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Zebra Technologies Announces Record Sales and Earnings for the 2013 Fourth Quarter and Full Year

Companies mentioned in this article: Zebra Technologies Corporation

LINCOLNSHIRE, Ill., Feb. 19, 2014 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2013 fourth quarter diluted earnings per share of a record $0.82, including exit, restructuring and acquisition costs that reduced earnings by $0.09 per share. Earnings per share for the fourth quarter of 2012 totaled $0.68. Net sales for the quarter ended December 31, 2013, increased 12.4% to a record $284,539,000 from $253,179,000 for the fourth quarter of 2012.


                         Summary Financial Performance (Unaudited)
                          ----------------------------------------

                                     4Q13               4Q12       Change
                                     ----               ----       ------

    Net sales (in
     000s)                             $284,539           $253,179         12.4%

    Gross margin (%)                       49.6               49.2     0.4 pts.

    Operating margin
     (%)                                   17.3               17.5   (0.2) pts.

    Income from
     continuing                         $41,525            $34,799         19.3%

       operations (in
        000s)

    Income (loss)
     from
     discontinued                          $125               $191       (34.6%)

       operations, net
        of tax (in 000s)

    Net income (in
     000s)                              $41,650            $34,990         19.0%

    Diluted earnings
     per share:

    Income from
     continuing
     operations                           $0.82              $0.68         20.6%

    Income from
     discontinued
     operations                           $0.00              $0.00          N/M

    Net income                            $0.82              $0.68         20.6%
    ----------                            -----              -----         ----

"Effective execution of a proven growth strategy and an improving business environment led to strong performance across the breadth of Zebra's solutions, geographic regions and industries served," stated Anders Gustafsson, Zebra's chief executive officer. "Zebra is well positioned for further growth as the brand of choice for helping companies around the world gain greater visibility into their extended value chains. The success of our actions is generating an improved business pipeline with customers in retail, healthcare and manufacturing. We are expanding into new markets by extending our reach in emerging geographic regions and entering new industries, with a stream of innovative products and solutions that address critical business needs."

For the full year, earnings from continuing operations for 2013 totaled $2.63 per share, including acquisition and exit and restructuring costs that reduced earnings by $0.17 per share. For 2012, earnings from continuing operations were $2.35 per share, including acquisition, exit and restructuring costs and an asset impairment charge that reduced earnings by $0.23 per share. Net sales increased 4.2% to a record $1,038,159,000 for 2013 from $996,168,000 for 2012.

As of December 31, 2013, Zebra had $415,795,000 in cash and investments, and no long-term debt. Net inventories were $121,023,000, and net accounts receivable were $176,917,000.

Discussion and Analysis - Fourth Quarter

    --  Net sales growth of 12.4% included sales growth in North America, Asia
        Pacific and the Europe, Middle East and Africa regions. The higher sales
        occurred across all product and service categories.
    --  The operations of Hart Systems, which the company acquired in December
        2013, had no material effect on 2013 fourth quarter financial results.
    --  Gross profit increased 13.3% for the fourth quarter of 2013 over the
        same period of the prior year. Gross profit was 49.6% of sales for the
        2013 fourth quarter and 49.2% for the prior-year period. The increase is
        primarily due to higher volumes.
    --  Operating expenses increased by 14.4%, principally from increased
        expenses for compensation, outside professional services, information
        systems, and depreciation. The increase in amortization expense is
        related to the acquisition of certain patent rights in December 2012.
        Higher acquisition costs relate to increased activity in investigated
        and completed mergers and acquisitions during the period. Exit and
        restructuring costs in 2013 relate to the restructuring of the location
        solutions business management structure.
    --  The effective income tax rate for 2013 reflects the effect of a higher
        proportion of income generated in jurisdictions with lower tax rates.

Stock Purchase Update
During the fourth quarter of 2013, Zebra returned $4,643,000 to shareholders through the repurchase of 88,100 shares of Zebra Technologies Corporation Class A Common Stock at a weighted average price of $52.70 per share. At December 31, 2013, the company had 665,475 shares remaining in its stock buyback authorization, and 50,349,546 shares of common stock were outstanding.

First Quarter Outlook
Zebra announced its financial forecast for the first quarter of 2014. Net sales are expected within a range of $276,000,000 to $286,000,000. Diluted earnings per share are expected within a range of $0.77 to $0.87.

