Zebra Technologies Announces Record Sales and EPS for the Third Quarter of 2011 Favorable shipments in North America and growth in all regions lead to ninth consecutive sequential quarter of sales growth; Board authorizes additional three million shares for stock buyback

LINCOLNSHIRE, Ill., Nov. 8, 2011 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced record 2011 third quarter income from continuing operations of $34,187,000, or $0.64 per diluted share, compared with $27,247,000, or $0.48 per diluted share, for the third quarter of 2010. Net sales for the quarter ended October 1, 2011, increased 10.2% to a record $253,338,000 from $229,807,000 for the corresponding period for 2010. Quarterly net income of $45,001,000, or $0.84 per diluted share, for 2011 includes $0.20 per diluted share in income from discontinued operations. Third quarter 2011 income from discontinued operations relate to the sale of proveo AG.


Summary Financial Performance (Unaudited)


3Q11

3Q10

Change

Net sales (in 000s)

$253,338

$229,807

10.2%

Gross margin (%)

48.8

47.5

1.3 pts.

Operating margin (%)

19.3

17.5

1.8 pts.

Income from continuing
  operations (in 000s)


$34,187


$27,247


25.5%

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


10,814


(1,096)


NM 

Net income (in 000s)

$45,001

$26,151

72.1%

Diluted earnings per share:




Income from continuing operations

$0.64

$0.48

33.3%

Income from discontinued
  operations, net of tax


$0.20


$(0.02)


NM 

Net income

$0.84

$0.46

82.6%

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




"Excellent execution led to strong performance in all geographies and across our product lines to deliver another quarter of record results," stated Anders Gustafsson, Zebra's chief executive officer. "Increasingly, our ongoing investments in better geographic coverage, new product development and building stronger go-to-market channels are paying off, making Zebra a more valued strategic business partner. Our broader range of products and solutions are helping our customers make smarter decisions by giving them greater visibility into their operations. Zebra remains well positioned to extend leadership in an attractive industry and build greater shareholder value."

As of October 1, 2011, Zebra had $299,047,000 in cash and investments, and no long-term debt. Net inventories were $120,378,000, and net accounts receivable were $162,314,000.

Discussion and Analysis

  • Net sales for the third quarter of 2011 benefited from growth in all geographic regions, with the highest growth occurring in the company's Asia Pacific region. The addition of Zebra sales representatives in high-growth countries and regions over the past twelve months, and other initiatives, complemented continued favorable business conditions in these territories. Quarterly sales increased 7.8% on a constant-currency basis from a year ago. On a sequential basis, North American sales benefited from higher shipments to retail customers.
  • Gross margin of 48.8%, versus 47.5% a year ago, reflects lower costs for raw materials, higher volumes and favorable movements in foreign exchange rates, partially offset by a less favorable product mix.
  • Operating expense growth of 8.4% includes higher employee-related payroll and benefit costs, in part related to geographic expansion and other growth initiatives. Operating profit margin increased from 17.6% to 19.3%.  
  • During the third quarter, the company completed the sale of proveo AG, a discontinued operation. This sale generated a net gain of $10,814,000, or $0.20 per diluted share.  

Stock Purchase Update

During the third quarter of 2011, Zebra repurchased 1,824,910 shares of Zebra Technologies Corporation Class A Common Stock. At October 1, 2011, the company had 925,090 shares remaining in its stock buyback authorization, and 52,388,510 shares of common stock were outstanding.

In addition, Zebra's Board has authorized the purchase of up to an additional 3,000,000 shares of Zebra Technologies Corporation Class A Common Stock. These purchases can be made from time to time in the open market or in private transactions. There is no expiration date on the authorization.

Fourth Quarter Outlook

Zebra announced its financial forecast for the fourth quarter of 2011. Net sales are expected within a range of $242,000,000 to $255,000,000. Diluted earnings per share from continuing operations are expected within a range of $0.57 to $0.64.  

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 third 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 fourth quarter of 2011 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 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.

