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Press release from PR Newswire

Zebra Technologies Announces 2012 Third Quarter Financial Results

Tuesday, November 06, 2012

Zebra Technologies Announces 2012 Third Quarter Financial Results03:00 EST Tuesday, November 06, 2012Results include $9.1 million non-cash asset impairment charge; Record sales in North America and Latin America offset weakness in EuropeLINCOLNSHIRE, Ill., Nov. 6, 2012 /PRNewswire/ --Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2012 third quarter continuing operations diluted earnings per share of $0.51, including a non-cash asset impairment charge of $9,114,000, which reduced earnings by $0.18 per share. Earnings from continuing operations for the third quarter of 2011 totaled $0.64 per share. Net sales for the quarter ended September 29, 2012, decreased 0.5% to $252,037,000 from $253,338,000 for the third quarter of 2011. Movements in foreign exchange rates decreased sales by $3,767,000, or 1.5 percentage points, from a weaker euro against the U.S. dollar, compared with a year ago.Summary Financial Performance (Unaudited)3Q123Q11ChangeNet sales (in 000s)$       252,037$   253,338-0.5%Gross margin (%)50.448.81.6 pts.Income from continuing    operations (in 000s)$         26,581$     34,187-22.2%Income from discontinued   operations, net of tax (in 000s)$              516$      10,814-95.2%Net income (in 000s)$         27,097$     45,001-39.8%Diluted earnings per share:Income from continuing operations$          0.51$         0.64-20.3%Income from discontinued operations$          0.01$         0.20-95.0%Net income$          0.52$         0.84-38.1%"Zebra delivered strong results in a challenged environment on the basis of the diversity of our business," stated Anders Gustafsson, Zebra's chief executive officer. "Investments in sales resources and channel expansion have resulted in engagements with more customers in targeted markets. In addition, we are serving our customers with a broader array of innovative solutions from a more efficient and productive product development process. During the quarter, we also deployed $75 million on the acquisition of LaserBand and share buybacks. We remain confident in our ability to deliver increasing returns to enhance shareholder value over the long term." As of September 29, 2012, Zebra had $368,795,000 in cash and investments, and no long-term debt. Net inventories were $122,915,000, and net accounts receivable were $165,160,000. Discussion and AnalysisNet sales for the third quarter of 2012 included year-over-year growth of 6.9% in North America and 9.3% in Latin America, both records. This growth offset sales declines of 4.9% in Asia Pacific and 10.6% in the Europe, Middle East and Africa region. Gross profit of 50.4%, versus 48.8% in 2011, reflects reduced overhead, freight and reserve costs, partially offset by unfavorable movements in foreign exchange rates and product mix. Unfavorable foreign currency movements decreased third quarter gross profit by $2,939,000. Operating expense growth of 18.1% included a non-cash asset impairment charge of $9,114,000, increased amortization costs, higher compensation costs, consulting fees, rent, and depreciation. The 2012 effective tax rate increase in the third quarter reflects the non-deductibility of the non-cash asset impairment charge, as well as a rate decrease related to the second quarter implementation of a new structure for Zebra's international subsidiaries. The effect of the non-deductibility of the asset impairment charge increased the effective tax rate by 6.0% for the third quarter of 2012.  Stock Purchase Update During the third quarter of 2012, Zebra returned $15.0 million to shareholders through the repurchase of 400,000 shares of Zebra Technologies Corporation Class A Common Stock. At September 29, 2012, the company had 2,422,336 shares remaining in its stock buyback authorization, and 51,252,384 shares of common stock were outstanding. Fourth Quarter Outlook Zebra announced its financial forecast for the fourth quarter of 2012. Net sales are expected within a range of $245,000,000 to $255,000,000. Diluted earnings per share are expected within a range of $0.62 to $0.70.  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 2012. 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 2012 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, 2011. About Zebra Technologies A global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) offers technologies that give a virtual voice to an organization's assets, people and transactions, enabling organizations to unlock greater business value. The company's extensive portfolio of marking and printing technologies, including RFID and real-time location solutions, illuminates mission-critical information to help customers take smarter business actions. For more information about Zebra's solutions, visit http://www.zebra.com. ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Amounts in thousands)September 29, 2012December 31, 2011ASSETS(Unaudited)Current assets:Cash and cash equivalents$     52,253$     36,418Investments and marketable securities160,690182,398Accounts receivable, net 165,160155,230Receivable from buyer027,580Inventories, net122,915133,288Deferred income taxes15,50613,931Income tax receivable013,111Prepaid expenses and other current assets14,45422,917Total current assets530,978584,873Property and equipment at cost, less accumulated depreciation and amortization102,53797,822Long-term deferred income taxes7,53611,866Goodwill95,34579,703Other intangibles, net39,01712,667Long-term investments and marketable securities155,852107,879Other assets9,4254,196Total assets$   940,690$   899,006LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$     28,180$     33,273Accrued liabilities50,56864,612Deferred revenue12,28811,089Income taxes payable2,0310Total current liabilities93,067108,974Deferred rent1,4061,592Other long-term liabilities13,18811,515Total liabilities107,661122,081Stockholders' equity:Preferred Stock??Class A Common Stock722722Additional paid-in capital136,750131,422Treasury stock(628,683)(596,622)Retained earnings1,333,5301,245,616Accumulated other comprehensive loss(9,290)(4,213)Total stockholders' equity833,029776,925Total liabilities and stockholders' equity$   940,690$   899,006 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGS(Amounts in thousands, except per share data)(Unaudited)Three Months EndedNine Months EndedSeptember 29, 2012October 1, 2011September 29, 2012October 1, 2011Net sales:  Net sales of tangible products$     239,786$     241,686$     706,970$     700,568  Revenue from services and software12,25111,65236,01935,612Total net sales252,037253,338742,989736,180Cost of sales  Cost of sales of tangible products118,751122,529357,764351,042  Cost of services and software6,3627,25618,04119,889Total cost of sales125,113129,785375,805370,931Gross profit126,924123,553367,184365,249Operating expenses:   Selling and marketing32,32131,94296,59391,420   Research and development22,00722,58464,75966,752   General and administrative22,48118,97871,20362,372   Amortization of intangible assets1,6708433,2102,514   Acquisition costs5661882,072188   Exit and restructuring costs013802,090   Asset impairment charge9,11409,1140Total operating expenses88,15974,673246,951225,336Operating income38,76548,880120,233139,913Other income (expense):   Investment income5411341,9591,350   Foreign exchange loss (514)(173)(936)(1,300)   Other, net(294)(859)(1,144)(1,356)Total other income (expense)(267)(898)(121)(1,306)Income from continuing operations before income taxes38,49847,982120,112138,607Income taxes11,91713,79533,01441,123Income from continuing operations26,58134,18787,09897,484Income from discontinued operations, net of tax51610,81481642,115Net income$       27,097$       45,001$       87,914$     139,599Basic earnings per share:   Income from continuing operations$          0.52$          0.64$          1.68$          1.79   Income from discontinued operations0.010.200.020.77      Net income$          0.53$          0.84$          1.70$          2.56Diluted earnings per share:   Income from continuing operations$          0.51$          0.64$          1.67$          1.78   Income from discontinued operations0.010.200.020.77      Net income$          0.52$          0.84$          1.69$          2.55Basic weighted average shares outstanding51,56653,33951,77554,405Diluted weighted average and equivalent shares outstanding51,80953,62852,04154,770 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Amounts in thousands)(Unaudited)Three Months EndedNine Months EndedSeptember 29, 2012October 1, 2011September 29, 2012October 1, 2011Net income$ 27,097$ 45,001$ 87,914$ 139,599Other comprehensive income (loss):  Unrealized gains (losses) on hedging transactions, net of income taxes(3,946)5,615(6,192)2,838  Unrealized holding gains (losses) on investments, net of income taxes392(636)917(303)  Foreign currency translation adjustment12173198(630)Comprehensive income$ 23,555$ 50,153$ 82,837$ 141,504 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited)Nine Months EndedSeptember 29, 2012October 1, 2011Cash flows from operating activities:        Net income$    87,914$   139,599        Adjustments to reconcile net income to net cash provided by (used in) operating activities:                Depreciation and amortization18,90617,985                Equity-based compensation11,48511,060                Asset