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 fourth quarter of 2013. 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 first quarter of 2014 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. The success of integrating acquisitions including Hart Systems could also affect profitability, reported results and the company's competitive position in it industry. 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 the Zebra's latest Form 10-K which is on file with the Securities and Exchange Commission.

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.


    Contact:

    Investors:                          Media:
    ----------                          ------

    Douglas A. Fox, CFA                 Robb Kristopher

    Vice President, Investor Relations  Director, Corporate Communications

    and Treasurer                       and Public Relations

    + 1 847 793 6735                    + 1 847 793 5514

    dfox@zebra.com                      rkristopher@zebra.com


                            ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS 
    (Amounts in thousands)
    (Unaudited)


                                                       December 31,                 December 31,

                                                                     2013                         2012
                                                                     ----                         ----

                       ASSETS

    Current assets:

    Cash and cash
     equivalents                                                  $62,827                      $64,740

    Investments and
     marketable securities                                        350,380                      324,140

    Accounts receivable,
     net                                                          176,917                      168,732

    Inventories, net                                              121,023                      123,357

    Deferred income taxes                                          19,810                       13,484

    Income taxes
     receivable                                                     7,622                            -

    Prepaid expenses and
     other current assets                                          15,524                       16,410
                                                                                                ------

    Total current assets                                          754,103                      710,863
                                                                  -------                      -------


    Property and equipment
     at cost, less
     accumulated
     depreciation and
     amortization                                                 109,588                      101,349

    Long-term deferred
     income taxes                                                       -                        2,602

    Goodwill                                                      155,800                       94,942

    Other intangibles, net                                         68,968                       39,151

    Long-term investments
     and marketable
     securities                                                     2,588                        5,195

    Other assets                                                   28,765                       13,646
                                                                   ------                       ------

                           Total assets                        $1,119,812                     $967,748
                                                               ==========                     ========


                  LIABILITIES AND
                STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                                              $34,688                      $23,045

    Accrued liabilities                                            61,962                       57,234

    Deferred revenue                                               15,506                       13,326

    Income taxes payable                                            6,898                        1,609
                                                                    -----                        -----

    Total current
     liabilities                                                  119,054                       95,214

    Long-term deferred
     tax liability                                                 25,492                            -

    Deferred rent                                                   1,131                        1,303

    Other long-term
     liabilities                                                   15,477                       14,229
                                                                   ------                       ------

                          Total liabilities                       161,154                      110,746
                                                                  -------                      -------


    Stockholders' equity:

    Class A Common Stock                                              722                          722

    Additional paid-in
     capital                                                      143,295                      139,523

    Treasury stock                                               (678,456)                    (641,438)

    Retained earnings                                           1,502,878                    1,368,520

    Accumulated other
     comprehensive loss                                            (9,781)                     (10,325)
                                                                   ------                      -------

                          Total stockholders'
                           equity                                 958,658                      857,002
                                                                  -------                      -------

                          Total liabilities and
                           stockholders' equity                $1,119,812                     $967,748
                                                               ==========                     ========


                                              ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

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


                                Three Months Ended               Year Ended
                                ------------------               ----------

                                 December 31, 2013            December 31, 2012            December 31, 2013          December 31, 2012
                                 -----------------            -----------------            -----------------          -----------------

    Net sales:

      Net sales of
       tangible
       products                              $269,583                     $241,257                     $984,532                   $948,227

      Revenue from
       services
       and
       software                                14,956                       11,922                       53,627                     47,941
                                               ------                       ------                       ------                     ------

    Total net
     sales                                    284,539                      253,179                    1,038,159                    996,168
                                              -------                      -------                    ---------                    -------


    Cost of
     sales:

      Cost of
       sales of
       tangible
       products                               136,547                      121,869                      507,513                    479,633

      Cost of
       services
       and
       software                                 6,964                        6,850                       27,036                     24,891
                                                -----                        -----                       ------                     ------

    Total cost
     of sales                                 143,511                      128,719                      534,549                    504,524
                                              -------                      -------                      -------                    -------


    Gross profit                              141,028                      124,460                      503,610                    491,644
                                              -------                      -------                      -------                    -------


    Operating
     expenses:

