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Zebra Technologies Announces 2012 Second Quarter Financial Results

July 30, 2012

LINCOLNSHIRE, Ill., July 31, 2012 /PRNewswire/ — Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2012 second quarter continuing operations diluted earnings per share of $0.58, compared with $0.60 for the second quarter of 2011. Results for the second quarter of 2012 include acquisition expenses of $1,252,000, which reduced earnings by $0.02 per share. Net sales for the quarter ended June 30, 2012, increased 0.6% to $247,077,000 from $245,541,000 for the second quarter of 2011.

                              Summary Financial Performance (Unaudited)
                               ----------------------------------------
                                         2Q12                        2Q11                    Change
                                         ----                        ----                    ------
    Net sales (in 000s)                         $247,077                  $245,541                   0.6%
    Gross margin (%)                                48.7                      49.6  -0.9 pts.
    Operating margin (%)                            15.9                      19.0  -3.1 pts.
    Income from continuing                       $30,353                   $33,169                  -8.5%
       operations (in 000s)
    Income (loss) from
     discontinued                                    300                      (205)                  N/M
       operations, net of tax
        (in 000s)
    Net income (in 000s)                         $30,653                   $32,964                  -7.0%
    Diluted earnings per
     share:
    Income from continuing
     operations                                     0.58                      0.60                  -3.3%
    Income from discontinued
     operations                                     0.01                     (0.00)                  N/M
    Net income                                      0.59                      0.60                  -1.7%
    ----------                                      ----                      ----                  ----

“Zebra’s second quarter results reflect the challenged business environment in Europe, as well as high growth in North America,” stated Anders Gustafsson, Zebra’s chief executive officer. “During the quarter, we introduced innovative new products, including the ZT200 series of tabletop printers, to serve more of our customers’ supply chain visibility needs. In addition, our recently completed acquisition of LaserBand positions Zebra for additional profitable growth and high returns in delivering patient identification and asset management solutions to healthcare providers worldwide. Looking ahead, we will remain nimble in managing the business through the current business climate. At the same time, we have great confidence in our business over the long term and our ability to build shareholder value.”

As of June 30, 2012, Zebra had $386,822,000 in cash and investments, and no long-term debt. Net inventories were $116,689,000, and net accounts receivable were $156,146,000.

Discussion and Analysis

  • Net sales for the second quarter of 2012 included year-over-year growth of 10.4% in North America and 5.4% in Latin America, which offset sales declines of 6.2% in Asia Pacific and 8.8% in the Europe, Middle East and Africa region. Record printers shipped during the second quarter included record sales of mobile and desktop printers and growth in card printers. Movements in foreign exchange rates decreased sales by $4,846,000 due to a weaker euro against the U.S. dollar and lowered earnings by $0.05 per share.
  • Gross margin of 48.7%, versus 49.6% a year ago, primarily reflects movements in product mix and foreign exchange rates.
  • Operating expense growth of 7.9% included higher costs related to merger and acquisition activity, higher consulting fees, and increased expenditures on information services and maintenance contracts.
  • The decline in the effective income tax rate from 28.3% a year ago to 23.6% for the current quarter was largely the result of the implementation of a new legal-entity structure for the company’s non-U.S. operations, and a reduction in the statutory income tax rate for the U.K.

Stock Purchase Update

During the second quarter of 2012, Zebra returned $14.9 million to shareholders through the repurchase of 409,296 shares of Zebra Technologies Corporation Class A Common Stock. At June 30, 2012, the company had 2,822,336 shares remaining in its stock buyback authorization, and 51,683,426 shares of common stock were outstanding.

Third Quarter Outlook

Zebra announced its financial forecast for the third quarter of 2012. Net sales are expected within a range of $245,000,000 to $255,000,000. Diluted earnings per share are expected within a range of $0.60 to $0.69.

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 2012. 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 2012 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, 2011.

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.

                                         ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                                   CONSOLIDATED BALANCE SHEETS
                                                      (Amounts in thousands)
                                                                  June 30,               December 31,
                                                                                 2012                     2011
                                                                                 ----                     ----
    ASSETS                                                       (Unaudited)
    Current assets:
    Cash and cash equivalents                                                $105,368                  $36,418
    Investments and marketable
     securities                                                               147,485                  182,398
    Accounts receivable, net                                                  156,146                  155,230
    Receivable from buyer                                                      13,790                   27,580
    Inventories, net                                                          116,689                  133,288
    Deferred income taxes                                                      13,170                   13,931
    Income tax receivable                                                       3,629                   13,111
    Prepaid expenses and other
     current assets                                                            25,473                   22,917
                                                                                                        ------
    Total current assets                                                      581,750                  584,873
                                                                              -------                  -------

