2014

Zebra Technologies Announces 2009 Third Quarter Financial Results Strong sequential increases in sales and earnings led by improved business in North America

LINCOLNSHIRE, Ill., Nov. 4 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced net sales of $200,778,000 for the quarter that ended October 3, 2009, compared with $244,073,000 for the corresponding period a year ago. Quarterly net income was $11,111,000, or $0.19 per diluted share, including $3,515,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.04 per share. Net income for the third quarter of 2008 was $25,770,000, or $0.40 per diluted share, including a $0.04 per diluted share impact from exit, restructuring and integration costs.

"We are pleased to report better-than-expected sales and solid earnings performance for the third quarter," stated Anders Gustafsson, Zebra's chief executive officer. "These results were in large part driven by not only increasing demand for our products, but also our strategic commitment over the last year to continue investment in areas that strengthen Zebra's future. We reinforced our industry-leading position, maintained strong cash flows and began to realize the initial benefits from our outsourcing activities."

Mr. Gustafsson continued, "Around the world, as we continue to drive competitive advantage through innovation, more customers are turning to Zebra to help them improve business performance and supply chain execution with our industry-leading suite of specialty printing, RFID and other asset tracking solutions. Zebra will continue to capitalize on our strategic and financial strength as the business environment improves by investing in global expansion and other high-returning activities to deliver better customer service, improve operational efficiency, and build stockholder value."

At October 3, 2009, Zebra had $223,272,000 in cash and investments, and no long-term debt. Net inventories were $79,807,000, and net accounts receivable were $144,375,000.

Discussion and Analysis

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

  • Net sales in all geographic regions were affected by lower economic activity, with relatively better sales performance in North America, which increased 13.2% from the second quarter of 2009.
  • Lower overhead absorption because of reduced volumes and a less favorable product mix contributed to a decline in gross profit margin to 45.7% from 48.3% a year ago. These factors were partially offset by the benefit of outsourcing and higher gross profit margin in the company's Zebra Enterprise Solutions group.
  • Operating expenses declined from cost-reduction actions, which reduced overall employee-related compensation, travel and entertainment expenses and project expenses, in addition to lower expenses for amortization of intangible assets and exit, restructuring and integration costs. These reductions were offset by increases in general and administrative expenses for consulting and benefit costs. In addition, operating expenses for the third quarter 2008 include a non-taxable $5,302,000 reduction in operating expenses for the settlement of Zebra's claim against the escrow for its acquisition of WhereNet Corp., and a $1,121,000 gain on the sale/leaseback of the company's facility in Camarillo, CA, recognized as a reduction in general and administrative expenses.
  • Investment income totaled $901,000 for the third quarter of 2009, compared with an investment loss of $5,140,000, which included write-downs of $4,374,000 on securities and $2,897,000 on a long-term investment.

For the first nine months of 2009, net sales were $581,063,000, compared with $744,132,000. Net income for the year to-date was $29,474,000, or $0.49 per diluted share, including $9,455,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.11 per share. For the same period a year ago, net income was $78,940,000, or $1.20 per diluted share, including $12,218,000 or $0.13 per diluted share in exit, restructuring and integration costs.

Stock Purchase Update

During the third quarter of 2009, the company repurchased 326,850 shares of Zebra Technologies Corporation Class A Common Stock. At the end of the third quarter, Zebra had 2,792,838 shares remaining in the company's stock buyback authorization and 58,832,620 shares of common stock outstanding.

Fourth Quarter Outlook

Zebra announced its financial forecast for the fourth quarter of 2009. Net sales are expected within a range of $200,000,000 and $212,000,000. Diluted earnings per share are expected within a range of $0.18 and $0.25. 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 third 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 fourth quarter of 2009 stated in the paragraph above captioned "Fourth Quarter Outlook." Actual results may differ from those expressed or implied in the company's forward-looking statements. These statements represent estimates only as of the date they were made. Zebra 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                     Orlando De Bruce
               Vice President, Investor Relations      Director, Global Public
               and Treasurer                           Relations
               +1 847 793 6735                         +1 510 267 5052
               dfox@zebra.com                          odebruce@zebra.com



