Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 01, 2016 | Nov. 08, 2016 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 1, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
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 (in shares) | 52,785,730 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 163 | $ 192 |
Accounts receivable, net of allowances for doubtful accounts of $6 | 599 | 671 |
Inventories, net | 345 | 397 |
Prepaid expenses and other current assets | 90 | 74 |
Assets held for sale | 68 | 0 |
Total Current assets | 1,265 | 1,334 |
Property and equipment, net | 292 | 298 |
Goodwill | 2,460 | 2,490 |
Other intangibles, net of accumulated amortization of $500 and $342, respectively | 533 | 757 |
Long-term deferred income taxes | 83 | 70 |
Other long-term assets | 65 | 91 |
Total Assets | 4,698 | 5,040 |
Current liabilities: | ||
Accounts payable | 360 | 289 |
Accrued liabilities | 347 | 367 |
Deferred revenue | 204 | 197 |
Income taxes payable | 0 | 42 |
Liabilities held for sale | 21 | 0 |
Total Current liabilities | 932 | 895 |
Long-term debt | 2,788 | 3,012 |
Long-term deferred revenue | 101 | 125 |
Other long-term liabilities | 129 | 115 |
Total Liabilities | 3,950 | 4,147 |
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 | 199 | 194 |
Treasury stock at cost, 19,335,780 and 19,990,006 shares at October 1, 2016 and December 31, 2015, respectively | (614) | (631) |
Retained earnings | 1,223 | 1,377 |
Accumulated other comprehensive loss | (61) | (48) |
Total Stockholders’ Equity | 748 | 893 |
Total Liabilities and Stockholders’ Equity | $ 4,698 | $ 5,040 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 6 | $ 6 |
Accumulated amortization | $ 500 | $ 342 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 72,151,857 | 72,151,857 |
Treasury stock, shares (in shares) | 19,335,780 | 19,990,006 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Net sales: | ||||
Net sales of tangible products | $ 772 | $ 788 | $ 2,241 | $ 2,305 |
Revenue from services and software | 132 | 128 | 391 | 394 |
Total Net sales | 904 | 916 | 2,632 | 2,699 |
Cost of sales: | ||||
Cost of sales of tangible products | 402 | 403 | 1,164 | 1,196 |
Cost of services and software | 88 | 99 | 258 | 287 |
Total Cost of sales | 490 | 502 | 1,422 | 1,483 |
Gross profit | 414 | 414 | 1,210 | 1,216 |
Operating expenses: | ||||
Selling and marketing | 112 | 120 | 337 | 367 |
Research and development | 96 | 100 | 284 | 296 |
General and administrative | 74 | 67 | 225 | 203 |
Amortization of intangible assets | 59 | 59 | 178 | 190 |
Acquisition and integration costs | 28 | 37 | 98 | 94 |
Impairment of goodwill and other intangibles | 62 | 0 | 62 | 0 |
Exit and restructuring costs | 7 | 6 | 17 | 35 |
Total Operating expenses | 438 | 389 | 1,201 | 1,185 |
Operating (loss) income | (24) | 25 | 9 | 31 |
Other (expense) income: | ||||
Foreign exchange loss | (1) | (5) | (4) | (21) |
Interest expense, net | (46) | (46) | (145) | (145) |
Other, net | (6) | 1 | (9) | (1) |
Total Other expenses | (53) | (50) | (158) | (167) |
Loss before income taxes | (77) | (25) | (149) | (136) |
Income tax expense (benefit) | 6 | 4 | 5 | (5) |
Net loss | $ (83) | $ (29) | $ (154) | $ (131) |
Basic loss per share (USD per share) | $ (1.61) | $ (0.57) | $ (2.99) | $ (2.56) |
Diluted loss per share (USD per share) | $ (1.61) | $ (0.57) | $ (2.99) | $ (2.56) |
Basic weighted average shares outstanding (in shares) | 51,690,204 | 51,151,541 | 51,499,447 | 50,925,976 |
Diluted weighted average and equivalent shares outstanding (in shares) | 51,690,204 | 51,151,541 | 51,499,447 | 50,925,976 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (83) | $ (29) | $ (154) | $ (131) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized loss on anticipated sales hedging transactions | (1) | (2) | (5) | (5) |
Unrealized gain (loss) on forward interest rate swaps hedging transactions | 3 | (6) | (7) | (10) |
Foreign currency translation adjustment | 0 | (12) | (1) | (22) |
Comprehensive loss | $ (81) | $ (49) | $ (167) | $ (168) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (154) | $ (131) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 234 | 240 |
Impairment of goodwill, intangibles and other assets | 67 | 0 |
Amortization of debt issuance cost and discount | 16 | 13 |
Share-based compensation | 20 | 25 |
Excess tax benefit from equity-based compensation | (2) | (11) |
Deferred income taxes | (4) | (38) |
Unrealized gain on forward interest rate swaps | (2) | (3) |
All other, net | 5 | 12 |
Changes in assets and liabilities, net of businesses acquired: | ||
Accounts receivable | 46 | 41 |
