Zebra Technologies Announces 2009 Fourth Quarter Financial Results
Improved business in all regions leads to 72% sequential growth in operating income on an 11% sequential increase in sales that were well ahead of expectations
LINCOLNSHIRE, Ill., Feb. 9 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced 2009 fourth quarter net sales of $222,522,000 and net income of $17,630,000, or $0.30 per diluted share, including $2,737,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.03 per share. For the fourth quarter of 2008, the company had net sales of $232,568,000 and a net loss of $117,361,000, or $1.88 per basic and diluted share. Results for the fourth quarter of 2008 include pretax non-cash impairment charges of $157,600,000, or $2.20 per basic and diluted share after tax, and pretax exit, restructuring and integration expenses of $7,791,000 which reduced earnings by $0.08 per basic and diluted share after tax.
"Strong customer demand in all geographic regions led to results well ahead of expectations, as customers invested in Zebra products and solutions to improve their business processes and become more competitive in a stabilizing economic environment," stated Anders Gustafsson, Zebra's chief executive officer. "We experienced broad-based sales through our industry-leading global channel network and to large enterprise customers."
Mr. Gustafsson added, "Zebra enters 2010 a leaner, more responsive company with many opportunities for growth and stockholder value creation. Streamlined North American sales and marketing processes are improving customer intimacy in the region. In Asia-Pacific, Latin America and other high-growth territories, we are adding Zebra sales personnel to capture more available business. New, innovative products, such as our recently introduced re-transfer card printer, are enabling us to meet more of our customers' identification and supply chain management needs."
At December 31, 2009, Zebra had $246,721,000 in cash and investments, and no long-term debt. Net inventories were $79,926,000, and net accounts receivable were $150,992,000.
Discussion and Analysis
- Net sales, up 10.8% from the third quarter of 2009 and down 4.3% from the fourth quarter of 2008, benefited from stronger customer demand in all geographic regions and an improved product mix including higher sales of high-performance and mid-range tabletop thermal printers.
- The improved product mix, higher volumes and benefits from outsourcing thermal printer production, offset by higher freight costs incurred to meet greatly increased customer demand, were the major factors affecting gross margins.
- Operating expenses continued to benefit from lower employee-related costs.
- During the fourth quarter of 2008, the company recorded non-cash charges of $157,600,000 following an impairment review in accordance with the Statement of Financial Accounting Standard (SFAS) No. 142 "Goodwill and Other Intangibles" (currently ASC 350) and SFAS No. 144 "Accounting for the Impairment or Disposal of Long-lived Assets" (currently ASC 360). The charges were primarily attributable to impairment of goodwill and other assets recorded in connection with acquisitions in Zebra Enterprise Solutions in response to then-current and expected business conditions primarily in automotive and industrial manufacturing associated with the business from the WhereNet acquisition in 2007. The impairment also included a charge for a reduction in the estimated value of radio frequency identification (RFID) licenses, patents and other intellectual property related to the company's Specialty Printing Group.
For the full year, net sales were $803,585,000 for 2009, compared with $976,700,000 for 2008. Net income for the twelve months was $47,104,000, or $0.79 per diluted share, including $12,191,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.14 per diluted share. For 2008, net loss was $38,421,000, or $0.60 per basic and diluted share, including the $157,600,000 in impairment charges and $20,009,000 in exit, restructuring and integration costs.
Stock Purchase Update
During the fourth quarter of 2009, the company repurchased 593,552 shares of Zebra Technologies Corporation Class A Common Stock. At December 31, 2009, Zebra had 2,199,286 shares remaining in the company's stock buyback authorization and 58,318,983 shares of common stock outstanding.
First Quarter Outlook
Zebra announced its financial forecast for the first quarter of 2010. Net sales are expected within a range of $217,000,000 and $230,000,000. Diluted earnings per share are expected within a range of $0.25 and $0.32. This forecast includes expected exit and restructuring costs of $0.02 per diluted share.
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 fourth quarter of 2009. The conference call will be held at 11:00 AM 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 first quarter of 2010 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 widely reported uncertainty over future global economic conditions, the availability of credit, and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs, including the effect of Zebra's activities to transfer final assembly of its printers to a third-party manufacturer. 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, 2008 and Form 10-Q for the quarter ended October 3, 2009.
Zebra Technologies Corporation helps its customers identify, track and manage assets, transactions and people with systems and solutions that improve business processes. 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.