    Property and equipment at cost,
     less accumulated depreciation
     and amortization                                                         100,992                   97,822
    Long-term deferred income taxes                                            12,260                   11,866
    Goodwill                                                                   79,703                   79,703
    Other intangibles, net                                                     11,127                   12,667
    Long-term investments and
     marketable securities                                                    133,969                  107,879
    Other assets                                                                8,989                    4,196
                                                                                -----                    -----
                        Total assets                                         $928,790                 $899,006
                                                                             ========                 ========

                        LIABILITIES AND STOCKHOLDERS'
                         EQUITY
    Current liabilities:
    Accounts payable                                                          $29,216                  $33,273
    Accrued liabilities                                                        53,117                   64,612
    Deferred revenue                                                           11,992                   11,089
    Total current liabilities                                                  94,325                  108,974
    Deferred rent                                                               1,521                    1,592
    Other long-term liabilities                                                11,965                   11,515
                                                                               ------                   ------
                        Total liabilities                                     107,811                  122,081
                                                                              -------                  =======

    Stockholders' equity:
    Preferred Stock                                                                 -                        -
    Class A Common Stock                                                          722                      722
    Additional paid-in capital                                                131,881                  131,422
    Treasury stock                                                           (612,310)                (596,622)
    Retained earnings                                                       1,306,433                1,245,616
    Accumulated other comprehensive
     loss                                                                      (5,747)                  (4,213)
                                                                               ------                   ------
                        Total stockholders' equity                            820,979                  776,925
                                                                              -------                  -------
                        Total liabilities and
                         stockholders' equity                                $928,790                 $899,006
                                                                             ========                 ========
                                                           ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                                                 CONSOLIDATED STATEMENTS OF EARNINGS
                                                            (Amounts in thousands, except per share data)
                                                                             (Unaudited)

                                Three Months Ended                    Six Months Ended
                                ------------------                    ----------------
                                   June 30, 2012                           July 2,                         June 30, 2012           July 2,
                                                                                            2011                                                 2011
                                                                                                                                               ----
    Net sales:
      Net sales of
       tangible products                         $234,708                             $232,762                           $467,184          $458,882
      Revenue from
       services and
       software                                    12,369                               12,779                             23,768            23,960
                                                   ------                               ------                             ------            ------
    Total net sales                               247,077                              245,541                            490,952           482,842
                                                  -------                              -------                            -------           -------

    Cost of sales
      Cost of sales of
       tangible products                          119,980                              117,732                            239,013           228,513
      Cost of services
       and software                                 6,720                                6,111                             11,679            12,633
                                                    -----                                -----                             ------            ------
    Total cost of sales                           126,700                              123,843                            250,692           241,146
                                                  -------                              -------                            -------           -------

    Gross profit                                  120,377                              121,698                            240,260           241,696
                                                  -------                              -------                            -------           -------

    Operating expenses:
       Selling and
        marketing                                  32,158                               30,950                             64,272            59,478
       Research and
        development                                22,336                               22,487                             42,752            44,168
       General and
        administrative                             24,402                               20,688                             48,722            43,394
       Amortization of
        intangible assets                             770                                  836                              1,540             1,671
       Acquisition costs                            1,252                                    0                              1,506                 0
       Exit and
        restructuring
        costs                                           0                                   66                                  0             1,952

    Total operating
     expenses                                      80,918                               75,027                            158,792           150,663
                                                   ------                               ------                            -------           -------

    Operating income                               39,459                               46,671                             81,468            91,033
                                                   ------                               ------                             ------            ------

    Other income (expense):
       Investment income                              826                                  656                              1,418             1,216
       Foreign exchange
        loss                                          (80)                                (833)                              (422)           (1,127)
       Other, net                                    (486)                                (243)                              (850)             (497)
                                                     ----                                 ----                               ----              ----
    Total other income
     (expense)                                        260                                 (420)                               146              (408)
                                                      ---                                 ----                                ---              ----

    Income from
     continuing
     operations before
     income taxes                                  39,719                               46,251                             81,614            90,625
    Income taxes                                    9,366                               13,082                             21,097            27,328
                                                    -----                               ------                             ------            ------
    Income from
     continuing
     operations                                    30,353                               33,169                             60,517            63,297
    Income (loss) from
     discontinued
     operations, net of
     tax                                              300                                 (205)                               300            31,301

    Net income                                    $30,653                              $32,964                            $60,817           $94,598
                                                  =======                              =======                            =======           =======

