Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 02, 2016 | May. 03, 2016 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 2, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ZBRA | |
Entity Registrant Name | ZEBRA TECHNOLOGIES CORP | |
Entity Central Index Key | 877,212 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,239,352 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 194 | $ 192 |
Accounts receivable, net of allowances for doubtful accounts of $5 and $6 | 606 | 674 |
Inventories, net | 386 | 394 |
Prepaid expenses and other current assets | 95 | 72 |
Total Current assets | 1,281 | 1,332 |
Property and equipment, net | 300 | 298 |
Goodwill | 2,495 | 2,493 |
Other intangibles, net | 700 | 757 |
Long-term deferred income taxes | 56 | 52 |
Other long-term assets | 89 | 92 |
Total Assets | 4,921 | 5,024 |
Current liabilities: | ||
Accounts payable | 316 | 289 |
Accrued liabilities | 349 | 358 |
Deferred revenue | 208 | 198 |
Income taxes payable | 0 | 31 |
Total Current liabilities | 873 | 876 |
Long-term debt | 2,937 | 3,012 |
Long-term deferred revenue | 118 | 124 |
Other long-term liabilities | 114 | 99 |
Total Liabilities | 4,042 | 4,111 |
Stockholders’ Equity: | ||
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued | 0 | 0 |
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares | 1 | 1 |
Additional paid-in capital | 204 | 194 |
Treasury stock at cost, 19,867,914 and 19,990,006 shares at April 2, 2016 and December 31, 2015, respectively | (629) | (631) |
Retained earnings | 1,369 | 1,398 |
Accumulated other comprehensive loss | (66) | (49) |
Total Stockholders’ Equity | 879 | 913 |
Total Liabilities and Stockholders’ Equity | $ 4,921 | $ 5,024 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5 | $ 6 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Treasury Stock, Shares | 19,867,914 | 19,990,006 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 72,151,857 | 72,151,857 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Net sales: | ||
Net sales of tangible products | $ 714 | $ 755 |
Revenue from services and software | 133 | 138 |
Total Net sales | 847 | 893 |
Cost of sales: | ||
Cost of sales of tangible products | 373 | 386 |
Cost of services and software | 84 | 98 |
Total Cost of sales | 457 | 484 |
Gross profit | 390 | 409 |
Operating expenses: | ||
Selling and marketing | 121 | 122 |
Research and development | 93 | 96 |
General and administrative | 74 | 66 |
Amortization of intangible assets | 59 | 68 |
Acquisition and integration costs | 37 | 26 |
Exit and restructuring costs | 6 | 11 |
Total Operating expenses | 390 | 389 |
Operating income | 0 | 20 |
Other expenses: | ||
Foreign exchange gain (loss) | 1 | (27) |
Interest expense and other, net | (50) | (51) |
Total Other expenses | (49) | (78) |
Loss before income taxes | (49) | (58) |
Income tax benefit | (20) | (33) |
Net loss | $ (29) | $ (25) |
Basic loss per share (in USD per share) | $ (0.56) | $ (0.50) |
Diluted loss per share (in USD per share) | $ (0.56) | $ (0.50) |
Basic weighted average shares outstanding (in shares) | 51,299,632 | 50,666,970 |
Diluted weighted average and equivalent shares outstanding (in shares) | 51,299,632 | 50,666,970 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (29) | $ (25) |
Other comprehensive (loss) income, net of tax: | ||
Unrealized (loss) gain on anticipated sales hedging transactions | (15) | 2 |
Unrealized loss on forward interest rate swaps hedging transactions | (7) | (7) |
Foreign currency translation adjustment | 5 | (2) |
Comprehensive loss | $ (46) | $ (32) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (29) | $ (25) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 77 | 80 |
Amortization of debt issuance cost and discount | 5 | 5 |
Share-based compensation | 9 | 9 |
Excess tax benefit from equity-based compensation | 0 | (2) |
Deferred income taxes | 3 | 0 |
Unrealized gain on forward interest rate swaps | (1) | (2) |
All other, net | 3 | 0 |
Changes in assets and liabilities, net of businesses acquired: | ||
Accounts receivable | 68 | 28 |
Inventories | 9 | (25) |
Other assets | (1) | (13) |
Accounts payable | 20 | (27) |
Accrued liabilities | (28) | 10 |
Deferred revenue | 3 | 29 |
Income taxes | (50) | (33) |
Other operating activities | 7 | 2 |
Net cash provided by operating activities | 95 | 36 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (19) | (26) |
Acquisition of businesses, net of cash acquired | 0 | (49) |
Proceeds from sale of long-term investments | 0 | 2 |
Purchases of long-term investments | (1) | 0 |
Purchases of investments and marketable securities | 0 | (1) |
Proceeds from sales of investments and marketable securities | 0 | 25 |
Net cash used in investing activities | (20) | (49) |
Cash flows from financing activities: | ||
Payment of debt | (80) | (50) |
Proceeds from exercise of stock options and stock purchase plan purchases | 3 | 8 |
Excess tax benefit from share-based compensation | 0 | 2 |
Net cash used in financing activities | (77) | (40) |
Effect of exchange rate changes on cash | 4 | (11) |
Net increase (decrease) in cash and cash equivalents | 2 | (64) |
Cash and cash equivalents at beginning of period | 192 | 394 |
Cash and cash equivalents at end of period | 194 | 330 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid, net | 29 | 5 |
Interest paid | $ 26 | $ 27 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Apr. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Basis of Presentation Zebra Technologies Corporation and its subsidiaries ("Zebra" or "Company") is a global leader respected for innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic information and data capture solutions industry. We design, manufacture, and sell a broad range of products that capture and move data, including: mobile computers; barcode scanners and imagers; radio frequency identification device ("RFID") readers; wireless LAN (“WLAN”) solutions and software; specialty printers for barcode labeling and personal identification; real-time location systems (“RTLS”); related accessories and supplies such as self-adhesive labels and other consumables; and utilities and application software. End-users of our products include those in the retail, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. Benefits of our solutions include improved efficiency and workflow management, increased productivity and asset utilization, real-time, actionable enterprise information, and better customer experiences. In October 2014, Zebra acquired the Enterprise business ("Enterprise") from Motorola Solutions, Inc. (“MSI”) for $3.45 billion in cash (the "Acquisition"). Enterprise is an industry leader in mobile computing and advanced data capture technologies and services, which complement Zebra’s barcode printing and RFID products. Its products include rugged and enterprise-grade mobile computers; barcode scanners and imagers; RFID readers; WLAN solutions and software; and services that are associated with these products. Enterprise service revenues include sales arising from maintenance, repair, product support, system installation and integration services, and other services. Management prepared these unaudited interim consolidated financial statements for Zebra Technologies Corporation and its subsidiaries according to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and notes. These financial statements do not include all of the information and notes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements, although management believes that the disclosures are adequate to make the information presented not misleading. Therefore, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2015. In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to present fairly its consolidated balance sheet as of April 2, 2016 and the consolidated statements of operations, comprehensive loss and cash flows for the three months ended April 2, 2016 and April 4, 2015. These results, however, are not necessarily indicative of the results expected for the full year. During the first quarter of 2016, the Company identified certain errors in its 2015 annual consolidated financial statements primarily related to the underaccrual of certain estimates, most notably for its sales commission plan, which were partially offset by tax-related items. These errors were corrected in the first quarter of 2016 by recording $10.3 million of additional expenses, primarily within operating expenses, which when combined with tax-related items resulted in a $3.1 million increase to the net loss within the consolidated statement of operations. The Company concluded that these errors were not material to the consolidated financial statements for the year ended December 31, 2015 and is not expected to be material to the consolidated financial statements for the year ending December 31, 2016. Reclassifications: Prior-period amounts differ from amounts previously reported because certain immaterial amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 3 Months Ended |
Apr. 02, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Adopted In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-5, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This update provides guidance to customers about whether a cloud computing arrangement includes a software license or should be accounted for differently. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance does not change generally accepted accounting principles for a customer’s accounting for service contracts. This update is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company has prospectively adopted this new standard on January 1, 2016 and concluded that it does not have a material impact on its consolidated financial statements. Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606) .” The core principle is that a company should recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, " Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net) ," which clarifies gross versus net revenue reporting when another party is involved in the transaction. In April 2016, the FASB issued ASU 2016-10, " Identifying Performance Obligations and Licensing ," which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. There are two transition methods available under the new standard, either cumulative effect or retrospective. The standard will be effective for us in the first quarter of 2018. Earlier adoption is permitted only for annual periods after December 15, 2016. Management is still assessing the impact of adoption on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory, ” which changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value for entities that measure inventory using first-in, first-out (FIFO) or average cost. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years beginning after December 15, 2016 and for interim periods therein. Earlier adoption is permitted and the guidance must be applied prospectively after the date of adoption. Management is still assessing the impact of adoption on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, " Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard will be effective for us in the first quarter of 2017 and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. Management is still assessing the impact of adoption on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, " Fair Value Measurements," and as such these investments may be measured at cost. ASU 2016-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods. Early adoption of the amendment in this ASU is not permitted. Amendments should be applied by means of cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values including disclosure requirements should be applied prospectively to equity investments that exist as of the date of adoption of the ASU. Management is still assessing the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Subtopic 842)." This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key quantitative and qualitative information about leasing arrangements. The recognition, measurement, presentation and cash flows arising from a lease by a lessee have not significantly changed. There are two approaches for amortizing the right-of-use asset. Under the finance lease approach, interest on the lease liability is recognized separately from amortization of the right-of-use asset. Repayments of the principal portion of the lease liability will be classified as financing activities and payments of interest on the lease liability and variable lease payments will be classified as operating activities in the statement of cash flows. Under the operating lease approach, the cost of the lease is calculated on a straight-line basis over the life of the lease term. All cash payments are classified as operating activities in the statement of cash flows. It is effective for public entities for fiscal years and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. Management is currently assessing the impact of adoption on its consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are to be measured using inputs from 3 levels of the fair value hierarchy in accordance with ASC Topic 820, “ Fair Value Measurements .” