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Press release from PR Newswire

Zebra Technologies Announces 2011 Fourth Quarter Financial Results

Tuesday, February 14, 2012

Zebra Technologies Announces 2011 Fourth Quarter Financial Results03:00 EST Tuesday, February 14, 2012Strength in North America and Europe lead to favorable resultsLINCOLNSHIRE, Ill., Feb. 14, 2012 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2011 fourth quarter net income of $35,044,000, or $0.67 per diluted share, compared with $28,217,000, or $0.50 per diluted share, for the fourth quarter of 2010. Quarterly net income for 2011 includes income of $2,185,000, or $0.04 per diluted share, from discontinued operations. Net sales for the quarter ended December 31, 2011, increased 5.7% to $247,308,000 from $234,019,000 for the corresponding period for 2010. Summary Financial Performance (Unaudited)4Q114Q10ChangeNet sales (in 000s)$247,308$234,0195.7%Gross margin (%)49.148.90.2 pts.Operating margin (%)17.018.4-1.4 pts.Income from continuing   operations (in 000s)$32,859$29,63510.9%Income (loss) from discontinued   operations, net of tax (in 000s)$2,185$(1,418)NMNet income (in 000s)$35,044$28,21724.2%Diluted earnings per share:Income from continuing operations$0.63$0.5318.9%Income from discontinued   operations, net of tax$0.04$(0.03)NMNet income$0.67$ 0.5034.0%Note: Net sales and results for 2010 have been adjusted for the sales of Navis, proveo AG and other immaterial operations. "The great diversity of Zebra's business and excellent execution on several fronts contributed to our solid fourth quarter results," stated Anders Gustafsson, Zebra's chief executive officer. "During 2011, Zebra increased the pace of innovation with the introduction of 13 new printer products and 10 location software and hardware releases. Through our strategic sales and marketing activities, we built relationships with a broader base of customers to penetrate targeted industries more deeply. Our investments to extend geographic reach have resulted in improved coverage in attractive high-growth regions. These actions position Zebra for further profitable growth and the capacity for creating greater shareholder value." For all of 2011, net sales increased 10.0% to a record $983,488,000 from $894,359,000 for 2010. Annual income from continuing operations was $130,343,000, or $2.40 per diluted share, compared with $104,614,000, or $1.82 per diluted share. Net income for 2011 was $174,643,000, or $3.22 per diluted share, which was up from $101,778,000, or $1.77 per diluted share, for 2010. As of December 31, 2011, Zebra had $326,695,000 in cash and investments, and no long-term debt. Net inventories were $133,288,000, and net accounts receivable were $155,230,000. Discussion and AnalysisNet sales for the fourth quarter of 2011 benefited primarily from particularly strong business activity in the company's North American and Europe, Middle East and Africa (EMEA) regions. Quarterly sales increased 5.9% on a constant-currency basis from a year ago.Gross margin of 49.1%, versus 48.9% a year ago, reflects lower costs for raw materials and higher volumes, partially offset by less favorable movements in foreign exchange rates. Operating expense growth of 11.3% includes higher employee-related payroll and benefit costs driven by increased headcount from a year ago and higher market development activities primarily to support the company's geographic expansion activities. The company also held a global partner conference in 2011, not held in the prior year. Operating profit margin decreased from 18.4% to 17.0% due to the increases in selling and marketing expenses and a modest increase in research and development costs.Stock Purchase UpdateDuring the fourth quarter of 2011, Zebra repurchased 428,891 shares of Zebra Technologies Corporation Class A Common Stock. At December 31, 2011, the company had 3,496,199 shares remaining in its stock buyback authorization, and 52,095,000 shares of common stock were outstanding. First Quarter OutlookZebra announced its financial forecast for the first quarter of 2012. Net sales are expected within a range of $237,000,000 to $246,000,000. Diluted earnings per share from continuing operations are expected within a range of $0.52 to $0.59.  