Zebra Technologies Announces 2009 First Quarter Financial Results

May 05, 2009, 03:00 ET from Zebra Technologies Corporation

VERNON HILLS, Ill., May 5 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced net income of $9,352,000 or $0.16 per diluted share, for the first quarter of 2009, including $2,296,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.02 per share. Net income for the first quarter of 2008 was $27,644,000, or $0.42 per diluted share. Net sales were $192,609,000 for the quarter that ended April 4, 2009, compared with $246,277,000 for the corresponding period a year ago.

"We moved aggressively to align costs with the lower demand levels to successfully navigate through the current environment," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, we continued to make the investments that maximize risk-adjusted returns and deliver increasing stockholder value. We bought back stock while maintaining our strong financial position. We also made further progress on our global supply chain and ERP implementation projects which will help improve customer service, lower costs further and drive greater organizational effectiveness. Later this year, we will introduce new products and solutions that will serve more customer needs. All of these initiatives position Zebra to extend its global leadership and accelerate earnings growth as business conditions improve."

At April 4, 2009, Zebra had $189,311,000 in cash and investments, and no long-term debt. Net inventories were $101,248,000, and net accounts receivable were $137,176,000.

Discussion and Analysis

For the first quarter of 2009, compared with the first quarter of 2008:

  • Consolidated net sales were affected by the impact of declining global economic activity on business conditions. Sales declined on a comparable percentage basis in all of the company's geographic regions, with the largest sales decline occurring in North America. Product mix also had an effect on sales, with larger sales declines among high performance and midrange tabletop printers. Unfavorable foreign exchange currency movements reduced first quarter sales by $6,739,000.
  • Gross profit margin of 44.6% versus 49.9% a year ago was principally affected by the lower sales volume, unfavorable product mix and unfavorable foreign exchange rates. These factors were partially offset by higher profitability in the company's Zebra Enterprise Solutions group.
  • Operating expenses declined $11,926,000 as a result of cost-reduction actions taken in the second half of 2008, in addition to lower commissions and amortization of intangible assets, and a decline in exit, restructuring and integration costs.
  • The effective income tax rate of 32.0%, compared with 34.5% a year ago, reflects the effect of lower quarterly income and a higher proportion of permanent tax adjustments.

Stock Purchase Update

During the first quarter of 2009, the company repurchased 1,652,772 shares of Zebra Technologies Corporation Class A Common Stock. At the end of the first quarter, Zebra had 3,719,696 shares remaining in the company's stock buyback authorization and 59,398,813 outstanding shares of common stock.

Second Quarter Outlook

Zebra announced its financial forecast for the second quarter of 2009. Net sales are expected within a range of $186,000,000 and $200,000,000. Diluted earnings per share are expected within a range of $0.12 and $0.20. This forecast includes expected exit and restructuring costs of $0.04 per diluted share.

Conference Call Notification

Investors are invited to listen to a live Internet broadcast of Zebra's conference call discussing the company's financial results for the first quarter of 2009. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company's Web site 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 second quarter of 2009 stated in the paragraph above captioned "Second 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 may elect to update forward-looking statements but expressly disclaims any obligation to do so, even if the company's estimates change.

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. These factors also include the current credit crisis, capital markets volatility, and disruptions and overall worldwide deteriorating economic conditions that have been widely reported, as they may have adverse effects on Zebra, its suppliers and its customers. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs, including the effect of Zebra's activities to transfer final assembly of its printers to a third-party manufacturer. 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. In addition, the acquisitions of WhereNet, proveo, Navis and Multispectral Solutions have risks relating to integrating these companies' businesses and operations with Zebra's. 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, 2008.

Zebra Technologies Corporation helps its customers identify, track and manage assets, transactions and people with systems and solutions that improve business processes. Companies use innovative and reliable Zebra printers, supplies, RFID products and software to increase productivity, improve quality, lower costs, and deliver better customer service. Information about Zebra and Zebra-brand products can be found at http://www.zebra.com.

