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Press release from PR Newswire

Zebra Technologies Announces Record Sales and EPS for the Third Quarter of 2011

Tuesday, November 08, 2011

Zebra Technologies Announces Record Sales and EPS for the Third Quarter of 201103:00 EST Tuesday, November 08, 2011Favorable 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 buybackLINCOLNSHIRE, 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)3Q113Q10ChangeNet sales (in 000s)$253,338$229,80710.2%Gross margin (%)48.847.51.3 pts.Operating margin (%)19.317.51.8 pts.Income from continuing   operations (in 000s)$34,187$27,24725.5%Income (loss) from discontinued   operations, net of tax (in 000s)10,814(1,096)NM Net income (in 000s)$45,001$26,15172.1%Diluted earnings per share:Income from continuing operations$0.64$0.4833.3%Income from discontinued   operations, net of tax$0.20$(0.02)NM Net income$0.84$0.4682.6%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 AnalysisNet 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 UpdateDuring 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 OutlookZebra 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 NotificationInvestors 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  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 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 TechnologiesA 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 TECHNOLOGIES CORPORATIONCONSOLIDATED BALANCE SHEETS(Amounts in thousands)October 1, 2011December 31,2010ASSETS(Unaudited)Current assets:Cash and cash equivalents$  43,781$  46,175Restricted cash651,378Investments and marketable securities147,115125,567Accounts receivable, net 162,314130,143Receivable from buyer27,580-Inventories, net120,378112,970Deferred income taxes16,47015,670Income tax receivable1,707-Prepaid expenses and other current assets20,30311,505Assets of discontinued operations-148,169Total current assets539,713591,577Property and equipment at cost, less accumulated depreciation and amortization94,72687,093Long-term deferred income taxes18,24121,254Goodwill79,70379,703Other intangibles, net7,4419,755Long-term investments and marketable securities108,08685,478Other assets3,8624,004Total assets$  851,772$  878,864LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$  30,924$  34,578Accrued liabilities53,23665,163Deferred revenue10,2768,966Income taxes payable-5,900Liabilities of discontinued operations-21,827Total current liabilities94,436136,434Deferred rent1,6952,207Other long-term liabilities9,69310,191Total liabilities105,824148,832Stockholders' equity:Preferred Stock--Class A Common Stock722722Additional paid-in capital129,608129,715Treasury stock(587,510)(462,029)Retained earnings1,210,5721,070,973Accumulated other comprehensive income (loss)(7,444)(9,349)Total stockholders' equity745,948730,032Total liabilities and stockholders' equity$  851,772$  878,864ZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED STATEMENTS OF EARNINGS(Amounts in thousands, except per share data)(Unaudited)Three Months EndedNine Months EndedOct. 1, 2011Oct. 2, 2010Oct 1, 2011Oct. 2, 2010Net sales:  Net sales of tangible products$  241,686$  218,271$  700,568$  627,482  Revenue from services and software11,65211,53635,61232,858Total net sales253,338229,807736,180660,340Cost of sales  Cost of sales of tangible products122,529114,924351,042338,080  Cost of services and software7,2565,63619,88915,841Total cost of sales129,785120,560370,931353,921Gross profit123,553109,247365,249306,419Operating expenses:   Selling and marketing31,94228,06891,42080,423   Research and development22,58421,86266,75260,839   General and administrative19,16618,14762,56055,420   Amortization of intangible assets8438392,5142,320   Exit and restructuring costs138-2,0902,232Total operating expenses74,67368,916225,336201,234Operating income48,88040,331139,913105,185Other income (expense):   Investment income1346351,3502,111   Foreign exchange gain (loss) (173)(148)(1,300)444   Other, net(859)(160)(1,356)(885)Total other income (expense)(898)327(1,306)1,670Income from continuing operations   before income taxes 47,98240,658138,607106,855Income taxes13,79513,41141,12331,876Income from continuing operations34,18727,24797,48474,979Income (loss) from discontinued operations, net of tax10,814(1,096)42,115(1,418)Net income$  45,001$  26,151$  139,599$  73,561Basic earnings per share:   Income from continuing operations$  0.64$  0.48$  1.79$  1.30   Income (loss) from discontinued operations0.20(0.02)0.77(0.02)      Net income$  0.84$  0.46$  2.56$  1.28Diluted earnings per share:   Income from continuing operations$  0.64$  0.48$  1.78$  1.30   Income (loss) from discontinued operations0.20(0.02)0.77(0.02)      Net income$  0.84$  0.46$  2.55$  1.28Basic weighted average shares outstanding53,33956,73954,40557,405Diluted weighted average and equivalent shares outstanding53,62856,99854,77057,657ZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited)Nine Months EndedOct. 