Zebra Technologies Announces Record Earnings per Share in 2010 Fourth Quarter

Investments in geographic expansion contribute to strong growth in international regions

15 Feb, 2011, 03:00 ET from Zebra Technologies Corporation

LINCOLNSHIRE, Ill., Feb. 15, 2011 /PRNewswire/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced 2010 fourth quarter net income of $28,217,000, or a record $0.50 per diluted share, including $1,134,000 in exit, restructuring and integration costs that reduced diluted earnings by $0.01 per share. Quarterly net sales of $248,175,000 were up 11.5% from $222,522,000 for the same period of 2009. Net income for the fourth quarter of 2009 was $17,630,000, or $0.30 per diluted share, including $2,737,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.03 per share.

Summary Financial Performance

4Q10

4Q09

Change

Net sales (in thousands)

$248,175

$222,522

11.5%

Gross margin (%)

49.8

45.6

4.2 pts.

Operating margin (%)

16.3

11.8

4.5 pts.

Net income (in thousands)

$28,217

$17,630

60.1%

Diluted EPS

$0.50

$0.30

66.7%

"Zebra's sixth quarter of sequential sales growth accompanied further improvements in gross margin to produce our second quarterly record in EPS," stated Anders Gustafsson, Zebra's chief executive officer. "Our success in the fourth quarter and throughout 2010 is a direct result of the leverage we have in our financial strength, global go-to-market channels, broad product line and other competitive advantages. During the year we extended our industry leadership with additional sales representation in high-growth regions, broader and stronger distribution, and introductions of new, innovative products that enable us to serve more of our customers' asset tagging needs. These and other accomplishments make us optimistic in our capacity to achieve further growth and create greater value for all of our shareholders."

As of December 31, 2010, Zebra had $259,899,000 in cash and investments, and no long-term debt. Net inventories were $113,742,000, and net accounts receivable were $154,146,000.

Discussion and Analysis

  • Net sales for the fourth quarter of 2010 compared with the 2009 fourth quarter benefited from improved business conditions in all geographic regions, with the highest growth rates occurring in Latin America and Asia Pacific. All major printer product categories and aftermarket parts contributed to the growth. Quarterly sales increased 14.4% on a constant-currency basis from a year ago.
  • Gross margin of 49.8% versus 45.6% a year ago was principally driven by higher volumes, an improved product mix, product material savings and lower overhead and freight charges. These factors were partially offset by unfavorable movements in foreign exchange rates.  
  • Operating expenses increased 10.6% from the fourth quarter of 2009 substantially from increased selling and marketing and research and development expenses related to higher costs for compensation, business development, outside professional services, travel and entertainment, and project expenses.
  • Fourth quarter operating expenses for 2010 include $1,082,000 in favorable litigation settlements related to escrow funds associated with prior acquisitions.
  • The income tax rate of 29.9% for the fourth quarter of 2010 reflects an extension of Federal R&D tax credits. In addition, as Zebra's business continued to expand more rapidly in international regions that have lower tax rates, the company's consolidated global tax rate has declined.

For the full year, net sales were $956,848,000, up 19.1% from $803,585,000. Net income for 2010 totaled $101,778,000, or a record $1.77 per diluted share, compared with $47,104,000, or $0.79 per diluted share for 2009. Exit, restructuring and integration costs for 2010 totaled $4,197,000 and reduced diluted earnings by $0.05 per share. For 2009, exit, restructuring and integration costs of $12,191,000 lowered diluted earnings by $0.14 per share.

Stock Purchase Update

During the fourth quarter of 2010, Zebra repurchased 900,000 shares of Zebra Technologies Corporation Class A Common Stock. At December 31, 2010, 1,850,000 shares remained in the company's stock buyback authorization, and 55,711,325 shares of common stock were outstanding.

First Quarter Outlook

Zebra announced its financial forecast for the first quarter of 2011. Net sales are expected within a range of $224,000,000 to $235,000,000, reflecting the pending sale of the company's Navis operation and certain other assets. For the first quarter of 2010, Zebra's reported net sales were $226,431,000, including sales for Navis and the certain other assets in the range of $14,000,000 to $16,000,000. Adjusting for these sales, the company calculates that first quarter 2010 net sales were in the range of $210,431,000 and $212,431,000. Diluted earnings per share from continuing operations for the first quarter of 2011 are expected within a range of $0.41 to $0.47, including $0.02 per share in exit, restructuring and integration costs.  

On January 31, 2011, Zebra announced a definitive agreement to sell its Navis operation and other related assets to Cargotec Corporation for approximately $190,000,000 in cash. The transaction is expected to be completed in the first quarter of 2011 and is subject to regulatory approvals, customary closing conditions and working capital adjustments. The Navis operation and certain other assets will be designated as discontinued operations beginning in the first quarter of 2011.

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 fourth quarter of 2010. 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 first quarter of 2011 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. Risks to financial results also include the timing and successful completion of the Navis divestiture as well as the successful integration of the remaining portion of Zebra Enterprise Solutions into Zebra. 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, 2009.