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December December
31, 2009 31, 2008
------------ --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $38,943 $33,267
Restricted cash 1,725 1,639
Investments and marketable securities 114,064 85,654
Accounts receivable, net 150,992 152,679
Inventories, net 79,926 100,199
Deferred income taxes 10,792 11,679
Income taxes receivable 3,550 -
Prepaid expenses and other current assets 10,945 11,701
------ ------
Total current assets 410,937 396,818
------- -------
Property and equipment at cost, less
accumulated depreciation and amortization 77,589 75,363
Long-term deferred income taxes 35,842 51,251
Goodwill 153,225 151,356
Other intangibles, net 55,982 66,359
Long-term investments and marketable
securities 91,989 104,326
Other assets 4,915 5,405
----- -----
Total assets $830,479 $850,878
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $28,137 $38,152
Accrued liabilities 52,591 67,911
Deferred revenue 24,082 18,366
Income taxes payable - 558
--- ---
Total current liabilities 104,810 124,987
Deferred rent 4,108 4,903
Other long-term liabilities 9,432 10,250
----- ------
Total liabilities 118,350 140,140
------- -------
Stockholders' equity:
Preferred Stock - -
Class A Common Stock 722 722
Additional paid-in capital 136,104 144,861
Treasury stock (385,831) (344,147)
Retained earnings 969,195 922,091
Accumulated other comprehensive loss (8,061) (12,789)
------ -------
Total stockholders' equity 712,129 710,738
------- -------
Total liabilities and stockholders' equity $830,479 $850,878
======== ========
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
Three Months Ended Year Ended
------------------ ----------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited)
Net sales:
Net sales of
tangible products $197,097 $206,410 $701,044 $871,587
Revenue from
services and
software 25,425 26,158 102,541 105,113
------ ------ ------- -------
Total net sales 222,522 232,568 803,585 976,700
------- ------- ------- -------
Cost of sales:
Cost of sales of
tangible products 110,611 109,734 401,727 452,208
Cost of services
and software 10,433 11,945 41,137 45,187
------ ------ ------ ------
Total cost of sales 121,044 121,679 442,864 497,395
------- ------- ------- -------
Gross profit 101,478 110,889 360,721 479,305
------- ------- ------- -------
Operating expenses:
Selling and
marketing 28,006 29,982 100,199 121,435
Research and
development 21,516 23,104 85,089 94,449
General and
administrative 20,373 20,090 85,032 87,885
Amortization of
intangible assets 2,608 4,671 10,466 18,575
Claim settlement - - - (5,302)
Exit, restructuring
and integration costs 2,737 7,791 12,191 20,009
Asset impairment
charges - 157,600 (1,058) 157,600
------ ------- ------ -------
Total operating
expenses 75,240 243,238 291,919 494,651
------ ------- ------- -------
Operating income
(loss) 26,238 (132,349) 68,802 (15,346)
------ -------- ------ -------
Other income (expense):
Investment income 695 1,295 2,933 1,281
Foreign exchange
gain (loss) 795 2,640 (45) 3,518
Other, net (546) (277) (1,167) (1,366)
---- ---- ------ ------
Total other income 944 3,658 1,721 3,433
--- ----- ----- -----
Income (loss)
before income taxes 27,182 (128,691) 70,523 (11,913)
Income taxes 9,552 (11,330) 23,419 26,508
----- ------- ------ ------
Net income (loss) $17,630 $(117,361) $47,104 $(38,421)
======= ========= ======= ========
Basic earnings per
share $0.30 $(1.88) $0.79 $(0.60)
Diluted earnings
per share $0.30 $(1.88) $0.79 $(0.60)
Basic weighted
average shares
outstanding 58,583 62,561 59,306 64,524
Diluted weighted
average and
equivalent
shares outstanding 58,769 62,561 59,425 65,524
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended
----------
December December
31, 2009 31, 2008
-------- --------
(Unaudited)
Cash flows from operating activities:
Net income (loss) $47,104 $(38,421)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 32,913 38,581
Share-based compensation 11,467 14,962
Asset impairment charges (1,058) 157,600
Impairment of investments 943 7,271
Excess tax benefit from
share-based compensation (13) (192)
Loss (gain) on sale of assets 829 (1,121)
Deferred income taxes 16,247 (23,138)
Changes in assets and liabilities,
net of businesses acquired:
Accounts receivable, net 8,747 (21,891)
Inventories 22,315 (26,222)
Other assets (718) (2,758)
Accounts payable (16,105) 17,891
Accrued liabilities (16,315) 1,429
Deferred revenue 4,966 11,281
Income taxes payable (5,705) (1,002)
Other operating activities 81 4,012
--- -----
Net cash provided by
operating activities 105,698 138,282
------- -------
Cash flows from investing activities:
Purchases of property and equipment (24,890) (40,889)
Proceeds from sale of asset - 14,796
Acquisition of businesses,
net of cash acquired - (18,588)
Acquisition of intangible assets (425) (1,384)
Purchases of investments (329,292) (723,791)
Maturities of investments 257,936 592,749
