Zebra Technologies Announces 2009 Second Quarter Financial Results

VERNON HILLS, Ill., Aug. 4 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced net income of $9,011,000, or $0.15 per diluted share, for the second quarter of 2009, including $3,643,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.04 per share. Net income for the second quarter of 2008 was $25,526,000, or $0.39 per diluted share. Net sales were $187,676,000 for the quarter that ended July 4, 2009, compared with $253,782,000 for the corresponding period a year ago.

"The return of some large deal transactions along with ongoing expense control and working capital management helped Zebra deliver solid results in a stabilizing yet still-challenging business environment," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, we effectively addressed the elements within our control to generate significantly improved cash flows. We continued to buy back stock and make progress on our outsourcing and other business initiatives to deliver better customer service and improve efficiency. Zebra's future remains bright to extend industry leadership and position the company for improved performance when business conditions improve. We have great confidence in our ability to build stockholder value as the global leader in specialty printing, RFID and other solutions that improve business performance and supply chain execution."

At July 4, 2009, Zebra had $206,988,000 in cash and investments, and no long-term debt. Net inventories were $92,897,000, and net accounts receivable were $138,755,000.

Discussion and Analysis

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

  • The decline in global economic activity continued to affect consolidated net sales, with consistent percentage sales declines occurring in all geographic regions. Product mix also had an effect on sales, with larger sales declines among high performance and midrange tabletop printers. Movements in foreign exchange reduced sales by $3,415,000, compared with 2009 second quarter sales.
  • Gross profit margin of 43.6% versus 50.3% a year ago was principally affected by the impact of the lower sales volume and unfavorable product mix. These factors were partially offset by higher profitability in the company's Zebra Enterprise Solutions group.
  • Operating expenses declined $21,395,000, or 23.6%, from cost-reduction actions taken in the past twelve months, which reduced employee-related compensation, travel and entertainment expenses and sales support activity, in addition to lower expenses for amortization of intangible assets and exit, restructuring and integration costs.

Stock Purchase Update

During the second quarter of 2009, the company repurchased 600,008 shares of Zebra Technologies Corporation Class A Common Stock. At the end of the second quarter, Zebra had 3,119,688 shares remaining in the company's stock buyback authorization and 59,088,274 shares of common stock outstanding.

Third Quarter Outlook

Zebra announced its financial forecast for the third quarter of 2009. Net sales are expected within a range of $186,000,000 and $198,000,000. Diluted earnings per share are expected within a range of $0.14 and $0.21. This forecast includes expected exit and restructuring costs of $0.03 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 second 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 third quarter of 2009 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 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.

                              ZEBRA TECHNOLOGIES CORPORATION
                              CONSOLIDATED BALANCE SHEETS
                                (Amounts in thousands)

                                                         July 4,  December 31,
                                                          2009       2008
                                                        --------   --------
                                                       (Unaudited)
                             ASSETS
    Current assets:
       Cash and cash equivalents                          $44,792    $33,267
       Restricted cash                                      1,666      1,639
       Investments and marketable securities               71,595     85,654
       Accounts receivable, net                           138,755    152,679
       Inventories, net                                    92,897    100,199
       Deferred income taxes                               12,206     11,679
       Income taxes receivable                              1,031          -
       Prepaid expenses and other current assets           10,419     11,701
                                                           ------     ------
          Total current assets                            373,361    396,818
                                                          -------    -------

    Property and equipment at cost, less accumulated
     depreciation and amortization                         78,494     75,363
    Long-term deferred income taxes                        49,174     51,251
    Goodwill                                              152,856    151,356
    Other intangibles, net                                 61,135     66,359
    Long-term investments and marketable securities        88,935    104,326
    Other assets                                            4,724      5,405
                                                            -----      -----
    Total assets                                         $808,679   $850,878
                                                         ========   ========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
       Accounts payable                                   $28,114    $38,152
       Accrued liabilities                                 45,916     67,911
       Deferred revenue                                    20,121     18,366
       Income taxes payable                                     -        558
                                                              ---        ---
          Total current liabilities                        94,151    124,987
    Deferred rent                                           4,575      4,903
    Other long-term liabilities                            10,529     10,250
                                                           ------     ------
    Total liabilities                                     109,255    140,140
                                                          -------    -------

    Stockholders' equity:
       Preferred Stock                                          -          -
       Class A Common Stock                                   722        722
       Additional paid-in capital                         133,593    144,861
       Treasury stock                                    (367,464)  (344,147)
       Retained earnings                                  940,454    922,091
       Accumulated other comprehensive loss                (7,881)   (12,789)
                                                           ------    -------
                Total stockholders' equity                699,424    710,738
                                                          -------    -------
    Total liabilities and stockholders' equity           $808,679   $850,878
                                                         ========   ========


                           ZEBRA TECHNOLOGIES CORPORATION
                         CONSOLIDATED STATEMENTS OF EARNINGS
                    (Amounts in thousands, except per share data)
                                    (Unaudited)


