FA Play

VERNON HILLS, Ill., April 23 /PRNewswire-FirstCall/ — Zebra Technologies Corporation today announced 18.1% growth in net sales to a record $246,277,000 for the first quarter of 2008 from $208,576,000 for the first quarter of 2007. Net income for the period was $27,644,000, or $0.42 per diluted share, compared with $26,716,000, or $0.39 per diluted share, a year ago.
“Strong international sales, favorable performance in our new Enterprise Solutions business unit and progress on our strategic priorities gave Zebra a solid start in 2008,” stated Anders Gustafsson, Zebra’s chief executive officer. “Our programs to deliver more identification and tracking solutions to targeted vertical markets are delivering real results. Customers around the world, supported by an expanding geographic Zebra presence, are responding positively to the broader range of automatic identification technologies we’re now able to provide to improve their business processes. Zebra is well positioned to benefit from the demands for better management over an increasingly complex global supply chain. The diversity of our solutions portfolio, customers and geographic presence make us optimistic about further growth.”
Discussion and Analysis
For the first quarter of 2008 compared with the first quarter of 2007:

— Sales growth of 11.3% in the company’s Specialty Printing business unit
and the sales contributions of its 2007 acquisitions fueled
consolidated sales growth of 18.1%. International sales increased
31.8%, with record sales in the Asia Pacific and Europe, Middle East
and Africa regions.
— Gross profit margin increased to 49.9% from 47.8%. Profitability was
favorably affected by an improved product mix in specialty printers,
better overhead utilization and a positive contribution from the
company’s Enterprise Solutions business unit.
— 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 in 2007.
— Operating expenses were also affected by a $2,191,000 increase in the
amortization of intangible assets, as well as $3,234,000 in exit costs
related to the company’s previously announced initiative to transfer
final assembly of thermal printers to a third party.

At March 29, 2008, Zebra had $306,284,000 in cash and investments, and no long-term debt. Net inventories were $89,443,000, and accounts receivable, net, were $171,862,000.
During the first quarter of 2008, the company repurchased 1,029,000 shares of Zebra Technologies Class A Common Stock under an authorization to purchase up to 3,000,000 shares.
Second Quarter Outlook
Zebra announced its financial forecast for the second quarter of 2008. Net sales are expected within a range of $248,000,000 to $260,000,000. Earnings are expected between $0.38 and $0.44 per diluted share. This outlook includes approximately $4,800,000 in exit costs.
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 first quarter of 2008. 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 .
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 second 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, proveo and Navis, which were completed in 2007, and Multispectral Solutions, which was completed in April 2008, 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 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, 2007.
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 percent 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 .
CONTACT: Investors: Media:
Douglas A. Fox, CFA Tim Dreyer
Vice President, Investor Relations Manager, Public Relations
1 847 793 6735 1 847 793 5677

ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

March 29, December 31,
2008 2007
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $58,510 $38,211
Restricted cash 1,042 2,497
Investments and marketable securities 97,407 98,438
Accounts receivable, net 171,862 150,775
Inventories, net 89,443 85,038
Deferred income taxes 14,483 14,772
Prepaid expenses 10,776 31,101
Total current assets 443,523 420,832

Property and equipment at cost, less
accumulated depreciation and amortization 69,716 67,686
Long-term deferred income taxes 31,990 28,407
Goodwill 247,670 246,510
Other intangibles, net 115,287 119,424
Long-term investments and marketable
securities 149,325 142,033
Other assets 9,095 9,386
Total assets $1,066,606 $1,034,278

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable $47,119 $42,351
Accrued liabilities 85,229 69,437
Deferred revenue 11,111 9,633
Income taxes payable 13,300 751
Total current liabilities 156,759 122,172
Deferred rent 1,011 961
Other long-term liabilities 9,681 8,452
Total liabilities 167,451 131,585

Stockholders’ equity:
Preferred Stock - -
Class A Common Stock 722 722
Additional paid-in capital 143,457 141,522
Treasury stock (236,722) (205,058)
Retained earnings 988,156 960,512
Accumulated other comprehensive income 3,542 4,995
Total stockholders’ equity 899,155 902,693
Total liabilities and
stockholders’ equity $1,066,606 $1,034,278

ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)

