Company completes 3 million share stock buyback; Board authorizes additional 3 million share purchase
VERNON HILLS, Ill., Feb. 25 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (NASDAQ:ZBRA) today announced record net sales of $233,573,000 for the quarter ended December 31, 2007, up 11.3% from $209,903,000 for the fourth quarter of 2006. Net income for the period was $30,803,000, or $0.45 per diluted share, compared with $21,446,000, or $0.30 per diluted share, a year ago.
"Ongoing strong international growth, record sales in North America and increasing contributions from the businesses acquired earlier in 2007 led to solid results for the quarter and provide a favorable outlook for 2008 and beyond," stated Anders Gustafsson, Zebra's chief executive officer. "We enter 2008 with many more opportunities to accelerate sales and increase profitability. We will continue to drive more deeply into attractive vertical markets with solutions that deliver a measurable and quick return on investment for our customers. At the same time, our international expansion activities will enable us to provide a broader range of Zebra solutions to businesses in high-growth developing regions. In 2008, we will also take advantage of the business opportunities brought by our acquisitions of WhereNet, proveo and Navis. Together, these companies enable Zebra to provide a broad range of complex enterprise solutions that help our customers identify, track and manage assets, people and transactions within the enterprise and across the supply chain." Discussion and Analysis
For the fourth quarter of 2007 compared with the fourth quarter of 2006:
-- The company had record sales in its North American and EMEA regions,
along with high growth in Latin America. Sales from WhereNet Corp.,
which was acquired in January 2007, and proveo, which was acquired in
the third quarter of 2007, supplemented sales growth. Revenue from
Navis Holdings, LLC, which was acquired on December 14th, had a
minimal effect on fourth quarter sales. Foreign currency translation
also had a favorable effect on sales growth. -- Gross profit margin of 48.5% increased from 46.9%. Profitability was
positively affected by the higher sales volume, a favorable product
mix and movements in foreign exchange translation, partly offset by
increases to inventory reserves and warranty expense. -- Expenses for sales and marketing, research and development, and
general and administrative activities increased principally from the
addition of personnel and other expenses related to the acquisitions
of WhereNet, proveo and Navis. These increases were partially offset
by the absence of an insurance receivable reserve, which was
established in the fourth quarter of 2006.
For 2007, net sales advanced 14.3% to a record $868,279,000 from $759,524,000 for 2006. Net income totaled $110,113,000, or $1.60 per diluted share, versus $70,946,000, or $1.00 per diluted share, for the prior year.
At December 31, 2007, Zebra had $281,179,000 in cash and investments, and no long-term debt. Net inventories were $85,038,000, and accounts receivable, net, were $150,775,000.
First Quarter Outlook Zebra announced its financial forecast for the first quarter of 2008. Net sales are expected within a range of $238,000,000 and $255,000,000. Earnings are expected within a range of $0.36 and $0.44 per diluted share. This outlook excludes approximately $4,800,000 in deferred software revenue that the company is unable to recognize because of purchase accounting rules. The first quarter outlook includes approximately $4,700,000 in expenses related to Zebra's initiative to transfer final assembly of thermal printers to a third party. This global supply chain project was announced on February 6, 2008. In combination, these items have the effect of reducing projected first quarter earnings by $0.09 per diluted share.
Stock Purchase Authorization The company also announced it completed the purchase of 3 million shares of Zebra Technologies Corporation Common Stock that was previously authorized by its Board of Directors. The Board has authorized the purchase of an additional 3 million shares, which represent approximately 4.5% of Zebra stock outstanding. These purchases would be made from time to time, in the open market or in private transactions.
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 2007. The conference call will be held at 11:00 A.M. Eastern Time today. To listen to the call, visit the company's Web site at http://www.zebra.com/.
Analyst Day Reminder Investors are invited to attend Zebra's Analyst Day, which will be held on February 29, 2008, at the Grand Hyatt New York in New York City. Please visit the company's Web site at http://www.zebra.com/ for details and to register.
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 2008 stated in the paragraph above. 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 may elect to update forward-looking statements but expressly disclaims any obligation to do so, even if the company's estimates change.