Inventories | 38 | (26) |
Other assets | 20 | (33) |
Accounts payable | 63 | 8 |
Accrued liabilities | (23) | 2 |
Deferred revenue | (2) | 8 |
Income taxes | (69) | 13 |
Other operating activities | (8) | (4) |
Net cash provided by operating activities | 245 | 116 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (49) | (87) |
Acquisition of businesses, net of cash acquired | 0 | (52) |
Proceeds from sale of long-term investments | 0 | 3 |
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 | (50) | (112) |
Cash flows from financing activities: | ||
Payment of long-term debt | (303) | (130) |
Proceeds from issuance of long-term debt | 68 | 0 |
Proceeds from exercise of stock options and stock purchase plan purchases | 8 | 14 |
Taxes paid related to net share settlement of equity awards | (6) | (13) |
Excess tax benefit from share-based compensation | 2 | 11 |
Net cash used in financing activities | (231) | (118) |
Effect of exchange rate changes on cash | 7 | (22) |
Net decrease in cash and cash equivalents | (29) | (136) |
Cash and cash equivalents at beginning of period | 192 | 394 |
Cash and cash equivalents at end of period | 163 | 258 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid, net | 70 | 32 |
Interest paid | $ 121 | $ 118 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Oct. 01, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Zebra Technologies Corporation and its subsidiaries ("Zebra" or "Company") is a global leader respected for innovative solutions in the automatic information and data capture 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 software and services that are associated with these products. 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. Our customers have traditionally benefited from proven solutions that increase productivity and improve efficiency and asset utilization. The Company is poised to drive and capitalize on the evolution of the data capture industry into the broader Enterprise Asset Intelligence ("EAI") industry, based on important technology trends like the Internet of Things ("IoT"), ubiquitous mobility, and cloud computing. EAI solutions offer additional benefits to our customers including real-time, data-driven insights that improve operational visibility and drive workflow optimization. Management prepared these unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and notes. These consolidated 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/A 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 October 1, 2016 and the consolidated statements of operations and comprehensive loss for the three and nine months ended October 1, 2016 and October 3, 2015 and the consolidated statements of cash flows for the nine months ended October 1, 2016 and October 3, 2015. These results, however, are not necessarily indicative of the results expected for the full year. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Income Taxes The Company’s interim period tax provision is determined as follows: • At the end of each fiscal quarter, the Company estimates the income tax provision that will be provided for the fiscal year. • The forecasted annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of each quarter to compute the year-to-date tax applicable to ordinary income (loss). The term ordinary income (loss) refers to income (loss) from continuing operations, before income taxes, excluding significant, unusual or infrequently occurring items. • The tax effects of significant, unusual or infrequently occurring items are recognized as discrete items in the interim periods in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about valuation allowances established in prior years, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant, unusual or infrequently occurring items. The determination of the forecasted annual effective tax rate is based upon a number of significant estimates and judgments, including the forecasted annual income (loss) before income taxes of the Company in each tax jurisdiction in which it operates, the development of tax planning strategies during the year, and the need for a valuation allowance. In addition, the Company’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. Recently Adopted Accounting Pronouncement In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-05, “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 as of January 1, 2016 and concluded that it does not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements 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, “ 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. In