                               Three Months Ended     Six Months Ended
                               ------------------     ----------------
                              July 4,     June 28,  July 4,    June 28,
                               2009        2008      2009        2008
                             -------     --------  -------     --------
    Net sales               $187,676    $253,782  $380,285     $500,059
    Cost of sales            105,940     126,067   212,740      249,429
                             -------     -------   -------      -------
    Gross profit              81,736     127,715   167,545      250,630

    Operating expenses:
       Selling and
        marketing             23,724      31,920    46,400       60,473
       Research and
        development           20,614      25,251    42,418       47,466
       General and
        administrative        19,086      24,216    41,311       49,261
       Amortization of
        intangible assets      2,575       4,679     5,208        9,193
       Exit, restructuring
        and integration
        costs                  3,643       4,680     5,940        7,914
       Asset impairment
        charges                 (291)          -      (291)           -
                                ----         ---      ----          ---
    Total operating
     expenses                 69,351      90,746   140,986      174,307
                              ------      ------   -------      -------

    Operating income          12,385      36,969    26,559       76,323
                              ------      ------    ------       ------

    Other income
     (expense):
       Investment income       1,014       2,722     2,192        5,127
       Foreign exchange
        gain (loss)             (131)        (69)   (1,415)         631
       Other, net                (19)       (651)     (336)        (905)
                                 ---        ----      ----         ----
    Total other income           864       2,002       441        4,853
                                 ---       -----       ---        -----

    Income before income
     taxes                    13,249      38,971    27,000       81,176
    Income taxes               4,238      13,445     8,637       28,006
                               -----      ------     -----       ------
    Net income                $9,011     $25,526   $18,363      $53,170
                              ======     =======   =======      =======

    Basic earnings per
     share                     $0.15       $0.39     $0.31        $0.81
    Diluted earnings per
     share                     $0.15       $0.39     $0.31        $0.81

    Basic weighted
     average shares
     outstanding              59,271      65,128    59,821       65,664
    Diluted weighted
     average and
     equivalent
       shares outstanding     59,352      65,502    59,896       66,046



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

                                                    Six Months Ended
                                                    ----------------
                                                 July 4,          June 28,
                                                  2009              2008
                                                 -------          --------
    Cash flows from operating
     activities:
       Net income                                $18,363           $53,170
       Adjustments to reconcile net income
        to net cash provided by (used in)
       operating activities:
          Depreciation and amortization           15,947            18,607
          Stock-based compensation                 5,586             6,536
          Excess tax benefit from share-based
           compensation                                -              (131)
          Asset impairment charges                  (291)                -
          Deferred income taxes                    1,710            (3,185)
          Changes in assets and liabilities,
           net of effects of acquisitions:
             Accounts receivable, net             17,512           (29,780)
             Inventories                          10,133           (14,754)
             Other assets                           (212)            1,485
             Accounts payable                    (14,479)           13,129
             Accrued liabilities                 (21,855)           (3,876)
             Deferred revenue                      2,030             6,793
             Income taxes payable                 (2,773)            1,796
             Other operating activities              757               762
                                                     ---               ---
                Net cash provided by operating
                 activities                       32,428            50,552
                                                  ------            ------

    Cash flows from investing
     activities:
       Purchases of property and equipment       (12,648)          (20,249)
       Acquisition of businesses acquired,
        net of cash acquired                           -           (17,987)
       Acquisition of intangible assets                -              (470)
       Payments for patents and licensing
        arrangements                                (425)                -
       Purchases of investments and
        marketable securities                   (126,605)         (305,088)
       Maturities of investments and
        marketable securities                    100,830           227,129
       Sales of investments and marketable
        securities                                55,750           113,838
                                                  ------           -------
                Net cash provided by (used in)
                 investing activities             16,902            (2,827)
                                                  ------            ------

    Cash flows from financing
     activities:
       Purchase of treasury stock                (41,600)          (48,402)
       Proceeds from exercise of stock
        options and stock purchase plan
         purchases                                 2,027             3,383
       Excess tax benefit from share-based
        compensation                                   -               131
                                                     ---               ---
                Net cash used in financing
                 activities                      (39,573)          (44,888)
                                                 -------           -------

    Effect of exchange rate changes on
     cash                                          1,768               868
                                                   -----               ---

    Net increase in cash and cash
     equivalents                                  11,525             3,705
    Cash and cash equivalents at
     beginning of period                          33,267            38,211
                                                  ------            ------
    Cash and cash equivalents at end of
     period                                      $44,792           $41,916
                                                 =======           =======

    Supplemental disclosures of cash
     flow information:
     Income taxes paid                             7,334            27,096

    Supplemental disclosures of
     non-cash transactions:
       Purchase of treasury shares not
        paid in the second quarter of 2008             -              $570



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

                            SALES BY PRODUCT CATEGORY

                        Three Months Ended
                        ------------------
                                                    Percent Percent
                                                     of Net  of Net
    Product               July 4,   June 28, Percent Sales - Sales -
    Category               2009      2008    Change   2009    2008
    ----------           -------- --------- -------- ------- -------