    Basic earnings per share:
       Income from
        continuing
        operations                                  $0.58                                $0.60                              $1.16             $1.15
       Income (loss) from
        discontinued
        operations                                   0.01                                (0.00)                              0.01              0.57
                                                     ----                                -----                               ----              ----
          Net income                                $0.59                                $0.60                              $1.17             $1.72
                                                    =====                                =====                              =====             =====
    Diluted earnings per share:
       Income from
        continuing
        operations                                  $0.58                                $0.60                              $1.16             $1.14
       Income (loss) from
        discontinued
        operations                                   0.01                                (0.00)                              0.01              0.57
                                                     ----                                -----                               ----              ----
          Net income                                $0.59                                $0.60                              $1.17             $1.71
                                                    =====                                =====                              =====             =====

    Basic weighted
     average shares
     outstanding                                   51,771                               54,546                             51,881            54,981
    Diluted weighted
     average and
     equivalent shares
     outstanding                                   52,030                               54,958                             52,156            55,395

                                                        ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                                        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                    (Amounts in thousands)
                                                                          (Unaudited)

                             Three Months Ended                     Six Months Ended
                             ------------------                     ----------------
                                June 30, 2012                            July 2,                        June 30, 2012          July 2,
                                                                                        2011                                              2011
                                                                                        ----                                              ----

    Net income                                 $30,653                               $32,964                          $60,817          $94,598

    Other comprehensive
     income (loss):
       Unrealized gains
        (losses) on hedging
        transactions, net of
        income taxes                             2,400                                   (21)                          (2,246)          (2,777)
       Unrealized holding
        gains (losses) on
        investments, net of
        income taxes                               (46)                                  347                              524              333
       Foreign currency
        translation
        adjustment                                 105                                  (247)                             188             (802)

    Comprehensive income                       $33,112                               $33,043                          $59,283          $91,352
                                               =======                               =======                          =======          =======

                                           ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                       (Amounts in thousands)
                                                             (Unaudited)

                                                                         Six Months Ended
                                                                         ----------------
                                                                           June 30, 2012        July 2, 2011
                                                                           -------------        ------------
    Cash flows from operating
     activities:
            Net income                                                                 $60,817              $94,598
            Adjustments to reconcile net
             income to net cash provided
             by (used in)
            operating activities:
                    Depreciation and amortization                                       11,964               12,151
                    Equity-based compensation                                            8,045                8,013
                    Excess tax benefit from
                     equity-based compensation                                          (1,358)              (1,234)
                    Loss on sale of property and
                     equipment                                                             147                    5
                    Gain on sale of business                                              (613)             (68,001)
                    Deferred income taxes                                                  367                3,899
                    Changes in assets and
                     liabilities:
                            Accounts receivable, net                                      (657)               5,862
                            Inventories, net                                            16,599               (4,704)
                            Other assets                                                   527               (2,319)
                            Accounts payable                                            (9,594)              (4,695)
                            Accrued liabilities                                        (11,422)             (13,614)
                            Deferred revenue                                             1,460              (14,738)
                            Income taxes                                                10,714               (4,333)
                            Other operating activities                                  (2,341)              (3,402)
                                    Net cash provided by operating
                                     activities                                         84,655                7,488
                                                                                        ------                -----

    Cash flows from investing
     activities:
            Purchases of property and
             equipment                                                                 (10,599)             (11,232)
            Proceeds from the sale of
             business                                                                   13,790              161,008
            Purchase of long-term equity
             investment                                                                 (5,000)                   0
            Purchases of investments and
             marketable securities                                                    (313,863)            (573,686)
            Maturities of investments and
             marketable securities                                                     228,105              351,722
            Proceeds from sales of
             investments and marketable
             securities                                                                 95,106              183,485
                                    Net cash provided by investing
                                     activities                                          7,539              111,297
                                                                                         -----              -------

    Cash flows from financing
     activities:
            Purchase of treasury stock                                                 (24,645)             (82,388)
            Proceeds from exercise of
             stock options and stock
             purchase plan purchases                                                       142                8,096
            Excess tax benefit from
             equity-based compensation                                                   1,358                1,234
                                    Net cash used in financing
                                     activities                                        (23,145)             (73,058)
                                                                                       -------              -------

    Effect of exchange rate
     changes on cash                                                                       (99)                 239
                                                                                           ---                  ---

    Net increase in cash and cash
     equivalents                                                                        68,950               45,966
         Cash balance of discontinued
          operations at beginning of
          period                                                                             0                1,301
         Less: Cash balance of
          discontinued operations at
          end of period                                                                      0                  486
    Cash and cash equivalents at
     beginning of period                                                                36,418               46,175
                                                                                        ------               ------
    Cash and cash equivalents at
     end of period                                                                    $105,368              $92,956
                                                                                      ========              =======

    Supplemental disclosures of
     cash flow information:
     Income taxes paid                                                                 $13,479              $52,819

