6	%
Gross margin (%)		48.8		50.4		(1.6	) pts.
Operating margin (%)		17.7		15.4		2.3 pts.
Income from continuing operations (in 000s)	$	38,600	$	26,581		45.2	%
Income (loss) from discontinued operations, net of tax (in 000s)	$	0	$	516		N/M
Net income (in 000s)	$	38,600	$	27,097		42.5	%
Diluted earnings per share:
Income from continuing operations	$	0.76	$	0.51		49.0	%
Income from discontinued operations	$	0.00	$	0.01		N/M
Net income	$	0.76	$	0.52		46.2	%

“A steady run-rate business through the quarter complemented an improving pipeline for large enterprise deals, as we continued to extend Zebra’s industry leadership,” stated Anders Gustafsson, Zebra’s chief executive officer. “Favorable trends with customers in manufacturing, retail and healthcare, are resulting from our success in developing strong channels and securing tighter engagements with strategic customers. Zebra’s expanding range of products and solutions are enabling our customers to gain greater visibility across their value chains. Zebra remains well positioned to benefit from important technology trends such as the Internet of Things, Big Data and Cloud Computing which are creating new opportunities for growth and shareholder value creation.”

As of September 28, 2013, Zebra had $466,325,000 in cash and investments, and no long-term debt. Net inventories were $106,628,000, and net accounts receivable were $175,639,000.

For the first nine months of 2013, net sales were $753,620,000, compared with $742,989,000 for the first nine months of 2012. Net income for the nine months ending September 28, 2013, was $92,708,000, or $1.81 per diluted share, compared with $87,914,000, or $1.69 per diluted share, for the same period in 2012.

Discussion and Analysis – Third Quarter

•

Net sales growth of 4.6% included sales growth in all regions, including record sales in North America and Asia Pacific. The increase was primarily due to high sales of supplies, aftermarket parts and services. The 11.7% growth in supplies, which include labels, thermal ribbons and wristbands, was all on an organic basis.

•

Gross profit margin of 48.8%, versus 50.4% for 2012, reflects changes in product mix and higher costs for freight-in.

•

Operating expenses decreased by 7.2%, principally from a goodwill impairment charge of $9,114,000 in 2012. Operating expenses before the impairment charge increased 3.5% from higher compensation costs and outside professional services, as well as increased amortization and exit and restructuring costs.

•

The effective income tax rate for 2013 reflects the impact of a higher proportion of income generated in jurisdictions with lower tax rates. In addition, the 2012 rate includes the effect of a non-deductible non-cash asset impairment charge.

Stock Purchase Update

During the third quarter of 2013, Zebra returned $29,896,000 to shareholders through the repurchase of 641,719 shares of Zebra Technologies Corporation Class A Common Stock at a weighted average price of $46.59 per share. At September 28, 2013, the company had 753,575 shares remaining in its stock buyback authorization, and 50,229,576 shares of common stock were outstanding.

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Fourth Quarter Outlook

Zebra announced its financial forecast for the fourth quarter of 2013. Net sales are expected within a range of $263,000,000 to $273,000,000. Diluted earnings per share are expected within a range of $0.72 to $0.82.

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 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 fourth quarter of 2013 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. 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)


	September 28, 2013			December 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	64,196		$	64,740
Investments and marketable securities		399,541			324,140
Accounts receivable, net		175,639			168,732
Inventories, net		106,628			123,357
Deferred income taxes		13,434			13,484
Income taxes receivable		5,604			—
Prepaid expenses and other current assets		14,421			16,410

Total current assets		779,463			710,863

Property and equipment at cost, less accumulated depreciation and amortization		100,515			101,349
Long-term deferred income taxes		—			2,602
Goodwill		94,942			94,942
Other intangibles, net		33,594			39,151
Long-term investments and marketable securities		2,588			5,195
Other assets		16,536			13,646

Total assets	$	1,027,638		$	967,748

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,675		$	23,045
Accrued liabilities		49,448			57,234
Deferred revenue		15,104			13,326
Income taxes payable		7,346			1,609

Total current liabilities		98,573			95,214
Long-term deferred tax liability		2,236			—
Deferred rent		1,256			1,303
Other long-term liabilities		15,230			14,229

