Zebra Technologies Announces 2011 Fourth Quarter Financial Results Strength in North America and Europe lead to favorable results

LINCOLNSHIRE, Ill., Feb. 14, 2012 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2011 fourth quarter net income of $35,044,000, or $0.67 per diluted share, compared with $28,217,000, or $0.50 per diluted share, for the fourth quarter of 2010. Quarterly net income for 2011 includes income of $2,185,000, or $0.04 per diluted share, from discontinued operations. Net sales for the quarter ended December 31, 2011, increased 5.7% to $247,308,000 from $234,019,000 for the corresponding period for 2010.


Summary Financial Performance (Unaudited)


4Q11

4Q10

Change

Net sales (in 000s)

$247,308

$234,019

5.7%

Gross margin (%)

49.1

48.9

0.2 pts.

Operating margin (%)

17.0

18.4

-1.4 pts.

Income from continuing
  operations (in 000s)

$32,859

$29,635

10.9%

Income (loss) from discontinued
  operations, net of tax (in 000s)

$2,185

$(1,418)

NM

Net income (in 000s)

$35,044

$28,217

24.2%

Diluted earnings per share:




Income from continuing operations

$0.63

$0.53

18.9%

Income from discontinued
  operations, net of tax

$0.04

$(0.03)

NM

Net income

$0.67

$ 0.50

34.0%

Note: Net sales and results for 2010 have been adjusted for the sales of Navis,
proveo AG and other immaterial operations.




"The great diversity of Zebra's business and excellent execution on several fronts contributed to our solid fourth quarter results," stated Anders Gustafsson, Zebra's chief executive officer. "During 2011, Zebra increased the pace of innovation with the introduction of 13 new printer products and 10 location software and hardware releases. Through our strategic sales and marketing activities, we built relationships with a broader base of customers to penetrate targeted industries more deeply. Our investments to extend geographic reach have resulted in improved coverage in attractive high-growth regions. These actions position Zebra for further profitable growth and the capacity for creating greater shareholder value."

For all of 2011, net sales increased 10.0% to a record $983,488,000 from $894,359,000 for 2010. Annual income from continuing operations was $130,343,000, or $2.40 per diluted share, compared with $104,614,000, or $1.82 per diluted share. Net income for 2011 was $174,643,000, or $3.22 per diluted share, which was up from $101,778,000, or $1.77 per diluted share, for 2010.

As of December 31, 2011, Zebra had $326,695,000 in cash and investments, and no long-term debt. Net inventories were $133,288,000, and net accounts receivable were $155,230,000.

Discussion and Analysis

  • Net sales for the fourth quarter of 2011 benefited primarily from particularly strong business activity in the company's North American and Europe, Middle East and Africa (EMEA) regions. Quarterly sales increased 5.9% on a constant-currency basis from a year ago.
  • Gross margin of 49.1%, versus 48.9% a year ago, reflects lower costs for raw materials and higher volumes, partially offset by less favorable movements in foreign exchange rates.
  • Operating expense growth of 11.3% includes higher employee-related payroll and benefit costs driven by increased headcount from a year ago and higher market development activities primarily to support the company's geographic expansion activities. The company also held a global partner conference in 2011, not held in the prior year. Operating profit margin decreased from 18.4% to 17.0% due to the increases in selling and marketing expenses and a modest increase in research and development costs.

Stock Purchase Update

During the fourth quarter of 2011, Zebra repurchased 428,891 shares of Zebra Technologies Corporation Class A Common Stock. At December 31, 2011, the company had 3,496,199 shares remaining in its stock buyback authorization, and 52,095,000 shares of common stock were outstanding.

First Quarter Outlook

Zebra announced its financial forecast for the first quarter of 2012. Net sales are expected within a range of $237,000,000 to $246,000,000. Diluted earnings per share from continuing operations are expected within a range of $0.52 to $0.59.  

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 fourth quarter of 2011. 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 first quarter of 2012 stated in the paragraph above captioned "First 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, 2010.

About Zebra Technologies

A global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) provides enabling technologies that allow customers to take smarter actions. Our extensive portfolio of bar code, receipt, card, kiosk and RFID printers and supplies, as well as real-time location solutions give a digital voice to assets, people and transactions that provides greater visibility into mission-critical information. For more information about Zebra's solutions, visit http://www.zebra.com.