    CONTACT:  Investors:                            Media:
              Douglas A. Fox, CFA                   Tim Dreyer
              Vice President, Investor Relations    Manager, Public Relations
              and Treasurer                         +1 847 793 5677
              +1 847 793 6735                       tdreyer@zebra.com
                            ZEBRA TECHNOLOGIES CORPORATION
                              CONSOLIDATED BALANCE SHEETS
                                (Amounts in thousands)

                                                     April 4,    December 31,
                                                      2009            2008
    ASSETS                                         (Unaudited)
      Current assets:
      Cash and cash equivalents                        $34,699       $33,267
      Restricted cash                                    1,556         1,639
      Investments and marketable securities             58,071        85,654
      Accounts receivable, net                         137,176       152,679
      Inventories, net                                 101,248       100,199
      Deferred income taxes                             11,719        11,679
      Income taxes receivable                            7,257            --
      Prepaid expenses and other current assets         11,785        11,701
        Total current assets                           363,511       396,818

    Property and equipment at cost, less accumulated
     depreciation and amortization                      76,840        75,363
    Long-term deferred income taxes                     48,039        51,251
    Goodwill                                           150,404       151,356
    Other intangibles, net                              63,916        66,359
    Long-term investments and marketable securities     94,985       104,326
    Other assets                                         5,134         5,405
    Total assets                                      $802,829      $850,878


    Current liabilities:
      Accounts payable                                 $30,089       $38,152
      Accrued liabilities                               42,789        67,911
      Deferred revenue                                  19,766        18,366
      Income taxes payable                                  --           558
        Total current liabilities                       92,644       124,987
    Deferred rent                                        4,702         4,903
    Other long-term liabilities                         10,847        10,250
    Total liabilities                                  108,193       140,140

    Stockholders' equity:
      Preferred Stock                                       --            --
      Class A Common Stock                                 722           722
      Additional paid-in capital                       141,622       144,861
      Treasury stock                                  (365,376)     (344,147)
      Retained earnings                                931,443       922,091
      Accumulated other comprehensive loss             (13,775)      (12,789)
          Total stockholders' equity                   694,636       710,738
    Total liabilities and stockholders' equity        $802,829      $850,878

                            ZEBRA TECHNOLOGIES CORPORATION
                    (Amounts in thousands, except per share data)

                                                    Three Months Ended
                                              April 4, 2009   March 29, 2008

    Net sales                                    $192,609        $246,277
    Cost of sales                                 106,800         123,362
    Gross profit                                   85,809         122,915

    Operating expenses (income):
       Selling and marketing                       22,676          28,553
       Research and development                    21,804          22,215
       General and administrative                  22,225          25,045
       Amortization of intangible assets            2,634           4,514
       Exit, restructuring and integration costs    2,296           3,234
    Total operating expenses                       71,635          83,561

    Operating income                               14,174          39,354

    Other income (expense):
       Investment income                            1,178           2,405
       Foreign exchange gain (loss)                (1,284)            700
       Other, net                                    (317)           (254)
    Total other income (expense)                     (423)          2,851

    Income before income taxes                     13,751          42,205
    Income taxes                                    4,399          14,561
    Net income                                     $9,352         $27,644

    Basic earnings per share                        $0.16           $0.42
    Diluted earnings per share                      $0.16           $0.42

    Basic weighted average shares outstanding      60,266          66,134
    Diluted weighted average and equivalent
     shares outstanding                            60,332          66,518

                            ZEBRA TECHNOLOGIES CORPORATION
                                (Amounts in thousands)

                                                        Three Months Ended
                                                        April 4,   March 29,
                                                          2009       2008
    Cash flows from operating activities:
        Net income                                       $9,352     $27,644
        Adjustments to reconcile net income to net
         cash provided by (used in) operating activities:
        Depreciation and amortization                     7,953       9,088
        Stock-based compensation                          3,167       3,417
        Excess tax benefit from share-based compensation     --         (51)
        Deferred income taxes                             3,263      (3,553)
        Changes in assets and liabilities, net of
         effects of acquisitions:
           Accounts receivable, net                      13,018     (21,393)
           Inventories                                   (1,400)     (3,834)
           Other assets                                    (244)      1,256
           Accounts payable                              (6,539)      2,901
           Accrued liabilities                          (23,946)      7,085
           Deferred revenue                               2,544       2,745
           Income taxes payable                          (8,055)     12,534
           Other operating activities                      (327)     (5,635)
             Net cash (used in) provided by operating
              activities                                 (1,214)     32,204

