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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Zebra Technologies Corp | NASDAQ:ZBRA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-2.92 | -0.89% | 324.06 | 309.00 | 329.80 | 328.70 | 321.3004 | 328.70 | 269,124 | 01:00:00 |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
36-2675536
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
|
|
Non-accelerated filer
|
¨
(Do not check if smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
|
Emerging growth company
|
¨
|
|
|
PAGE
|
Item 1.
|
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Item 2.
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Item 3.
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Item 4.
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Item 1.
|
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Item 1A.
|
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Item 2.
|
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Item 6.
|
||
Item 1.
|
Consolidated Financial Statements
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
61
|
|
|
$
|
44
|
|
Accounts receivable, net of allowances for doubtful accounts of $2 million and $3 million as of March 30, 2019 and December 31, 2018, respectively
|
488
|
|
|
520
|
|
||
Inventories, net
|
510
|
|
|
520
|
|
||
Income tax receivable
|
21
|
|
|
24
|
|
||
Prepaid expenses and other current assets
|
62
|
|
|
54
|
|
||
Total Current assets
|
1,142
|
|
|
1,162
|
|
||
Property, plant and equipment, net
|
257
|
|
|
249
|
|
||
Right-of-use lease asset
|
110
|
|
|
—
|
|
||
Goodwill
|
2,567
|
|
|
2,495
|
|
||
Other intangibles, net
|
311
|
|
|
232
|
|
||
Long-term deferred income taxes
|
97
|
|
|
114
|
|
||
Other long-term assets
|
92
|
|
|
87
|
|
||
Total Assets
|
$
|
4,576
|
|
|
$
|
4,339
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
131
|
|
|
$
|
157
|
|
Accounts payable
|
457
|
|
|
552
|
|
||
Accrued liabilities
|
275
|
|
|
322
|
|
||
Deferred revenue
|
222
|
|
|
210
|
|
||
Income taxes payable
|
61
|
|
|
60
|
|
||
Total Current liabilities
|
1,146
|
|
|
1,301
|
|
||
Long-term debt
|
1,605
|
|
|
1,434
|
|
||
Long-term lease liabilities
|
102
|
|
|
—
|
|
||
Long-term deferred income taxes
|
1
|
|
|
8
|
|
||
Long-term deferred revenue
|
178
|
|
|
172
|
|
||
Other long-term liabilities
|
77
|
|
|
89
|
|
||
Total Liabilities
|
3,109
|
|
|
3,004
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued
|
—
|
|
|
—
|
|
||
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
305
|
|
|
294
|
|
||
Treasury stock at cost, 18,176,120 and 18,280,673 shares as of March 30, 2019 and December 31, 2018, respectively
|
(611
|
)
|
|
(613
|
)
|
||
Retained earnings
|
1,803
|
|
|
1,688
|
|
||
Accumulated other comprehensive loss
|
(31
|
)
|
|
(35
|
)
|
||
Total Stockholders’ Equity
|
1,467
|
|
|
1,335
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
4,576
|
|
|
$
|
4,339
|
|
|
Three Months Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
Net sales:
|
|
|
|
||||
Tangible products
|
$
|
924
|
|
|
$
|
839
|
|
Services and software
|
142
|
|
|
138
|
|
||
Total Net sales
|
1,066
|
|
|
977
|
|
||
Cost of sales:
|
|
|
|
||||
Tangible products
|
471
|
|
|
423
|
|
||
Services and software
|
94
|
|
|
89
|
|
||
Total Cost of sales
|
565
|
|
|
512
|
|
||
Gross profit
|
501
|
|
|
465
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
122
|
|
|
120
|
|
||
Research and development
|
111
|
|
|
101
|
|
||
General and administrative
|
76
|
|
|
71
|
|
||
Amortization of intangible assets
|
28
|
|
|
23
|
|
||
Acquisition and integration costs
|
4
|
|
|
2
|
|
||
Exit and restructuring costs
|
1
|
|
|
4
|
|
||
Total Operating expenses
|
342
|
|
|
321
|
|
||
Operating income
|
159
|
|
|
144
|
|
||
Other expenses:
|
|
|
|
||||
Foreign exchange loss
|
(3
|
)
|
|
—
|
|
||
Interest expense, net
|
(24
|
)
|
|
(11
|
)
|
||
Other, net
|
(1
|
)
|
|
—
|
|
||
Total Other expenses, net
|
(28
|
)
|
|
(11
|
)
|
||
Income before income tax
|
131
|
|
|
133
|