May 2016, the FASB issued ASU 2016-11, “ Rescission of SEC Guidance Because of ASU 2014-09 Pursuant to Staff Announcement at March 3, 2016 EITF Meeting, ” which rescinds certain SEC Staff Observer comments upon adoption of Topic 606. In May 2016, the FASB also issued ASU 2016-12, “ Narrow-Scope Improvements and Practical Expedients, ” which provides certain improvements and practical expedients in the interpretation and application of this topic. There are two transition methods available under the new standard, either cumulative effect or retrospective. These standards will be effective for the Company 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 the Company in the first quarter of 2017. 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 the Company 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. Earlier adoption is permitted. 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 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. With respect to the Company's consolidated financial statements, the most significant impact relates to the accounting for equity investments. This standard will be effective for the Company in the first quarter of 2018. Early adoption is prohibited for those provisions that apply to the Company. Amendments should be applied by means of cumulative effect adjustment to the consolidated 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 August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. ” This pronouncement provides clarification guidance on eight specific cash flow presentation issues that have developed due to diversity in practice. The issues include, but are not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and cash receipts from payments on beneficial interests in securitization transactions. The amendments in this ASU where practicable will be applied retrospectively. The standard will be effective for the Company in the first quarter of 2018. Earlier adoption is permitted. Management does not believe this pronouncement will have a material impact 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 consolidated balance sheet and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the consolidated balance sheet. The recognition, measurement, presentation and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, 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. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments-Credit Losses (Topic 326) -Measurement of Credit Losses on Financial Instruments. ” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management is currently assessing the impact of adoption on its consolidated financial statements. |
Business Divestiture
Business Divestiture | 9 Months Ended |
Oct. 01, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Business Divestiture | Business Divestiture On September 13, 2016, the Company entered into an Asset Purchase Agreement with Extreme Networks, Inc. to dispose of its wireless LAN (“WLAN”) business (“disposal group”) for $55 million in cash, subject to working capital and other adjustments. Management has determined that the disposal group does not qualify to be reported as discontinued operations and will therefore continue to be reported as part of continuing operations in its consolidated statements of operations. The assets and liabilities of the disposal group do qualify for assets held for sale accounting treatment and have been reclassified as assets and liabilities held for sale within the consolidated balance sheet at fair value less cost to sell. As reported on Form 8-K filed on September 20, 2016, the Company incurred a non-cash pre-tax charge related to the disposal group during the third quarter of 2016. This charge, which totaled $62 million , consists of impairments of goodwill for $32 million and other intangibles for $30 million and is shown separately on the consolidated statements of operations for the three and nine months ended October 1, 2016. The sale price of the disposal group was used as fair value in determining the impairment of the assets held for sale. Since the sales price of the disposal group was less than its carrying value, the resulting loss was recorded as an impairment. WLAN operating results are reported in the Enterprise segment. For the nine months ended October 1, 2016, the Company generated revenue and gross profit from these assets of $76 million and $37 million , respectively. The assets and liabilities classified as held for sale reflected in the consolidated balance sheets related to the WLAN business are as follows (in millions): October 1, Accounts receivable, net $ 27 Inventories, net 14 Prepaid expenses and other current assets 2 Current assets held for sale 43 Property and equipment, net 3 Goodwill — Other intangibles, net 18 Other long-term assets 4 Total assets held for sale $ 68 Accrued liabilities $ 5 Current liabilities held for sale 5 Deferred revenue 15 Other long-term liabilities 1 Total liabilities held for sale $ 21 On October 28, 2016, the Company completed the disposition of the disposal group. The finalization of the closing balance sheet is expected to be completed no later than the first quarter of 2017. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Oct. 01, 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 October 1, 2016 , are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Investments related to the deferred compensation plan $ 11 $ — $ — $ 11 Total Assets at fair value $ 11 $ — $ — $ 11 Liabilities: Forward interest rate swap contracts (2) $ — $ 37 $ — $ 37 Derivative contracts-foreign currency (1) 3 5 — 8 Liabilities related to the deferred compensation plan 11 — — 11 Total Liabilities at fair value $ 14 $ 42 $ — $ 56 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 $3 million and $6 million as of October 1, 2016 and December 31, 2015, respectively. (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. The estimated fair value of the Company’s long-term debt approximated $3.0 billion and $3.1 billion at October 1, 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 do 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. |
Inventories
Inventories | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of inventories, net are as follows (in millions): October 1, December 31, Raw material $ 164 $ 178 Finished goods 249 274 Inventories, gross 413 452 Inventory reserves (68 ) (55 ) Inventories, net $ 345 $ 397 |
Other Long-Term Assets
Other Long-Term Assets | 9 Months Ended |
Oct. 01, 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): October 1, 2016 December 31, 2015 Long-term investments $ 26 $ 31 Long-term notes receivable 14 14 Other long-term assets 11 24 Investments related to the deferred compensation plan 11 9 Long-term trade receivables — 11 Deposits 3 2 Total other long-term assets $ 65 $ 91 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 0.4% to 10.3% . 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. For the three and nine month periods ended October 1, 2016, the Company determined there was an other-than-temporary impairment on one of its cost method investments and wrote down the investment by $5 million to its fair value of approximately $1 million . This charge is included in other, net on the consolidated statements of operations. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Oct. 01, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities The components of accrued liabilities are as follows (in millions): October 1, December 31, Accrued other expenses $ 110 $ 131 Accrued compensation and related benefits 63 49 Accrued incentive compensation 42 68 Interest payable 42 36 Customer reserves 41 38 Accrued warranty 20 22 Restructuring liability 10 10 Foreign exchange contracts 8 — Interest rate swap liability 7 3 Accrued other taxes 4 10 Total accrued liabilities $ 347 $ 367 |
Costs Associated with Exit and
Costs Associated with Exit and Restructuring Activities | 9 Months Ended |
Oct. 01, 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 relate to the Company's acquisition of the Enterprise business from Motorola Solutions, Inc. ("Acquisition") in October 2014, which includes organizational design changes and operating efficiencies, and the sale of the Company's WLAN business. Total life-to-date costs for these projects of $63 million have been recorded through October 1, 2016 : $13 million in the Legacy Zebra segment and $50 million in the Enterprise segment. During the first nine months of 2016, the Company incurred exit and restructuring costs for these projects as follows (in millions): Cumulative costs incurred through December 31, 2015 Costs incurred for the nine months ended October 1, 2016 Cumulative costs incurred through October 1, 2016 Severance, stay bonus, and other employee-related expenses $ 37 $ 14 $ 51 Obligations for future non-cancellable lease payments 9 3 12 Total $ 46 $ 17 $ 63 Exit and restructuring charges were $1 million and $6 million for the Legacy Zebra and Enterprise segments, respectively, for the three month period ended October 1, 2016 and $4 million and $13 million , respectively, for the nine month period ended October 1, 2016 . Included in the charges for the three and nine month periods ended October 