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)



October 1,
2011


December 31,
2010

ASSETS

(Unaudited)



Current assets:




Cash and cash equivalents

$  43,781


$  46,175

Restricted cash

65


1,378

Investments and marketable securities

147,115


125,567

Accounts receivable, net

162,314


130,143

Receivable from buyer

27,580


-

Inventories, net

120,378


112,970

Deferred income taxes

16,470


15,670

Income tax receivable

1,707


-

Prepaid expenses and other current assets

20,303


11,505

Assets of discontinued operations

-


148,169

Total current assets

539,713


591,577





Property and equipment at cost, less accumulated depreciation and amortization

94,726


87,093

Long-term deferred income taxes

18,241


21,254

Goodwill

79,703


79,703

Other intangibles, net

7,441


9,755

Long-term investments and marketable securities

108,086


85,478

Other assets

3,862


4,004

Total assets

$  851,772


$  878,864





LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities:




Accounts payable

$  30,924


$  34,578

Accrued liabilities

53,236


65,163

Deferred revenue

10,276


8,966

Income taxes payable

-


5,900

Liabilities of discontinued operations

-


21,827

Total current liabilities

94,436


136,434

Deferred rent

1,695


2,207

Other long-term liabilities

9,693


10,191

Total liabilities

105,824


148,832





Stockholders' equity:




Preferred Stock

-


-

Class A Common Stock

722


722

Additional paid-in capital

129,608


129,715

Treasury stock

(587,510)


(462,029)

Retained earnings

1,210,572


1,070,973

Accumulated other comprehensive income (loss)

(7,444)


(9,349)

Total stockholders' equity

745,948


730,032

Total liabilities and stockholders' equity

$  851,772


$  878,864




ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended


Nine Months Ended


Oct. 1, 2011


Oct. 2, 2010


Oct 1, 2011


Oct. 2, 2010

Net sales:








 Net sales of tangible products

$  241,686


$  218,271


$  700,568


$  627,482

 Revenue from services and software

11,652


11,536


35,612


32,858

Total net sales

253,338


229,807


736,180


660,340









Cost of sales








 Cost of sales of tangible products

122,529


114,924


351,042


338,080

 Cost of services and software

7,256


5,636


19,889


15,841

Total cost of sales

129,785


120,560


370,931


353,921









Gross profit

123,553


109,247


365,249


306,419









Operating expenses:








  Selling and marketing

31,942


28,068


91,420


80,423

  Research and development

22,584


21,862


66,752


60,839

  General and administrative

19,166


18,147


62,560


55,420

  Amortization of intangible assets

843


839


2,514


2,320

  Exit and restructuring costs

138


-


2,090


2,232

Total operating expenses

74,673


68,916


225,336


201,234









Operating income

48,880


40,331


139,913


105,185









Other income (expense):








  Investment income

134


635


1,350


2,111

  Foreign exchange gain (loss)

(173)


(148)


(1,300)


444

  Other, net

(859)


(160)


(1,356)


(885)

Total other income (expense)

(898)


327


(1,306)


1,670









Income from continuing operations
  before income taxes

47,982


40,658


138,607


106,855

Income taxes

13,795


13,411


41,123


31,876









Income from continuing operations

34,187


27,247


97,484


74,979

Income (loss) from discontinued operations, net of tax

10,814


(1,096)


42,115


(1,418)

Net income

$  45,001


$  26,151


$  139,599


$  73,561









Basic earnings per share:








  Income from continuing operations

$  0.64


$  0.48


$  1.79


$  1.30

  Income (loss) from discontinued operations

0.20


(0.02)


0.77


(0.02)

     Net income

$  0.84


$  0.46


$  2.56


$  1.28

Diluted earnings per share:








  Income from continuing operations

$  0.64


$  0.48


$  1.78


$  1.30

  Income (loss) from discontinued operations

0.20


(0.02)


0.77


(0.02)

     Net income

$  0.84


$  0.46


$  2.55


$  1.28









Basic weighted average shares outstanding

53,339


56,739


54,405


57,405

Diluted weighted average and equivalent shares outstanding

53,628


56,998


54,770


57,657




ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



Nine Months Ended


Oct. 1, 2011


Oct. 2, 2010

Cash flows from operating activities:




  Net income

$  139,599


$  73,561

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




  Operating activities:




     Depreciation and amortization

17,985


23,698

     Equity-based compensation

11,060


8,155

     Impairment of investments

326


-

     Excess tax benefit from equity-based compensation

(1,265)


(83)

     Loss (gain) on sale of fixed assets

53


(58)

     Gain on sale of business

(66,753)


-

     Deferred income taxes

5,703


3,208

     Changes in assets and liabilities:




        Accounts receivable, net

(10,112)


(14,463)

        Inventories, net

(6,635)


(15,972)

        Other assets

(10,150)


(1,192)

        Accounts payable

(8,493)


6,747

        Accrued liabilities

(14,917)


13,861

        Deferred revenue

(16,707)


(1,530)

        Income taxes

(7,087)


9,197

        Other operating activities

2,116


(3,391)

           Net cash provided by operating activities

34,723


101,738





Cash flows from investing activities:




