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Press release from PR Newswire

Zebra Technologies Reports Record Results for First Quarter of 2011

Wednesday, May 04, 2011

Zebra Technologies Reports Record Results for First Quarter of 201103:00 EDT Wednesday, May 04, 2011Record income from continuing operations driven by continued strong sales growth and further improvements in profitabilityLINCOLNSHIRE, Ill., May 4, 2011 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2011 first quarter net income of $61,634,000, or $1.10 per diluted share. Quarterly income from continuing operations totaled $30,128,000, or $0.54 per diluted share, for 2011 compared with $25,547,000, or $0.43 per diluted share, for the first quarter of 2010. Income from discontinued operations for the first quarter of 2011 of $31,506,000, or $0.56 per diluted share, includes a recognized gain on the sale of the company's Navis operation. First quarter net sales were $237,301,000 for 2011, up 11.9% from $211,975,000 for 2010. Results for 2010 have been adjusted to account for the sale of Navis Holdings LLC, which was sold on March 18, 2011, and other immaterial operations which have been accounted for as discontinued operations. Summary Financial Performance (Unaudited)1Q111Q10ChangeNet sales (in 000s)$237,301$211,97511.9%Gross margin (%)50.646.14.5 pts.Operating margin (%)18.715.53.2 pts.Income from continuing   operations (in 000s)$30,128$25,54717.9%Income (loss) from discontinued   operations, net of tax (in 000s)31,506(814)NMNet income (in 000s)$61,634$24,733149.2%Diluted earnings per share:Income from continuing   operations$0.54$0.4325.6%Income (loss) from discontinued   operations, net of tax0.56(0.01)NMNet income$1.10$0.42161.9%Note: Net sales and results for 2010 have been adjusted for the March 2011 sale of Navis,and other immaterial operations which have been reflected as discontinued operations. "Excellent execution on a clear and focused business strategy helped Zebra deliver these record results," stated Anders Gustafsson, Zebra's chief executive officer. "Innovative new products introduced over the past year are helping us meet more of our customers' asset tagging needs in a more complex supply chain environment. At the same time, we are reaching more customers worldwide by building a larger, more formidable sales and marketing organization. The result of disciplined investments in products, channels and infrastructure makes us optimistic about extending Zebra's industry leadership in a fundamentally attractive industry, and for continued success in building shareholder value." As of April 2, 2011, Zebra had $375,378,000 in cash and investments, and no long-term debt. Net inventories were $120,508,000, and net accounts receivable were $141,218,000. Discussion and AnalysisNet sales for the first quarter of 2011 compared with the same quarter for 2010 benefited from improved business conditions in all geographic regions, with all major printer product categories and aftermarket parts contributing to the growth. The addition of Zebra sales representatives placed in high-growth countries and regions over the past twelve months, and other initiatives as part of the company's growth strategy, also contributed to the sales results. Quarterly sales increased 12.1% on a constant-currency basis from a year ago. Gross margin of 50.6%, versus 46.1% a year ago, reflects lower costs for raw materials, higher volumes and lower freight charges. Operating expense growth of 16.7% reflect higher employee-related compensation, payroll and benefit costs, in part related to geographic expansion and other growth initiatives. Income from discontinued operations includes a gain on the sale of the company's Navis operation, partially offset by losses in the discontinued businesses in 2011. Stock Purchase UpdateDuring the first quarter of 2011, Zebra repurchased 1,100,000 shares of Zebra Technologies Corporation Class A Common Stock. At April 2, 2011, 750,000 shares remained in the company's stock buyback authorization, and 54,730,861 shares of common stock were outstanding. Second Quarter OutlookZebra announced its financial forecast for the second quarter of 2011. Net sales are expected within a range of $240,000,000 to $250,000,000. Diluted earnings per share from continuing operations are expected within a range of $0.54 to $0.61, including $0.01 per share in exit, restructuring and integration costs.  