Zebra Technologies Announces 2011 Fourth Quarter Financial Results

Strength in North America and Europe lead to favorable results

14 Feb, 2012, 03:00 ET from Zebra Technologies Corporation

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



RELATED LINKS

http://www.zebra.com