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
RELATED LINKS
http://www.zebra.com
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