Sales of investments 56,020 198,541
------ -------
Net cash provided by (used
in) investing activities (40,651) 21,434
------- ------
Cash flows from financing activities:
Purchase of treasury shares (65,445) (157,582)
Proceeds from exercise of stock options
and stock purchase plan purchases 4,972 7,145
Excess tax benefit from
share-based compensation 13 192
--- ---
Net cash used in financing
activities (60,460) (150,245)
------- --------
Effect of exchange rate changes on cash 1,089 (14,415)
----- -------
Net increase (decrease) in
cash and cash equivalents 5,676 (4,944)
Cash and cash equivalents at
beginning of year 33,267 38,211
------ ------
Cash and cash equivalents at
end of year $38,943 $33,267
======= =======
Supplemental disclosures of
cash flow information:
Income taxes paid 10,742 49,092
ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)
SALES BY PRODUCT CATEGORY
Three Months Ended
------------------
Percent of Percent of
Product December December Percent Net Sales Net Sales
Category 31, 2009 31, 2008 Change -2009 -2008
--------- -------- -------- ------ ----- -----
Hardware $156,706 $164,042 (4.5) 70.4 70.5
Supplies 39,011 40,870 (4.5) 17.5 17.6
Service and
software 25,425 26,158 (2.8) 11.4 11.2
Shipping and
handling 1,380 1,498 (7.9) 0.7 0.7
----- ----- --- ---
Total sales $222,522 $232,568 (4.3) 100.0 100.0
======== ======== ===== =====
Year Ended
----------
Percent of Percent of
Product December December Percent Net Sales Net Sales
Category 31, 2009 31, 2008 Change -2009 -2008
--------- -------- -------- ------ ----- -----
Hardware $539,934 $692,638 (22.0) 67.1 70.9
Supplies 155,847 172,106 (9.4) 19.4 17.6
Service and
software 102,541 105,113 (2.4) 12.8 10.8
Shipping and
handling 5,263 6,843 (23.1) 0.7 0.7
----- ----- --- ---
Total sales $803,585 $976,700 (17.7) 100.0 100.0
======== ======== ===== =====
SALES BY GEOGRAPHIC REGION
Three Months Ended
------------------
Percent Percent
of Net of Net
December December Percent Sales - Sales -
Geographic Region 31, 2009 31, 2008 Change 2009 2008
----------------- -------- -------- ------ ---- ----
Europe, Middle
East and Africa $82,377 $81,302 1.3 37.0 35.0
Latin America 20,196 17,871 13.0 9.1 7.7
Asia-Pacific 21,984 21,411 2.7 9.9 9.1
------ ------ --- ---
Total
International 124,557 120,584 3.3 56.0 51.8
North America 97,965 111,984 (12.5) 44.0 48.2
------ ------- ----- ---- ----
Total sales $222,522 $232,568 (4.3) 100.0 100.0
======== ======== ===== =====
Year Ended
----------
Percent Percent
of Net of Net
Geographic December December Percent Sales - Sales -
Region 31, 2009 31, 2008 Change 2009 2008
---------- -------- --------- ------ ---- ----
Europe, Middle
East and
Africa $294,296 $353,273 (16.7) 36.6 36.2
Latin America 65,060 76,489 (14.9) 8.1 7.8
Asia-Pacific 82,120 102,672 (20.0) 10.2 10.5
------ ---- ---- ----
Total
International 441,476 532,434 (17.1) 54.9 54.5
North America 362,109 444,266 (18.5) 45.1 45.5
------- ----
Total sales $803,585 $976,700 (17.7) 100.0 100.0
======== ======== ===== =====
ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- --------
Net sales:
Specialty
Printing
Group $203,122 $210,494 $722,556 $882,459
Zebra
Enterprise
Solutions 19,400 22,074 81,029 94,241
------ ------ ------ ------
Total $222,522 $232,568 $803,585 $976,700
======== ======== ======== ========
Cost of
sales:
Specialty
Printing
Group $113,253 $113,187 $410,311 $454,337
Zebra
Enterprise
Solutions 7,791 8,492 32,553 43,058
----- ----- ------ ------
Total $121,044 $121,679 $442,864 $497,395
======== ======== ======== ========
Operating
expenses:
Specialty
Printing
Group $42,519 $66,781 $164,124 $221,934
Zebra
Enterprise
Solutions 17,024 163,208 63,730 217,149
Corporate and
other 15,697 13,249 64,065 55,568
------ ------ ------ ------
Total $75,240 $243,238 $291,919 $494,651
======= ======== ======== ========
Operating
income
(loss):
Specialty
Printing
Group $47,350 $30,526 $148,121 $206,188
Zebra
Enterprise
Solutions (5,415) (149,626) (15,254) (165,966)
Corporate and
other (15,697) (13,249) (64,065) (55,568)
------- ------- ------- -------
Total $26,238 $(132,349) $68,802 $(15,346)
======= ========= ======= ========
Corporate and other includes corporate administration costs or assets
that support both reporting segments.
ZEBRA TECHNOLOGIES CORPORATION
PRINTER UNITS and AVERAGE UNIT PRICES
(Unaudited)
Three Months
Ended Year Ended
December 31, December 31,
------------ Percent ------------ Percent
2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Total
printers
shipped 244,100 249,902 (2.3) 850,230 972,478 (12.6)
Average
selling
price of
printers
shipped $531 $538 (1.3) $527 $594 (11.3)
CONTACT:
Investors: Media:
Douglas A. Fox, CFA Orlando De Bruce
Vice President, Investor Relations Director, Global Public Relations
and Treasurer +1 510 267 5052
+1 847 793 6735 [email protected]@zebra.com
SOURCE Zebra Technologies Corporation
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