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Zebra Technologies Corporation News

Zebra Technologies Announces 2008 First Quarter Financial Results

VERNON HILLS, Ill., April 23 PRNewswire-FirstCall — Zebra Technologies Corporation (Nasdaq: ZBRA) today announced 18.1% growth in net sales to a record $246,277,000 for the first quarter of 2008 from $208,576,000 for the first quarter of 2007. Net income for the period was $27,644,000, or $0.42 per diluted share, compared with $26,716,000, or $0.39 per diluted share, a year ago.

"Strong international sales, favorable performance in our new Enterprise Solutions business unit and progress on our strategic priorities gave Zebra a solid start in 2008," stated Anders Gustafsson, Zebra's chief executive officer. "Our programs to deliver more identification and tracking solutions to targeted vertical markets are delivering real results. Customers around the world, supported by an expanding geographic Zebra presence, are responding positively to the broader range of automatic identification technologies we're now able to provide to improve their business processes. Zebra is well positioned to benefit from the demands for better management over an increasingly complex global supply chain. The diversity of our solutions portfolio, customers and geographic presence make us optimistic about further growth."

Discussion and Analysis For the first quarter of 2008 compared with the first quarter of 2007: — Sales growth of 11.3% in the company's Specialty Printing business unit and the sales contributions of its 2007 acquisitions fueled consolidated sales growth of 18.1%. International sales increased 31.8%, with record sales in the Asia Pacific and Europe, Middle East and Africa regions. — Gross profit margin increased to 49.9% from 47.8%. Profitability was favorably affected by an improved product mix in specialty printers, better overhead utilization and a positive contribution from the company's Enterprise Solutions business unit. — Expenses for sales and marketing, research and development, and general and administrative activities increased principally from the addition of personnel and other expenses related to the acquisitions of WhereNet, proveo and Navis in 2007. — Operating expenses were also affected by a $2,191,000 increase in the amortization of intangible assets, as well as $3,234,000 in exit costs related to the company's previously announced initiative to transfer final assembly of thermal printers to a third party.

At March 29, 2008, Zebra had $306,284,000 in cash and investments, and no long-term debt. Net inventories were $89,443,000, and accounts receivable, net, were $171,862,000.

During the first quarter of 2008, the company repurchased 1,029,000 shares of Zebra Technologies Class A Common Stock under an authorization to purchase up to 3,000,000 shares.

Second Quarter Outlook

Zebra announced its financial forecast for the second quarter of 2008. Net sales are expected within a range of $248,000,000 to $260,000,000. Earnings are expected between $0.38 and $0.44 per diluted share. This outlook includes approximately $4,800,000 in exit costs.

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 first quarter of 2008. The conference call will be held at 11:00 a.m. 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 second quarter of 2008 stated in the paragraph above. 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 market conditions in North America and other geographic regions and market acceptance of Zebra's printer and software products and competitors' product offerings and the potential effects of technological changes. Other factors include U.S. and foreign regulations that pertain to electrical and electronic equipment, including European Union and other country directives relating to the collection, recycling, treatment and disposal of products and the reduction or elimination of certain specified materials in such products. Zebra's failure to comply with these regulations may subject Zebra to penalties, prevent Zebra from selling its products in a certain country, or increase the cost of supplying the products. Profits and profitability will be affected by the company'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 is involved, and particularly litigation or claims related to alleged infringement of third-party intellectual property rights, is another factor. In addition, the acquisitions of WhereNet, proveo and Navis, which were completed in 2007, and Multispectral Solutions, which was completed in April 2008, 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, 2007.