impairment charge9,1140                Impairment of investments0326                Excess tax benefit from equity-based compensation(1,492)(1,265)                Loss on sale of property and equipment17853                Gain on sale of business(613)(66,753)                Deferred income taxes2,7555,703                Changes in assets and liabilities:                        Accounts receivable, net(6,108)(10,112)                        Inventories, net11,981(6,635)                        Other assets12,070(10,150)                        Accounts payable(10,843)(8,493)                        Accrued liabilities(11,341)(14,917)                        Deferred revenue2,644(16,707)                        Income taxes14,711(7,087)                        Other operating activities(6,378)2,116                                Net cash provided by operating activities134,98334,723Cash flows from investing activities:        Purchases of property and equipment(17,140)(17,829)        Proceeds from the sale of business27,580161,206        Acquisition of business, net of cash acquired(59,874)0        Acquisition of intangible assets(3,000)(200)        Purchase of long-term equity investment(5,000)0        Purchases of investments and marketable securities(483,349)(791,811)        Maturities of investments and marketable securities324,139493,649        Proceeds from sales of investments and marketable securities133,863253,377                                Net cash provided by (used in) investing activities(82,781)98,392Cash flows from financing activities:        Purchase of treasury stock(39,697)(146,373)        Proceeds from exercise of stock options and stock purchase plan purchases1,9099,197        Excess tax benefit from equity-based compensation1,4921,265                                Net cash used in financing activities (36,296)(135,911)Effect of exchange rate changes on cash(71)(899)Net increase in cash and cash equivalents15,835(3,695)        Cash balance of discontinued operations at beginning of period01,301        Less: Cash balance of discontinued operations at end of period00Cash and cash equivalents at beginning of period36,41846,175Cash and cash equivalents at end of period$   52,253$   43,781Supplemental disclosures of cash flow information: Income taxes paid$   16,773$   53,512 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESSUPPLEMENTAL SALES INFORMATION(Amounts in thousands)(Unaudited)SALES BY PRODUCT CATEGORYThree Months EndedSeptember 29,October 1,PercentPercent ofPercent ofProduct Category20122011ChangeNet Sales - 2012Net Sales ? 2011Hardware$ 183,053$ 193,214(5.3)72.676.3Supplies55,42347,11017.622.018.6Service and software12,25111,6525.14.94.6  Subtotal products250,727251,976(0.5)99.599.5Shipping and handling1,3101,362(3.8)0.50.5  Total net sales$ 252,037$ 253,338(0.5)100.0100.0 Nine Months EndedSeptember 29,October,PercentPercent ofPercent ofProduct Category20122011ChangeNet Sales - 2012Net Sales ? 2011Hardware$     548,222$     555,108(1.2)73.975.4Supplies154,893141,3239.620.819.2Service and software36,01935,6121.14.84.8   Subtotal products739,134732,0431.099.599.4Shipping and handling3,8554,137(6.8)0.50.6   Total net sales$     742,989$     736,1800.9100.0100.0 SALES BY GEOGRAPHIC REGIONThree Months EndedSeptember 29,October 1,PercentPercent ofPercent ofGeographic Region20122011ChangeNet Sales - 2012Net Sales - 2011Europe, Middle East and Africa$ 75,637$ 84,597(10.6)30.033.4Latin America26,18823,9689.310.49.5Asia-Pacific36,84338,723(4.9)14.615.3  Total International138,668147,288(5.9)55.058.2North America113,369106,0506.945.041.8  Total net sales$ 252,037$ 253,338(0.5)100.0100.0 Nine Months EndedSeptember 29,October 1,PercentPercent ofPercent ofGeographic Region20122011ChangeNet Sales - 2012Net Sales - 2011Europe, Middle East and Africa$     239,615$     254,218(5.7)32.334.5Latin America73,84668,1378.49.99.3Asia-Pacific105,912109,518(3.3)14.314.9   Total International419,373431,873(2.9)56.558.7North America323,616304,3076.343.541.3   Total net sales$     742,989$     736,1800.9100.0100.0 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESPRINTER UNITS and AVERAGE UNIT PRICES(Unaudited)Three Months EndedSeptember 29,October 1,Percent20122011ChangeTotal printers shipped310,972315,743(1.5)Average selling price of printers shipped$492$524(6.1)Nine Months EndedSeptember 29,October 1,Percent20122011ChangeTotal printers shipped938,827876,4837.1Average selling price of printers shipped$488$535(8.7) Contact: Investors: Media:Douglas A. Fox,  CFA Robb KristopherVice President, Investor Relations Director, Corporate Communicationsand Treasurer and Public Relations+ 1 847 793 6735+ 1 847 793 5514dfox@zebra.com rkristopher@zebra.comSOURCE Zebra Technologies Corporation