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following 3 broad levels: Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. Financial assets and liabilities carried at fair value as of April 2, 2016, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Investments related to the deferred compensation plan $ 9 $ — $ — $ 9 Total Assets at fair value $ 9 $ — $ — $ 9 Liabilities: Forward interest rate swap contracts (2) $ — $ 35 $ — $ 35 Derivative contracts- foreign currency (1) 6 17 — 23 Liabilities related to the deferred compensation plan 9 — — 9 Total Liabilities at fair value $ 15 $ 52 $ — $ 67 Financial assets and liabilities carried at fair value as of December 31, 2015, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Derivative contracts- foreign currency (1) $ 6 $ 1 $ — $ 7 Investments related to the deferred compensation plan 9 — — 9 Total Assets at fair value $ 15 $ 1 $ — $ 16 Liabilities: Forward interest rate swap contracts (2) $ — $ 26 $ — $ 26 Liabilities related to the deferred compensation plan 9 — — 9 Total Liabilities at fair value $ 9 $ 26 $ — $ 35 (1) The fair value of the derivative 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 (Level 2). If the hedge has been traded but not settled at period end, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, transfers from Level 2 to Level 1 of the fair value hierarchy totaled $6 million each as of April 2, 2016 and December 31, 2015. (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. See gross balance reporting in Note 9 Derivative Instruments. |
Inventories
Inventories | 3 Months Ended |
Apr. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of inventories, net are as follows (in millions): April 2, December 31, Raw material $ 180 $ 178 Work in process 1 — Finished goods 272 272 Inventories, gross 453 450 Inventory reserves (67 ) (56 ) Inventories, net $ 386 $ 394 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 3 Months Ended |
Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Goodwill and Other Intangibles Other intangibles, net having estimated useful lives ranging from 1 to 15 years are as follows (in millions): April 2, December 31, Other intangibles Customer relationships $ 519 $ 517 Patent and patent rights 247 247 Unpatented technology 270 270 Trade names 40 40 Current technology 25 25 Accumulated amortization (401 ) (342 ) Other intangibles, net $ 700 $ 757 Amortization of intangible assets was $59 million and $68 million for the three months ended April 2, 2016 and April 4, 2015, respectively. Certain intangible assets including goodwill are denominated in foreign currency and, as such, include the effects of foreign currency translation. As of April 2, 2016, goodwill totaled $2.3 billion for the Enterprise reportable segment and $154 million for the Legacy Zebra reportable segment. |
Other Long-Term Assets
Other Long-Term Assets | 3 Months Ended |
Apr. 02, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Long-Term Assets | Other Long-Term Assets Other long-term assets consist of the following (in millions): April 2, 2016 December 31, 2015 Long-term investments $ 32 $ 31 Other long-term assets 23 25 Long-term notes receivable 14 14 Investments related to the deferred compensation plan 9 9 Long-term trade receivable 9 11 Deposits 2 2 Total $ 89 $ 92 The long-term investments, which are accounted for using the cost method of accounting, are primarily in venture-capital backed technology companies, and the Company’s ownership interest is between 1.9% to 17.4% . Under the cost method of accounting, investments are carried at cost and are adjusted only for other-than-temporary declines in fair value, certain distributions and additional investments. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Apr. 02, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities The components of accrued liabilities are as follows (in millions): April 2, December 31, Accrued other expenses $ 130 $ 134 Interest payable 54 36 Accrued compensation and related benefits 53 47 Customer reserves 34 38 Accrued derivative contracts- foreign currency 23 — Accrued incentive compensation 22 62 Accrued warranty 21 22 Restructuring liability 7 9 Accrued taxes 5 10 Total accrued liabilities $ 349 $ 358 |
Costs Associated with Exit and
Costs Associated with Exit and Restructuring Activities | 3 Months Ended |
Apr. 02, 2016 | |
Restructuring and Related Activities [Abstract] | |
Costs Associated with Exit and Restructuring Activities | Costs Associated with Exit and Restructuring Activities Total exit and restructuring charges specific to the Acquisition of $51 million life to date have been recorded through April 2, 2016: $11 million in the Legacy Zebra segment and $40 million in the Enterprise segment related to organizational design changes and operating efficiencies. During the first three months of 2016, the Company incurred exit and restructuring costs specific to the Acquisition as follows (in millions): Cumulative costs incurred through December 31, 2015 Costs incurred for the three months ended April 2, 2016 Cumulative costs incurred through April 2, 2016 Severance, stay bonuses, and other employee-related expenses $ 36 $ 3 $ 39 Obligations for future non-cancellable lease payments 9 3 12 Total $ 45 $ 6 $ 51 Exit and restructuring charges for the three month period ended April 2, 2016 were $2 million and $4 million for the Legacy Zebra and the Enterprise segments, respectively. The Company expects additional charges related to the Acquisition through the end of 2016 ranging from $10 million to $20 million . A rollforward of the exit and restructuring accruals is as follows (in millions): April 2, April 4, Balance at beginning of the period $ 14 $ 7 Charged to earnings 6 11 Cash paid (7 ) (10 ) Balance at the end of the period $ 13 $ 8 Liabilities related to exit and restructuring activities are included in the following accounts in the Consolidated Balance Sheets (in millions): April 2, December 31, Accrued liabilities $ 7 $ 9 Other long-term liabilities 6 5 Total liabilities related to exit and restructuring activities $ 13 $ 14 Payments of the related, long-term liabilities will be completed by October 2024. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Apr. 02, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company conducts business on a multinational basis in a wide variety of foreign currencies; as such, the Company manages these risks using derivative financial instruments. The exposure to market risk for changes in foreign currency exchange rates arises from cross-border financing activities between subsidiaries and foreign currency denominated monetary assets and liabilities. The objective is to preserve the economic value of non-functional currency denominated cash flows. Therefore, the goal is to hedge transaction exposures with natural offsets to the fullest extent possible, and once these opportunities have been exhausted, through foreign exchange forward and option contracts with third parties. The Company entered into a credit agreement which provides for a term loan of $2.2 billion (“Term Loan”) and a revolving credit facility of $250.0 million (“Revolving Credit Facility”). See Note 11 Long-Term Debt. As such, the Company has exposure to market risk for changes in interest expense calculated off of variable interest rates on the term facility that was used to fund the Acquisition. The Company entered into forward interest rate swaps to hedge a portion of the interest rate risk associated with the Term Loan. The fair value of the forward starting interest rate swap contracts is estimated using market quoted forward interest rates for the London Interbank Offered Rate (“LIBOR”) at the balance sheet date and the application of such rates subject to the interest rate swap terms. In accordance with ASC 815, “ Derivative and Hedging ,” the Company recognizes derivative instruments as either assets or liabilities on the balance sheet and measures them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated as and qualifies for hedge accounting. The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. Credit and Market Risk Financial instruments, including derivatives, expose the Company to counterparty credit risk for nonperformance and to market risk related to interest and currency exchange rates. The Company manages its exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties, and procedures to monitor concentrations of credit risk. Its counterparties in derivative transactions are commercial banks with significant experience using derivative instruments. The Company monitors the impact of market risk on the fair value and cash flows of its derivative and other financial instruments considering reasonably possible changes in interest rates and currency exchange rates and restricts the use of derivative financial instruments to hedging activities. The Company continually monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer. Fair Value of Derivative Instruments The Company has determined that derivative instruments for hedges that have traded but have not settled are considered Level 1 in the fair value hierarchy, and hedges that have not traded are considered Level 2 in the fair value hierarchy. Derivative instruments are used to manage risk and are not used for trading or other speculative purposes, nor does the Company use leveraged derivative financial instruments. The foreign currency exchange contracts are valued using broker quotations or market transactions, in either the listed or over-the-counter markets. Non-Designated Foreign Currency Derivatives The Company uses forward contracts to manage exposure related to its British Pound, Canadian Dollar, Czech Koruna, Brazilian Real, Malaysian Ringgit, and Euro denominated net assets. Forward contracts typically mature within three months after execution of the contracts. The Company records monetary gains and losses on these contracts and options in income each quarter along with the transaction gains and losses related to its net asset positions, which would ordinarily offset each other. Summary financial information related to these activities included in the Company’s consolidated statements of operations as other (expense) income is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Realized (loss) gain from foreign exchange derivatives $ (5 ) $ 1 Gain (loss) on net foreign currency assets 6 (28 ) Foreign exchange gain (loss) $ 1 $ (27 ) April 2, December 31, Notional balance of outstanding contracts (in millions): British Pound/US dollar £ 7 £ 5 Euro/US dollar € 125 € 133 British Pound/Euro £ — £ 7 Canadian Dollar/US dollar $ 3 $ 5 Czech Koruna/US dollar Kč 240 Kč 140 Brazilian Real/US dollar R$ 10 R$ 28 Malaysian Ringgit/US dollar RM 52 RM 13 Net fair value of outstanding contracts $ — $ 1 Hedging of Anticipated Sales The Company manages the exchange rate risk of anticipated Euro denominated sales using put options, forward contracts, collars and participating forwards. The Company designates these contracts as cash flow hedges which mature within twelve months after the execution of the contracts. Gains and losses on these contracts are deferred in other comprehensive income until the contracts are settled and the hedged sales are realized. The deferred gain or loss will then be reported as an increase or decrease to sales. At the end of the fourth quarter of 2015, the Company expanded its hedging activities to manage the exposure from the Enterprise segment related to fluctuations of foreign currency exchange rates. The impact is reflected in the consolidated statements of comprehensive loss. Summary financial information related to the cash flow hedges within comprehensive (loss) income is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Change in unrealized (loss) gain on anticipated sales hedging: Gross $ (19 ) $ 2 Income tax (benefit) expense (4 ) — Net $ (15 ) $ 2 Summary financial information related to the cash flow hedges of future revenues is as follows (in millions, except percentages): April 2, December 31, Notional balance of outstanding contracts versus the dollar € 523 € 193 Hedge effectiveness 100 % 100 % Three Months Ended April 2, 2016 April 4, 2015 Net (loss) gain included in revenue $ (2 ) $ 6 The Company