                             ZEBRA TECHNOLOGIES CORPORATION
                              CONSOLIDATED BALANCE SHEETS
                                  (Amounts in thousands)

                                                     October 3,   December 31,
                                                        2009         2008
                                                        ----         ----
    ASSETS                                          (Unaudited)
    Current assets:
      Cash and cash equivalents                        $39,048     $33,267
      Restricted cash                                    1,748       1,639
      Investments and marketable securities             91,055      85,654
      Accounts receivable, net                         144,375     152,679
      Inventories, net                                  79,807     100,199
      Deferred income taxes                             11,312      11,679
      Income taxes receivable                              369           -
      Prepaid expenses and other current assets         10,503      11,701
                                                        ------      ------
        Total current assets                           378,217     396,818
                                                       -------     -------

    Property and equipment at cost, less accumulated
     depreciation and amortization                      78,984      75,363
    Long-term deferred income taxes                     47,422      51,251
    Goodwill                                           153,497     151,356
    Other intangibles, net                              58,633      66,359
    Long-term investments and marketable securities     91,421     104,326
    Other assets                                         5,254       5,405
                                                         -----       -----
    Total assets                                      $813,429    $850,878
                                                      ========    ========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                                 $22,716     $38,152
      Accrued liabilities                               48,582      67,911
      Deferred revenue                                  21,867      18,366
      Income taxes payable                                   -         558
                                                           ---         ---
        Total current liabilities                       93,165     124,987
    Deferred rent                                        4,241       4,903
    Other long-term liabilities                          9,479      10,250
                                                         -----      ------
    Total liabilities                                  106,885     140,140
                                                       -------     -------

    Stockholders' equity:
      Preferred Stock                                      722         722
      Class A Common Stock                                   -           -
      Additional paid-in capital                       134,953     144,861
      Treasury stock                                  (372,800)   (344,147)
      Retained earnings                                951,565     922,091
      Accumulated other comprehensive loss              (7,896)    (12,789)
                                                        ------     -------
          Total stockholders' equity                   706,544     710,738
                                                       -------     -------
    Total liabilities and stockholders' equity        $813,429    $850,878
                                                      ========    ========



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

                               Three Months Ended        Nine Months Ended
                             October 3, September 27, October 3, September 27,
                                2009        2008         2009        2008
                                ----        ----         ----        ----
    Net sales                 $200,778    $244,073    $581,063     $744,132
    Cost of sales              109,080     126,287     321,820      375,716
                               -------     -------     -------      -------
    Gross profit                91,698     117,786     259,243      368,416

    Operating expenses:
       Selling and marketing    25,793      30,980      72,193       91,453
       Research and development 21,155      23,879      63,573       71,345
       General and
        administrative          23,348      18,534      64,659       67,795
       Amortization of intangible
        assets                   2,649       4,711       7,857       13,904
       Exit, restructuring and
        integration costs        3,515       4,304       9,455       12,218
       Claim settlement              -      (5,302)          -      (5,302)
       Asset impairment charges     88           -        (203)          -
                                   ---         ---        ----         ---
    Total operating expenses    76,548      77,106     217,534      251,413
                                ------      ------     -------      -------

    Operating income            15,150      40,680      41,709      117,003
                                ------      ------      ------      -------

    Other income (expense):
       Investment income           901      (5,140)      3,093          (14)
       Foreign exchange
        gain (loss)                575         247        (840)         878
       Other, net                 (286)       (185)       (622)      (1,089)
                                  ----        ----        ----       ------
    Total other income           1,190      (5,078)      1,631         (225)
                                 -----      ------       -----         ----

    Income before income taxes  16,340      35,602      43,340      116,778
    Income taxes                 5,229       9,832      13,866       37,838
                                 -----       -----      ------       ------
    Net income                 $11,111     $25,770     $29,474      $78,940
                               =======     =======     =======      =======

    Basic earnings per share     $0.19       $0.40       $0.49        $1.21
    Diluted earnings per share   $0.19       $0.40       $0.49        $1.20

    Basic weighted average
     shares outstanding         58,954      64,328      59,548       65,190
    Diluted weighted average and
     equivalent shares
     outstanding                59,083      64,653      59,643       65,550