1, 2011Oct. 2, 2010Cash 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 amortization17,98523,698      Equity-based compensation11,0608,155      Impairment of investments326-      Excess tax benefit from equity-based compensation(1,265)(83)      Loss (gain) on sale of fixed assets53(58)      Gain on sale of business(66,753)-      Deferred income taxes5,7033,208      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 activities2,116(3,391)            Net cash provided by operating activities34,723101,738Cash 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 businesses161,206-   Purchases of investments and marketable securities(791,811)(312,201)   Maturities of investments and marketable securities493,649230,715   Sales of investments and marketable securities253,37774,371            Net cash provided (used) by investing activities98,392(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 purchases9,1977,772   Excess tax benefit from equity-based compensation1,26583            Net cash (used) in financing activities (135,911)(59,529)Effect of exchange rate changes on cash(899)44Net increase (decrease) in cash and cash equivalents(3,695)8,504   Cash balance of discontinued operations at beginning of period1,3011,693   Less: Cash balance of discontinued operations at end of period-653Cash and cash equivalents at beginning of period46,17537,250Cash and cash equivalents at end of period$  43,781$  46,794Supplemental disclosures of cash flow information: Income taxes paid $  53,512$  9,764ZEBRA TECHNOLOGIES CORPORATIONSUPPLEMENTAL SALES INFORMATION(Amounts in thousands)(Unaudited)SALES BY PRODUCT CATEGORYThree Months EndedOct. 1,Oct. 2,PercentPercent ofPercent ofProduct Category20112010ChangeNet Sales - 2011Net Sales ? 2010Hardware$  193,214$  175,48910.176.376.4Supplies47,11041,64413.118.618.1Service and software11,65211,5361.04.65.0   Subtotal products251,976228,66910.299.599.5Shipping and handling1,3621,13819.70.50.5   Total net sales$  253,338$  229,80710.2100.0100.0Nine Months EndedOct. 1,Oct. 2,PercentPercent ofPercent ofProduct Category20112010ChangeNet Sales - 2011Net Sales ? 2010Hardware$  555,108$  497,80611.575.475.4Supplies141,323125,91412.219.219.1Service and software35,61232,8588.44.84.9   Subtotal products732,043656,57811.599.499.4Shipping and handling4,1373,76210.00.60.6   Total net sales$  736,180$  660,34011.5100.0100.0SALES BY GEOGRAPHIC REGIONThree Months EndedOct. 1,Oct. 2,PercentPercent ofPercent ofGeographic Region20112010ChangeNet Sales - 2011Net Sales - 2010Europe, Middle East and Africa$  84,597$  73,57315.033.432.0Latin America23,96820,59316.49.59.0Asia-Pacific38,72332,08820.715.314.0   Total International147,288126,25416.758.255.0North America106,050103,5532.441.845.0   Total net sales$  253,338$  229,80710.2100.0100.0Nine Months EndedOct. 1,Oct. 2,PercentPercent ofPercent ofGeographic Region20112010ChangeNet Sales - 2011Net Sales - 2010Europe, Middle East and Africa$  254,218$  221,12815.034.533.5Latin America68,13759,30014.99.39.0Asia-Pacific109,51880,82135.514.912.2   Total International431,873361,24919.558.754.7North America304,307299,0911.741.345.3   Total net sales$  736,180$  660,34011.5100.0100.0ZEBRA TECHNOLOGIES CORPORATIONPRINTER UNITS and AVERAGE UNIT PRICES(Unaudited)Three Months EndedOct. 1,Oct. 2,Percent20112010ChangeTotal printers shipped315,743265,96218.7Average selling price of printers shipped$524$545(3.9)Nine Months EndedOct. 1,Oct. 2,Percent20112010ChangeTotal printers shipped876,483781,14712.2Average selling price of printers shipped$535$5320.5Contact:Investors:Media:Douglas A. Fox, CFADrew FergusonVice President, Investor Relations    Senior Vice Presidentand TreasurerOgilvy Public Relations Worldwide+1 847 793 6735 +1 312 397 6033dfox@zebra.comdrew.ferguson@ogilvy.comSOURCE Zebra Technologies Corporation