records its foreign exchange contracts at fair value on its consolidated balance sheets as a current asset or liability, depending upon the fair value calculation as detailed in Note 3 Fair Value Measurements. The amounts recorded on the consolidated balance sheets are as follows (in millions): April 2, December 31, Assets: Prepaid expenses and other current assets $ — $ 7 Total $ — $ 7 Liabilities: Accrued liabilities $ 23 $ — Total $ 23 $ — Forward Interest Rate Swaps The forward interest rate swaps hedge the interest rate risk associated with the variable interest payments on the Company’s Term Loan. In June 2014, the Company entered into a commitment letter for a new variable rate credit facility to fund the Acquisition and also entered into 2 tranches of floating-to-fixed forward interest rate swaps (“Original Swaps”). These Original Swaps were used to economically hedge interest rate risk associated with the variable rate commitment until July 30, 2014, and as such, changes in their fair value were recognized in earnings in other (expense) income. Effective July 30, 2014, the Original Swaps were designated as cash flow hedges of interest rate exposure associated with variability in future cash flows on the variable rate commitment. On October 27, 2014, the variable rate commitment was funded and the Company entered into a Term Loan that accrues interest at a variable rate of LIBOR (subject to a floor of 0.75% per annum) plus a margin of 4.0% . On October 30, 2014, the Company discontinued hedge accounting for the Original Swaps due to the syndication of the Original Swaps to a group of commercial banks (“Syndicated Swaps”), which resulted in their termination. The changes in fair value of the Original Swaps between July 30, 2014 and their termination were included in other comprehensive (loss) income and any ineffectiveness was insignificant. The amounts included in other comprehensive (loss) income will be amortized to earnings in other (expense) income as the interest payments under the Term Loan affect earnings. The Syndicated Swaps were not designated as hedges and the changes in fair value are recognized in earnings in other (expense) income. On November 20, 2014, the Company entered into additional floating-to-fixed forward starting interest rate swaps (“New Swaps”) and designated these as cash flow hedges of interest rate exposure associated with variability in future cash flows on its Term Loan. To offset the impact to earnings of the changes in fair value of the Syndicated Swaps, the Company also entered into fixed-to-floating forward starting interest rate swaps (“Offsetting Swaps”), which were not designated in a hedging relationship and the changes in the fair value are recognized in earnings in other income (expense). Changes in fair value of the New Swaps that are designated as cash flow hedges and are effective at offsetting variability in the future cash flows on the Company’s Term Loan are recognized in other comprehensive (loss) income. Any ineffectiveness is immediately recognized in earnings. The balance sheet position of the New Swaps designated in a hedge relationship is as follows (in millions): April 2, December 31, Accrued liabilities $ 1 $ 1 Other long-term liabilities $ 25 $ 14 Hedge effectiveness 100 % 100 % The forward interest rate swaps not designated in a hedging relationship are recorded in a net liability position of $9 million as of April 2, 2016 and $11 million as of December 31, 2015 in the consolidated balance sheets. The gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at April 2, 2016 were as follows (in millions): Gross Fair Value Counterparty Offsetting Net Fair Value in the Consolidated Balance Sheets Counterparty A $ 18 $ 10 $ 8 Counterparty B 6 3 3 Counterparty C 6 3 3 Counterparty D 12 5 7 Counterparty E 6 2 4 Counterparty F 6 3 3 Counterparty G 7 — 7 Total $ 61 $ 26 $ 35 The New Swaps, each with a term of 1 year, are designated as cash flow hedges of interest rate exposure associated with variability in future cash flows on the Term Loan. The notional amount of the designated New Swaps effective in each year of the cash flow hedge relationships does not exceed the principal amount of the Term Loan which is hedged. The New Swaps have the following notional amounts per year (in millions): April 2, Year 2016 $ 1,010 Year 2017 697 Year 2018 544 Year 2019 544 Year 2020 272 Year 2021 272 Notional balance of outstanding contracts $ 3,339 The gain recognized on the forward interest rate swaps not designated in a hedge relationship is combined with interest expense and other, net in the consolidated statements of operations is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Interest income on forward interest rate swaps $ 1 $ 2 The loss recognized in other comprehensive unrealized loss on the forward interest rate swaps designated in a hedging relationship is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Change in unrealized loss on forward interest rate swap hedging: Gross $ (10 ) $ (12 ) Income tax benefit (3 ) (5 ) Net $ (7 ) $ (7 ) A loss of $1 million was reclassified from accumulated other comprehensive loss into interest expense and other, net on the forward interest rate swaps designated in a hedging relationship during the three month period ended April 2, 2016. There were no significant reclassifications during the three month period ended April 4, 2015. At April 2, 2016, the Company expects that approximately $14 million in losses on the forward interest rate swaps designated in a hedging relationship that will be reclassified from accumulated other comprehensive loss into earnings during the next 4 quarters. |
Warranty
Warranty | 3 Months Ended |
Apr. 02, 2016 | |
Product Warranties Disclosures [Abstract] | |
Warranty | Warranty In general, the Company provides warranty coverage of 1 year on mobile computers and WLAN products. Advanced data capture products are warrantied from 1 to 5 years, depending on the product. Printers are warrantied for 1 year against defects in material and workmanship. Thermal printheads are warranted for 6 months and batteries are warrantied for 1 year. Battery-based products, such as location tags, are covered by a 90 -day warranty. A provision for warranty expense is recorded at the time of sale and is adjusted quarterly based on historical warranty experience. The following table is a summary of the Company’s accrued warranty obligation (in millions): Three Months Ended April 2, 2016 April 4, 2015 Balance at the beginning of the period $ 22 $ 25 Warranty expense 7 9 Warranty payments (8 ) (7 ) Balance at the end of the period $ 21 $ 27 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 02, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Private Offering On October 15, 2014, the Company completed a private offering of $1.05 billion aggregate principal of 7.25% Senior Notes due October 15, 2022 (the "Senior Notes"). The Senior Notes yielded an effective interest rate of 7.61% at issuance. The Senior Notes are governed by the terms of the indenture, dated as of October 15, 2014, by and among the Company and U.S. Bank National Association, as Trustee. Interest on the Senior Notes is payable in cash on April 15 and October 15 of each year. The indenture covering the Senior Notes contains certain covenants limiting among other things, the ability of the Company and its restricted subsidiaries, with certain exceptions as described in the indenture, to: (i) incur indebtedness or issue certain preferred stock; (ii) incur liens; (iii) pay dividends or make distributions in respect of capital stock; (iv) purchase or redeem capital stock; (v) make investments or certain other restricted payments; (vi) sell assets; (vii) issue or sell stock of restricted subsidiaries; (viii) enter into transactions with stockholders or affiliates; or (ix) effect a consolidation or merger. The Senior Notes are guaranteed, jointly and severally, on a senior and unsecured basis by its direct and indirect wholly-owned existing and future domestic restricted subsidiaries, subject to certain exceptions. The Senior Notes rank equal in right of payment to all of our existing and future unsecured, unsubordinated obligations. The Senior Notes are effectively subordinated to the secured obligations of the Company and subsidiaries to the extent of the value of the assets securing such obligations. Credit Facilities On October 27, 2014, the Company entered into a credit agreement, which provides for a term loan of $2.2 billion and a revolving credit facility of $250 million . Borrowings under the Term Loan bear interest at a variable rate plus an applicable margin, subject to an all-in floor of 4.75% . As of April 2, 2016, the Term Loan interest rate was 4.75% . Interest payments are payable quarterly. The Company has entered into interest rate swaps to manage interest rate risk on its long-term debt. See Note 9 Derivative Instruments. The credit agreement requires the Company to prepay the Term Loan and Revolving Credit Facility, under certain circumstances or transactions defined in the credit agreement. Also, the Company may make optional prepayments of the Term Loans, in whole or in part, without premium or penalty. The Company made optional principal prepayments of $80 million during the three months ended April 2, 2016. Unless satisfied by further optional prepayments, the Company is required to make a scheduled principal payment of $1.96 billion due on October 27, 2021 . The Revolving Credit Facility is available for working capital and other general corporate purposes including letters of credit. The amount (including letters of credit) shall not exceed $250 million . As of April 2, 2016, the Company had established letters of credit amounting to $3 million , which reduced funds available for other borrowings under the agreement to $247 million . The Revolving Credit Facility will mature and the related commitments will terminate on October 27, 2019 . Borrowings under the Revolving Credit Facility bear interest at a variable rate plus an applicable margin. As of April 2, 2016, the Revolving Credit Facility interest rate was 3.25% and the outstanding letters of credit fee was 2.50% . Interest payments are payable quarterly. As of April 2, 2016 and December 31, 2015, the Company did not have any borrowings against the Revolving Credit Facility. In addition to paying interest on outstanding principal amounts under the Revolving Credit Facility, the Company is required to pay a quarterly commitment fee to the lenders with respect to the unutilized commitments. The commitment fee rate is currently 0.375% . The commitment fee rate will be adjusted to 0.250% , 0.375% or 0.500% depending on the Company’s consolidated total secured net leverage ratio. The Revolving Credit Facility contains certain covenants limiting among other things, the ability of the Company and its restricted subsidiaries, with certain exceptions as described in the agreement, to: (i) incur indebtedness, make guarantees or issue certain equity securities; (ii) pay dividends on its capital stock or redeem, repurchase or retire its capital stock; (iii) make certain investments, loans and acquisitions; (iv) sell certain assets or issue capital stock of restricted subsidiaries; (v) create liens or engage in sale-leaseback transactions; (vi) merge, consolidate or transfer or dispose of substantially all of their assets; (vii) engage in certain transactions with affiliates; (viii) alter the business it conducts; (ix) amend, prepay, redeem or purchase subordinated debt; and (x) enter into agreements limiting subsidiary dividends and distributions. The Revolving Credit Facility also requires the Company to comply with a financial covenant consisting of a quarterly maximum consolidated total secured net leverage ratio test that will be tested only at the end of the fiscal quarter if 20% of the commitments under the Revolving Credit Facility have been drawn and remain outstanding. The Term Loan and obligations under the Revolving Credit Facility are collateralized by a security interest in substantially all of the Company’s assets as defined in the security agreement and guaranteed by its direct and indirect wholly-owned existing and future domestic restricted subsidiaries, subject to certain exceptions. The following table summarizes the carrying value of the Company’s debt (in millions): April 2, December 31, Senior Notes $ 1,050 $ 1,050 Term Loan 1,955 2,035 Less: debt issuance costs (25 ) (26 ) Less: unamortized discounts (43 ) (47 ) Long-term debt $ 2,937 $ 3,012 The estimated fair value of the Company’s long-term debt approximated $3.1 billion at April 2, 2016 and December 31, 2015, respectively. These fair value amounts represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the long-term debt will continue to vary each period based on fluctuations in market interest rates, as well as changes to the Company’s credit ratings. This methodology resulted in a Level 2 classification in the fair value hierarchy. |