1, 2016 was $4 million specific to the sale of the WLAN business. The Company expects total charges for the year ended December 31, 2016 to be in the range of $20 million to $30 million . A rollforward of the exit and restructuring accruals is as follows (in millions): Three Months Ended Nine Months Ended October 1, October 3, October 1, October 3, Balance at the beginning of the period $ 13 $ 18 $ 15 $ 7 Charged to earnings 7 6 17 35 Cash paid (4 ) (8 ) (16 ) (26 ) Reclassification to held for sale liabilities (2 ) — (2 ) — Balance at the end of the period $ 14 $ 16 $ 14 $ 16 Liabilities related to exit and restructuring activities are included in the following accounts in the consolidated balance sheets (in millions): October 1, December 31, Accrued liabilities $ 10 $ 10 Other long-term liabilities 4 5 Total liabilities related to exit and restructuring activities $ 14 $ 15 Payments of the related long-term liabilities will be completed by October 2024. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Oct. 01, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC 815, “Derivatives and Hedging.” The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes. In accordance with ASC 815, “ Derivative and Hedging ,” the Company recognizes derivative instruments as either assets or liabilities on the consolidated balance sheet and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions): Asset (Liability) Derivatives Balance Sheet Classification Fair Value October 1, 2016 December 31, 2015 Derivative instruments designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 2 Foreign exchange contracts Accrued liabilities (5 ) — Forward interest rate swaps Accrued liabilities (4 ) (1 ) Forward interest rate swaps Other long-term liabilities (23 ) (14 ) Total derivative instruments designated as hedges $ (32 ) $ (13 ) Derivative instruments not designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 5 Foreign exchange contracts Accrued liabilities (3 ) — Forward interest rate swaps Accrued liabilities (3 ) (2 ) Forward interest rate swaps Other long-term liabilities (7 ) (9 ) Total derivative instruments not designated as hedges (13 ) (6 ) Total Net Derivative Liability $ (45 ) $ (19 ) See also Note 4 - Fair Value Measurements. The following table presents the gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions): Gain (Loss) Recognized in Income Three Months Ended Nine Months Ended Statement of Operations Classification October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Derivative instruments not designated as hedges: Foreign exchange contracts Foreign exchange (loss) gain $ (3 ) $ 3 $ (6 ) $ 6 Forward interest rate swaps Interest expense, net — 3 2 3 Total (loss) gain recognized in income $ (3 ) $ 6 $ (4 ) $ 9 Credit and Market Risk Management Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s credit risk counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the 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. Foreign Currency Exchange Risk Management The Company conducts business on a multinational basis in a wide variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises from euro denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company realizes its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign exchange forward and option contracts. The Company manages the exchange rate risk of anticipated euro denominated sales using put options, forward contracts, and participating forwards, all of which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Gains and losses on these contracts are deferred in accumulated other comprehensive loss until the contract is settled and the hedged sale is realized. The deferred gain or loss is then reported as an increase or decrease to net sales. As of October 1, 2016 and December 31, 2015, the notional amounts of the Company’s foreign exchange cash flow hedges were €409 million and €193 million , respectively. 