|
||
Income tax expense
|
16
|
|
|
24
|
|
||
Net income
|
$
|
115
|
|
|
$
|
109
|
|
Basic earnings per share
|
$
|
2.14
|
|
|
$
|
2.04
|
|
Diluted earnings per share
|
$
|
2.12
|
|
|
$
|
2.01
|
|
|
Three Months Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
Net income
|
$
|
115
|
|
|
$
|
109
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Unrealized gain (loss) on anticipated sales hedging transactions
|
4
|
|
|
(1
|
)
|
||
Unrealized gain on forward interest rate swap hedging transactions
|
—
|
|
|
5
|
|
||
Foreign currency translation adjustment
|
—
|
|
|
2
|
|
||
Comprehensive income
|
$
|
119
|
|
|
$
|
115
|
|
|
|
Three Months Ended March 30, 2019
|
|||||||||||||||||||||||||
|
|
Class A Common Stock Shares
|
|
Class A Common Stock Value
|
|
Additional Paid-in Capital
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
Balance at December 31, 2018
|
|
53,871,184
|
|
|
$
|
1
|
|
|
$
|
294
|
|
|
$
|
(613
|
)
|
|
$
|
1,688
|
|
|
$
|
(35
|
)
|
|
$
|
1,335
|
|
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations
|
|
110,382
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Shares withheld related to net share settlement
|
|
(5,829
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
||||||
Unrealized gain anticipated sales hedging transactions (net of income taxes)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||
Balance at March 30, 2019
|
|
53,975,737
|
|
|
$
|
1
|
|
|
$
|
305
|
|
|
$
|
(611
|
)
|
|
$
|
1,803
|
|
|
$
|
(31
|
)
|
|
$
|
1,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Three Months Ended March 31, 2018
|
|||||||||||||||||||||||||
|
|
Class A Common Stock Shares
|
|
Class A Common Stock Value
|
|
Additional Paid-in Capital
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
Balance at December 31, 2017
|
|
53,236,095
|
|
|
$
|
1
|
|
|
$
|
257
|
|
|
$
|
(620
|
)
|
|
$
|
1,248
|
|
|
$
|
(52
|
)
|
|
$
|
834
|
|
Cumulative effect of change in accounting principle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations
|
|
162,827
|
|
|
—
|
|
|
(1
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Shares withheld related to net share settlement
|
|
(2,293
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
||||||
Unrealized loss on anticipated sales hedging transactions (net of income taxes)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Unrealized gain on forward interest rate swaps hedging transactions (net of income taxes)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Balance at March 31, 2018
|
|
53,396,629
|
|
|
$
|
1
|
|
|
$
|
266
|
|
|
$
|
(616
|
)
|
|
$
|
1,376
|
|
|
$
|
(46
|
)
|
|
$
|
981
|
|
|
Three Months Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
115
|
|
|
$
|
109
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
47
|
|
|
43
|
|
||
Amortization of debt issuance costs and discounts
|
1
|
|
|
2
|
|
||
Share-based compensation
|
10
|
|
|
10
|
|
||
Deferred income taxes
|
(10
|
)
|
|
(2
|
)
|
||
Unrealized loss/(gain) on forward interest rate swaps
|
8
|
|
|
(12
|
)
|
||
Other, net
|
1
|
|
|
(1
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
28
|
|
|
9
|
|
||
Inventories, net
|
23
|
|
|
6
|
|
||
Other assets
|
(10
|
)
|
|
(7
|
)
|
||
Accounts payable
|
(97
|
)
|
|
(12
|
)
|
||
Accrued liabilities
|
(94
|
)
|
|
(74
|
)
|
||
Deferred revenue
|
18
|
|
|
19
|
|
||
Income taxes
|
2
|
|
|
22
|
|
||
Other operating activities
|
—
|
|
|
4
|
|
||
Net cash provided by operating activities
|
42
|
|
|
116
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(15
|
)
|
|
(18
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(179
|
)
|
|
—
|
|
||
Proceeds from sale of long-term investments
|
10
|
|
|
—
|
|
||
Purchases of long-term investments
|
—
|
|
|
(2
|
)
|
||
Net cash used in investing activities
|
(184
|
)
|
|
(20
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments of long-term debt
|
(37
|
)
|
|
(95
|
)
|
||
Proceeds from issuance of long-term debt
|
183
|
|
|
—
|
|
||
Other financing activities
|
15
|
|
|
3
|
|
||