Contingencies
Contingencies | 3 Months Ended |
Apr. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is subject to a variety of investigations, claims, suits and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company's view of these matters and its potential effects may change in the future. In connection with the acquisition of the Enterprise business from Motorola Solutions, Inc., the Company acquired Symbol Technologies, Inc., a subsidiary of Motorola Solutions (“Symbol”). A putative federal class action lawsuit, Waring v. Symbol Technologies, Inc., et al. , was filed on August 16, 2005 against Symbol Technologies, Inc. and two of its former officers in the United States District Court for the Eastern District of New York by Robert Waring. After the filing of the Waring action, several additional purported class actions were filed against Symbol and the same former officers making substantially similar allegations (collectively, the New Class Actions”). The Waring action and the New Class Actions were consolidated for all purposes and on April 26, 2006, the Court appointed the Iron Workers Local # 580 Pension Fund as lead plaintiff and approved its retention of lead counsel on behalf of the putative class. On August 30, 2006, the lead plaintiff filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”), and named additional former officers and directors of Symbol as defendants. The lead plaintiff alleges that the defendants misrepresented the effectiveness of Symbol’s internal controls and forecasting processes, and that, as a result, all of the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the individual defendants violated Section 20(a) of the Exchange Act. The lead plaintiff alleges that it was damaged by the decline in the price of Symbol’s stock following certain purported corrective disclosures and seeks unspecified damages. By orders entered on June 25 and August 3, 2015, the court granted lead plaintiff’s motion for class certification, certifying a class of investors that includes those that purchased Symbol common stock between April 29, 2003 and August 1, 2005. The parties have substantially completed fact and expert discovery. However, by order entered on January 8, 2016, the court granted Symbol’s request for certain additional fact and expert discovery; pursuant to a proposed scheduling order filed on January 21, 2016, the parties agreed to complete that discovery by approximately June 17, 2016. There are also certain discovery motions pending that could, if granted, reopen fact discovery. The court has held in abeyance all other deadlines, including the deadline for the filing of dispositive motions, and has not set a date for trial. One of the insurers in our insurance group has denied insurance coverage and is not agreeing to reimburse defense costs incurred by the Company in connection with this matter. The Company establishes an accrued liability for loss contingencies related to legal matters when the loss is both probable and estimable. In addition, for some matters for which a loss is probable or reasonably possible, an estimate of the amount of loss or range of loss is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Currently, the Company is unable to reasonably estimate the amount of reasonably possible losses for this matter. |
Loss per Share
Loss per Share | 3 Months Ended |
Apr. 02, 2016 | |
Earnings Per Share [Abstract] | |
Loss per Share | Loss per Share Loss per share were computed as follows (in millions, except share data): Three Months Ended April 2, 2016 April 4, 2015 Weighted average shares: Basic weighted average shares outstanding 51,299,632 50,666,970 Effect of dilutive securities outstanding — — Diluted weighted average and equivalent shares outstanding 51,299,632 50,666,970 Net loss $ (29 ) $ (25 ) Basic per share amounts: Basic weighted average shares outstanding 51,299,632 50,666,970 Per share amount $ (0.56 ) $ (0.50 ) Diluted per share amounts: Diluted weighted average shares outstanding 51,299,632 50,666,970 Per share amount $ (0.56 ) $ (0.50 ) Anti-dilutive securities consist primarily of stock appreciation rights (SARs) with an exercise price greater than the average market closing price of the Class A common stock. Due to a net loss in the first quarter of 2016 and 2015, options, awards and warrants were anti-dilutive and therefore excluded from the earnings per share calculation. These excluded outstanding options, awards and warrants are as follows: Three Months Ended April 2, 2016 April 4, 2015 Potentially dilutive shares 1,478,983 1,042,982 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Apr. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company has share-based compensation and employee stock purchase plans under which shares of the Company’s Class A common stock are available for future grants and sales. Pre-tax share-based compensation expense recognized in the statements of operations was $9 million for the three-month periods ended April 2, 2016 and April 4, 2015, respectively. Tax related benefits of $3 million were also recognized for the three-month periods ended April 2, 2016 and April 4, 2015, respectively. The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Company’s stock price over its entire stock history. Stock option grants in the table below include both stock options, all of which were non-qualified, and stock appreciation rights (SARs) that will be settled in the Class A common stock or cash. Restricted stock grants are valued at the market closing price on the grant date. The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value based on those assumptions: Three Months Ended April 2, 2016 April 4, 2015 Expected dividend yield 0% 0% Forfeiture rate 10.24% 10.32% Volatility 33.98% 34.92% Risk free interest rate 1.53% 1.73% Range of interest rates 0.02% - 2.14% 0.02% - 2.61% Expected weighted-average life 5.32 years 5.36 years Fair value of SARs granted (in millions) $— $— Weighted-average grant date fair value of SARs granted $— $— SAR activity was as follows: April 2, 2016 SARs Shares Weighted- Outstanding at beginning of period 1,397,611 $ 56.78 Granted — — Exercised (10,800 ) 37.03 Forfeited (19,497 ) 75.20 Expired — — Outstanding at end of period 1,367,314 56.66 Exercisable at end of period 728,463 36.01 Intrinsic value of exercised SARs (in millions) $ — The following table summarizes information about SARs outstanding at April 2, 2016: April 2, 2016 Outstanding Exercisable Aggregate intrinsic value (in millions) $24 $20 Weighted-average remaining contractual term 6.5 years 5.1 years Stock option activity was as follows: April 2, 2016 Options Shares Weighted- Outstanding at beginning of period 204,434 $ 36.66 Granted — — Exercised (7,590 ) 42.68 Forfeited — — Expired (2,490 ) 43.35 Outstanding at end of period 194,354 36.34 Exercisable at end of period 194,354 36.34 Intrinsic value of exercised options (in millions) $ — Restricted stock award activity was as follows: April 2, 2016 Restricted Stock Awards Shares Weighted-Average Outstanding at beginning of period 566,447 $ 77.68 Granted — — Released (12,592 ) 58.37 Forfeited (7,586 ) 85.80 Outstanding at end of period 546,269 77.93 Performance share award activity was as follows: April 2, 2016 Performance Share Awards Shares Weighted-Average Outstanding at beginning of period 332,630 $ 73.40 Grant adjustment (2,531 ) 73.07 Released — — Forfeited (2,719 ) 73.07 Outstanding at end of period 327,380 73.22 There was no restricted stock unit and performance stock unit grants for the quarter. As of April 2, 2016, total unearned compensation costs related to the Company’s share-based compensation plans was $37 million which will be amortized over the weighted average remaining service period of 2.2 years. The fair value of the purchase rights issued to employees under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. An expected life of 3 months was used to calculate the fair value. Three Months Ended April 2, April 4, Fair market value $ 69.65 $ 77.41 Option price $ 66.17 $ 73.54 Expected dividend yield — % — % Expected volatility 59 % 23 % Risk free interest rate 0.21 % 0.04 % |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recognized a tax benefit of $20 million and $33 million for the three months ended April 2, 2016 and April 4, 2015, respectively. The Company’s effective tax rates were 41.2% and 56.5% as of April 2, 2016 and April 4, 2015, respectively. The Company’s effective tax rate differed from the federal statutory rate of 35% primarily due to foreign sourced income mix and non-taxable interest income. The change in the effective tax rates is due to restructuring of legal entities that led to a change in the foreign income mix year over year, new U.S. income inclusions, and unbenefited losses in foreign jurisdictions. |
Other Comprehensive Loss
Other Comprehensive Loss | 3 Months Ended |
Apr. 02, 2016 | |
Equity [Abstract] | |
Other Comprehensive Loss | Other Comprehensive Loss Stockholders’ equity includes certain items classified as other comprehensive loss, including: • Unrealized (loss) gain on anticipated sales hedging transactions relate 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 9 Derivative Instruments. • Unrealized (loss) gain on forward interest rate swaps hedging transactions refer to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the Acquisition. See Note 9 Derivative Instruments for more details. • Foreign currency translation adjustment relates 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 other comprehensive income. The components of accumulated other comprehensive loss ("AOCI") for the 3 months ended April 2, 2016 and April 4, 2015 are as follows (in millions): Unrealized (losses) gain on sales hedging Unrealized (losses)/ gains on forward interest rate swaps (1) Currency translation adjustments Total Balance at December 31, 2014 $ 5 $ (8 ) $ (6 ) $ (9 ) Other comprehensive (loss) income before reclassifications 9 (12 ) (2 ) (5 ) Amounts reclassified from AOCI (6 ) — (6 ) Tax (expense) benefit (1 ) 5 4 Other comprehensive income (loss) 2 (7 ) (2 ) (7 ) Balance at April 4, 2015 $ 7 $ (15 ) $ (8 ) $ (16 ) Balance at December 31, 2015 $ (1 ) $ (15 ) $ (33 ) $ (49 ) Other comprehensive (loss) income before reclassifications (20 ) (9 ) 5 (24 ) Amounts reclassified from AOCI 1 (1 ) — — Tax benefit (expense) 4 3 — 7 Other comprehensive (loss) income (15 ) (7 ) 5 (17 ) Balance at April 2, 2016 $ (16 ) $ (22 ) $ (28 ) $ (66 ) (1) See Note 9 Derivatives Instruments regarding timing of reclassifications. Reclassification out of AOCI to earnings during the 3 months ended April 2, 2016 and April 4, 2015 were as follows (in millions): April 2, April 4, Comprehensive Income Components Financial Statement Line Item Unrealized loss (gain) on sales hedging: Total before tax Net sales of tangible products $ 1 $ (6 ) Tax (benefit) expense — 1 Net of taxes 1 (5 ) Unrealized loss (gain) on forward interest rate swaps: Total before tax Interest expense (income) (1 ) — Tax expense (benefit) — — Net of taxes (1 ) — Total amounts reclassified from AOCI $ — $ (5 ) |
Segment Information
Segment Information | 3 Months Ended |
Apr. 02, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has 2 reportable segments: Legacy Zebra and Enterprise. The operating segments have been identified based on the financial data utilized by the Company's Chief Executive Officer (the chief operating decision maker) to assess segment performance and allocate resources among the Company's segments. The chief operating decision maker uses adjusted operating income to assess segment profitability. Adjusted operating income excludes purchase accounting adjustments, amortization, acquisition, integration and exit and restructuring costs. Segment assets are not reviewed by the Company's chief operating decision maker and therefore are not disclosed below. Financial information by segment is presented as follows (in millions): Three Months Ended April 2, April 4, Net sales: Legacy Zebra $ 313 $ 332 Enterprise 537 567 Total segment 850 899 Corporate, eliminations (1) (3 ) (6 ) Total $ 847 $ 893 Operating income: Legacy Zebra $ 69 $ 77 Enterprise 36 54 Total segment 105 131 Corporate, eliminations (2) (105 ) (111 ) Total $ — $ 20 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments related to the Acquisition. (2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments; amortization expense, acquisition and integration expenses and exit and restructuring costs. |