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. The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to its Brazilian Real, British Pound, Canadian Dollar, Czech Koruna, Euro, Malaysian Ringgit, Australian Dollar and Swedish Krona denominated net assets. These forward contracts typically mature within three months after execution. Monetary gains and losses on these forward contracts are recorded in income each quarter and are generally offset by the transaction gains and losses related to their net asset positions. The notional values of these outstanding contracts are as follow: October 1, December 31, Notional balance of outstanding contracts (in millions): British Pound/US dollar £ 4 £ 5 Euro/US dollar € 128 € 133 British Pound/Euro £ 7 £ 7 Canadian Dollar/US dollar $ 7 $ 5 Czech Koruna/US dollar Kč 181 Kč 140 Brazilian Real/US dollar R$ 39 R$ 28 Malaysian Ringgit/US dollar RM 110 RM 13 Australian Dollar/US dollar $ 25 $ — Swedish Krona/US dollar kr 16 kr — Net fair value of outstanding contracts (in millions) $ — $ 1 Interest Rate Risk Management In October 2014, the Company entered into a credit agreement, which provides for a term loan (“Term Loan”) of $2.2 billion and a revolving credit facility (“Revolving Credit Facility”) of $250.0 million . See Note 11 Long-Term Debt. Borrowings under the Term Loan bear interest at a variable rate plus an applicable margin. As a result, the Company is exposed to market risk associated with the variable interest rate payments on the Term Loan. The Company has entered into forward interest rate swaps to hedge a portion of this interest rate risk. Certain of the forward interest rate swaps, each with a term of 1 year, are designated as cash flow hedges. The notional amount of these designated swaps effective in each year of the cash flow hedge does not exceed the principal amount of the Term Loan which is hedged. The changes in fair value of the swaps designated as cash flow hedges are recognized in accumulated other comprehensive loss, with any ineffectiveness immediately recognized in earnings. At October 1, 2016, the Company estimated that approximately $16 million in losses on the forward interest rate swaps designated as cash flow hedges will be reclassified from accumulated other comprehensive loss into earnings during the next 4 quarters. 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. The following table presents the gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at October 1, 2016 (in millions): Gross Fair Value Counterparty Offsetting Net Fair Value in the Consolidated Balance Sheets Counterparty A $ 18 $ 11 $ 7 Counterparty B 7 3 4 Counterparty C 7 3 4 Counterparty D 13 6 7 Counterparty E 6 2 4 Counterparty F 7 3 4 Counterparty G 7 — 7 Total $ 65 $ 28 $ 37 |
Warranty
Warranty | 9 Months Ended |
Oct. 01, 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 warrantied for 6 months and batteries are warrantied for 1 year. Battery-based products, such as location tags, are covered by a 90 -day warranty. The provision for warranty expense is adjusted quarterly based on historical warranty experience. The following table is a summary of the Company’s accrued warranty obligation (in millions): Nine Months Ended October 1, 2016 October 3, 2015 Balance at the beginning of the period $ 22 $ 25 Warranty expense 20 23 Warranty payments (22 ) (24 ) Balance at the end of the period $ 20 $ 24 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Oct. 01, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following table summarizes the carrying value of the Company’s long-term debt (in millions): October 1, 2016 December 31, 2015 7.25% Senior Notes due 2022 $ 1,050 $ 1,050 4.00% Term Loan due 2021 1,800 2,035 3.25% Revolving Credit Facility — — Less: debt issuance costs (23 ) (26 ) Less: unamortized discounts (39 ) (47 ) Long-term debt $ 2,788 $ 3,012 During 2014, the Company entered into a credit agreement which provides for a term loan of $2.2 billion and a revolving credit facility of $250.0 million . Borrowings under this agreement bear interest at a variable rate subject to a floor of 4.00% . As of October 1, 2016 , the Term Loan interest rate was 4.09% . Interest payments are payable quarterly. The Company has also entered into interest rate swaps to manage interest rate risk on its long-term debt. The Company is required to make a final scheduled principal payment of $1.8 billion due on October 27, 2021. Additionally, the Company may make optional prepayments of the Term Loan, in whole or in part, without premium or penalty. The Company made optional principal prepayments of $235 million during the nine months ended October 1, 2016 . On November 4, 2016, the Company made an additional principal prepayment of $42 million . Borrowings under the Revolving Credit Facility bear interest at a variable rate plus an applicable margin. As of October 1, 2016 , the Revolving Credit Facility interest rate was 3.25% . Interest payments are payable quarterly. As of October 1, 2016 , the Company had established letters of credit amounting to $4 million , which reduced funds available for other borrowings under the agreement to $246 million . On June 2, 2016 (the "Closing Date"), the Company entered into the first amendment to our existing Term Loan credit agreement dated as of