Net cash provided by/(used in) financing activities
|
161
|
|
|
(92
|
)
|
||
Effect of exchange rate changes on cash
|
(2
|
)
|
|
(2
|
)
|
||
Net increase in cash and cash equivalents
|
17
|
|
|
2
|
|
||
Cash and cash equivalents at beginning of period
|
44
|
|
|
62
|
|
||
Cash and cash equivalents at end of period
|
$
|
61
|
|
|
$
|
64
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Income taxes paid
|
$
|
22
|
|
|
$
|
2
|
|
Interest paid
|
$
|
16
|
|
|
$
|
26
|
|
|
As Reported December 31, 2018
|
|
Adjustment
|
|
As Adjusted January 1, 2019
|
||||||
Assets:
|
|
|
|
|
|
||||||
Prepaid expenses and other current assets
(1)
|
$
|
54
|
|
|
$
|
(1
|
)
|
|
$
|
53
|
|
Right-of-use assets
|
—
|
|
|
110
|
|
|
110
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Accrued liabilities
(2)
|
322
|
|
|
28
|
|
|
350
|
|
|||
Long-term lease liabilities
|
—
|
|
|
103
|
|
|
103
|
|
|||
Other long-term liabilities
(1)
|
89
|
|
|
(22
|
)
|
|
67
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
March 30, 2019
|
|
March 31, 2018
|
||||||||||||||||||||
Segment
|
Tangible Products
|
|
Services and Software
|
|
Total
|
|
Tangible Products
|
|
Services and Software
|
|
Total
|
||||||||||||
AIT
|
$
|
320
|
|
|
$
|
37
|
|
|
$
|
357
|
|
|
$
|
313
|
|
|
$
|
39
|
|
|
$
|
352
|
|
EVM
|
604
|
|
|
105
|
|
|
709
|
|
|
526
|
|
|
99
|
|
|
625
|
|
||||||
Total
|
$
|
924
|
|
|
$
|
142
|
|
|
$
|
1,066
|
|
|
$
|
839
|
|
|
$
|
138
|
|
|
$
|
977
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Raw material
|
$
|
133
|
|
|
$
|
125
|
|
Work in process
|
4
|
|
|
3
|
|
||
Finished goods
|
373
|
|
|
392
|
|
||
Total
|
$
|
510
|
|
|
$
|
520
|
|
Inventory
|
$
|
14
|
|
Property, plant and equipment
|
10
|
|
|
Identifiable intangible assets
|
106
|
|
|
Other assets acquired
|
11
|
|
|
Deferred tax liabilities
|
(24
|
)
|
|
Other liabilities assumed
|
(13
|
)
|
|
Net Assets Acquired
|
$
|
104
|
|
Goodwill on acquisition
|
75
|
|
|
Cash paid, net of cash acquired
|
$
|
179
|
|
|
Fair Value
(in millions)
|
|
Useful Life
(in years)
|
||
Customer and other relationships
|
$
|
79
|
|
|
8
|
Current Technology
|
25
|
|
|
8
|
|
Trade Names
|
2
|
|
|
3
|
|
Total identifiable intangible assets
|
$
|
106
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
(1)
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
20
|
|
Forward interest rate swap contracts
(2)
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Money market investments related to the deferred compensation plan
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total Assets at fair value
|
$
|
20
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
41
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Forward interest rate swap contracts
(2)
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Foreign exchange contracts
(1)
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Liabilities related to the deferred compensation plan
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total Liabilities at fair value
|
$
|
21
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
(1)
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Forward interest rate swap contracts
(2)
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Money market investments related to the deferred compensation plan
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Total Assets at fair value
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
38
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities related to the deferred compensation plan
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Total Liabilities at fair value
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
(1)
|
The fair value of the foreign exchange contracts is calculated as follows:
|
a.
|
Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts.
|
b.
|
Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.
|
c.
|
Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1).
|
(2)
|
The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms.