       Selling and
        marketing                              36,280                       33,313                      138,020                    129,906

       Research and
        development                            23,712                       22,605                       91,147                     87,364

       General and
        administrative                         24,434                       20,964                       96,216                     92,167

       Amortization
        of
        intangible
        assets                                  1,826                        1,463                        7,383                      4,673

       Acquisition
        costs                                   3,322                        1,037                        4,690                      3,109

       Exit and
        restructuring
        costs                                   2,375                          960                        5,890                        960

       Asset
        impairment
        charge                                      0                            0                            0                      9,114

    Total
     operating
     expenses                                  91,949                       80,342                      343,346                    327,293
                                               ------                       ------                      -------                    -------


    Operating
     income                                    49,079                       44,118                      160,264                    164,351
                                               ------                       ------                      -------                    -------


    Other income
     (expense):

       Investment
        income                                    666                          526                        2,366                      2,485

       Foreign
        exchange
        loss                                      209                           (5)                        (524)                      (941)

       Other, net                                 252                         (577)                       1,721                     (1,721)
                                                  ---                         ----                        -----                     ------

    Total other
     income
     (expense)                                  1,127                          (56)                       3,563                       (177)
                                                -----                          ---                        -----                       ----


    Income from
     continuing
     operations
     before
     income
     taxes                                     50,206                       44,062                      163,827                    164,174

    Income taxes                                8,681                        9,263                       29,602                     42,277
                                                -----                        -----                       ------                     ------


    Income from
     continuing
     operations                                41,525                       34,799                      134,225                    121,897

    Income from
     discontinued
     operations,
     net of tax                                   125                          191                          133                      1,007
                                                  ---                          ---                          ---                      -----

    Net income                                $41,650                      $34,990                     $134,358                   $122,904
                                              =======                      =======                     ========                   ========


    Basic
     earnings
     per share:

       Income from
        continuing
        operations                              $0.83                        $0.69                        $2.65                      $2.36

       Income from
        discontinued
        operations                               0.00                         0.00                         0.00                       0.02
                                                 ----                         ----                         ----                       ----

          Net income                            $0.83                        $0.69                        $2.65                      $2.38
                                                =====                        =====                        =====                      =====

    Diluted
     earnings
     per share:

       Income from
        continuing
        operations                              $0.82                        $0.68                        $2.63                      $2.35

       Income from
        discontinued
        operations                               0.00                         0.00                         0.00                       0.02
                                                 ----                         ----                         ----                       ----

          Net income                            $0.82                        $0.68                        $2.63                      $2.37
                                                =====                        =====                        =====                      =====


    Basic
     weighted
     average
     shares
     outstanding                               50,289                       50,968                       50,693                     51,566

    Diluted
     weighted
     average and
     equivalent
     shares
     outstanding                               50,666                       51,262                       51,063                     51,843


                                         ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
    (Amounts in thousands)
    (Unaudited)


                            Three Months Ended               Year Ended
                            ------------------               ----------

                             December 31, 2013            December 31, 2012            December 31, 2013     December 31, 2012
                             -----------------            -----------------            -----------------     -----------------


    Net income                            $41,650                      $34,990                     $134,358              $122,904


    Other
     comprehensive
     income (loss):

       Unrealized
        gains (losses)
        on hedging
        transactions,
        net of income
        taxes                                (228)                      (1,048)                         118                (7,241)

       Unrealized
        holding gains
        (losses) on
        investments,
        net of income
        taxes                                  50                          (30)                        (456)                  887

       Foreign
        currency
        translation
        adjustment                            382                           42                          882                   242


    Comprehensive
     income                               $41,854                      $33,954                     $134,902              $116,792
                                          =======                      =======                     ========              ========

                                                                                                                                  
                                          ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                                                                                                                  
                             CONSOLIDATED STATEMENTS OF CASH FLOWS 
    (Amounts in thousands)
    (Unaudited)
                                                                                                     
                                                                                                     
                                                                                  Year Ended
                                                                                  ----------
                                                                                                                                  
                                                                               December 31, 2013            December 31, 2012
                                                                               -----------------            -----------------
                                                                                                                                  
    Cash flows from operating activities:
                                                                                                                                  
            Net income                                                                     $134,358                     $122,904
                                                                                                                                  