Contact:



Investors:

Media:

Douglas A. Fox, CFA

Kerry Kelly-Guiliano

Vice President, Investor Relations

Vice President, Strategic Communications

and Treasurer

F T I Consulting

+1 847 793 6735

+1 617 747 3603

dfox@zebra.com

kerry.guiliano@fticonsulting.com



ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)



December 31,

2011


December 31,

2010

ASSETS




Current assets:




Cash and cash equivalents

$  36,353


$  46,175

Restricted cash

65


1,378

Investments and marketable securities

182,398


125,567

Accounts receivable, net

155,230


130,143

Receivable from buyer

27,580


-

Inventories, net

133,288


112,970

Deferred income taxes

13,931


15,670

Income tax receivable

13,111


-

Prepaid expenses and other current assets

22,917


11,505

Assets of discontinued operations

-


148,169

Total current assets

584,873


591,577





Property and equipment at cost, less accumulated depreciation and amortization

97,822


87,093

Long-term deferred income taxes

11,866


21,254

Goodwill

79,703


79,703

Other intangibles, net

12,667


9,755

Long-term investments and marketable securities

107,879


85,478

Other assets

4,196


4,004

Total assets

$  899,006


$  878,864





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$  33,273


$  34,578

Accrued liabilities

64,612


65,163

Deferred revenue

11,089


8,966

Income taxes payable

-


5,900

Liabilities of discontinued operations

-


21,827

Total current liabilities

108,974


136,434

Deferred rent

1,592


2,207

Other long-term liabilities

11,515


10,191

Total liabilities

122,081


148,832





Stockholders' equity:




Preferred Stock

-


-

Class A Common Stock

722


722

Additional paid-in capital

131,422


129,715

Treasury stock

(596,622)


(462,029)

Retained earnings

1,245,616


1,070,973

Accumulated other comprehensive income (loss)

(4,213)


(9,349)

Total stockholders' equity

776,925


730,032

Total liabilities and stockholders' equity

$  899,006


$  878,864




ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended


Twelve Months Ended


Dec. 31, 2011


Dec. 31, 2010


Dec. 31, 2011


Dec. 31, 2010

Net sales:








 Net sales of tangible products

$  235,714


$  222,048


$  936,282


$  849,530

 Revenue from services and software

11,594


11,971


47,206


44,829

Total net sales

247,308


234,019


983,488


894,359









Cost of sales








 Cost of sales of tangible products

118,792


112,550


469,834


450,630

 Cost of services and software

6,996


7,113


26,885


22,954

Total cost of sales

125,788


119,663


496,719


473,584









Gross profit

121,520


114,356


486,769


420,775









Operating expenses:








  Selling and marketing

36,377


31,942


127,797


112,365

  Research and development

23,174


21,736


89,926


82,575

  General and administrative

19,089


17,809


81,649


73,229

  Amortization of intangible assets

806


891


3,320


3,211

  Litigation settlement

-


(1,082)


-


(1,082)

  Exit and restructuring costs

(49)


30


2,041


2,262

Total operating expenses

79,397


71,326


304,733


272,560









Operating income

42,123


43,030


182,036


148,215









Other income (expense):








  Investment income

594


567


1,944


2,678

  Foreign exchange gain (loss)

(706)


(613)


(2,006)


(169)

  Other, net

(899)


(232)


(2,255)


(1,117)

Total other income (expense)

(1,011)


(278)


(2,317)


1,392









Income from continuing operations
  before income taxes

41,112


42,752


179,719


149,607

Income taxes

8,253


13,117


49,376


44,993









Income from continuing operations

32,859


29,635


130,343


104,614

Income (loss) from discontinued operations, net of tax

2,185


(1,418)


44,300


(2,836)

Net income

$  35,044


$  28,217


$  174,643


$  101,778









Basic earnings per share:








  Income from continuing operations

$  0.63


$  0.53


$  2.42


$  1.83

  Income (loss) from discontinued operations

0.04


(0.03)


0.82


(0.05)

     Net income

$  0.67


$  0.50


$  3.24


$  1.78

Diluted earnings per share:








  Income from continuing operations

$  0.63


$  0.53


$  2.40


$  1.82

  Income (loss) from discontinued operations

0.04


(0.03)


0.82


(0.05)

     Net income

$  0.67


$  0.50


$  3.22


$  1.77









Basic weighted average shares outstanding

52,108


56,332


53,854


57,143

Diluted weighted average and equivalent shares outstanding

52,354


56,692


54,191


57,428




ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



Twelve Months Ended


Dec. 31, 2011


Dec. 31, 2010

Cash flows from operating activities:




  Net income

$  174,643


$  101,778

  Adjustments to reconcile net income to net cash provided by (used in)




  Operating activities:




     Depreciation and amortization

24,000


31,209

     Equity-based compensation

14,095


11,871

     Impairment of investments

219


-

     Excess tax benefit from equity-based compensation

(1,392)


(244)

     Loss (gain) on sale of fixed assets

284


(58)

     Gain on sale of business

(68,745)


-

     Deferred income taxes

10,796


(1,347)

     Changes in assets and liabilities:




        Accounts receivable, net

(3,269)