|
|
Asset / (Liability)
|
||||||||
|
|
|
Fair Values as of
|
||||||
|
Balance Sheet Classification
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Derivative instruments designated as hedges:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
20
|
|
|
$
|
15
|
|
Total derivative instruments designated as hedges
|
|
|
$
|
20
|
|
|
$
|
15
|
|
|
|
|
|
|
|
||||
Derivative instruments not designated as hedges:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
1
|
|
Forward interest rate swaps
|
Prepaid expenses and other current assets
|
|
1
|
|
|
2
|
|
||
Forward interest rate swaps
|
Other long-term assets
|
|
—
|
|
|
3
|
|
||
Foreign exchange contracts
|
Accrued liabilities
|
|
(1
|
)
|
|
—
|
|
||
Forward interest rate swaps
|
Other long-term liabilities
|
|
(4
|
)
|
|
—
|
|
||
Total derivative instruments not designated as hedges
|
|
|
(4
|
)
|
|
6
|
|
||
Total net derivative asset
|
|
|
$
|
16
|
|
|
$
|
21
|
|
|
(Loss) Gain Recognized in Income
|
||||||||
|
|
|
Three Months Ended
|
||||||
|
Statements of Operations Classification
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Derivative instruments not designated as hedges:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Foreign exchange loss
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
Forward interest rate swaps
|
Interest expense, net
|
|
(8
|
)
|
|
13
|
|
||
Total (loss) gain recognized in income
|
|
|
$
|
(10
|
)
|
|
$
|
13
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Term Loan A
|
$
|
608
|
|
|
$
|
608
|
|
Term Loan B
|
445
|
|
|
445
|
|
||
Revolving Credit Facility
|
578
|
|
|
408
|
|
||
Receivables Financing Facility
|
113
|
|
|
139
|
|
||
Total debt
|
$
|
1,744
|
|
|
$
|
1,600
|
|
Less: Debt issuance costs
|
(4
|
)
|
|
(5
|
)
|
||
Less: Unamortized discounts
|
(4
|
)
|
|
(4
|
)
|
||
Less: Current portion of long-term debt
|
(131
|
)
|
|
(157
|
)
|
||
Total long-term debt
|
$
|
1,605
|
|
|
$
|
1,434
|
|
2019
|
|
$
|
131
|
|
2020
|
|
54
|
|
|
2021
|
|
1,559
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
Thereafter
|
|
—
|
|
|
Total future maturities of long-term debt
|
|
$
|
1,744
|
|
2019
|
|
$
|
28
|
|
2020
|
|
33
|
|
|
2021
|
|
28
|
|
|
2022
|
|
20
|
|
|
2023
|
|
14
|
|
|
Thereafter
|
|
35
|
|
|
Total future minimum lease payments
|
|
$
|
158
|
|
Less: Interest
|
|
(26
|
)
|
|
Present value of lease liabilities
|
|
$
|
132
|
|
|
|
|
||
Reported as of March 30, 2019:
|
|
|
||
Current portion of lease liabilities
|
|
$
|
30
|
|
Long-term lease liabilities
|
|
102
|
|
|
Present value of lease liabilities
|
|
$
|
132
|
|
|
Three Months Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
Balance at the beginning of the period
|
$
|
22
|
|
|
$
|
18
|
|
Warranty expense
|
7
|
|
|
7
|
|
||
Warranty payments
|
(6
|
)
|
|
(8
|
)
|
||
Balance at the end of the period
|
$
|
23
|
|
|
$
|
17
|
|
|
|
Three Months Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Basic:
|
|
|
|
|
||||
Net income
|
|
$
|
115
|
|
|
$
|
109
|
|
Weighted-average shares outstanding
|
|
53,905,426
|
|
|
53,286,249
|
|
||
Basic earnings per share
|
|
$
|
2.14
|
|
|
$
|
2.04
|
|
|
|
|
|
|
||||
Diluted:
|
|
|
|
|
||||
Net income
|
|
$
|
115
|
|
|
$
|
109
|
|
Weighted-average shares outstanding
|
|
53,905,426
|
|
|
53,286,249
|
|
||
Dilutive shares
|
|
649,442
|
|
|
699,506
|
|
||
Diluted weighted-average shares outstanding
|
|
54,554,868
|
|
|
53,985,755
|
|
||
Diluted earnings per share
|
|
$
|
2.12
|
|
|
$
|
2.01
|
|
•
|
Unrealized gain (loss) on anticipated sales hedging transactions
relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note
7
,
Derivative Instruments
for more details.
|
•
|
Unrealized (loss) on forward interest rate swaps hedging transactions
refers to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the Enterprise Acquisition. See Note
7
,
Derivative Instruments
for more details.