Recently Issued Accounting Pr24
Recently Issued Accounting Pronouncements (Policies) | 3 Months Ended |
Apr. 02, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Adopted In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-5, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This update provides guidance to customers about whether a cloud computing arrangement includes a software license or should be accounted for differently. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance does not change generally accepted accounting principles for a customer’s accounting for service contracts. This update is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company has prospectively adopted this new standard on January 1, 2016 and concluded that it does not have a material impact on its consolidated financial statements. Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (Topic 606) .” The core principle is that a company should recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, " Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net) ," which clarifies gross versus net revenue reporting when another party is involved in the transaction. In April 2016, the FASB issued ASU 2016-10, " Identifying Performance Obligations and Licensing ," which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property. There are two transition methods available under the new standard, either cumulative effect or retrospective. The standard will be effective for us in the first quarter of 2018. Earlier adoption is permitted only for annual periods after December 15, 2016. Management is still assessing the impact of adoption on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory, ” which changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value for entities that measure inventory using first-in, first-out (FIFO) or average cost. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years beginning after December 15, 2016 and for interim periods therein. Earlier adoption is permitted and the guidance must be applied prospectively after the date of adoption. Management is still assessing the impact of adoption on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, " Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard will be effective for us in the first quarter of 2017 and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. Management is still assessing the impact of adoption on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, " Fair Value Measurements," and as such these investments may be measured at cost. ASU 2016-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods. Early adoption of the amendment in this ASU is not permitted. Amendments should be applied by means of cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values including disclosure requirements should be applied prospectively to equity investments that exist as of the date of adoption of the ASU. Management is still assessing the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Subtopic 842)." This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key quantitative and qualitative information about leasing arrangements. The recognition, measurement, presentation and cash flows arising from a lease by a lessee have not significantly changed. There are two approaches for amortizing the right-of-use asset. Under the finance lease approach, interest on the lease liability is recognized separately from amortization of the right-of-use asset. Repayments of the principal portion of the lease liability will be classified as financing activities and payments of interest on the lease liability and variable lease payments will be classified as operating activities in the statement of cash flows. Under the operating lease approach, the cost of the lease is calculated on a straight-line basis over the life of the lease term. All cash payments are classified as operating activities in the statement of cash flows. It is effective for public entities for fiscal years and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. Management is currently assessing the impact of adoption on its consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Carried at Fair Value | Financial assets and liabilities carried at fair value as of April 2, 2016, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Investments related to the deferred compensation plan $ 9 $ — $ — $ 9 Total Assets at fair value $ 9 $ — $ — $ 9 Liabilities: Forward interest rate swap contracts (2) $ — $ 35 $ — $ 35 Derivative contracts- foreign currency (1) 6 17 — 23 Liabilities related to the deferred compensation plan 9 — — 9 Total Liabilities at fair value $ 15 $ 52 $ — $ 67 Financial assets and liabilities carried at fair value as of December 31, 2015, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Derivative contracts- foreign currency (1) $ 6 $ 1 $ — $ 7 Investments related to the deferred compensation plan 9 — — 9 Total Assets at fair value $ 15 $ 1 $ — $ 16 Liabilities: Forward interest rate swap contracts (2) $ — $ 26 $ — $ 26 Liabilities related to the deferred compensation plan 9 — — 9 Total Liabilities at fair value $ 9 $ 26 $ — $ 35 (1) The fair value of the derivative 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 (Level 2). If the hedge has been traded but not settled at period end, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, transfers from Level 2 to Level 1 of the fair value hierarchy totaled $6 million each as of April 2, 2016 and December 31, 2015. (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. See gross balance reporting in Note 9 Derivative Instruments. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Components of Inventories, Net | The components of inventories, net are as follows (in millions): April 2, December 31, Raw material $ 180 $ 178 Work in process 1 — Finished goods 272 272 Inventories, gross 453 450 Inventory reserves (67 ) (56 ) Inventories, net $ 386 $ 394 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Other Intangibles Assets | Other intangibles, net having estimated useful lives ranging from 1 to 15 years are as follows (in millions): April 2, December 31, Other intangibles Customer relationships $ 519 $ 517 Patent and patent rights 247 247 Unpatented technology 270 270 Trade names 40 40 Current technology 25 25 Accumulated amortization (401 ) (342 ) Other intangibles, net $ 700 $ 757 |
Other Long-Term Assets (Tables)
Other Long-Term Assets (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Components of Other Long-Term Assets | Other long-term assets consist of the following (in millions): April 2, 2016 December 31, 2015 Long-term investments $ 32 $ 31 Other long-term assets 23 25 Long-term notes receivable 14 14 Investments related to the deferred compensation plan 9 9 Long-term trade receivable 9 11 Deposits 2 2 Total $ 89 $ 92 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Payables and Accruals [Abstract] | |
Components of Accrued Liabilities | The components of accrued liabilities are as follows (in millions): April 2, December 31, Accrued other expenses $ 130 $ 134 Interest payable 54 36 Accrued compensation and related benefits 53 47 Customer reserves 34 38 Accrued derivative contracts- foreign currency 23 — Accrued incentive compensation 22 62 Accrued warranty 21 22 Restructuring liability 7 9 Accrued taxes 5 10 Total accrued liabilities $ 349 $ 358 |
Costs Associated with Exit an30
Costs Associated with Exit and Restructuring Activities (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of Exit and Restructuring Costs Incurred | During the first three months of 2016, the Company incurred exit and restructuring costs specific to the Acquisition as follows (in millions): Cumulative costs incurred through December 31, 2015 Costs incurred for the three months ended April 2, 2016 Cumulative costs incurred through April 2, 2016 Severance, stay bonuses, and other employee-related expenses $ 36 $ 3 $ 39 Obligations for future non-cancellable lease payments 9 3 12 Total $ 45 $ 6 $ 51 |
Rollforward of Exit and Restructuring Accruals | A rollforward of the exit and restructuring accruals is as follows (in millions): April 2, April 4, Balance at beginning of the period $ 14 $ 7 Charged to earnings 6 11 Cash paid (7 ) (10 ) Balance at the end of the period $ 13 $ 8 |
Schedule of Liabilities Related to Exit and Restructuring Activities Included in Consolidated Balance Sheets [Table Text Block] | Liabilities related to exit and restructuring activities are included in the following accounts in the Consolidated Balance Sheets (in millions): April 2, December 31, Accrued liabilities $ 7 $ 9 Other long-term liabilities 6 5 Total liabilities related to exit and restructuring activities $ 13 $ 14 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Financial Information Related to Hedging of Net Assets Included in Consolidated Statements of Operations | Summary financial information related to these activities included in the Company’s consolidated statements of operations as other (expense) income is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Realized (loss) gain from foreign exchange derivatives $ (5 ) $ 1 Gain (loss) on net foreign currency assets 6 (28 ) Foreign exchange gain (loss) $ 1 $ (27 ) April 2, December 31, Notional balance of outstanding contracts (in millions): British Pound/US dollar £ 7 £ 5 Euro/US dollar € 125 € 133 British Pound/Euro £ — £ 7 Canadian Dollar/US dollar $ 3 $ 5 Czech Koruna/US dollar Kč 240 Kč 140 Brazilian Real/US dollar R$ 10 R$ 28 Malaysian Ringgit/US dollar RM 52 RM 13 Net fair value of outstanding contracts $ — $ 1 |
Financial Information Related to Cash Flow Hedges | Summary financial information related to the cash flow hedges within comprehensive (loss) income is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Change in unrealized (loss) gain on anticipated sales hedging: Gross $ (19 ) $ 2 Income tax (benefit) expense (4 ) — Net $ (15 ) $ 2 |
Financial Information Related to Cash Flow Hedges of Future Revenues | Summary financial information related to the cash flow hedges of future revenues is as follows (in millions, except percentages): April 2, December 31, Notional balance of outstanding contracts versus the dollar € 523 € 193 Hedge effectiveness 100 % 100 % Three Months Ended April 2, 2016 April 4, 2015 Net (loss) gain included in revenue $ (2 ) $ 6 |
Forward Contract Amounts Recorded in Consolidated Balance Sheet | The amounts recorded on the consolidated balance sheets are as follows (in millions): April 2, December 31, Assets: Prepaid expenses and other current assets $ — $ 7 Total $ — $ 7 Liabilities: Accrued liabilities $ 23 $ — Total $ 23 $ — |
Schedule of Gross and Net Amount Offset | The gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at April 2, 2016 were as follows (in millions): Gross Fair Value Counterparty Offsetting Net Fair Value in the Consolidated Balance Sheets Counterparty A $ 18 $ 10 $ 8 Counterparty B 6 3 3 Counterparty C 6 3 3 Counterparty D 12 5 7 Counterparty E 6 2 4 Counterparty F 6 3 3 Counterparty G 7 — 7 Total $ 61 $ 26 $ 35 |
Schedule of Series of Forward Starting Swaps Each with a Term of One Year | The New Swaps have the following notional amounts per year (in millions): April 2, Year 2016 $ 1,010 Year 2017 697 Year 2018 544 Year 2019 544 Year 2020 272 Year 2021 272 Notional balance of outstanding contracts $ 3,339 |
Forward Interest Rate Swap | |
Forward Contract Amounts Recorded in Consolidated Balance Sheet | The balance sheet position of the New Swaps designated in a hedge relationship is as follows (in millions): April 2, December 31, Accrued liabilities $ 1 $ 1 Other long-term liabilities $ 25 $ 14 Hedge effectiveness 100 % 100 % |
Schedule of Gain (Loss) Recognized on Forward Interest Rate Swaps Not Designated in Hedge Relationship | The gain recognized on the forward interest rate swaps not designated in a hedge relationship is combined with interest expense and other, net in the consolidated statements of operations is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Interest income on forward interest rate swaps $ 1 $ 2 |
Schedule of Loss Recognized in Other Comprehensive Unrealized Loss on Forward Interest Rate Swaps Designated in Hedging Relationship | The gain recognized on the forward interest rate swaps not designated in a hedge relationship is combined with interest expense and other, net in the consolidated statements of operations is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Interest income on forward interest rate swaps $ 1 $ 2 The loss recognized in other comprehensive unrealized loss on the forward interest rate swaps designated in a hedging relationship is as follows (in millions): Three Months Ended April 2, 2016 April 4, 2015 Change in unrealized loss on forward interest rate swap hedging: Gross $ (10 ) $ (12 ) Income tax benefit (3 ) (5 ) Net $ (7 ) $ (7 ) |