October 27, 2014 (the "Refinancing Amendment"). The Refinancing Amendment lowered the index rate spread for LIBOR loans from LIBOR + 400 bp to LIBOR + 325 bp. In accounting for the Refinancing Amendment, the Company applied the provisions of ASC Subtopic 470-50, Modifications and Extinguishments (“ASC 470-50”). The evaluation of the accounting under ASC 470-50 was done on a creditor by creditor basis in order to determine if the terms of the debt were substantially different and, as a result, whether to apply modification or extinguishment accounting. It was determined that the terms of the debt were not substantially different for approximately 96.6% of the lenders, and applied modification accounting. For the remaining 3.4% of the lenders, extinguishment accounting was applied. During the second quarter of 2016, the Company recorded a $2.7 million charge to other expense, primarily related to costs incurred with third parties for arranger, legal and other services and the unamortized fees related to the extinguished debt. Additionally, the Company paid $4.9 million to the creditors in exchange for the modification and reported it as a debt discount which is being amortized over the life of the modified debt using the interest method. |
Contingencies
Contingencies | 9 Months Ended |
Oct. 01, 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. The court has certified a class of investors that includes those that purchased Symbol common stock between March 12, 2004 and August 1, 2005. The parties have substantially completed fact and expert discovery. However, there are 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. The current lead Directors and Officers insurer continues to maintain its position of 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 the above mentioned matter. |
Loss per Share
Loss per Share | 9 Months Ended |
Oct. 01, 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 Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Weighted average shares: Basic weighted average shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Effect of dilutive securities outstanding — — — — Diluted weighted average and equivalent shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Net loss $ (83 ) $ (29 ) $ (154 ) $ (131 ) Basic per share amounts: Basic weighted average shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Per share amount $ (1.61 ) $ (0.57 ) $ (2.99 ) $ (2.56 ) Diluted per share amounts: Diluted weighted average shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Per share amount $ (1.61 ) $ (0.57 ) $ (2.99 ) $ (2.56 ) 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 net losses in both the third quarter and first nine months 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 Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Potentially dilutive shares 1,340,123 1,435,155 1,366,130 1,492,882 |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Oct. 01, 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 $21 million and $26 million for the nine month periods ended October 1, 2016 and October 3, 2015 , respectively. Tax related benefits of $7 million and $9 million were also recognized for the nine month periods ended October 1, 2016 and October 3, 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: Nine Months Ended October 1, 2016 October 3, 2015 Expected dividend yield 0% 0% Forfeiture rate 9.01% 10.24% Volatility 43.14% 33.98% Risk free interest rate 1.29% 1.53% Range of interest rates 0.25% - 1.75% 0.02% - 2.14% Expected weighted-average life 5.33 years 5.32 years Fair value of SARs granted (in millions) $ 12 $ 12 Weighted-average grant date fair value of SARs granted $ 20.06 $ 35.25 The following table summarizes the stock awards activity: Nine Months Ended October 1, 2016 Stock Awards Shares Weighted- Outstanding at beginning of period 1,397,611 $ 56.68 Granted 618,866 51.83 Exercised (58,384 ) 39.71 Forfeited (52,858 ) 65.26 Expired (5,577 ) 81.27 Outstanding at end of period 1,899,658 55.22 Exercisable at end of period 933,358 43.92 Intrinsic value of exercised SARs (in millions) $ 2 The following table summarizes information about stock awards outstanding at October 1, 2016 : Outstanding Exercisable Aggregate intrinsic value (in millions) $ 26 $ 20 Weighted-average remaining contractual term 7.1 years 5.2 years There were no stock options issued during the nine months ended October 1, 2016. A summary of the status of the Company's restricted stock awards, restricted stock units, performance stock awards and performance stock units activity was as follows: Nine Months Ended October 1, 2016 Restricted