|
•
|
Foreign currency translation adjustments
relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. The Company is required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI.
|
|
|
Unrealized gain (loss) on sales hedging
|
|
Unrealized (loss) on forward interest rate swaps
|
|
Currency translation adjustments
|
|
Total
|
||||||||
Balance at December 31, 2017
|
|
$
|
(9
|
)
|
|
$
|
(9
|
)
|
|
$
|
(34
|
)
|
|
$
|
(52
|
)
|
Other comprehensive (loss) income before reclassifications
|
|
(6
|
)
|
|
5
|
|
|
2
|
|
|
1
|
|
||||
Amounts reclassified from AOCI
(1)
|
|
5
|
|
|
1
|
|
|
—
|
|
|
6
|
|
||||
Tax expense
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Other comprehensive (loss) income
|
|
(1
|
)
|
|
5
|
|
|
2
|
|
|
6
|
|
||||
Balance at March 31, 2018
|
|
$
|
(10
|
)
|
|
$
|
(4
|
)
|
|
$
|
(32
|
)
|
|
$
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2018
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
(47
|
)
|
|
$
|
(35
|
)
|
Other comprehensive income before reclassifications
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Amounts reclassified from AOCI
(1)
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Tax expense
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Other comprehensive income
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Balance at March 30, 2019
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
(47
|
)
|
|
$
|
(31
|
)
|
|
Three Months Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
Net sales:
|
|
|
|
||||
AIT
|
$
|
357
|
|
|
$
|
352
|
|
EVM
|
709
|
|
|
625
|
|
||
Total Net sales
|
$
|
1,066
|
|
|
$
|
977
|
|
Operating income:
|
|
|
|
||||
AIT
(1)
|
$
|
92
|
|
|
$
|
92
|
|
EVM
(1)
|
101
|
|
|
80
|
|
||
Total segment Operating income
|
193
|
|
|
172
|
|
||
Corporate, eliminations
(2)
|
(34
|
)
|
|
(28
|
)
|
||
Total Operating income
|
$
|
159
|
|
|
$
|
144
|
|
(1)
|
AIT and EVM segment Operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense attributable to AIT and EVM are proportionate to each segment’s Net sales.
|
(2)
|
To the extent applicable, amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, and exit and restructuring costs.
|
|
Three Months Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
North America
|
$
|
510
|
|
|
$
|
457
|
|
Europe, Middle East and Africa
|
376
|
|
|
349
|
|
||
Asia-Pacific
|
125
|
|
|
115
|
|
||
Latin America
|
55
|
|
|
56
|
|
||
Total Net sales
|
$
|
1,066
|
|
|
$
|
977
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|||||||||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
1,066
|
|
|
$
|
977
|
|
|
$
|
89
|
|
|
9.1
|
%
|
Gross profit
|
501
|
|
|
465
|
|
|
36
|
|
|
7.7
|
%
|
|||
Operating expenses
|
342
|
|
|
321
|
|
|
21
|
|
|
6.5
|
%
|
|||
Operating income
|
$
|
159
|
|
|
$
|
144
|
|
|
$
|
15
|
|
|
10.4
|
%
|
Gross margin
|
47.0
|
%
|
|
47.6
|
%
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
510
|
|
|
$
|
457
|
|
|
$
|
53
|
|
|
11.6
|
%
|
EMEA
|
376
|
|
|
349
|
|
|
27
|
|
|
7.7
|
%
|
|||
Asia-Pacific
|
125
|
|
|
115
|
|
|
10
|
|
|
8.7
|
%
|
|||
Latin America
|
55
|
|
|
56
|
|
|
(1
|
)
|
|
(1.8
|
)%
|
|||
Total net sales
|
$
|
1,066
|
|
|
$
|
977
|
|
|
$
|
89
|
|
|
9.1
|
%
|
|
Three Months Ended
|
||||||||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
As a % of Net sales
|
||||||||
|
|
|
2019
|
|
2018
|
||||||||
Selling and marketing
|
$
|
122
|
|
|
$
|
120
|
|
|
11.4
|
%
|
|
12.3
|
%
|
Research and development
|
111
|
|
|
101
|
|
|
10.4
|
%
|
|
10.3
|
%
|
||
General and administrative
|
76
|
|
|
71
|
|
|
7.1
|
%
|
|
7.3
|
%
|
||
Amortization of intangible assets
|
28
|
|
|
23
|
|
|
NM
|
|
|
NM
|
|
||
Acquisition and integration costs
|
4
|
|
|
2
|
|
|
NM
|
|
|
NM
|
|
||
Exit and restructuring costs
|
1
|
|
|
4
|
|
|
NM
|
|
|
NM
|
|
||
Total operating expenses
|
$
|
342
|
|
|
$
|
321
|
|
|
32.1
|
%
|
|
32.9
|
%
|
|
Three Months Ended
|
|
|
March 30, 2019
|
|
Reported GAAP Consolidated Net sales growth
|
9.1
|
%
|
Adjustments:
|
|
|
Impact of foreign currency translation
(1)
|
0.9
|
%
|
Impact of acquisitions
(2)
|
(2.1
|
)%
|
Consolidated Organic Net sales growth
|
7.9
|
%
|
(1)
|
Operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, we exclude the impact of the company’s foreign currency hedging program in both the current and prior year periods.