About Zebra Technologies

Zebra Technologies Corporation (NASDAQ: ZBRA) provides the broadest range of innovative technology solutions to identify, track, and manage the deployment of critical assets for improved business efficiency. Zebra's products include reliable on-demand printers and state-of-the-art software and hardware solutions utilizing a wide array of automatic identification technologies. By enabling improvements in sourcing, visibility, security and accuracy, Zebra helps its customers to put the right asset in the right place at the right time. Zebra serves more than 90 percent of Fortune 500 companies worldwide. For more information about Zebra's solutions, visit http://www.zebra.com.

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

December 31,

2010

December 31,

2009

ASSETS

Current assets:

    Cash and cash equivalents

$  47,476

$  38,943

    Restricted cash

1,378

1,725

    Investments and marketable securities

125,567

114,064

    Accounts receivable, net of allowances of $2,161 in 2010 and $2,186 in 2009

154,146

150,992

    Inventories, net

113,742

79,926

    Deferred income taxes

19,393

10,792

    Income taxes receivable

-

4,724

    Prepaid expenses and other current assets

14,833

9,771

        Total current assets

476,535

410,937

Property and equipment at cost, net of

    accumulated depreciation and amortization

88,983

77,589

Long term deferred income taxes

21,023

35,842

Goodwill

151,933

153,225

Other intangibles, net

49,706

55,982

Long term investments and marketable securities

85,478

91,989

Other assets

5,206

4,915

Total assets

$  878,864

$  830,479

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

    Accounts payable

$  35,304

$  28,137

    Accrued liabilities

68,090

52,591

    Deferred revenue

26,757

24,082

    Income taxes payable

5,900

-

        Total current liabilities

136,051

104,810

Deferred rent

2,406

4,108

Other long-term liabilities

10,375

9,432

Total liabilities

148,832

118,350

Stockholders' equity:

    Preferred stock

-

-

    Class A Common Stock

722

722

    Additional paid-in capital

129,715

136,104

    Treasury stock

(462,029)

(385,831)

    Retained earnings

1,070,973

969,195

    Accumulated other comprehensive income (loss)

(9,349)

(8,061)

            Total stockholders' equity

730,032

712,129

            Total liabilities and stockholders' equity

$  878,864

$  830,479

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

2010

December 31,

2009

December 31,

2010

December 31,

2009

Net sales:

 Net sales of tangible products

$         223,071

$         197,097

$  855,269

$  701,044

 Revenue from services and software

25,104

25,425

101,579

102,541

Total net sales

248,175

222,522

956,848

803,585

Cost of sales:

 Cost of sales of tangible products

113,191

110,611

455,007

401,727

 Cost of services and software

11,343

10,433

40,972

41,137

Total cost of sales

124,534

121,044

495,979

442,864

Gross profit

123,641

101,478

460,869

360,721

Operating expenses:

  Selling and marketing

34,496

28,543

122,689

102,535

  Research and development

26,741

21,838

101,930

86,390

  General and administrative

19,492

19,514

79,710

81,395

  Amortization of intangible assets

2,426

2,608

9,573

10,466

  Litigation/claim settlement

(1,082)

-

(1,082)

-

  Exit, restructuring and integration costs

1,134

2,737

4,197

12,191

  Asset impairment charges

-

-

-

(1,058)

Total operating expenses

83,207

75,240

317,017

291,919

Operating income

40,434

26,238

143,852

68,802

Other income (expense):

  Investment income

570

695

2,681

2,933

  Foreign exchange gain (loss)

(448)

795

(213)

(45)

  Other, net

(333)

(545)

(1,385)

(1,167)

Total other income (expense)

(211)

945

1,083

1,721

Income before income taxes

40,223

27,183

144,935

70,523

Income taxes

12,006

9,553

43,157

23,419

Net income

$           28,217

$        17,630

$  101,778

$  47,104

Basic earnings per share

$      0.50

$  0.30

$  1.78

$  0.79

Diluted earnings per share

$      0.50

$  0.30

$  1.77

$  0.79

Basic weighted average shares outstanding

56,332

58,583

57,143

59,306

Diluted weighted average and equivalent   shares outstanding

56,692

58,769

57,428

59,425

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Twelve Months Ended

December 31,

2010

December 31,

2009

Cash flows from operating activities:

  Net income

$  101,778

$  47,104

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

  operating activities:

     Depreciation and amortization

31,209

32,913

     Equity-based compensation

11,871

11,467

     Asset impairment charges

-

(1,058)

     Impairment of investments

-

958

     Excess tax benefit from share-based compensation

(244)

(13)

     Loss (gain) on sale of assets

(58)

829

     Deferred income taxes

6,361

12,550

     Changes in assets and liabilities, net of businesses acquired:

        Accounts receivable, net

(4,603)

8,747

        Inventories, net

(33,884)

22,315

        Other assets

(3,993)

(733)

        Accounts payable

6,619

(16,105)

        Accrued liabilities

15,386

(16,315)