Warranty (Tables)
Warranty (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Product Warranties Disclosures [Abstract] | |
Summary of Accrued Warranty Obligation | The following table is a summary of the Company’s accrued warranty obligation (in millions): Three Months Ended April 2, 2016 April 4, 2015 Balance at the beginning of the period $ 22 $ 25 Warranty expense 7 9 Warranty payments (8 ) (7 ) Balance at the end of the period $ 21 $ 27 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Carrying Value of Debt | The following table summarizes the carrying value of the Company’s debt (in millions): April 2, December 31, Senior Notes $ 1,050 $ 1,050 Term Loan 1,955 2,035 Less: debt issuance costs (25 ) (26 ) Less: unamortized discounts (43 ) (47 ) Long-term debt $ 2,937 $ 3,012 |
Loss per Share (Tables)
Loss per Share (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Earnings Per Share | Loss per share were computed as follows (in millions, except share data): Three Months Ended April 2, 2016 April 4, 2015 Weighted average shares: Basic weighted average shares outstanding 51,299,632 50,666,970 Effect of dilutive securities outstanding — — Diluted weighted average and equivalent shares outstanding 51,299,632 50,666,970 Net loss $ (29 ) $ (25 ) Basic per share amounts: Basic weighted average shares outstanding 51,299,632 50,666,970 Per share amount $ (0.56 ) $ (0.50 ) Diluted per share amounts: Diluted weighted average shares outstanding 51,299,632 50,666,970 Per share amount $ (0.56 ) $ (0.50 ) |
Potentially Dilutive Securities Excluded from Earnings Per Share Calculation | Due to a net loss in the first quarter of 2016 and 2015, options, awards and warrants were anti-dilutive and therefore excluded from the earnings per share calculation. These excluded outstanding options, awards and warrants are as follows: Three Months Ended April 2, 2016 April 4, 2015 Potentially dilutive shares 1,478,983 1,042,982 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Weighted-Average Assumptions Used for Grants of Stock Options and SARs | The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value based on those assumptions: Three Months Ended April 2, 2016 April 4, 2015 Expected dividend yield 0% 0% Forfeiture rate 10.24% 10.32% Volatility 33.98% 34.92% Risk free interest rate 1.53% 1.73% Range of interest rates 0.02% - 2.14% 0.02% - 2.61% Expected weighted-average life 5.32 years 5.36 years Fair value of SARs granted (in millions) $— $— Weighted-average grant date fair value of SARs granted $— $— |
Summary of SARs Activity | SAR activity was as follows: April 2, 2016 SARs Shares Weighted- Outstanding at beginning of period 1,397,611 $ 56.78 Granted — — Exercised (10,800 ) 37.03 Forfeited (19,497 ) 75.20 Expired — — Outstanding at end of period 1,367,314 56.66 Exercisable at end of period 728,463 36.01 Intrinsic value of exercised SARs (in millions) $ — |
Schedule of Outstanding and Exercisable Options | The following table summarizes information about SARs outstanding at April 2, 2016: April 2, 2016 Outstanding Exercisable Aggregate intrinsic value (in millions) $24 $20 Weighted-average remaining contractual term 6.5 years 5.1 years |
Summary of Stock Option Activity | Stock option activity was as follows: April 2, 2016 Options Shares Weighted- Outstanding at beginning of period 204,434 $ 36.66 Granted — — Exercised (7,590 ) 42.68 Forfeited — — Expired (2,490 ) 43.35 Outstanding at end of period 194,354 36.34 Exercisable at end of period 194,354 36.34 Intrinsic value of exercised options (in millions) $ — |
Summary of Restricted Stock Award Activity | Restricted stock award activity was as follows: April 2, 2016 Restricted Stock Awards Shares Weighted-Average Outstanding at beginning of period 566,447 $ 77.68 Granted — — Released (12,592 ) 58.37 Forfeited (7,586 ) 85.80 Outstanding at end of period 546,269 77.93 |
Summary of Performance Share Award Activity | Performance share award activity was as follows: April 2, 2016 Performance Share Awards Shares Weighted-Average Outstanding at beginning of period 332,630 $ 73.40 Grant adjustment (2,531 ) 73.07 Released — — Forfeited (2,719 ) 73.07 Outstanding at end of period 327,380 73.22 |
Weighted-Average Assumptions Used for Employee Purchase Rights Granted Under Stock Purchase Plan | The fair value of the purchase rights issued to employees under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. An expected life of 3 months was used to calculate the fair value. Three Months Ended April 2, April 4, Fair market value $ 69.65 $ 77.41 Option price $ 66.17 $ 73.54 Expected dividend yield — % — % Expected volatility 59 % 23 % Risk free interest rate 0.21 % 0.04 % |
Other Comprehensive Loss (Table
Other Comprehensive Loss (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive (Loss) Income (AOCI) | The components of accumulated other comprehensive loss ("AOCI") for the 3 months ended April 2, 2016 and April 4, 2015 are as follows (in millions): Unrealized (losses) gain on sales hedging Unrealized (losses)/ gains on forward interest rate swaps (1) Currency translation adjustments Total Balance at December 31, 2014 $ 5 $ (8 ) $ (6 ) $ (9 ) Other comprehensive (loss) income before reclassifications 9 (12 ) (2 ) (5 ) Amounts reclassified from AOCI (6 ) — (6 ) Tax (expense) benefit (1 ) 5 4 Other comprehensive income (loss) 2 (7 ) (2 ) (7 ) Balance at April 4, 2015 $ 7 $ (15 ) $ (8 ) $ (16 ) Balance at December 31, 2015 $ (1 ) $ (15 ) $ (33 ) $ (49 ) Other comprehensive (loss) income before reclassifications (20 ) (9 ) 5 (24 ) Amounts reclassified from AOCI 1 (1 ) — — Tax benefit (expense) 4 3 — 7 Other comprehensive (loss) income (15 ) (7 ) 5 (17 ) Balance at April 2, 2016 $ (16 ) $ (22 ) $ (28 ) $ (66 ) |
Reclassification Out of AOCI to Earnings | Reclassification out of AOCI to earnings during the 3 months ended April 2, 2016 and April 4, 2015 were as follows (in millions): April 2, April 4, Comprehensive Income Components Financial Statement Line Item Unrealized loss (gain) on sales hedging: Total before tax Net sales of tangible products $ 1 $ (6 ) Tax (benefit) expense — 1 Net of taxes 1 (5 ) Unrealized loss (gain) on forward interest rate swaps: Total before tax Interest expense (income) (1 ) — Tax expense (benefit) — — Net of taxes (1 ) — Total amounts reclassified from AOCI $ — $ (5 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Segment Reporting [Abstract] | |
Segment Information by Reportable Segments | Financial information by segment is presented as follows (in millions): Three Months Ended April 2, April 4, Net sales: Legacy Zebra $ 313 $ 332 Enterprise 537 567 Total segment 850 899 Corporate, eliminations (1) (3 ) (6 ) Total $ 847 $ 893 Operating income: Legacy Zebra $ 69 $ 77 Enterprise 36 54 Total segment 105 131 Corporate, eliminations (2) (105 ) (111 ) Total $ — $ 20 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments related to the Acquisition. (2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments; amortization expense, acquisition and integration expenses and exit and restructuring costs. |
Description of Business and B38
Description of Business and Basis of Presentation (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Oct. 31, 2014 | Apr. 02, 2016 | |
Selling and Marketing Expense | Restatement Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Error correction, description | 10.3 | |
Income Tax Benefit | Restatement Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Error correction, description | 3.1 | |
Enterprise Business | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Payments to Acquire Businesses, Gross | $ 3,450 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Carried at Fair Value (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | $ 9 | $ 16 |
Total Liabilities at fair value | 67 | 35 |
Fair value, assets, Level 2 to Level 1 transfers, amount | 6 | 6 |
Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 35 | 26 |
Derivative contracts- foreign currency | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 7 | |
Total Liabilities at fair value | 23 | |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 9 | 15 |
Total Liabilities at fair value | 15 | 9 |
Level 1 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Level 1 | Derivative contracts- foreign currency | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 6 | |
Total Liabilities at fair value | 6 | |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 1 |
Total Liabilities at fair value | 52 | 26 |
Level 2 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 35 | 26 |
Level 2 | Derivative contracts- foreign currency | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 1 | |
Total Liabilities at fair value | 17 | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Total Liabilities at fair value | 0 | 0 |
Level 3 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Level 3 | Derivative contracts- foreign currency | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | |
Total Liabilities at fair value | 0 | |
Investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 9 | 9 |
Investments related to the deferred compensation plan | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 9 | 9 |
Investments related to the deferred compensation plan | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Investments related to the deferred compensation plan | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Liabilities Related to the Deferred Compensation Plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 9 | 9 |
Liabilities Related to the Deferred Compensation Plan | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 9 | 9 |
Liabilities Related to the Deferred Compensation Plan | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 0 | 0 |
Liabilities Related to the Deferred Compensation Plan | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | $ 0 | $ 0 |
Inventories - Components of Inv
Inventories - Components of Inventories, Net (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 180 | $ 178 |
Work in process | 1 | 0 |
Finished goods | 272 | 272 |
Inventories, gross | 453 | 450 |
Inventory reserves | (67) | (56) |
Inventories, net | $ 386 | $ 394 |
Goodwill and Other Intangible41
Goodwill and Other Intangibles - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Apr. 02, 2016 | Apr. 04, 2015 | Dec. 31, 2015 | |
Goodwill [Line Items] | |||
Amortization of intangible assets | $ 59 | $ 68 | |
Goodwill | $ 2,495 | $ 2,493 | |
Minimum | |||
Goodwill [Line Items] | |||
Estimated useful life of intangible assets (in years) | 1 year | ||
Maximum | |||
Goodwill [Line Items] | |||
Estimated useful life of intangible assets (in years) | 15 years | ||
Enterprise Business | |||
Goodwill [Line Items] | |||
Goodwill | $ 2,300 | ||
Zebra Legacy | |||
Goodwill [Line Items] | |||
Goodwill | $ 154 |
Goodwill and Other Intangible42
Goodwill and Other Intangibles - Summary of Other Intangibles Assets (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Other intangibles | ||
Accumulated amortization | $ (401) | $ (342) |
Other intangibles, net | 700 | 757 |
Customer relationships | ||
Other intangibles | ||
Gross amount | 519 | 517 |
Patent and patent rights | ||
Other intangibles | ||
Gross amount | 247 | 247 |
Unpatented technology | ||
Other intangibles | ||
Gross amount | 270 | 270 |
Trade names | ||
Other intangibles | ||
Gross amount | 40 | 40 |
Current technology | ||
Other intangibles | ||
Gross amount | $ 25 | $ 25 |
Other Long-Term Assets - Compon
Other Long-Term Assets - Components of Other Long-Term Assets (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Long-term investments | $ 32 | $ 31 |
Other long-term assets | 23 | 25 |
Long-term notes receivable | 14 | 14 |
Investments related to the deferred compensation plan | 9 | 9 |
Long-term trade receivable | 9 | 11 |
Deposits | 2 | 2 |
Total | $ 89 | $ 92 |
Other Long-Term Assets - Additi
Other Long-Term Assets - Additional Information (Detail) - Enterprise Business | 3 Months Ended |
Apr. 02, 2016 | |
Minimum | |
Restructuring Cost and Reserve [Line Items] | |
Percentage of interest acquired | 1.90% |
Maximum | |
Restructuring Cost and Reserve [Line Items] | |
Percentage of interest acquired | 17.40% |
Accrued Liabilities - Component
Accrued Liabilities - Components of Accrued Liabilities (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued other expenses | $ 130 | $ 134 |
Interest payable | 54 | 36 |
Accrued compensation and related benefits | 53 | 47 |
Customer reserves | 34 | 38 |
Accrued derivative contracts- foreign currency | 23 | 0 |
Accrued incentive compensation | 22 | 62 |