|
(2)
|
For purposes of computing Organic Net sales, amounts directly attributable to the Xplore acquisition (included in our consolidated results beginning August 14, 2018) and the Temptime acquisition (included in our consolidated results beginning February 21, 2019) will be excluded for 12-months following the acquisition date.
|
|
Three Months Ended
|
|||||||||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
357
|
|
|
$
|
352
|
|
|
$
|
5
|
|
|
1.4
|
%
|
Gross profit
|
184
|
|
|
183
|
|
|
1
|
|
|
0.5
|
%
|
|||
Operating expenses
|
92
|
|
|
91
|
|
|
1
|
|
|
1.1
|
%
|
|||
Operating income
|
$
|
92
|
|
|
$
|
92
|
|
|
$
|
—
|
|
|
—
|
%
|
Gross margin
|
51.5
|
%
|
|
52.0
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
March 30, 2019
|
|
AIT Reported GAAP Net sales growth
|
1.4
|
%
|
Adjustments:
|
|
|
Impact of foreign currency translations
(1)
|
1.0
|
%
|
Impact of acquisition
(2)
|
(1.2
|
)%
|
AIT Organic Net sales growth
|
1.2
|
%
|
(1)
|
Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, we exclude the impact of the company’s foreign currency hedging program in both the current and prior year periods.
|
(2)
|
For purposes of computing Organic Net sales, amounts directly attributable to the Temptime acquisition (included in our consolidated results beginning February 21, 2019) will be excluded for 12-months following the acquisition date.
|
|
Three Months Ended
|
|||||||||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
709
|
|
|
$
|
625
|
|
|
$
|
84
|
|
|
13.4
|
%
|
Gross profit
|
318
|
|
|
282
|
|
|
36
|
|
|
12.8
|
%
|
|||
Operating expenses
|
217
|
|
|
202
|
|
|
15
|
|
|
7.4
|
%
|
|||
Operating income
|
$
|
101
|
|
|
$
|
80
|
|
|
$
|
21
|
|
|
26.3
|
%
|
Gross margin
|
44.9
|
%
|
|
45.1
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
March 30, 2019
|
|
EVM Reported GAAP Net sales growth
|
13.4
|
%
|
Adjustments:
|
|
|
Impact of foreign currency translation
(1)
|
0.8
|
%
|
Impact of acquisition
(2)
|
(2.6
|
)%
|
EVM Organic Net sales growth
|
11.6
|
%
|
(1)
|
Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, the Company excludes the impact of the company’s foreign currency hedging program in both the current and prior year periods.
|
(2)
|
For purposes of computing Organic Net sales, amounts directly attributable to the Xplore acquisition (included in our consolidated results beginning August 14, 2018) will be excluded for 12-months following the acquisition date.
|
|
Three Months Ended
|
|||||||||||||
Cash flows provided by (used in) from:
|
March 30,
2019 |
|
March 31,
2018 |
|
$ Change
|
|
% Change
|
|||||||
Operating activities
|
$
|
42
|
|
|
$
|
116
|
|
|
$
|
(74
|
)
|
|
(63.8
|
)%
|
Investing activities
|
(184
|
)
|
|
(20
|
)
|
|
(164
|
)
|
|
NM
|
|
|||
Financing activities
|
161
|
|
|
(92
|
)
|
|
253
|
|
|
NM
|
|
|||
Effect of exchange rates on cash
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
NM
|
|
|||
Net increase in cash and cash equivalents
|
$
|
17
|
|
|
$
|
2
|
|
|
$
|
15
|
|
|
NM
|
|
•
|
Cash flow provided by operating activities decreased by
$74 million
compared to the prior year. The decrease was primarily due to timing of accounts payable and higher incentive compensation and income tax payments that were partially offset by higher net income, favorable timing of collections on accounts receivable, reduced inventory levels, and lower cash payments for interest.