Total liabilities		117,295			110,746

Stockholders’ equity:
Preferred Stock		—			—
Class A Common Stock		722			722
Additional paid-in capital		139,768			139,523
Treasury stock		(681,388	)		(641,438	)
Retained earnings		1,461,228			1,368,520
Accumulated other comprehensive loss		(9,987	)		(10,325	)

Total stockholders’ equity		910,343			857,002

Total liabilities and stockholders’ equity	$	1,027,638		$	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						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Net sales:
Net sales of tangible products	$	249,919		$	239,786		$	714,949		$	706,970
Revenue from services and software		13,604			12,251			38,671			36,019

Total net sales		263,523			252,037			753,620			742,989

Cost of sales:
Cost of sales of tangible products		128,191			118,751			370,966			357,764
Cost of services and software		6,722			6,362			20,072			18,041

Total cost of sales		134,913			125,113			391,038			375,805

Gross profit		128,610			126,924			362,582			367,184

Operating expenses:
Selling and marketing		34,395			32,321			101,740			96,593
Research and development		22,376			22,007			67,435			64,759
General and administrative		22,452			22,481			71,781			71,203
Amortization of intangible assets		1,831			1,670			5,557			3,210
Acquisition costs		268			566			1,368			2,072
Exit and restructuring costs		519			0			3,515			0
Asset impairment charge		0			9,114			0			9,114

Total operating expenses		81,841			88,159			251,396			246,951

Operating income		46,769			38,765			111,186			120,233

Other income (expense):
Investment income		550			541			1,700			1,959
Foreign exchange loss		(173	)		(514	)		(733	)		(936	)
Other, net		(5	)		(294	)		1,468			(1,144	)

Total other income (expense)		372			(267	)		2,435			(121	)

Income from continuing operations before income taxes		47,141			38,498			113,621			120,112
Income taxes		8,541			11,917			20,921			33,014

Income from continuing operations		38,600			26,581			92,700			87,098
Income from discontinued operations, net of tax		0			516			8			816

Net income	$	38,600		$	27,097		$	92,708		$	87,914

Basic earnings per share:
Income from continuing operations	$	0.76		$	0.52		$	1.82		$	1.68
Income from discontinued operations		0.00			0.01			0.00			0.02

Net income	$	0.76		$	0.53		$	1.82		$	1.70

Diluted earnings per share:
Income from continuing operations	$	0.76		$	0.51		$	1.81		$	1.67
Income from discontinued operations		0.00			0.01			0.00			0.02

Net income	$	0.76		$	0.52		$	1.81		$	1.69

Basic weighted average shares outstanding		50,590			51,566			50,808			51,775
Diluted weighted average and equivalent shares outstanding		50,924			51,809			51,171			52,041

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Net income	$	38,600		$	27,097		$	92,708		$	87,914
Other comprehensive income (loss):
Unrealized gains (losses) on hedging transactions, net of income taxes		(1,007	)		(3,946	)		345			(6,192	)
Unrealized holding gains (losses) on investments, net of income taxes		433			392			(506	)		917
Foreign currency translation adjustment		182			12			499			198

Comprehensive income	$	38,208		$	23,555		$	93,046		$	82,837

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Nine Months Ended
	September 28, 2013			September 29, 2012
Cash flows from operating activities:
Net income	$	92,708		$	87,914
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		23,312			18,906
Share-based compensation		9,372			11,485
Asset impairment charge		—			9,114
Excess tax benefit from share-based compensation		(4,170	)		(1,492	)
Loss on sale of property and equipment		172			178
Gain on sale of business		—			(613	)
Deferred income taxes		4,888			2,755
Changes in assets and liabilities:
Accounts receivable, net		(6,641	)		(6,108	)
Inventories, net		16,702			11,981
Other assets		2,257			12,070
Accounts payable		(445	)		(10,843	)
Accrued liabilities		(6,256	)		(11,341	)
Deferred revenue		1,752			2,644
Income taxes		3,040			14,711
Other operating activities		298			(6,378	)