  Purchases of property and equipment

(17,829)


(23,752)

  Payments for patents and licensing arrangements

(200)


(2,882)

  Proceeds from the sale of businesses

161,206


-

  Purchases of investments and marketable securities

(791,811)


(312,201)

  Maturities of investments and marketable securities

493,649


230,715

  Sales of investments and marketable securities

253,377


74,371

           Net cash provided (used) by investing activities

98,392


(33,749)





Cash flows from financing activities:




  Purchase of treasury stock

(146,373)


(67,384)

  Proceeds from exercise of stock options and stock purchase plan purchases

9,197


7,772

  Excess tax benefit from equity-based compensation

1,265


83

           Net cash (used) in financing activities

(135,911)


(59,529)





Effect of exchange rate changes on cash

(899)


44





Net increase (decrease) in cash and cash equivalents

(3,695)


8,504

  Cash balance of discontinued operations at beginning of period

1,301


1,693

  Less: Cash balance of discontinued operations at end of period

-


653

Cash and cash equivalents at beginning of period

46,175


37,250

Cash and cash equivalents at end of period

$  43,781


$  46,794





Supplemental disclosures of cash flow information:




Income taxes paid

$  53,512


$  9,764








ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)


SALES BY PRODUCT CATEGORY



Three Months Ended







Oct. 1,


Oct. 2,


Percent


Percent of


Percent of

Product Category

2011


2010


Change


Net Sales - 2011


Net Sales – 2010

Hardware

$  193,214


$  175,489


10.1


76.3


76.4

Supplies

47,110


41,644


13.1


18.6


18.1

Service and software

11,652


11,536


1.0


4.6


5.0

  Subtotal products

251,976


228,669


10.2


99.5


99.5

Shipping and handling

1,362


1,138


19.7


0.5


0.5

  Total net sales

$  253,338


$  229,807


10.2


100.0


100.0




Nine Months Ended







Oct. 1,


Oct. 2,


Percent


Percent of


Percent of

Product Category

2011


2010


Change


Net Sales - 2011


Net Sales – 2010

Hardware

$  555,108


$  497,806


11.5


75.4


75.4

Supplies

141,323


125,914


12.2


19.2


19.1

Service and software

35,612


32,858


8.4


4.8


4.9

  Subtotal products

732,043


656,578


11.5


99.4


99.4

Shipping and handling

4,137


3,762


10.0


0.6


0.6

  Total net sales

$  736,180


$  660,340


11.5


100.0


100.0



SALES BY GEOGRAPHIC REGION



Three Months Ended







Oct. 1,


Oct. 2,


Percent


Percent of


Percent of

Geographic Region

2011


2010


Change


Net Sales - 2011


Net Sales - 2010

Europe, Middle East and Africa

$  84,597


$  73,573


15.0


33.4


32.0

Latin America

23,968


20,593


16.4


9.5


9.0

Asia-Pacific

38,723


32,088


20.7


15.3


14.0

  Total International

147,288


126,254


16.7


58.2


55.0

North America

106,050


103,553


2.4


41.8


45.0

  Total net sales

$  253,338


$  229,807


10.2


100.0


100.0




Nine Months Ended







Oct. 1,


Oct. 2,


Percent


Percent of


Percent of

Geographic Region

2011


2010


Change


Net Sales - 2011


Net Sales - 2010

Europe, Middle East and Africa

$  254,218


$  221,128


15.0


34.5


33.5

Latin America

68,137


59,300


14.9


9.3


9.0

Asia-Pacific

109,518


80,821


35.5


14.9


12.2

  Total International

431,873


361,249


19.5


58.7


54.7

North America

304,307


299,091


1.7


41.3


45.3

  Total net sales

$  736,180


$  660,340


11.5


100.0


100.0




ZEBRA TECHNOLOGIES CORPORATION

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)



Three Months Ended


Oct. 1,


Oct. 2,


Percent


2011


2010


Change

Total printers shipped

315,743


265,962


18.7

Average selling price of printers shipped

$524


$545


(3.9)




Nine Months Ended


Oct. 1,


Oct. 2,


Percent


2011


2010


Change

Total printers shipped

876,483


781,147


12.2

Average selling price of printers shipped

$535


$532


0.5




Contact:


Investors:

Media:

Douglas A. Fox, CFA

Drew Ferguson

Vice President, Investor Relations    

Senior Vice President

and Treasurer

Ogilvy Public Relations Worldwide

+1 847 793 6735

+1 312 397 6033

dfox@zebra.com

drew.ferguson@ogilvy.com



SOURCE Zebra Technologies Corporation



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