Conference Call NotificationInvestors are invited to listen to a live webcast of Zebra's conference call discussing the company's financial results for the fourth 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 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 first quarter of 2012 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. 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 http://www.zebra.com.Contact:Investors:Media:Douglas A. Fox, CFAKerry Kelly-GuilianoVice President, Investor RelationsVice President, Strategic Communicationsand TreasurerF T I Consulting+1 847 793 6735+1 617 747 3603dfox@zebra.comkerry.guiliano@fticonsulting.comZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED BALANCE SHEETS(Amounts in thousands)(Unaudited)December 31,2011December 31,2010ASSETSCurrent assets:Cash and cash equivalents$  36,353$  46,175Restricted cash651,378Investments and marketable securities182,398125,567Accounts receivable, net 155,230130,143Receivable from buyer27,580-Inventories, net133,288112,970Deferred income taxes13,93115,670Income tax receivable13,111-Prepaid expenses and other current assets22,91711,505Assets of discontinued operations-148,169Total current assets584,873591,577Property and equipment at cost, less accumulated depreciation and amortization97,82287,093Long-term deferred income taxes11,86621,254Goodwill79,70379,703Other intangibles, net12,6679,755Long-term investments and marketable securities107,87985,478Other assets4,1964,004Total assets$  899,006$  878,864LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$  33,273$  34,578Accrued liabilities64,61265,163Deferred revenue11,0898,966Income taxes payable-5,900Liabilities of discontinued operations-21,827Total current liabilities108,974136,434Deferred rent1,5922,207Other long-term liabilities11,51510,191Total liabilities122,081148,832Stockholders' equity:Preferred Stock--Class A Common Stock722722Additional paid-in capital131,422129,715Treasury stock(596,622)(462,029)Retained earnings1,245,6161,070,973Accumulated other comprehensive income (loss)(4,213)(9,349)Total stockholders' equity776,925730,032Total liabilities and stockholders' equity$  899,006$  878,864ZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED STATEMENTS OF EARNINGS(Amounts in thousands, except per share data)(Unaudited)Three Months EndedTwelve Months EndedDec. 31, 2011Dec. 31, 2010Dec. 31, 2011Dec. 31, 2010Net sales:  Net sales of tangible products$  235,714$  222,048$  936,282$  849,530  Revenue from services and software11,59411,97147,20644,829Total net sales247,308234,019983,488894,359Cost of sales  Cost of sales of tangible products118,792112,550469,834450,630  Cost of services and software6,9967,11326,88522,954Total cost of sales125,788119,663496,719473,584Gross profit121,520114,356486,769420,775Operating expenses:   Selling and marketing36,37731,942127,797112,365   Research and development23,17421,73689,92682,575   General and administrative19,08917,80981,64973,229   Amortization of intangible assets8068913,3203,211   Litigation settlement-(1,082)-(1,082)   Exit and restructuring costs(49)302,0412,262Total operating expenses79,39771,326304,733272,560Operating income42,12343,030182,036148,215Other income (expense):   Investment income5945671,9442,678   Foreign exchange gain (loss) (706)(613)(2,006)(169)   Other, net(899)(232)(2,255)(1,117)Total other income (expense)(1,011)(278)(2,317)1,392Income from continuing operations   before income taxes 41,11242,752179,719149,607Income taxes8,25313,11749,37644,993Income from continuing operations32,85929,635130,343104,614Income (loss) from discontinued operations, net of tax2,185(1,418)44,300(2,836)Net income$  35,044$  28,217$  174,643$  101,778Basic earnings per share:   Income from continuing operations$  0.63$  0.53$  2.42$  1.83   Income (loss) from discontinued operations0.04(0.03)0.82(0.05)      Net income$  0.67$  0.50$  3.24$  1.78Diluted earnings per share:   Income from continuing operations$  0.63$  0.53$  2.40$  1.82   Income (loss) from discontinued operations0.04(0.03)0.82(0.05)      Net income$  0.67$  0.50$  3.22$  1.77Basic weighted average shares outstanding52,10856,33253,85457,143Diluted weighted average and equivalent shares outstanding52,35456,69254,19157,428ZEBRA TECHNOLOGIES CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited)Twelve Months EndedDec. 