|
•
|
The increase in net cash used in investing activities was driven by cash payments for the net assets of Temptime.
|
•
|
Net cash provided by financing activities during the three months ended
March 30, 2019
consisted primarily of net debt proceeds of
$146 million
, including amounts borrowed to fund the Temptime acquisition, compared to
$95 million
of net debt repayments during the three months ended
March 31, 2018
.
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Term Loan A
|
$
|
608
|
|
|
$
|
608
|
|
Term Loan B
|
445
|
|
|
445
|
|
||
Revolving Credit Facility
|
578
|
|
|
408
|
|
||
Receivables Financing Facility
|
113
|
|
|
139
|
|
||
Total debt
|
$
|
1,744
|
|
|
$
|
1,600
|
|
Less: Debt issuance costs
|
(4
|
)
|
|
(5
|
)
|
||
Less: Unamortized discounts
|
(4
|
)
|
|
(4
|
)
|
||
Less: Current portion of long-term debt
|
(131
|
)
|
|
(157
|
)
|
||
Total long-term debt
|
$
|
1,605
|
|
|
$
|
1,434
|
|
|
Three Months Ended
|
||||||||||||||||
|
March 30, 2019
|
|
March 31, 2018
|
||||||||||||||
|
AIT
|
|
|
EVM
|
|
|
Total
|
|
|
AIT
|
|
|
EVM
|
|
|
Total
|
|
Customer A
|
5.3
|
%
|
|
12.3
|
%
|
|
17.6
|
%
|
|
6.5
|
%
|
|
14.4
|
%
|
|
20.9
|
%
|
Customer B
|
5.1
|
%
|
|
9.8
|
%
|
|
14.9
|
%
|
|
5.8
|
%
|
|
9.7
|
%
|
|
15.5
|
%
|
Customer C
|
6.7
|
%
|
|
8.0
|
%
|
|
14.7
|
%
|
|
6.3
|
%
|
|
7.0
|
%
|
|
13.3
|
%
|
•
|
Market acceptance of the Company’s products and solution offerings and competitors’ offerings and the potential effects of technological changes,
|
•
|
The effect of global market conditions, including North America; EMEA; Latin America; and Asia-Pacific regions in which we do business,
|
•
|
The impact of foreign exchange rates due to the large percentage of our sales and operations being outside the U.S.,
|
•
|
Our ability to control manufacturing and operating costs,
|
•
|
Risks related to the manufacturing of the Company’s products and conducting business operations in non-U.S. countries, including the risk of depending on key suppliers who are also in non-U.S. countries,
|
•
|
The Company’s ability to purchase sufficient materials, parts, and components to meet customer demand, particularly in light of global economic conditions,
|
•
|
The availability of credit and the volatility of capital markets, which may affect our suppliers, customers, and ourselves,
|
•
|
Success of integrating acquisitions,
|
•
|
Interest rate and financial market conditions,
|
•
|
Access to cash and cash equivalents held outside the U.S.,
|
•
|
The effect of natural disasters on our business,
|
•
|
The impact of changes in foreign and domestic governmental policies, laws, or regulations,
|
•
|
The outcome of litigation in which the Company may be involved, particularly litigation or claims related to infringement of third-party intellectual property rights, and
|
•
|
The outcome of any future tax matters or tax law changes.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 6.
|
Exhibits
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101
|
The following financial information from Zebra Technologies Corporation Quarterly Report on Form 10-Q, for the quarter ended March 30, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
|
|
ZEBRA TECHNOLOGIES CORPORATION
|
||
|
|
|
|
Date: April 30, 2019
|
By:
|
|
/s/ Anders Gustafsson
|
|
|
|
Anders Gustafsson
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: April 30, 2019
|
By:
|
|
/s/ Olivier Leonetti
|
|
|
|
Olivier Leonetti
|
|
|
|
Chief Financial Officer
|
1 Year Zebra Technologies Chart |
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