Accrued warranty | 21 | 22 |
Restructuring liability | 7 | 9 |
Accrued taxes | 5 | 10 |
Total accrued liabilities | $ 349 | $ 358 |
Costs Associated with Exit an46
Costs Associated with Exit and Restructuring Activities - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 02, 2016 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||
Exit and restructuring charges, incurred life to date | $ 51 | |
Zebra Legacy | ||
Restructuring Cost and Reserve [Line Items] | ||
Exit and restructuring charges, incurred life to date | 11 | |
Exit and restructuring charges | 2 | |
Enterprise Solutions | ||
Restructuring Cost and Reserve [Line Items] | ||
Exit and restructuring charges, incurred life to date | 40 | |
Exit and restructuring charges | $ 4 | |
Scenario, Forecast | Zebra Legacy | ||
Restructuring Cost and Reserve [Line Items] | ||
Exit and restructuring charges | $ 10 | |
Scenario, Forecast | Enterprise Business | ||
Restructuring Cost and Reserve [Line Items] | ||
Exit and restructuring charges | $ 20 |
Costs Associated with Exit an47
Costs Associated with Exit and Restructuring Activities - Summary of Exit and Restructuring Costs Incurred (Detail) - The Acquisition - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | 15 Months Ended |
Apr. 02, 2016 | Dec. 31, 2015 | Apr. 02, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||
Severance, stay bonuses, and other employee-related expenses | $ 3 | $ 36 | $ 39 |
Obligations for future non-cancellable lease payments | 3 | 9 | 12 |
Total | $ 6 | $ 45 | $ 51 |
Costs Associated with Exit an48
Costs Associated with Exit and Restructuring Activities - Rollforward of Exit and Restructuring Accruals (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of the period | $ 14 | $ 7 |
Charged to earnings | 6 | 11 |
Cash paid | (7) | (10) |
Balance at the end of the period | $ 13 | $ 8 |
Cost Associated with Exit and R
Cost Associated with Exit and Restructuring Activities - Liabilities Included in the Balance Sheet (Details) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 | Apr. 04, 2015 | Dec. 31, 2014 |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | $ 13 | $ 14 | $ 8 | $ 7 |
Accrued Liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | 7 | 9 | ||
Other Long-term Liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | $ 6 | $ 5 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) | Oct. 27, 2014USD ($) | Jun. 30, 2014tranch | Apr. 02, 2016USD ($) | Apr. 04, 2015USD ($) | Dec. 31, 2015USD ($) |
Change in unrealized loss on forward interest rate swap hedging: | |||||
Debt instrument, carrying amount | $ 2,937,000,000 | $ 3,012,000,000 | |||
Number of tranches | tranch | 2 | ||||
Net liability position of derivatives | 9,000,000 | $ 11,000,000 | |||
(Loss) gain on accumulated other comprehensive income | 1,000,000 | $ 0 | |||
Losses on the forward interest rate swaps designated in a hedging relationship expected to be reclassified from accumulated other comprehensive loss into earnings during the next 12 months. | 14,000,000 | ||||
Term Loan | |||||
Change in unrealized loss on forward interest rate swap hedging: | |||||
Debt instrument, carrying amount | $ 2,200,000,000 | ||||
Interest rate description | Term Loan that accrues interest at a variable rate of LIBOR (subject to a floor of 0.75% per annum) plus a margin of 4.0%. | ||||
Floor Rate | Term Loan | |||||
Change in unrealized loss on forward interest rate swap hedging: | |||||
Interest rate variable | 0.75% | ||||
Margin Rate | Term Loan | |||||
Change in unrealized loss on forward interest rate swap hedging: | |||||
Interest rate variable | 4.00% | ||||
Revolving Credit Facility | |||||
Change in unrealized loss on forward interest rate swap hedging: | |||||
Revolving credit facility maximum borrowing capacity | $ 250,000,000 | $ 250,000,000 |
Derivative Instruments - Financ
Derivative Instruments - Financial Information Related to Hedging of Net Assets Included in Consolidated Statements of Operations (Detail) € in Thousands, £ in Thousands, MYR in Thousands, CZK in Thousands, CAD in Thousands, BRL in Thousands, $ in Thousands | 3 Months Ended | ||||||||||||||
Apr. 02, 2016USD ($) | Apr. 04, 2015USD ($) | Apr. 02, 2016CAD | Apr. 02, 2016MYR | Apr. 02, 2016GBP (£) | Apr. 02, 2016CZK | Apr. 02, 2016EUR (€) | Apr. 02, 2016BRL | Dec. 31, 2015USD ($) | Dec. 31, 2015CAD | Dec. 31, 2015MYR | Dec. 31, 2015GBP (£) | Dec. 31, 2015CZK | Dec. 31, 2015EUR (€) | Dec. 31, 2015BRL | |
Derivative [Line Items] | |||||||||||||||
Realized (loss) gain from foreign exchange derivatives | $ (5,000) | $ 1,000 | |||||||||||||
Gain (loss) on net foreign currency assets | 6,000 | (28,000) | |||||||||||||
Foreign exchange gain (loss) | 1,000 | $ (27,000) | |||||||||||||
Net fair value of outstanding contracts | $ 0 | $ 1,000 | |||||||||||||
British Pound/US dollar | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | £ | £ 7,000 | £ 5,000 | |||||||||||||
Euro/US dollar | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | € | € 125,000 | € 133,000 | |||||||||||||
British Pound/Euro | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | £ | £ 0 | £ 7,000 | |||||||||||||
Canadian Dollar/US dollar | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | CAD | CAD 3,000 | CAD 5,000 | |||||||||||||
Czech Koruna/US dollar | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | CZK | CZK 240,000 | CZK 140,000 | |||||||||||||
Brazilian Real/US dollar | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | BRL | BRL 10,000 | BRL 28,000 | |||||||||||||
Malaysian Ringgit/US dollar | Foreign Exchange Forward | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Notional balance of outstanding contracts (in millions): | MYR | MYR 52,000 | MYR 13,000 |
Derivative Instruments - Fina52
Derivative Instruments - Financial Information Related to Cash Flow Hedges (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Change in unrealized (loss) gain on anticipated sales hedging: | ||
Unrealized (loss) gain on anticipated sales hedging transactions | $ (15) | $ 2 |
Cash Flow Hedging | ||
Change in unrealized (loss) gain on anticipated sales hedging: | ||
Gross | (19) | 2 |
Income tax (benefit) expense | (4) | 0 |
Unrealized (loss) gain on anticipated sales hedging transactions | $ (15) | $ 2 |
Derivative Instruments - Fina53
Derivative Instruments - Financial Information Related to Cash Flow Hedges of Future Revenues (Detail) - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 02, 2016 | Apr. 04, 2015 | Dec. 31, 2015 | |
Derivative [Line Items] | |||
Hedge effectiveness | 100.00% | 100.00% | |
Net (loss) gain included in revenue | $ (2,000) | $ 6,000 | |
Foreign Exchange Forward | |||
Derivative [Line Items] | |||
Notional balance of outstanding contracts versus the dollar | $ 523,000 | $ 193,000 |
Derivative Instruments - Forwar
Derivative Instruments - Forward Contract Amounts Recorded in Consolidated Balance Sheets (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Assets: | ||
Total Assets | $ 0 | $ 7 |
Derivative Liability [Abstract] | ||
Accrued Liabilities | 23 | 0 |
Prepaid expenses and other current assets | ||
Assets: | ||
Total Assets | $ 0 | $ 7 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Balance Sheet Position of Forward Interest Rate Swaps Designated in Hedge Relationship (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Change in unrealized loss on forward interest rate swap hedging: | ||
Accrued liabilities | $ 349 | $ 358 |
Other long-term liabilities | 114 | 99 |
Forward Interest Rate Swap | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Accrued liabilities | 1 | 1 |
Other long-term liabilities | $ 25 | $ 14 |
Hedge effectiveness | 100.00% | 100.00% |
Derivative Instruments - Sche56
Derivative Instruments - Schedule of Gross and Net Amount Offset (Detail) - USD ($) $ in Millions | Apr. 02, 2016 | Dec. 31, 2015 |
Change in unrealized loss on forward interest rate swap hedging: | ||
Net Fair Value in the Consolidated Balance Sheets | $ 23 | $ 0 |
Balance Sheet Offsetting | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 61 | |
Counterparty Offsetting | 26 | |
Net Fair Value in the Consolidated Balance Sheets | 35 | |
Balance Sheet Offsetting | Counterparty A | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 18 | |
Counterparty Offsetting | 10 | |
Net Fair Value in the Consolidated Balance Sheets | 8 | |
Balance Sheet Offsetting | Counterparty B | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 6 | |
Counterparty Offsetting | 3 | |
Net Fair Value in the Consolidated Balance Sheets | 3 | |
Balance Sheet Offsetting | Counterparty C | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 6 | |
Counterparty Offsetting | 3 | |
Net Fair Value in the Consolidated Balance Sheets | 3 | |
Balance Sheet Offsetting | Counterparty D | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 12 | |
Counterparty Offsetting | 5 | |
Net Fair Value in the Consolidated Balance Sheets | 7 | |
Balance Sheet Offsetting | Counterparty E | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 6 | |
Counterparty Offsetting | 2 | |
Net Fair Value in the Consolidated Balance Sheets | 4 | |
Balance Sheet Offsetting | Counterparty F | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 6 | |
Counterparty Offsetting | 3 | |
Net Fair Value in the Consolidated Balance Sheets | 3 | |
Balance Sheet Offsetting | Counterparty G | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross Fair Value | 7 | |
Counterparty Offsetting | 0 | |
Net Fair Value in the Consolidated Balance Sheets | $ 7 |
Derivative Instruments - Sche57
Derivative Instruments - Schedule of Series of Forward Starting Swaps Each with a Term of One Year (Detail) $ in Millions | Apr. 02, 2016USD ($) |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | $ 3,339 |
Year 2,016 | |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | 1,010 |
Year 2,017 | |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | 697 |
Year 2,018 | |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | 544 |
Year 2,019 | |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | 544 |
Year 2,020 | |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | 272 |
Year 2,021 | |
Change in unrealized loss on forward interest rate swap hedging: | |
Notional balance of outstanding contracts | $ 272 |
Derivative Instruments - Sche58
Derivative Instruments - Schedule of (Loss) Gain Recognized on Forward Interest Rate Swaps Not Designated in Hedge Relationship (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Forward Interest Rate Swap | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Interest income on forward interest rate swaps | $ 1 | $ 2 |
Derivative Instruments - Sche59
Derivative Instruments - Schedule of Loss Recognized in Other Comprehensive Unrealized Loss on Forward Interest Rate Swaps Designated in Hedging Relationship (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Change in unrealized loss on forward interest rate swap hedging: | ||
Net of taxes | $ (7) | $ (7) |
Forward Interest Rate Swap | ||
Change in unrealized loss on forward interest rate swap hedging: | ||
Gross | (10) | (12) |
Income tax benefit | (3) | (5) |
Net of taxes | $ (7) | $ (7) |
Warranty - Additional Informati
Warranty - Additional Information (Detail) | 3 Months Ended |
Apr. 02, 2016 | |
Wireless LAN Products | Enterprise Solutions | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Mobile Products | Enterprise Solutions | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Printers | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Thermal Printheads | |
Product Warranty Liability [Line Items] | |
Product warranty period | 6 months |
Batteries | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Battery Based Products | |
Product Warranty Liability [Line Items] | |
Product warranty period | 90 days |
Minimum | Advanced Data Capture Products | |
Product Warranty Liability [Line Items] | |
Product warranty period | 1 year |
Maximum | Advanced Data Capture Products | |
Product Warranty Liability [Line Items] | |
Product warranty period | 5 years |
Warranty - Summary of Accrued W
Warranty - Summary of Accrued Warranty Obligation (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at the beginning of the period | $ 22 | $ 25 |
Warranty expense | 7 | 9 |
Warranty payments | (8) | (7) |
Balance at the end of the period | $ 21 | $ 27 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | Oct. 27, 2014 | Oct. 15, 2014 | Apr. 02, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||||
Debt instrument, carrying amount | $ 2,937,000,000 | $ 3,012,000,000 | ||
Fair value of our long-term debt | $ 3,100,000,000 | 3,100,000,000 | ||
7.25 % Senior Notes Due 2022 | ||||
Debt Instrument [Line Items] | ||||
Private offering aggregate principal amount | $ 1,050,000,000 | |||