    Cash flows from investing activities:
        Purchases of property and equipment              (6,802)     (5,909)
        Payments for patents and licensing
         arrangements                                      (425)         --
        Purchases of investments and marketable
         securities                                     (57,473)   (190,530)
        Maturities of investments and marketable
         securities                                      72,401     128,723
        Sales of investments and marketable securities   22,583      78,156
              Net cash provided by investing activities  30,284      10,440

    Cash flows from financing activities:
        Purchase of treasury stock                      (28,593)    (24,600)
        Proceeds from exercise of stock options and
         stock purchase plan purchases                    1,168         667
        Excess tax benefit from share-based
         compensation                                        --          51
              Net cash used in financing activities     (27,425)    (23,882)

    Effect of exchange rate changes on cash                (213)       (159)

    Net increase in cash and cash equivalents             1,432      18,603
    Cash and cash equivalents at beginning of period     33,267      38,211
    Cash and cash equivalents at end of period          $34,699     $56,814

    Supplemental disclosures of cash flow information:
      Income taxes paid                                  $8,302      $2,471

    Supplemental disclosures of non-cash transactions:
      Purchase of treasury shares not paid in the first
       quarter of 2008                                       --      $9,153

                            ZEBRA TECHNOLOGIES CORPORATION
                            SUPPLEMENTAL SALES INFORMATION
                                (Amounts in thousands)

                        Sales by Product Category

                               Three Months Ended
                              Apr. 4,     Mar. 29,    Percent    Percent of
                               2009         2008       Change     Net Sales

    Hardware                 $125,865     $180,181     (30.1)        65.3
    Supplies                   38,081       41,902      (9.1)        19.8
    Service and software       25,925       25,180       3.0         13.5
    Shipping and handling       1,368        1,802     (24.1)         0.7
    Cash flow from hedging
     activities                 1,370      (2,788)        NM          0.7
        Total sales          $192,609     $246,277     (21.8)       100.0

                        Sales by Geographic Region

                               Three Months Ended
                              Apr. 4,     Mar. 29,    Percent   Percent of
                               2009         2008       Change    Net Sales

    Europe, Middle East
     and Africa               $74,620      $95,509     (21.9)        38.7
    Latin America              13,071       15,983     (18.2)         6.8
    Asia-Pacific               19,409       25,639     (24.3)        10.1
      Total international     107,100      137,131     (21.9)        55.6
    North America              85,509      109,146     (21.7)        44.4
        Total sales          $192,609     $246,277     (21.8)       100.0

                           ZEBRA TECHNOLOGIES CORPORATION
                               (Amounts in thousands)

                                    Three Months Ended
                                   April 4,     March 29,
                                     2009         2008
      Specialty Printing           $170,768     $224,752
      Enterprise Solutions           21,841       21,525
        Total                      $192,609     $246,277

    Cost of sales
      Specialty Printing             97,096      112,814
      Enterprise Solutions            9,704       10,548
        Total                       106,800      123,362

        Gross profit                 85,809      122,915

    Operating expenses
      Specialty Printing             39,673       50,333
      Enterprise Solutions           15,496       18,040
      Administrative and other       16,466       15,188
        Total                        71,635       83,561

        Operating income            $14,174      $39,354

                          ZEBRA TECHNOLOGIES CORPORATION
                       PRINTER UNITS and AVERAGE UNIT PRICES

                                       Three Months Ended
                                    April 4,      March 29,
                                      2009           2008

    Total Printers Shipped          199,218         242,401
    Average Unit Prices                $517            $614

SOURCE Zebra Technologies Corporation