(4,603)

        Inventories, net

(19,545)


(33,884)

        Other assets

(11,408)


(3,993)

        Accounts payable

(5,439)


6,619

        Accrued liabilities

(11,086)


15,386

        Deferred revenue

(14,131)


3,414

        Income taxes

(14,983)


16,980

        Other operating activities

5,582


(2,669)

           Net cash provided by operating activities

79,621


140,459





Cash flows from investing activities:




  Purchases of property and equipment

(26,918)


(30,721)

  Payments for patents and licensing arrangements

(1,232)


(3,497)

  Proceeds from the sale of businesses

161,206


-

  Purchases of investments and marketable securities

(991,633)


(382,091)

  Maturities of investments and marketable securities

607,996


274,208

  Sales of investments and marketable securities

303,801


102,485

           Net cash provided (used) by investing activities

53,220


(39,616)





Cash flows from financing activities:




  Purchase of treasury stock

(160,200)


(102,091)

  Proceeds from exercise of stock options and stock purchase plan purchases

13,009


8,975

  Excess tax benefit from equity-based compensation

1,392


244

           Net cash used in financing activities

(145,799)


(92,872)





Effect of exchange rate changes on cash

1,835


562





Net increase (decrease) in cash and cash equivalents

(11,123)


8,533

  Cash balance of discontinued operations at beginning of period

1,301


1,694

  Less: Cash balance of discontinued operations at end of period

-


1,301

Cash and cash equivalents at beginning of period

46,175


37,249

Cash and cash equivalents at end of period

$  36,353


$  46,175





Supplemental disclosures of cash flow information:




Income taxes paid

$  65,364


$  26,563








ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)



SALES BY PRODUCT CATEGORY



Three Months Ended







Dec. 31,


Dec. 31,


Percent


Percent of


Percent of

Product Category

2011


2010


Change


Net Sales - 2011


Net Sales – 2010

Hardware

$  188,198


$  178,933


5.2


76.1


76.5

Supplies

46,135


41,719


10.6


18.6


17.8

Service and software

11,594


11,971


(3.1)


4.7


5.1

  Subtotal products

245,927


232,623


5.7


99.4


99.4

Shipping and handling

1,381


1,396


(1.1)


0.6


0.6

  Total net sales

$  247,308


$  234,019


5.7


100.0


100.0






Twelve Months Ended







Dec. 31,


Dec. 31,


Percent


Percent of


Percent of

Product Category

2011


2010


Change


Net Sales - 2011


Net Sales – 2010

Hardware

$  743,308


$  676,738


9.8


75.5


75.7

Supplies

187,457


167,633


11.8


19.1


18.7

Service and software

47,206


44,829


5.3


4.8


5.0

  Subtotal products

977,971


889,200


10.0


99.4


99.4

Shipping and handling

5,517


5,159


6.9


0.6


0.6

  Total net sales

$  983,488


$  894,359


10.0


100.0


100.0




SALES BY GEOGRAPHIC REGION



Three Months Ended







Dec. 31,


Dec. 31,


Percent


Percent of


Percent of

Geographic Region

2011


2010


Change


Net Sales - 2011


Net Sales - 2010

Europe, Middle East and Africa

$  88,360


$  84,531


4.5


35.7


36.1

Latin America

21,578


21,380


0.9


8.7


9.1

Asia-Pacific

32,470


32,334


0.4


13.1


13.8

  Total International

142,408


138,245


3.0


57.5


59.0

North America

104,900


95,774


9.5


42.5


41.0

  Total net sales

$  247,308


$  234,019


5.7


100.0


100.0





Twelve Months Ended







Dec. 31,


Dec. 31,


Percent


Percent of


Percent of

Geographic Region

2011


2010


Change


Net Sales - 2011


Net Sales - 2010

Europe, Middle East and Africa

$  342,578


$  305,659


12.1


34.8


34.2

Latin America

89,715


80,679


11.2


9.1


9.0

Asia-Pacific

141,987


113,156


25.5


14.5


12.7

  Total International

574,280


499,494


15.0


58.4


55.9

North America

409,208


394,865


3.6


41.6


44.1

  Total net sales

$  983,488


$  894,359


10.0


100.0


100.0





ZEBRA TECHNOLOGIES CORPORATION

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)



Three Months Ended


Dec. 31,


Dec. 31,


Percent


2011


2010


Change

Total printers shipped

312,409


276,597


12.9

Average selling price of printers shipped

$506


$535


(5.4)





Twelve Months Ended


Dec. 31,


Dec. 31,


Percent


2011


2010


Change

Total printers shipped

1,188,892


1,057,744


12.4

Average selling price of printers shipped

$527


$533


(1.1)




SOURCE Zebra Technologies Corporation



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