            Adjustments to reconcile net income to
             net cash provided by (used in)
             operating activities:
                                                                                                     
                                                                                                                                  
                    Depreciation and amortization                                            32,110                       26,177
                                                                                                                                  
                    Share-based compensation                                                 13,109                       14,727
                                                                                                                                  
                    Asset impairment charge                                                       -                        9,114
                                                                                                                                  
                    Excess tax benefit from share-based
                     compensation                                                            (4,277)                      (1,578)
                                                                                                                                  
                    Loss on sale of property and equipment                                      224                          311
                                                                                                                                  
                    Gain on sale of business                                                   (201)                        (930)
                                                                                                                                  
                    Deferred income taxes                                                     7,929                        8,067
                                                                                                                                  
                    Changes in assets and liabilities:
                                                                                                                                  
                            Accounts receivable, net                                         (6,488)                      (8,647)
                                                                                                                                  
                            Inventories, net                                                  2,743                       11,530
                                                                                                                                  
                            Other assets                                                       (342)                       7,304
                                                                                                                                  
                            Accounts payable                                                  7,544                      (14,605)
                                                                                                                                  
                            Accrued liabilities                                               6,220                       (4,193)
                                                                                                                                  
                            Deferred revenue                                                  2,133                        4,351
                                                                                                                                  
                            Income taxes                                                       (242)                      16,335
                                                                                                                                  
                            Other operating activities                                          (54)                      (7,536)
                                                                                                                                  
                                    Net cash provided by operating
                                     activities                                             194,766                      183,331
                                                                                            -------                      -------
                                                                                                                                  
                                                                                                                                  
    Cash flows from investing activities:
                                                                                                                                  
            Purchases of property and equipment                                             (20,211)                     (22,443)
                                                                                                                                  
            Proceeds from the sale of business                                                    -                       27,580
                                                                                                                                  
            Acquisition of business, net of cash
             acquired                                                                       (95,328)                     (59,876)
                                                                                                                                  
            Acquisition of intangible assets                                                 (1,500)                      (3,500)
                                                                                                                                  
            Purchase of long-term equity
             investment                                                                     (12,021)                      (9,125)
                                                                                                                                  
            Purchases of investments and
             marketable securities                                                         (410,283)                    (347,609)
                                                                                                                                  
            Maturities of investments and
             marketable securities                                                           49,453                      145,028
                                                                                                                                  
            Proceeds from sales of investments and
             marketable securities                                                          336,741                      164,410
                                                                                                                                  
                                    Net cash used in investing activities                  (153,149)                    (105,535)
                                                                                           --------                     --------
                                                                                                                                  
                                                                                                                                  
    Cash flows from financing activities:
                                                                                                                                  
            Purchase of treasury stock                                                      (63,102)                     (54,373)
                                                                                                                                  
            Proceeds from exercise of stock
             options and stock purchase plan
             purchases                                                                       14,652                        3,361
                                                                                                                                  
            Excess tax benefit from share-based
             compensation                                                                     4,277                        1,578
                                                                                                                                  
                                    Net cash used in financing activities                   (44,173)                     (49,434)
                                                                                            -------                      -------
                                                                                                                                  
                                                                                                                                  
    Effect of exchange rate changes on
     cash                                                                                       643                          (40)
                                                                                                ---                          ---
                                                                                                                                  
                                                                                                                                  
    Net increase (decrease) in cash and
     cash equivalents                                                                        (1,913)                      28,322
                                                                                                                                  
    Cash and cash equivalents at beginning
     of period                                                                               64,740                       36,418
                                                                                             ------                       ------
                                                                                                                                  
    Cash and cash equivalents at end of
     period                                                                                 $62,827                      $64,740
                                                                                            =======                      =======
                                                                                                                                  
                                                                                                                                  
    Supplemental disclosures of cash flow
     information:
                                                                                                                                  
     Income taxes paid                                                                      $18,418                      $20,059


                                          ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

                                SUPPLEMENTAL SALES INFORMATION 
    (Amounts in thousands)
    (Unaudited)


                                                     SALES BY PRODUCT CATEGORY


                      Three Months Ended
                      ------------------

                         December 31,                 December 31,                 Percent            Percent of        Percent of