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

                                                       Nine Months Ended
                                                       -----------------
                                                     October 3,  September 27,
                                                       2009         2008
                                                       ----         ----
    Cash flows from operating activities:
       Net income                                     $29,474      $78,940
       Adjustments to reconcile net income
        to net cash provided by (used in)
        operating activities:
          Depreciation and amortization                24,409       28,418
          Stock-based compensation                      8,687       10,780
          Excess tax benefit from share-based
           compensation                                   (11)        (187)
          Gain on sale of asset                           357       (1,121)
          Asset impairment charges                       (203)           -
          Deferred income taxes                         4,259       (4,624)
          Changes in assets and liabilities,
           net of effects of acquisitions:
             Accounts receivable, net                  13,797      (29,654)
             Inventories                               22,632      (22,575)
             Other assets                                (677)         930
             Accounts payable                         (21,216)       7,573
             Accrued liabilities                      (19,389)      (6,009)
             Deferred revenue                           2,674       13,279
             Income taxes payable                      (2,394)       2,295
             Other operating activities                   584        2,461
                                                          ---        -----
                Net cash provided by operating
                 activities                            62,983       80,506
                                                       ------       ------

    Cash flows from investing activities:
       Purchases of property and equipment            (19,499)     (28,534)
       Proceeds from sale of assets                         -       14,796
       Acquisition of businesses acquired,
        net of cash acquired                                -      (18,570)
       Acquisition of intangible assets                     -       (1,100)
       Payments for patents and licensing
        arrangements                                     (425)           -
       Purchases of investments and
        marketable securities                        (236,520)    (502,699)
       Maturities of investments and
        marketable securities                         194,939      388,362
       Sales of investments and marketable
        securities                                     49,899      178,104
                                                       ------      -------
                Net cash provided by (used in)
                 investing activities                 (11,606)      30,359
                                                      -------       ------

    Cash flows from financing activities:
       Purchase of treasury stock                     (49,609)    (107,504)
       Proceeds from exercise of stock
        options and stock purchase plan
        purchases                                       3,250        4,343
       Excess tax benefit from share-based
        compensation                                       11          187
                                                          ---          ---
                Net cash used in financing activities (46,348)    (102,974)
                                                      -------     --------

    Effect of exchange rate changes on cash               752          775
                                                          ---          ---

    Net increase in cash and cash equivalents           5,781        8,666
    Cash and cash equivalents at beginning of period   33,267       38,211
                                                       ------       ------
    Cash and cash equivalents at end of period        $39,048      $46,877
                                                      =======      =======

    Supplemental disclosures of cash flow
     information:
     Income taxes paid                                 19,856       40,682



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

                                      SALES BY PRODUCT CATEGORY

                          Three Months Ended
                        -----------------------
                                                           Percent     Percent
                                                            of Net     of Net
    Product             October 3, September 27, Percent    Sales -    Sales -
     Category              2009        2008      Change      2009       2008
    ---------              ----        ----      ------      ----       ----
    Hardware            $131,484    $175,663     (25.1)      65.5       72.0
    Supplies              43,229      45,530      (5.1)      21.5       18.7
    Service and
     software             25,443      26,260      (3.1)      12.7       10.8
    Shipping and
     handling              1,250       1,710     (26.9)       0.6        0.6
    Cash flow hedging
     activities             (629)     (5,090)       NM       (0.3)      (2.1)
                             ---       -----       ---        ---        ---
      Total sales       $200,778    $244,073     (17.7)     100.0      100.0
                         =======     =======      ====      =====      =====


                           Nine Months Ended
                        -----------------------
                                                           Percent     Percent
                                                            of Net     of Net
    Product             October 3, September 27, Percent    Sales -    Sales -
     Category              2009        2008      Change      2009       2008
    ---------              ----        ----      ------      ----       ----
    Hardware            $382,504    $541,483    (29.4)       65.8       72.8
    Supplies             116,836     131,236    (11.0)       20.1       17.6
    Service and
     software             77,116      78,955     (2.3)       13.3       10.6
    Shipping and
     handling              3,883       5,344    (27.3)        0.7        0.7
    Cash flow hedging
     activities              724     (12,886)      NM         0.1       (1.7)
                             ---      ------      ---         ---        ---
      Total sales       $581,063    $744,132    (21.9)      100.0      100.0
                         =======     =======     ====       =====      =====