Conference Call NotificationInvestors are invited to listen to a live webcast of Zebra's conference call discussing the company's financial results for the first 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  Forward-looking StatementThis 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 2011 stated in the paragraph above captioned "Second 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 TechnologiesZebra Technologies Corporation offers the broadest range of enabling solutions to identify, track, and manage critical assets, people and transactions for improved business efficiencies. Serving more than 90 percent of Global Fortune 500 companies in more than 100 countries around the world, our specialty on-demand printing, RFID and enterprise location solutions help customers create smarter and more connected infrastructures, resulting in significant improvements in visibility and business performance. For more information about Zebra's solutions, visit A. Fox, CFATim DreyerVice President, Investor RelationsManager, Public Relationsand Treasurer+1 847 793 5677+1 847 793 6735tdreyer@zebra.comdfox@zebra.comZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED BALANCE SHEETS(Amounts in thousands)April 2, 2011December 31,2010ASSETS(Unaudited)Current assets:Cash and cash equivalents$  79,685$  46,175Restricted cash651,378Investments and marketable securities164,812125,567Accounts receivable, net 141,218130,143Receivable from buyer12,290-Inventories, net120,508112,970Deferred income taxes18,59215,670Prepaid expenses and other current assets10,25211,505Discontinued operations1,111148,169Total current assets548,533591,577Property and equipment at cost, less accumulated depreciation and amortization90,74587,093Long-term deferred income taxes19,28621,254Goodwill79,70379,703Other intangibles, net8,9209,755Long-term investments and marketable securities130,81685,478Receivable from buyer12,290-Other assets3,9134,004Total assets$  894,207$  878,864LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$  32,413$  34,578Accrued liabilities50,84565,163Deferred revenue11,0198,966Income taxes payable33,2565,900Discontinued operations47621,827Total current liabilities128,009136,434Deferred rent1,7992,207Other long-term liabilities9,99310,191Total liabilities139,801148,832Stockholders' equity:Preferred Stock--Class A Common Stock722722Additional paid-in capital133,232129,715Treasury stock(499,483)(462,029)Retained earnings1,132,6071,070,973Accumulated other comprehensive loss(12,672)(9,349)Total stockholders' equity754,406730,032Total liabilities and stockholders' equity$  894,207$  878,864ZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED STATEMENTS OF EARNINGS(Amounts in thousands, except per share data)(Unaudited)Three Months EndedApril 2, 2011April 3, 2010Net sales:  Net sales of tangible products$  226,120$  201,463  Revenue from services and software11,18110,512Total net sales237,301211,975Cost of sales:  Cost of sales of tangible products110,781109,075  Cost of services and software6,5225,137Total cost of sales117,303114,212Gross profit119,99897,763Operating expenses:   Selling and marketing28,52824,673   Research and development21,68118,324   General and administrative22,70619,318   Amortization of intangible assets835741   Exit and restructuring costs1,8861,766Total operating expenses75,63664,822Operating income44,36232,941Other income (expense):   Investment income560842   Foreign exchange gain (loss) (294)168   Other, net(254)(270)Total other income (expense)12740Income before income taxes 44,37433,681Income taxes14,2468,134Income from continuing operations30,12825,547Income (loss) from discontinued operations, net of tax31,506(814)Net income$  61,634$  24,733Basic earnings per share:   Income from continuing operations$  0.54$  0.44   Income (loss) from discontinued operations0.57(0.01)      Net income $  1.11$  0.43Diluted earnings per share:   Income from continuing operations$  0.54$  0.43   Income (loss) from discontinued operations0.56(0.01)      Net income $  1.10$  0.42Basic weighted average shares outstanding55,35358,016Diluted weighted average and equivalent shares outstanding55,77458,265ZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited)Three Months EndedApril 2, 2011April 3, 2010Cash flows from operating activities:   Net income$  61,634$  24,733   Adjustments to reconcile net income to net cash provided by (used in)   operating activities:      Depreciation and amortization5,9327,814      Equity-based compensation4,4882,231      Excess tax benefit from equity-based compensation(645)(3)      Gain on divestiture(67,213)-      Loss (gain) on sale of assets9(82)      Deferred income taxes2,5403,535      Changes in assets and liabilities:         Accounts receivable, net12,5633,990         Inventories, net(7,136)(1,780)         