Net cash provided by operating activities		136,989			134,983

Cash flows from investing activities:
Purchases of property and equipment		(13,522	)		(17,140	)
Proceeds from the sale of business		—			27,580
Acquisition of business, net of cash acquired		—			(59,874	)
Acquisition of intangible assets		(1,500	)		(3,000	)
Purchase of long-term equity investment		(1,708	)		(5,000	)
Purchases of investments and marketable securities		(338,227	)		(483,349	)
Maturities of investments and marketable securities		41,021			324,139
Proceeds from sales of investments and marketable securities		223,905			133,863

Net cash provided by (used in) investing activities		(90,031	)		(82,781	)

Cash flows from financing activities:
Purchase of treasury stock		(58,459	)		(39,697	)
Proceeds from exercise of stock options and stock purchase plan purchases		6,470			1,909
Excess tax benefit from share-based compensation		4,170			1,492

Net cash used in financing activities		(47,819	)		(36,296	)

Effect of exchange rate changes on cash		317			(71	)

Net increase (decrease) in cash and cash equivalents		(544	)		15,835
Cash and cash equivalents at beginning of period		64,740			36,418

Cash and cash equivalents at end of period	$	64,196		$	52,253

Supplemental disclosures of cash flow information:
Income taxes paid	$	10,951		$	16,773

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY


	Three Months Ended
	September 28,		September 29,		Percent			Percent of		Percent of
Product Category	2013		2012		Change			Net Sales – 2013		Net Sales – 2012
Hardware	$	186,721	$	183,053		2.0			70.8		72.6
Supplies		61,897		55,423		11.7			23.5		22.0
Service and software		13,604		12,251		11.0			5.2		4.9

Subtotal products		262,222		250,727		4.6			99.5		99.5
Shipping and handling		1,301		1,310		(0.7	)		0.5		0.5

Total net sales	$	263,523	$	252,037		4.6			100.0		100.0


	Nine Months Ended
	September 28,		September 29,		Percent			Percent of		Percent of
Product Category	2013		2012		Change			Net Sales – 2013		Net Sales – 2012
Hardware	$	532,350	$	548,222		(2.9	)		70.7		73.9
Supplies		178,638		154,893		15.3			23.7		20.8
Service and software		38,671		36,019		7.4			5.1		4.8

Subtotal products		749,659		739,134		1.4			99.5		99.5
Shipping and handling		3,961		3,855		2.7			0.5		0.5

Total net sales	$	753,620	$	742,989		1.4			100.0		100.0

SALES BY GEOGRAPHIC REGION


	Three Months Ended
	September 28,		September 29,		Percent			Percent of		Percent of
Geographic Region	2013		2012		Change			Net Sales – 2013		Net Sales – 2012
Europe, Middle East and Africa	$	79,225	$	75,637		4.7			30.1		30.0
Latin America		26,252		26,188		0.2			10.0		10.4
Asia-Pacific		41,922		36,843		13.8			15.9		14.6

Total International		147,399		138,668		6.3			56.0		55.0
North America		116,124		113,369		2.4			44.0		45.0

Total net sales	$	263,523	$	252,037		4.6			100.0		100.0


	Nine Months Ended
	September 28,		September 29,		Percent			Percent of		Percent of
Geographic Region	2013		2012		Change			Net Sales – 2013		Net Sales – 2012
Europe, Middle East and Africa	$	237,811	$	239,615		(0.8	)		31.6		32.3
Latin America		73,706		73,846		(0.2	)		9.8		9.9
Asia-Pacific		111,803		105,912		5.6			14.8		14.3

Total International		423,320		419,373		0.9			56.2		56.5
North America		330,300		323,616		2.1			43.8		43.5

Total net sales	$	753,620	$	742,989		1.4			100.0		100.0

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)


	Three Months Ended
	September 28,		September 29,		Percent
	2013		2012		Change
Total printers shipped		325,395		310,972		4.6
Average selling price of printers shipped	$	482	$	492		(2.0	)

	Nine Months Ended
	September 28,		September 29,		Percent
	2013		2012		Change
Total printers shipped		953,420		938,827		1.6
Average selling price of printers shipped	$	471	$	488		(3.5	)

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