        Deferred revenue

3,414

4,966

        Income taxes payable

9,272

(2,008)

        Other operating activities

(2,669)

81

           Net cash provided by operating activities

140,459

105,698

Cash flows from investing activities:

  Purchases of property and equipment

(30,721)

(24,890)

  Acquisition of intangible assets

(3,497)

(425)

  Purchases of investments

(382,091)

(329,292)

  Maturities of investments

274,208

257,936

  Proceeds from sales of investments

102,485

56,020

           Net cash provided by (used in) investing activities

(39,616)

(40,651)

Cash flows from financing activities:

  Purchase of treasury shares

(102,091)

(65,445)

  Proceeds from exercise of stock options and stock purchase plan purchases

8,975

4,972

  Excess tax benefit from share-based compensation

244

13

           Net cash used in financing activities

(92,872)

(60,460)

Effect of exchange rate changes on cash

562

1,089

Net increase (decrease) in cash and cash equivalents

8,533

5,676

Cash and cash equivalents at beginning of year

38,943

33,267

Cash and cash equivalents at end of year

$  47,476

$  38,943

Supplemental disclosures of cash flow information:

   Income taxes paid

26,563

10,742

ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY

Three Months Ended

December 31,

December 31,

Percent

Percent of

Percent of

Product Category

2010

2009

Change

Net Sales - 2010

Net Sales - 2009

Hardware

$   179,956

$   156,706

14.8

72.5

70.4

Supplies

41,719

39,011

6.9

16.8

17.5

Service and software

25,104

25,425

(1.3)

10.1

11.4

  Subtotal products

246,779

221,142

11.6

99.4

99.3

Shipping and handling

1,396

1,380

1.2

0.6

0.7

  Total net sales

$   248,175

$   222,522

11.5

100.0

100.0

Twelve Months Ended

December 31,

December 31,

Percent

Percent of

Percent of

Product Category

2010

2009

Change

Net Sales - 2010

Net Sales - 2009

Hardware

$   682,455

$   539,934

26.4

71.4

67.1

Supplies

167,633

155,847

7.6

17.5

19.4

Service and software

101,579

102,541

(0.9)

10.6

12.8

  Subtotal products

951,667

798,322

19.2

99.5

99.3

Shipping and handling

5,181

5,263

(1.6)

0.5

0.7

  Total net sales

$    956,848

$    803,585

19.1

100.0

100.0

SALES BY GEOGRAPHIC REGION

Three Months Ended

December 31,

December 31,

Percent

Percent of

Percent of

Geographic Region

2010

2009

Change

Net Sales - 2010

Net Sales - 2009

Europe, Middle East and Africa

$        91,800

$        82,377

11.4

37.0

37.0

Latin America

23,215

20,196

14.9

9.4

9.1

Asia-Pacific

34,458

21,984

56.7

13.9

9.9

  Total International

149,473

124,557

20.0

60.3

56.0

North America

98,702

97,965

0.8

39.7

44.0

  Total net sales

$      248,175

$      222,522

11.5

100.0

100.0

Twelve Months Ended

December 31,

December 31,

Percent

Percent of

Percent of

Geographic Region

2010

2009

Change

Net Sales - 2010

Net Sales - 2009

Europe, Middle East and Africa

$          338,573

$       294,296

15.0

35.4

36.6

Latin America

87,278

65,060

34.2

9.1

8.1

Asia-Pacific

123,796

82,120

50.8

12.9

10.2

  Total International

549,647

441,476

24.5

57.4

54.9

North America

407,201

362,109

12.5

42.6

45.1

   Total sales

$        956,848

$        803,585

19.1

100.0

100.0

ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

2010

December 31,

2009

December 31,

2010

December 31,

2009

Net sales:

SPG

$  227,163

$  203,122

$  871,036

$  722,556

ZES

21,012

19,400

85,812

81,029

      Total

$  248,175

$  222,522

$  956,848

$  803,585

Cost of Sales:

SPG

$  115,276

$  113,253

$  457,368

$  410,311

ZES

9,258

7,791

38,611

32,553

      Total

$  124,534

$  121,044

$  495,979

$  442,864

Operating expenses:

SPG

$  49,445

$  42,519

$  183,770

$  164,124

ZES

17,135

17,024

66,772

63,730

Corporate and other

16,627

15,697

66,475

64,065

      Total

$  83,207

$  75,240

$  317,017

$  291,919

Operating income (loss):

SPG

$  62,442

$  47,350

$  229,898

$ 148,121

ZES

(5,381)

(5,415)

(19,571)

(15,254)

Corporate and other

(16,627)

(15,697)

(66,475)

(64,065)

      Total

$  40,434

$  26,238

$  143,852

$  68,802

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

December 31,

December 31,

Percent

2010

2009

Change

Total printers shipped

276,597

244,100

13.3

Average selling price of printers shipped

$535

$531

0.8

Twelve Months Ended

December 31,

December 31,

Percent

2010

2009

Change

Total printers shipped

1,057,744

850,230

24.4

Average selling price of printers shipped

$533

$522

2.1

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

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