Zebra Technologies Corporation helps companies identify, track and manage assets, transactions and people with on-demand specialty digital printing and automatic identification solutions. In more than 100 countries around the world, more than 90 percent of Fortune 500 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 Tim Dreyer Vice President, Investor Relations Manager, Public Relations +1 847 793 6735 +1 847 793 5677 dfox@zebra.com tdreyer@zebra.com ZEBRA TECHNOLOGIES CORPORATION CONSOLIDATED BALANCE SHEETS (Amounts in thousands) March 29, December 31, 2008 2007 ASSETS (Unaudited) Current assets: Cash and cash equivalents $58,510 $38,211 Restricted cash 1,042 2,497 Investments and marketable securities 97,407 98,438 Accounts receivable, net 171,862 150,775 Inventories, net 89,443 85,038 Deferred income taxes 14,483 14,772 Prepaid expenses 10,776 31,101 Total current assets 443,523 420,832 Property and equipment at cost, less accumulated depreciation and amortization 69,716 67,686 Long-term deferred income taxes 31,990 28,407 Goodwill 247,670 246,510 Other intangibles, net 115,287 119,424 Long-term investments and marketable securities 149,325 142,033 Other assets 9,095 9,386 Total assets $1,066,606 $1,034,278 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $47,119 $42,351 Accrued liabilities 85,229 69,437 Deferred revenue 11,111 9,633 Income taxes payable 13,300 751 Total current liabilities 156,759 122,172 Deferred rent 1,011 961 Other long-term liabilities 9,681 8,452 Total liabilities 167,451 131,585 Stockholders' equity: Preferred Stock - - Class A Common Stock 722 722 Additional paid-in capital 143,457 141,522 Treasury stock (236,722) (205,058) Retained earnings 988,156 960,512 Accumulated other comprehensive income 3,542 4,995 Total stockholders' equity 899,155 902,693 Total liabilities and stockholders' equity $1,066,606 $1,034,278 ZEBRA TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands, except per share data) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 Net sales $246,277 $208,576 Cost of sales 123,480 108,786 Gross profit 122,797 99,790 Operating expenses: Selling and marketing 30,861 28,164 Research and development 19,789 14,185 General and administrative 25,045 17,932 Amortization of intangible assets 4,514 2,323 Exit costs 3,234 - Acquired in-process research and development - 1,853 Total operating expenses 83,443 64,457 Operating income 39,354 35,333 Other income (expense): Investment income 2,405 5,304 Foreign exchange gains 700 175 Other, net (254) 76 Total other income 2,851 5,555 Income before income taxes 42,205 40,888 Income taxes 14,561 14,172 Net income $27,644 $26,716 Basic earnings per share $0.42 $0.39 Diluted earnings per share $0.42 $0.39 Basic weighted average shares outstanding 66,134 68,908 Diluted weighted average and equivalent shares outstanding 66,518 69,367 ZEBRA TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 Cash flows from operating activities: Net income $27,644 $26,716 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,088 5,853 Stock-based compensation 3,417 3,338 Excess tax benefit from share-based compensation (51) (479) Acquired in-process research and development - 1,853 Deferred income taxes (3,553) (1,097) Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable, net (21,393) (7,065) Inventories (3,834) 2,779 Other assets 2,952 (123) Accounts payable 2,901 (12,275) Accrued liabilities 7,085 (7,619) Deferred revenue 2,745 3,301 Income taxes payable 12,534 10,815 Other operating activities (5,635) 834 Net cash provided by operating activities 33,900 26,831 Cash flows from investing activities: Purchases of property and equipment (5,909) (5,333) Acquisition of businesses acquired, net of cash acquired - (127,200) Purchases of investments and marketable securities (190,530) (166,285) Maturities of investments and marketable securities 128,723 195,424 Sales of investments and marketable securities 78,156 78,069 Net cash used in investing activities 10,440 (25,325) Cash flows from financing activities: Purchase of treasury stock (24,600) (6,048) Proceeds from exercise of stock options and stock purchase plan purchases 667 4,337 Excess tax benefit from share-based compensation 51 479 Net cash used in financing activities (23,882) (1,232) Effect of exchange rate changes on cash (159) 18 Net increase in cash and cash equivalents 20,299 292 Cash and cash equivalents at beginning of period 38,211 39,648 Cash and cash equivalents at end of period $58,510 $39,940 Supplemental disclosures of cash flow information: Income taxes paid $2,471 $4,357 Supplemental disclosures of non-cash transactions: Purchase of treasury shares not paid in the first quarter of 2008 $9,153 - ZEBRA TECHNOLOGIES CORPORATION SUPPLEMENTAL SALES INFORMATION (Amounts in thousands) (Unaudited) Sales by Product Category Three Months Ended Mar. 29, Mar. 31, Percent Percent of 2008 2007 Change Total Sales Hardware $180,181 $159,588 12.9 73.2 Supplies 41,902 38,081 10.0 17.0 Service and software 25,180 9,394 168.0 10.2 Shipping and handling 1,802 1,648 9.3 0.7 Cash flow from hedging activities (2,788) (135) NM (1.1) Total sales $246,277 $208,576 18.1 100.0 Sales by Geographic Region Three Months Ended Mar. 29, Mar. 31, Percent Percent of 2008 2007 Change Total Sales Europe, Middle East and Africa $97,370 $75,985 28.1 39.5 Latin America 15,983 12,523 27.6 6.5 Asia-Pacific 23,778 15,562 52.8 9.7 Total international 137,131 104,070 31.8 55.7 North America 109,146 104,506 4.4 44.3 Total sales $246,277 $208,576 18.1 100.0 ZEBRA TECHNOLOGIES CORPORATION SUPPLEMENTAL SEGMENT INFORMATION (Amounts in thousands) (Unaudited) Three Months Ended March 29, March 31, 2008 2007 Sales Specialty Printing $224,751 $201,895 Enterprise Solutions 21,526 6,681 Total 246,277 208,576 Cost of sales Specialty Printing 112,812 104,266 Enterprise Solutions 10,668 4,520 Total 123,480 108,786 Gross profit 122,797 99,790 Operating expenses Specialty Printing 50,334 45,837 Enterprise Solutions 17,921 5,741 Administrative and other 15,188 12,879 Total 83,443 64,457 Operating income $39,354 $35,333

SOURCE Zebra Technologies Corporation

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