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 market conditions in North America and other geographic regions and market acceptance of Zebra's printer and software products and competitors' product offerings and the potential effects of technological changes. Other factors include U.S. and foreign regulations that pertain to electrical and electronic equipment, including European Union and other country directives relating to the collection, recycling, treatment and disposal of products and the reduction or elimination of certain specified materials in such products. Zebra's failure to comply with these regulations may subject Zebra to penalties, prevent Zebra from selling its products in a certain country, or increase the cost of supplying the products. Profits and profitability will be affected by the company'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 is involved, and particularly litigation or claims related to alleged infringement of third-party intellectual property rights, is another factor. In addition, the acquisitions of WhereNet, which was completed in January 2007, proveo, which was completed in the third quarter of 2007, and Navis, which was completed in December 2007, have risks relating to integrating these companies' businesses and operations with Zebra's. These and other factors could have an adverse effect on Zebra's revenues, 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, 2006.
Zebra Technologies Corporation helps companies identify, track and manage assets, transactions and people with on-demand specialty digital printing and automatic identification solutions. In more than 100 countries around the world, more than 90% of Fortune 500 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/.
CONTACT: Investors: Media:
Douglas A. Fox, CFA Michelle Meek
Director, Investor Relations Outlook Marketing Services
+1 847 793 6735 +1 312 873 3424
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands) December 31, December 31,
2007 2006 ASSETS
Current assets:
Cash and cash equivalents $38,211 $39,648
Restricted cash 2,497 1,366
Investments and marketable securities 98,438 219,930
Accounts receivable, net 150,775 122,540
Inventories, net 85,038 81,190
Deferred income taxes 14,772 9,464
Prepaid expenses and other current assets 31,101 5,552
Total current assets 420,832 479,690 Property and equipment at cost,
less accumulated depreciation and
amortization 67,686 57,431
Long-term deferred income taxes 28,407 11,917
Goodwill 246,510 70,714
Other intangibles, net 119,424 34,025
Long-term investments and
marketable securities 142,033 298,245
Other assets 9,386 11,120
Total assets $1,034,278 $963,142
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $42,351 $28,980
Accrued liabilities 79,070 43,191
Income taxes payable 751 2,683
Total current liabilities 122,172 74,854
Deferred rent 961 638
Other long-term liabilities 8,452 9,969
Total liabilities 131,585 85,461 Stockholders' equity:
Preferred Stock - -
Class A Common Stock 722 722
Additional paid-in capital 141,522 139,083
Treasury stock (205,058) (119,335)
Retained earnings 960,512 850,399
Accumulated other comprehensive income 4,995 6,812
Total stockholders' equity 902,693 877,681
Total liabilities and stockholders'
equity $1,034,278 $963,142 ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data) Three Months Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006 Net sales $233,573 $209,903 $868,279 $759,524
Cost of sales 120,275 111,493 451,161 401,104
Gross profit 113,298 98,410 417,118 358,420 Operating expenses:
Selling and marketing 35,683 27,702 121,996 96,788
Research and development 15,642 12,768 57,600 48,959
General and administrative 21,854 18,284 81,356 62,656
Amortization of intangible
assets 3,257 1,394 11,128 3,653
Insurance receivable
reserve - 12,543 - 12,543
Litigation settlement - - - 53,392
Acquired in-process research
and development - - 1,853 -
Total operating expenses 76,436 72,691 273,933 277,991 Operating income (loss) 36,862 25,719 143,185 80,429 Other income (expense):
Investment income 8,545 6,980 23,966 23,182
Interest expense 49 (16) (44) (252)
Foreign exchange gains 553 (822) 523 (635)
Other, net 182 (170) (255) (1,082)
Total other income 9,329 5,972 24,190 21,213 Income before income taxes
and cumulative effect of
accounting change 46,191 31,691 167,375 101,642
Income tax 15,388 10,245 57,262 32,015
Income before cumulative
effect of accounting change 30,803 21,446 110,113 69,627 Cumulative effect of