31, 2011Dec. 31, 2010Cash flows from operating activities:   Net income$  174,643$  101,778   Adjustments to reconcile net income to net cash provided by (used in)   Operating activities:      Depreciation and amortization24,00031,209      Equity-based compensation14,09511,871      Impairment of investments219-      Excess tax benefit from equity-based compensation(1,392)(244)      Loss (gain) on sale of fixed assets284(58)      Gain on sale of business(68,745)-      Deferred income taxes10,796(1,347)      Changes in assets and liabilities:         Accounts receivable, net(3,269)(4,603)         Inventories, net(19,545)(33,884)         Other assets(11,408)(3,993)         Accounts payable(5,439)6,619         Accrued liabilities(11,086)15,386         Deferred revenue(14,131)3,414         Income taxes(14,983)16,980         Other operating activities5,582(2,669)            Net cash provided by operating activities79,621140,459Cash flows from investing activities:   Purchases of property and equipment(26,918)(30,721)   Payments for patents and licensing arrangements(1,232)(3,497)   Proceeds from the sale of businesses161,206-   Purchases of investments and marketable securities(991,633)(382,091)   Maturities of investments and marketable securities607,996274,208   Sales of investments and marketable securities303,801102,485            Net cash provided (used) by investing activities53,220(39,616)Cash flows from financing activities:   Purchase of treasury stock(160,200)(102,091)   Proceeds from exercise of stock options and stock purchase plan purchases13,0098,975   Excess tax benefit from equity-based compensation1,392244            Net cash used in financing activities (145,799)(92,872)Effect of exchange rate changes on cash1,835562Net increase (decrease) in cash and cash equivalents(11,123)8,533   Cash balance of discontinued operations at beginning of period1,3011,694   Less: Cash balance of discontinued operations at end of period-1,301Cash and cash equivalents at beginning of period46,17537,249Cash and cash equivalents at end of period$  36,353$  46,175Supplemental disclosures of cash flow information: Income taxes paid $  65,364$  26,563ZEBRA TECHNOLOGIES CORPORATIONSUPPLEMENTAL SALES INFORMATION(Amounts in thousands)(Unaudited)SALES BY PRODUCT CATEGORYThree Months EndedDec. 31,Dec. 31,PercentPercent ofPercent ofProduct Category20112010ChangeNet Sales - 2011Net Sales ? 2010Hardware$  188,198$  178,9335.276.176.5Supplies46,13541,71910.618.617.8Service and software11,59411,971(3.1)4.75.1   Subtotal products245,927232,6235.799.499.4Shipping and handling1,3811,396(1.1)0.60.6   Total net sales$  247,308$  234,0195.7100.0100.0Twelve Months EndedDec. 31,Dec. 31,PercentPercent ofPercent ofProduct Category20112010ChangeNet Sales - 2011Net Sales ? 2010Hardware$  743,308$  676,7389.875.575.7Supplies187,457167,63311.819.118.7Service and software47,20644,8295.34.85.0   Subtotal products977,971889,20010.099.499.4Shipping and handling5,5175,1596.90.60.6   Total net sales$  983,488$  894,35910.0100.0100.0SALES BY GEOGRAPHIC REGIONThree Months EndedDec. 31,Dec. 31,PercentPercent ofPercent ofGeographic Region20112010ChangeNet Sales - 2011Net Sales - 2010Europe, Middle East and Africa$  88,360$  84,5314.535.736.1Latin America21,57821,3800.98.79.1Asia-Pacific32,47032,3340.413.113.8   Total International142,408138,2453.057.559.0North America104,90095,7749.542.541.0   Total net sales$  247,308$  234,0195.7100.0100.0Twelve Months EndedDec. 31,Dec. 31,PercentPercent ofPercent ofGeographic Region20112010ChangeNet Sales - 2011Net Sales - 2010Europe, Middle East and Africa$  342,578$  305,65912.134.834.2Latin America89,71580,67911.29.19.0Asia-Pacific141,987113,15625.514.512.7   Total International574,280499,49415.058.455.9North America409,208394,8653.641.644.1   Total net sales$  983,488$  894,35910.0100.0100.0ZEBRA TECHNOLOGIES CORPORATIONPRINTER UNITS and AVERAGE UNIT PRICES(Unaudited)Three Months EndedDec. 31,Dec. 31,Percent20112010ChangeTotal printers shipped312,409276,59712.9Average selling price of printers shipped$506$535(5.4)Twelve Months EndedDec. 31,Dec. 31,Percent20112010ChangeTotal printers shipped1,188,8921,057,74412.4Average selling price of printers shipped$527$533(1.1)SOURCE Zebra Technologies Corporation