    Product
     Category                          2013                         2012           Change          Net Sales - 2013  Net Sales - 2012
    ---------                          ----                         ----           ------          ----------------  ----------------

    Hardware                       $202,772                     $182,267                   11.2                 71.2              72.0

    Supplies                         65,327                       57,607                   13.4                 23.0              22.8

    Service and
     software                        14,956                       11,922                   25.4                  5.3               4.7
                                     ------                       ------                                         ---               ---

       Subtotal
        products                    283,055                      251,796                   12.4                 99.5              99.5

    Shipping
     and
     handling                         1,484                        1,383                    7.3                  0.5               0.5

       Total net
        sales                      $284,539                     $253,179                   12.4                100.0             100.0
                                   ========                     ========                                       =====             =====


                          Year Ended
                          ----------

                         December 31,                 December 31,                 Percent            Percent of        Percent of

    Product
     Category                          2013                         2012           Change          Net Sales - 2013  Net Sales - 2012
    ---------                          ----                         ----           ------          ----------------  ----------------

    Hardware                       $735,123                     $730,489                    0.6                 70.8              73.4

    Supplies                        243,965                      212,499                   14.8                 23.5              21.3

    Service and
     software                        53,627                       47,941                   11.9                  5.2               4.8
                                     ------                       ------                                         ---               ---

       Subtotal
        products                  1,032,715                      990,929                    4.2                 99.5              99.5

    Shipping
     and
     handling                         5,444                        5,239                    3.9                  0.5               0.5

       Total net
        sales                    $1,038,159                     $996,168                    4.2                100.0             100.0
                                 ==========                     ========                                       =====             =====


                                                 SALES BY GEOGRAPHIC REGION


                      Three Months Ended
                      ------------------

                         December 31,                 December 31,                 Percent            Percent of        Percent of

    Geographic
     Region                            2013                         2012           Change          Net Sales - 2013  Net Sales - 2012
    ----------                         ----                         ----           ------          ----------------  ----------------

    Europe,
     Middle
     East and
     Africa                         $88,660                      $83,355                    6.4                 31.2              32.9

    Latin
     America                         25,335                       26,255                   (3.5)                 8.9              10.4

    Asia-
     Pacific                         40,936                       31,665                   29.3                 14.4              12.5
                                     ------                       ------                                        ----              ----

       Total
        International               154,931                      141,275                    9.7                 54.5              55.8

    North
     America                        129,608                      111,904                   15.8                 45.5              44.2
                                    -------                      -------                                        ----              ----

       Total net
        sales                      $284,539                     $253,179                   12.4                100.0             100.0
                                   ========                     ========                                       =====             =====


                          Year Ended
                          ----------

                         December 31,                 December 31,                 Percent            Percent of        Percent of

    Geographic
     Region                            2013                         2012           Change          Net Sales - 2013  Net Sales - 2012
    ----------                         ----                         ----           ------          ----------------  ----------------

    Europe,
     Middle
     East and
     Africa                        $326,470                     $322,970                    1.1                 31.4              32.4

    Latin
     America                         99,041                      100,101                   (1.1)                 9.5              10.0

    Asia-
     Pacific                        152,740                      137,577                   11.0                 14.7              13.8
                                    -------                      -------                                        ----              ----

       Total
        International               578,251                      560,648                    3.1                 55.6              56.2

    North
     America                        459,908                      435,520                    5.6                 44.4              43.8
                                    -------                      -------                                        ----              ----

       Total net
        sales                    $1,038,159                     $996,168                    4.2                100.0             100.0
                                 ==========                     ========                                       =====             =====


                       ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

                      PRINTER UNITS and AVERAGE UNIT PRICES 
    (Unaudited)


                       Three Months Ended
                       ------------------

                        December 31,                 December 31,        Percent

                                      2013                         2012  Change
                                      ----                         ----  ------

    Total printers
     shipped                       368,204                      321,314          14.6

    Average selling
     price of
     printers shipped                 $462                         $477          (3.1)


                          Year Ended
                          ----------

                        December 31,                 December 31,        Percent

                                      2013                         2012  Change
                                      ----                         ----  ------

    Total printers
     shipped                     1,321,624                    1,260,141           4.9

    Average selling
     price of
     printers shipped                 $469                         $485          (3.3)

SOURCE Zebra Technologies Corporation