accounting change (net of
tax effect of $694) - - - 1,319
Net income $30,803 $21,446 $110,113 $70,946 Basic earnings per share
before cumulative effect
of accounting change $0.46 $0.31 $1.61 $0.99
Diluted earnings per share
before cumulative effect
of accounting change $0.45 $0.30 $1.60 $0.98 Basic earnings per share $0.46 $0.31 $1.61 $1.01
Diluted earnings per share $0.45 $0.30 $1.60 $1.00 Basic weighted average
shares outstanding 67,472 70,108 68,463 70,516
Diluted weighted average
and equivalent shares
outstanding 67,913 70,499 68,908 70,956 ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands) Year Ended December 31,
2007 2006 Cash flows from operating activities:
Net income $110,113 $70,946
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 26,902 16,087
Share-based compensation 15,067 7,540
Excess tax benefit from share-based
compensation (921) (1,514)
Cumulative effect of accounting change
(net of tax) - (1,319)
Acquired in-process technology 1,853 -
Insurance receivable reserve - 12,543
Deferred income taxes (5,477) (6,737)
Changes in assets and liabilities,
net of businesses acquired:
Accounts receivable, net 4,453 (4,292)
Inventories (134) (13,430)
Other assets (1,321) (483)
Accounts payable (3,418) (1,869)
Accrued liabilities 16,479 8,559
Income taxes payable (1,337) 2,586
Other operating activities (26,064) (552)
Net cash provided by operating
activities 136,195 88,065 Cash flows from investing activities:
Purchases of property and equipment (22,070) (19,197)
Acquisition of businesses, net of
cash acquired (286,761) (2,681)
Acquisition of intangible assets (4,800) (18,091)
Purchases of investments and marketable
securities (1,009,196) (1,110,472)
Maturities of investments and marketable
securities 913,904 757,249
Sales of investments and marketable
securities 374,107 374,666
Net cash used in investing activities (34,816) (18,526) Cash flows from financing activities:
Purchase of treasury shares (107,390) (68,221)
Proceeds from exercise of stock options
and stock purchase plan purchases 3,671 10,402
Excess tax benefit from share-based
compensation 921 1,514
Net cash used in financing activities (102,798) (56,305) Effect of exchange rate changes on cash (18) 1,972 Net increase (decrease) in cash and cash
equivalents (1,437) 15,206
Cash and cash equivalents at beginning
of year 39,648 24,442
Cash and cash equivalents at end of year $38,211 $39,648 Supplemental disclosures of cash flow
information:
Interest paid $44 $252
Income taxes paid 62,130 33,070 Supplemental disclosures of non-cash
transaction:
Purchase of treasury shares not paid
until 2007 $ - $4,704 ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited) Sales by Product Category Three Months Ended
Dec. 31, Dec. 31, Percent Percent of
2007 2006 Change Total Sales Hardware $177,394 $163,081 8.8 75.9
Supplies 41,580 38,578 7.8 17.8
Service and software 14,120 6,954 103.0 6.0
Shipping and handling 1,744 1,610 8.3 0.8
Cash flow from hedging
activities (1,265) (320) NM (0.5)
Total sales $233,573 $209,903 11.3 100.0
Sales by Geographic Region Three Months Ended
Dec. 31, Dec. 31, Percent Percent of
2007 2006 Change Total Sales Europe, Middle East
and Africa $93,895 $74,440 26.1 40.2
Latin America 15,452 13,854 11.5 6.6
Asia-Pacific 16,100 16,723 (3.7) 6.9
Total international 125,447 105,017 19.5 53.7
North America 108,126 104,886 3.1 46.3
Total sales $233,573 $209,903 11.3 100.0
Sales by Product Category Year Ended
Dec. 31, Dec. 31, Percent Percent of
2007 2006 Change Total Sales Hardware $660,034 $578,002 14.2 76.1
Supplies 161,678 150,709 7.3 18.6
Service and software 42,801 25,664 66.8 4.9
Shipping and handling 6,826 6,022 13.4 0.8
Cash flow from hedging
activities (3,060) (873) NM (0.4)
Total sales $868,279 $759,524 14.3 100.0
Sales by Geographic Region Year Ended
Dec. 31, Dec. 31, Percent Percent of
2007 2006 Change Total Sales Europe, Middle East
and Africa $320,225 $264,711 21.0 36.9
Latin America 60,090 53,619 12.1 6.9
Asia-Pacific 71,871 61,374 17.1 8.3
Total international 452,186 379,704 19.1 52.1
North America 416,093 379,820 9.6 47.9
Total sales $868,279 $759,524 14.3 100.0
DATASOURCE: Zebra Technologies Corporation CONTACT: Investors, Douglas A. Fox, CFA, Director, Investor Relations of Zebra Technologies Corporation, +1-847-793-6735, ; or media, Michelle Meek of Outlook Marketing Services, +1-312-873-3424, , for Zebra Technologies Corporation Web site: http://www.zebra.com/
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