Three Months Ended
March 29, March 31,
2008 2007

Net sales $246,277 $208,576
Cost of sales 123,480 108,786
Gross profit 122,797 99,790

Operating expenses:
Selling and marketing 30,861 28,164
Research and development 19,789 14,185
General and administrative 25,045 17,932
Amortization of intangible assets 4,514 2,323
Exit costs 3,234 -
Acquired in-process research
and development - 1,853
Total operating expenses 83,443 64,457

Operating income 39,354 35,333

Other income (expense):
Investment income 2,405 5,304
Foreign exchange gains 700 175
Other, net (254) 76
Total other income 2,851 5,555

Income before income taxes 42,205 40,888
Income taxes 14,561 14,172
Net income $27,644 $26,716

Basic earnings per share $0.42 $0.39
Diluted earnings per share $0.42 $0.39

Basic weighted average shares outstanding 66,134 68,908
Diluted weighted average and equivalent
shares outstanding 66,518 69,367

ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

Three Months Ended
March 29, March 31,
2008 2007
Cash flows from operating activities:
Net income $27,644 $26,716
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 9,088 5,853
Stock-based compensation 3,417 3,338
Excess tax benefit from
share-based compensation (51) (479)
Acquired in-process research
and development - 1,853
Deferred income taxes (3,553) (1,097)
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable, net (21,393) (7,065)
Inventories (3,834) 2,779
Other assets 2,952 (123)
Accounts payable 2,901 (12,275)
Accrued liabilities 7,085 (7,619)
Deferred revenue 2,745 3,301
Income taxes payable 12,534 10,815
Other operating activities (5,635) 834
Net cash provided by
operating activities 33,900 26,831

Cash flows from investing activities:
Purchases of property and equipment (5,909) (5,333)
Acquisition of businesses acquired,
net of cash acquired - (127,200)
Purchases of investments and
marketable securities (190,530) (166,285)
Maturities of investments and
marketable securities 128,723 195,424
Sales of investments and
marketable securities 78,156 78,069
Net cash used in investing activities 10,440 (25,325)

Cash flows from financing activities:
Purchase of treasury stock (24,600) (6,048)
Proceeds from exercise of stock options
and stock purchase plan purchases 667 4,337
Excess tax benefit from
share-based compensation 51 479
Net cash used in financing activities (23,882) (1,232)

Effect of exchange rate changes on cash (159) 18

Net increase in cash and cash equivalents 20,299 292
Cash and cash equivalents at
beginning of period 38,211 39,648
Cash and cash equivalents at end of period $58,510 $39,940

Supplemental disclosures of cash
flow information:
Income taxes paid $2,471 $4,357

Supplemental disclosures of
non-cash transactions:
Purchase of treasury shares not paid
in the first quarter of 2008 $9,153 -

ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)

Sales by Product Category

Three Months Ended
Mar. 29, Mar. 31, Percent Percent of
2008 2007 Change Total Sales

Hardware $180,181 $159,588 12.9 73.2
Supplies 41,902 38,081 10.0 17.0
Service and software 25,180 9,394 168.0 10.2
Shipping and handling 1,802 1,648 9.3 0.7
Cash flow from hedging
activities (2,788) (135) NM (1.1)
Total sales $246,277 $208,576 18.1 100.0

Sales by Geographic Region

Three Months Ended
Mar. 29, Mar. 31, Percent Percent of
2008 2007 Change Total Sales

Europe, Middle East
and Africa $97,370 $75,985 28.1 39.5
Latin America 15,983 12,523 27.6 6.5
Asia-Pacific 23,778 15,562 52.8 9.7
Total international 137,131 104,070 31.8 55.7
North America 109,146 104,506 4.4 44.3
Total sales $246,277 $208,576 18.1 100.0

ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)

Three Months Ended
March 29, March 31,
2008 2007
Sales
Specialty Printing $224,751 $201,895
Enterprise Solutions 21,526 6,681
Total 246,277 208,576

Cost of sales
Specialty Printing 112,812 104,266
Enterprise Solutions 10,668 4,520
Total 123,480 108,786

Gross profit 122,797 99,790

Operating expenses
Specialty Printing 50,334 45,837
Enterprise Solutions 17,921 5,741
Administrative and other 15,188 12,879
Total 83,443 64,457

Operating income $39,354 $35,333

Zebra Technologies Corporation