Interest rate on senior notes | 7.25% | |||
Effective interest rate of senior notes yielded | 7.61% | |||
Interest on the senior notes is payable description | Interest on the Senior Notes is payable in cash on April 15 and October 15 of each year. | |||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, carrying amount | $ 2,200,000,000 | |||
Interest rate variable | 4.75% | |||
Term loan interest rate | 4.75% | |||
Line of credit facility, principal prepayment | $ 80,000,000 | |||
Principal payment made at maturity | $ 1,960,000,000 | |||
Debt instrument maturity date | Oct. 27, 2021 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Revolving credit facility maximum borrowing capacity | $ 250,000,000 | $ 250,000,000 | ||
Letters of credit | 3,000,000 | |||
Funds available for other borrowings | $ 247,000,000 | |||
Revolving credit facility, maturity date | Oct. 27, 2019 | |||
Revolving credit facility interest rate | 3.25% | |||
Commitment fee percentage | 0.375% | |||
Commitment fee percentage, scenario one | 0.25% | |||
Commitment fee percentage, scenario two | 0.375% | |||
Commitment fee percentage, scenario three | 0.50% | |||
Unused capacity, commitment fee percentage | 20.00% | |||
Borrowings under revolving credit facility | $ 0 | $ 0 | ||
Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Revolving credit facility interest rate | 2.50% |
Long-Term Debt - Summary of Car
Long-Term Debt - Summary of Carrying Value of Debt (Detail) - USD ($) | Apr. 02, 2016 | Dec. 31, 2015 | Oct. 27, 2014 |
Debt Instrument [Line Items] | |||
Less: debt issuance costs | $ (25,000,000) | $ (26,000,000) | |
Less: unamortized discounts | (43,000,000) | (47,000,000) | |
Long-term debt | 2,937,000,000 | 3,012,000,000 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, carrying amount | 1,955,000,000 | 2,035,000,000 | |
Long-term debt | $ 2,200,000,000 | ||
7.25 % Senior Notes Due 2022 | |||
Debt Instrument [Line Items] | |||
Debt instrument, carrying amount | $ 1,050,000,000 | $ 1,050,000,000 |
Contingencies (Details)
Contingencies (Details) | Apr. 02, 2016officer |
Commitments and Contingencies Disclosure [Abstract] | |
Number of former officers being sued | 2 |
Loss per Share - Computation of
Loss per Share - Computation of Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Weighted average shares: | ||
Basic weighted average shares outstanding (in shares) | 51,299,632 | 50,666,970 |
Effect of dilutive securities outstanding (in shares) | 0 | 0 |
Diluted weighted average and equivalent shares outstanding (in shares) | 51,299,632 | 50,666,970 |
Net loss | $ (29) | $ (25) |
Basic per share amounts: | ||
Basic weighted average shares outstanding (in shares) | 51,299,632 | 50,666,970 |
Per share amount (in USD per share) | $ (0.56) | $ (0.50) |
Diluted per share amounts: | ||
Diluted weighted average and equivalent shares outstanding (in shares) | 51,299,632 | 50,666,970 |
Per share amount (in USD per share) | $ (0.56) | $ (0.50) |
Loss per Share - Potentially Di
Loss per Share - Potentially Dilutive Securities Excluded from Earnings Per Share Calculation (Detail) - shares | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive shares (in shares) | 1,478,983 | 1,042,982 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) $ in Millions | 3 Months Ended |
Apr. 02, 2016USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Pre-tax share-based compensation expense recognized | $ 9 |
Tax related benefits recognized | 3 |
Total unearned compensation costs related to performance share awards | $ 37 |
Total unearned compensation costs amortization period | 2 years 2 months 12 days |
Stock Purchase Plan | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected weighted-average life | 3 months |
Share-Based Compensation - Weig
Share-Based Compensation - Weighted-Average Assumptions Used for Grants of Stock Options and SARs (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate, minimum | 0.02% | 0.02% |
Risk free interest rate, maximum | 2.14% | 2.61% |
Stock Option and Stock Appreciation Rights (SARs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Forfeiture rate | 10.24% | 10.32% |
Volatility | 33.98% | 34.92% |
Risk free interest rate | 1.53% | 1.73% |
Expected weighted-average life | 5 years 3 months 25 days | 5 years 4 months 10 days |
Fair value of SARs granted (in millions) | $ 0 | $ 0 |
Weighted-average grant date fair value of SARs granted (per underlying share) | $ 0 | $ 0 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of SARs Activity (Detail) - Stock Appreciation Rights (SARs) $ / shares in Units, $ in Millions | 3 Months Ended |
Apr. 02, 2016USD ($)$ / sharesshares | |
SARs | |
Shares, Outstanding at beginning of period | shares | 1,397,611 |
Shares, Granted | shares | 0 |
Shares, Exercised | shares | (10,800) |
Shares, Expired | shares | (19,497) |
Shares, Expired | shares | 0 |
Shares, Outstanding at end of period | shares | 1,367,314 |
Shares, Exercisable at end of period | shares | 728,463 |
Weighted-Average Exercise Price, Outstanding at beginning of year | $ / shares | $ 56.78 |
Weighted-Average Exercise Price, Granted | $ / shares | 0 |
Weighted-Average Exercise Price, Exercised | $ / shares | 37.03 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 75.20 |
Weighted-Average Exercise Price, Expired | $ / shares | 0 |
Weighted-Average Exercise Price, Outstanding at end of period | $ / shares | 56.66 |
Weighted-Average Exercise Price, Exercisable at end of period | $ / shares | $ 36.01 |
Aggregate intrinsic value, Outstanding | $ | $ 24 |
Aggregate intrinsic value, Exercisable | $ | $ 20 |
Weighted-average remaining contractual term, Outstanding | 6 years 6 months |
Weighted-average remaining contractual term, Exercisable | 5 years 1 month 6 days |
Intrinsic value of exercised options (in millions) | $ | $ 0 |
Share-Based Compensation - Su70
Share-Based Compensation - Summary of Stock Option Activity (Detail) - Stock Option $ / shares in Units, $ in Millions | 3 Months Ended |
Apr. 02, 2016USD ($)$ / sharesshares | |
Options | |
Shares, Outstanding at beginning of period | shares | 204,434 |
Shares, Granted | shares | 0 |
Shares, Exercised | shares | (7,590) |
Shares, Forfeited | shares | 0 |
Shares, Expired | shares | (2,490) |
Shares, Outstanding at end of period | shares | 194,354 |
Shares, Exercisable at end of period | shares | 194,354 |
Intrinsic value of exercised options (in millions) | $ | $ 0 |
Weighted-Average Exercise Price, Outstanding at beginning of year | $ / shares | $ 36.66 |
Weighted-Average Exercise Price, Granted | $ / shares | 0 |
Weighted-Average Exercise Price, Exercised | $ / shares | 42.68 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 0 |
Weighted-Average Exercise Price, Expired | $ / shares | 43.35 |
Weighted-Average Exercise Price, Outstanding at end of period | $ / shares | 36.34 |
Weighted-Average Exercise Price, Exercisable at end of period | $ / shares | $ 36.34 |
Share-Based Compensation - Su71
Share-Based Compensation - Summary of Restricted Stock Award Activity (Detail) - Restricted Stock Awards | 3 Months Ended |
Apr. 02, 2016$ / sharesshares | |
Restricted Stock Awards | |
Shares, Outstanding at beginning of period | shares | 566,447 |
Shares, Granted | shares | 0 |
Shares, Released | shares | (12,592) |
Shares, Forfeited | shares | (7,586) |
Shares, Outstanding at end of period | shares | 546,269 |
Weighted-Average Grant Date Fair Value, Outstanding at beginning of year | $ / shares | $ 77.68 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 0 |
Weighted-Average Grant Date Fair Value, Released | $ / shares | 58.37 |
Weighted-Average Grant Date Fair Value, Forfeited | $ / shares | 85.80 |
Weighted-Average Grant Date Fair Value, Outstanding at end of period | $ / shares | $ 77.93 |
Share-Based Compensation - Su72
Share-Based Compensation - Summary of Performance Share Award Activity (Detail) - Performance Share Awards | 3 Months Ended |
Apr. 02, 2016$ / sharesshares | |
Performance Share Awards | |
Shares, Outstanding at beginning of period | shares | 332,630 |
Shares, Granted | shares | (2,531) |
Shares, Released | shares | 0 |
Shares, Forfeited | shares | (2,719) |
Shares, Outstanding at end of period | shares | 327,380 |
Weighted-Average Grant Date Fair Value, Outstanding at beginning of year | $ / shares | $ 73.40 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 73.07 |
Weighted-Average Grant Date Fair Value, Released | $ / shares | 0 |
Weighted-Average Grant Date Fair Value, Forfeited | $ / shares | 73.07 |
Weighted-Average Grant Date Fair Value, Outstanding at end of period | $ / shares | $ 73.22 |
Share-Based Compensation - We73
Share-Based Compensation - Weighted-Average Assumptions Used for Employee Purchase Rights Granted Under Stock Purchase Plan (Detail) - $ / shares | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate, minimum | 0.02% | 0.02% |
Risk free interest rate, maximum | 2.14% | 2.61% |
Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair market value | $ 69.65 | $ 77.41 |
Option price | $ 66.17 | $ 73.54 |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 59.00% | 23.00% |
Risk free interest rate | 0.21% | 0.04% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 20 | $ 33 |
Effective tax rate | 41.20% | 56.50% |
Statutory tax rate | 35.00% |
Other Comprehensive Loss - Comp
Other Comprehensive Loss - Components of Accumulated Other Comprehensive (Loss) Income (AOCI) (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | $ (49) | $ (9) |
Other comprehensive (loss) income before reclassifications | (24) | (5) |
Amounts reclassified from AOCI | 0 | (6) |
Tax (expense) benefit | 7 | 4 |
Other comprehensive income/(loss) | (17) | (7) |
Ending Balance | (66) | (16) |
Unrealized (losses) gain on sales hedging | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (1) | 5 |
Other comprehensive (loss) income before reclassifications | (20) | 9 |
Amounts reclassified from AOCI | 1 | (6) |
Tax (expense) benefit | 4 | (1) |
Other comprehensive income/(loss) | (15) | 2 |
Ending Balance | (16) | 7 |
Unrealized (losses)/ gains on forward interest rate swaps | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (15) | (8) |
Other comprehensive (loss) income before reclassifications | (9) | (12) |
Amounts reclassified from AOCI | (1) | 0 |
Tax (expense) benefit | 3 | 5 |
Other comprehensive income/(loss) | (7) | (7) |
Ending Balance | (22) | (15) |
Currency translation adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (33) | (6) |
Other comprehensive (loss) income before reclassifications | 5 | (2) |
Amounts reclassified from AOCI | 0 | |
Tax (expense) benefit | 0 | |
Other comprehensive income/(loss) | 5 | (2) |
Ending Balance | $ (28) | $ (8) |
Other Comprehensive Loss - Recl
Other Comprehensive Loss - Reclassification Out of AOCI to Earnings (Detail) - USD ($) | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Unrealized loss (gain) on sales hedging: | ||
Unrealized (loss) gain on anticipated sales hedging transactions | $ (15,000,000) | $ 2,000,000 |
Unrealized loss (gain) on forward interest rate swaps: | ||
Net of taxes | (7,000,000) | (7,000,000) |
Reclassification Out of AOCI to Earnings | ||
Unrealized loss (gain) on forward interest rate swaps: | ||
Total amounts reclassified from AOCI | 0 | (5,000,000) |
Reclassification Out of AOCI to Earnings | Unrealized (losses) gain on sales hedging | Net sales of tangible products | ||
Unrealized loss (gain) on sales hedging: | ||
Total before tax | 1,000,000 | (6,000,000) |
Tax (benefit) expense | 0 | 1,000,000 |
Unrealized (loss) gain on anticipated sales hedging transactions | 1,000,000 | (5,000,000) |
Reclassification Out of AOCI to Earnings | Unrealized loss/(gain) on forward interest rate swaps: | Interest expense (income) | ||
Unrealized loss (gain) on forward interest rate swaps: | ||
Total before tax | (1,000,000) | 0 |
Tax expense (benefit) | 0 | 0 |
Net of taxes | $ (1,000,000) | $ 0 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Apr. 02, 2016Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Segment I
Segment Information - Segment Information by Reportable Segments (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Net sales: | ||
Net sales | $ 847 | $ 893 |
Operating income: | ||
Operating income | 0 | 20 |
Operating Segments | ||
Net sales: | ||
Net sales | 850 | 899 |
Operating income: | ||
Operating income | 105 | 131 |
Corporate, Eliminations | ||
Net sales: | ||
Net sales | (3) | (6) |
Operating income: | ||
Operating income | (105) | (111) |
Zebra Legacy | Operating Segments | ||
Net sales: | ||
Net sales | 313 | 332 |
Operating income: | ||
Operating income | 69 | 77 |
Enterprise Solutions | Operating Segments | ||
Net sales: | ||
Net sales | 537 | 567 |
Operating income: | ||
Operating income | $ 36 | $ 54 |