    Hardware              $125,092  $185,640  (32.6)  66.7  73.1
    Supplies                35,588    43,803  (18.8)  19.0  17.3
    Service and software    25,748    27,516   (6.4)  13.7  10.8
    Shipping and handling    1,265     1,832  (30.9)   0.6   0.8
    Cash flow hedging
     activities                (17)   (5,009)    NM      0  (2.0)
                               ---    ------            --  ----
       Total sales        $187,676  $253,782  (26.0) 100.0 100.0
                          ========  ========         ===== =====


                         Six Months Ended
                        ------------------
                                                    Percent Percent
                                                     of Net  of Net
    Product               July 4,   June 28, Percent Sales - Sales -
    Category               2009      2008    Change   2009    2008
    ----------           -------- --------- -------- ------- -------

    Hardware              $251,019 $365,821  (31.4)   65.9   73.3
    Supplies                73,607   85,706  (14.1)   19.4   17.1
    Service and software    51,673   52,695   (1.9)   13.6   10.5
    Shipping and handling    2,633    3,634  (27.5)    0.7    0.7
    Cash flow hedging
     activities              1,353   (7,797)    NM     0.4   (1.6)
                             -----   ------            ---   ----
       Total sales        $380,285 $500,059  (24.0)  100.0  100.0
                          ======== ========          =====  =====


                               SALES BY GEOGRAPHIC REGION

                         Three Months Ended
                         ------------------
                                                    Percent Percent
                                                     of Net  of Net
    Product               July 4,   June 28, Percent Sales - Sales -
    Category               2009      2008    Change   2009    2008
    ----------           -------- --------- -------- ------- -------


    Europe, Middle East
     and Africa             $69,044  $92,112 (25.0)   36.8   36.3
    Latin America            15,005   21,367 (29.8)    8.0    8.4
    Asia-Pacific             19,839   28,031 (29.2)   10.6   11.0
                             ------   ------          ----   ----
       Total International  103,888  141,510 (26.6)   55.4   55.7
    North America            83,788  112,272 (25.4)   44.6   44.3
                             ------  -------          ----   ----
       Total sales         $187,676 $253,782 (26.0)  100.0  100.0
                           ======== ========         =====  =====


                          Six Months Ended
                         ------------------
                                                    Percent Percent
                                                     of Net  of Net
    Product               July 4,   June 28, Percent Sales - Sales -
    Category               2009      2008    Change   2009    2008
    ----------           -------- --------- -------- ------- -------

    Europe, Middle East
     and Africa            $143,664 $187,620 (23.4)   37.8   37.5
    Latin America            28,076   37,350 (24.8)    7.4    7.5
    Asia-Pacific             39,247   53,671 (26.9)   10.3   10.7
                             ------   ------          ----   ----
       Total International  210,987  278,641 (24.3)   55.5   55.7
    North America           169,298  221,418 (23.5)   44.5   44.3
                            -------  -------          ----   ----
       Total sales         $380,285 $500,059 (24.0)  100.0  100.0
                           ======== ========         =====  =====


                         ZEBRA TECHNOLOGIES CORPORATION
                        SUPPLEMENTAL SEGMENT INFORMATION
                             (Amounts in thousands)
                                   (Unaudited)

                               Three Months Ended      Six Months Ended
                               ------------------      ----------------
                               July 4,     June 28,  July 4,    June 28,
                                2009         2008      2009      2008
                              ---------    ---------  -------   --------
    Net sales:
    SPG                       $167,909     $228,762  $338,667  $453,513
    ZES                         19,767       25,020    41,608    46,546
                                ------       ------    ------    ------
       Total                  $187,676     $253,782  $380,285  $500,059
                              ========     ========  ========  ========

    Operating profit
     (loss):
    SPG                        $30,088      $59,563   $64,087  $121,168
    ZES                         (4,335)      (7,639)   (7,694)  (14,703)
    Corporate and other        (13,368)     (14,955)  (29,834)  (30,142)
                               -------      -------   -------   -------
       Total                   $12,385      $36,969   $26,559   $76,323
                               =======      =======   =======   =======

                               July 4,    December 31,
                                2009         2008
                            ------------ ------------
    Identifiable assets:
    SPG                       $340,414     $376,515
    ZES                        187,649      190,572
    Corporate and other        280,616      283,791
                               -------      -------
       Total                  $808,679     $850,878
                              ========     ========


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

                             Three Months Ended         Six Months Ended
                             ------------------         ----------------
                          July 4, June 28, Percent  July 4, June 28,  Percent
                           2009     2008    Change   2009     2008    Change
                           ----     ----    ------   ----     ----    ------
    Total printers
     shipped              205,199  238,458  (13.9)  404,417  480,859  (15.9)
    Average selling price
     of printers  shipped    $508     $630  (19.4)     $512     $622  (17.7)



    CONTACT:  Investors:                     Media:
    Douglas A. Fox, CFA                      Orlando De Bruce
    Vice President, Investor Relations       Director, Global Public Relations
    and Treasurer                            +1 510 267 5052
    +1 847 793 6735                          odebruce@zebra.com
    dfox@zebra.com


SOURCE Zebra Technologies Corporation



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