Other assets(1,690)224         Accounts payable(7,150)870         Accrued liabilities(17,120)(9,118)         Deferred revenue(15,749)(1,618)         Income taxes27,7324,295         Other operating activities(3,364)(4,917)            Net cash (used in) provided by operating activities(5,169)30,174Cash flows from investing activities:   Purchases of property and equipment(3,922)(5,818)   Proceeds from the sale of business188,588-   Receivable from buyer(24,580)-   Purchases of investments and marketable securities(382,410)(89,586)   Maturities of investments and marketable securities209,50961,144   Sales of investments and marketable securities88,30417,736            Net cash provided by (used in) investing activities75,489(16,524)Cash flows from financing activities:   Purchase of treasury stock(41,567)(20,823)   Proceeds from exercise of stock options and stock purchase plan purchases2,7574,191   Excess tax benefit from equity-based compensation6453            Net cash used in financing activities (38,165)(16,629)Effect of exchange rate changes on cash33624Net increase (decrease) in cash and cash equivalents32,491(2,955)   Cash balance of discontinued operations at beginning of period1,3011,693   Cash balance of discontinued operations at end of period(282)(729)Cash and cash equivalents at beginning of period46,17537,250Cash and cash equivalents at end of period$  79,685$  35,259Supplemental disclosures of cash flow information: Income taxes paid (refunded)$  8,958$  (454)ZEBRA TECHNOLOGIES CORPORATIONSUPPLEMENTAL SALES INFORMATION(Amounts in thousands)(Unaudited)SALES BY PRODUCT CATEGORYThree Months EndedApril 2,April 3,PercentPercent ofPercent ofProduct Category20112010ChangeNet Sales - 2011Net Sales ? 2010Hardware$  180,136$  159,40913.075.975.2Supplies44,63540,6979.718.819.2Service and software11,18110,5126.44.75.0   Subtotal products235,952210,61812.099.499.4Shipping and handling1,3491,357(0.6)0.60.6   Total net sales$  237,301$  211,97511.9100.0100.0SALES BY GEOGRAPHIC REGIONThree Months EndedApril 2,April 3,PercentPercent ofPercent ofGeographic Region20112010ChangeNet Sales - 2011Net Sales - 2010Europe, Middle East and Africa$  84,230$  76,31610.435.536.0Latin America20,10419,4823.28.59.2Asia-Pacific32,49523,12040.513.710.9   Total International136,829118,91815.157.756.1North America100,47293,0578.042.343.9   Total net sales$  237,301$  211,97511.9100.0100.0ZEBRA TECHNOLOGIES CORPORATIONPRINTER UNITS and AVERAGE UNIT PRICES(Unaudited)Three Months EndedApril 2,April 3,Percent20112010ChangeTotal printers shipped284,177244,38616.3Average selling price of printers shipped$524$547(4.2)ZEBRA TECHNOLOGIES CORPORATIONPRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS BY QUARTER FOR 2010(Amounts in thousands, except per share data)(Unaudited)Quarter EndedApril 3, 2010July 3, 2010Oct. 2, 2010 Dec. 31, 2010 Net sales: Net sales of tangible products$  201,463$  207,748$  218,271$  222,048Revenue from services and software10,51210,81011,53611,971Total net sales211,975218,558229,807234,019Cost of sales: Cost of sales of tangible products109,075114,081114,924112,490Cost of services and software5,1375,0685,6367,083Total cost of sales114,212119,149120,560119,573Gross profit97,76399,409109,247114,446Operating expenses: Selling and marketing24,67327,68228,06831,942Research and development18,32420,65321,86221,736General and administrative19,31817,95518,14717,809Amortization of intangible assets741740839891Litigation settlement------(1,082)Exit and restructuring costs1,766466--30Total operating expenses64,82267,49668,91671,326Operating income32,94131,91340,33143,120Other income (expense): Investment income842634635567Foreign exchange gain(loss)168424(148)(613)Other, net(270)(455)(160)(232)Total other income(expense)740603327(278)Income before income taxes33,68132,51640,65842,842Income taxes8,13410,33113,41113,117Income from continuing operations25,54722,18527,24729,725Income (loss) from discontinued operations,   net of tax    (814)    492    (1,096)    (1,508)Net income$  24,733$  22,677$  26,151$  28,217Basic earnings per share: Income from continuing operations$  0.44$  0.38$  0.48$  0.53Income (loss) from discontinued operations(0.01)0.01(0.02)(0.03)Net income$  0.43$  0.39$  0.46$  0.50Diluted earnings per share:Income from continuing operations$  0.43$  0.38$  0.48$  0.53Income (loss) from discontinued operations(0.01)0.01(0.02)(0.03)Net income $  0.42$  0.39$  0.46$  0.50Basic weighted average shares outstanding58,01657,48956,73956,332Diluted weighted average and equivalent shares outstanding58,26557,73756,99856,692SOURCE Zebra Technologies Corporation