                                   SALES BY GEOGRAPHIC REGION

                          Three Months Ended
                        -----------------------
                                                           Percent     Percent
                                                            of Net     of Net
    Geographic          October 3, September 27, Percent    Sales -    Sales -
     Region                2009        2008      Change      2009       2008
    ---------              ----        ----      ------      ----       ----
    Europe, Middle
     East and Africa     $67,591     $85,381     (19.9)      33.7       35.0
    Latin America         17,452      21,268     (17.9)       8.7        8.7
    Asia-Pacific          20,889      26,560     (24.3)      10.4       10.9
      Total
       International     105,932     133,209     (20.5)      52.8       54.6
    North America         94,846     110,864     (14.4)      47.2       45.4
                          ------     -------      ----       ----       ----
      Total sales       $200,778    $244,073     (17.7)     100.0      100.0
                         =======     =======      ====      =====      =====


                           Nine Months Ended
                        -----------------------
                                                           Percent     Percent
                                                            of Net     of Net
    Geographic          October 3, September 27, Percent    Sales -    Sales -
     Region                2009        2008      Change      2009       2008
    ---------              ----        ----      ------      ----       ----
    Europe, Middle
     East and Africa    $211,255    $276,538     (22.3)      36.4       37.2
    Latin America         45,528      58,618     (22.3)       7.8        7.9
    Asia-Pacific          60,136      76,694     (26.0)      10.3       10.3
      Total
       International     316,919     411,850     (23.0)      54.5       55.4
    North America        264,144     332,282     (20.5)      45.5       44.6
                         -------     -------      ----       ----       ----
      Total sales       $581,063    $744,132     (21.9)     100.0      100.0
                         =======     =======      ====      =====      =====



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

                               Three Months Ended        Nine Months Ended
                             October 3, September 27, October 3, September 27,
                                2009        2008         2009        2008
                                ----        ----         ----        ----
    Net sales:
    Specialty Printing
     Group                    $180,757    $218,452    $519,434      $671,965
    Zebra Enterprise
     Solutions                  20,021      25,621      61,629        72,167
                                ------      ------      ------        ------
       Total                  $200,778    $244,073    $581,063      $744,132
                              ========    ========    ========      ========

    Cost of sales:
    Specialty Printing
     Group                    $101,926    $114,999    $297,058      $341,149
    Zebra Enterprise
     Solutions                   7,154      11,288      24,762        34,567
                                 -----      ------      ------        ------
       Total                  $109,080    $126,287    $321,820      $375,716
                              ========    ========    ========      ========

    Operating expenses:
    Specialty Printing
     Group                     $42,149     $48,959    $121,607      $155,153
    Zebra Enterprise
     Solutions                  15,866      15,970      47,560        53,940
    Corporate and other         18,533      12,177      48,367        42,320
                                ------      ------      ------        ------
       Total                   $76,548     $77,106    $217,534      $251,413
                               =======     =======    ========      ========

    Operating income (loss):
    Specialty Printing
     Group                     $36,682     $54,494    $100,769      $175,663
    Zebra Enterprise
     Solutions                  (2,999)     (1,637)    (10,693)      (16,340)
    Corporate and other        (18,533)    (12,177)    (48,367)      (42,320)
                               -------     -------     -------       -------
       Total                   $15,150     $40,680     $41,709      $117,003
                               =======     =======     =======      ========



    Corporate and other includes corporate administration costs or assets
    that support both reporting segments.



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

                    Three Months Ended               Nine Months Ended
             -------------------------------- --------------------------------
             October 3, September 27, Percent October 3, September 27, Percent
                2009        2008      Change     2009        2008      Change
                ----        ----      ------     ----        ----      ------
    Total
     printers
     shipped   201,713     241,717     (16.6)  606,130      722,576     (16.1)
    Average
     selling
     price of
     printers
     shipped      $551        $596      (7.6)     $577         $613      (5.9)


SOURCE Zebra Technologies Corporation



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