                                                    ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                                            SUPPLEMENTAL SALES INFORMATION
                                                                (Amounts in thousands)
                                                                      (Unaudited)

                                                               SALES BY PRODUCT CATEGORY

                          Three Months Ended
                          ------------------
                               June 30,                         July 2,                             Percent           Percent of           Percent of
                                               2012                            2011                 Change         Net Sales - 2012     Net Sales - 2011
                                               ----                            ----                 ------         ----------------     ----------------
    Product Category
    ----------------
    Hardware                               $183,973                        $181,758                           1.2                  74.5                 74.0
    Supplies                                 49,508                          49,578                          (0.1)                 20.0                 20.2
    Service and software                     12,369                          12,779                          (3.2)                  5.0                  5.2
                                             ------                          ------                                                 ---                  ---
       Subtotal products                    245,850                         244,115                           0.7                  99.5                 99.4
    Shipping and handling                     1,227                           1,426                         (14.0)                  0.5                  0.6
                                              -----                           -----                         -----                   ---                  ---
       Total net sales                     $247,077                        $245,541                           0.6                 100.0                100.0
                                           ========                        ========                                               =====                =====
                          Six Months Ended
                          ----------------
                              June 30,             July 2,          Percent          Percent of           Percent of
                                              2012             2011 Change        Net Sales - 2012     Net Sales - 2011
                                              ----             ---- ------        ----------------     ----------------
    Product Category
    ----------------
    Hardware                              $365,169         $361,895          0.9                  74.4                 75.0
    Supplies                                99,470           94,213          5.6                  20.3                 19.5
    Service and software                    23,768           23,960         (0.8)                  4.8                  4.9
                                            ------           ------                                ---                  ---
       Subtotal products                   488,407          480,068          1.7                  99.5                 99.4
    Shipping and handling                    2,545            2,774         (8.3)                  0.5                  0.6
       Total net sales                    $490,952         $482,842          1.7                 100.0                100.0
                                          ========         ========                              =====                =====
                                                      SALES BY GEOGRAPHIC REGION

                       Three Months Ended
                       ------------------
                            June 30,             July 2,                         Percent          Percent of           Percent of
                                            2012                2011             Change        Net Sales - 2012     Net Sales - 2011
                                            ----                ----             ------        ----------------     ----------------
    Geographic Region
    -----------------
    Europe, Middle
     East and Africa                     $77,857             $85,391                     (8.8)                 31.5                 34.8
    Latin America                         25,371              24,065                      5.4                  10.3                  9.8
    Asia-Pacific                          35,921              38,299                     (6.2)                 14.5                 15.6
                                          ------              ------                                           ----                 ----
       Total
        International                    139,149             147,755                     (5.8)                 56.3                 60.2
    North America                        107,928              97,786                     10.4                  43.7                 39.8
                                         -------              ------                                           ----                 ----
       Total net sales                  $247,077            $245,541                      0.6                 100.0                100.0
                                        ========            ========                                          =====                =====
                       Six Months Ended
                       ----------------
                           June 30,             July 2,          Percent          Percent of           Percent of
                                           2012             2011 Change        Net Sales - 2012     Net Sales - 2011
                                           ----             ---- ------        ----------------     ----------------
    Geographic Region
    -----------------
    Europe, Middle
     East and Africa                   $163,978         $169,621         (3.3)                 33.4                 35.1
    Latin America                        47,658           44,169          7.9                   9.7                  9.1
    Asia-Pacific                         69,069           70,794         (2.4)                 14.1                 14.7
                                         ------           ------                               ----                 ----
       Total
        International                   280,705          284,584         (1.4)                 57.2                 58.9
    North America                       210,247          198,258          6.0                  42.8                 41.1
                                        -------          -------                               ----                 ----
       Total net sales                 $490,952         $482,842          1.7                 100.0                100.0
                                       ========         ========                              =====                =====

                  ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                       PRINTER UNITS and AVERAGE UNIT PRICES
                                    (Unaudited)

               Three Months Ended
               ------------------
              June 30,                            July 2,         Percent
                          2012                               2011 Change
                          ----                               ---- ------
     Total
     printers
     shipped           330,186                            276,563          19.4
     Average
     selling
     price
     of
     printers
     shipped              $471                               $558         (15.6)

              Six Months Ended
              ----------------
              June 30,                            July 2,         Percent
                          2012                               2011 Change
                          ----                               ---- ------
     Total
     printers
     shipped           627,855                            560,740          12.0
     Average
     selling
     price
     of
     printers
     shipped              $486                               $541         (10.1)
    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

SOURCE Zebra Technologies Corporation


Source: PR Newswire