Stock Awards and Units Shares Weighted-Average Outstanding at beginning of period 605,193 $ 77.82 Granted Restricted Stock Awards 381,278 51.60 Restricted Stock Units 31,194 51.42 Total shares granted 412,472 Released (234,402 ) 56.46 Forfeited (28,112 ) 79.34 Outstanding at end of period 755,151 70.25 Nine Months Ended October 1, 2016 Performance Stock Awards and Units Shares Weighted-Average Outstanding at beginning of period 341,703 $ 73.30 Granted Performance Stock Awards 178,378 50.34 Performance Stock Units — Total shares granted 178,378 Released (111,325 ) 46.58 Forfeited (6,819 ) 74.22 Outstanding at end of period 401,937 70.44 As of October 1, 2016 , total unearned compensation costs related to the Company’s share-based compensation plans was $54 million which will be amortized over the weighted average remaining service period of 2.6 years. |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates for the nine month periods ended October 1, 2016 and October 3, 2015 were (3.4)% and 3.7% , respectively. The Company’s effective tax rates differed from the U.S. federal income tax rate of 35% primarily due to the taxation of foreign earnings at lower rates and increases to valuation allowances in certain foreign jurisdictions that the Company was not able to benefit from due to uncertainty as to the realization of those losses, which accounted for approximately a 32% reduction in the rate in 2016. Additionally, the effective tax rate in 2016 was impacted by discrete items including the impact of the impairment of goodwill and intangible assets from the WLAN disposition. The Company expects that its consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of the foreign earnings rate differential and valuation allowances in jurisdictions with losses. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Oct. 01, 2016 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Stockholders’ equity includes certain items classified as accumulated other comprehensive loss, including: • Unrealized (loss) gain on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 9 Derivative Instruments for more details. • Unrealized (loss) gain on forward interest rate swaps hedging transactions refers to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the 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 accumulated other comprehensive income. The components of accumulated other comprehensive loss ("AOCI") for the nine months ended October 1, 2016 and October 3, 2015 are as follows (in millions): Unrealized (loss) gain on sales hedging Unrealized (loss)/ gain on forward interest rate swaps (1) Currency translation adjustments Total Balance at December 31, 2014 $ 5 $ (8 ) $ (6 ) $ (9 ) Other comprehensive income (loss) before reclassifications 6 (18 ) (15 ) (27 ) Amounts reclassified from AOCI to income (12 ) 1 (7 ) (18 ) Tax benefit 1 7 — 8 Other comprehensive loss (5 ) (10 ) (22 ) (37 ) Balance at October 3, 2015 $ — $ (18 ) $ (28 ) $ (46 ) Balance at December 31, 2015 $ (1 ) $ (15 ) $ (32 ) $ (48 ) Other comprehensive loss before reclassifications (16 ) (12 ) (1 ) (29 ) Amounts reclassified from AOCI to income 10 2 — 12 Tax benefit 1 3 — 4 Other comprehensive loss (5 ) (7 ) (1 ) (13 ) Balance at October 1, 2016 $ (6 ) $ (22 ) $ (33 ) $ (61 ) (1) See Note 9 Derivative Instruments regarding timing of reclassifications. Reclassifications out of AOCI to earnings during the three and nine months ended October 1, 2016 and October 3, 2015 were as follows (in millions): Three Months Ended Nine Months Ended October 1, October 3, October 1, October 3, Comprehensive Income Components Financial Statement Line Item Unrealized losses (gains) on sales hedging: Total before tax Net sales of tangible products $ 4 $ (1 ) $ 10 $ (12 ) Tax (benefit) expense (1 ) 1 (2 ) 3 Net of taxes 3 — 8 (9 ) Unrealized losses (gains) on forward interest rate swaps: Total before tax Interest expense, net 1 1 2 1 Tax benefit (1 ) — (1 ) — Net of taxes — 1 1 1 Currency translation adjustments Foreign exchange loss — — — (7 ) Total amounts reclassified from AOCI $ 3 $ 1 $ 9 $ (15 ) |
Segment Information
Segment Information | 9 Months Ended |
Oct. 01, 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 Nine Months Ended October 1, October 3, October 1, October 3, Net sales: Legacy Zebra $ 301 $ 314 $ 920 $ 966 Enterprise 605 605 1,720 1,746 Total segment 906 919 2,640 2,712 Corporate, eliminations (1) (2 ) (3 ) (8 ) (13 ) Total $ 904 $ 916 $ 2,632 $ 2,699 Operating (loss) income: Legacy Zebra $ 50 $ 67 $ 178 $ 206 Enterprise 89 64 200 161 Total segment 139 131 378 367 Corporate, eliminations (2) (163 ) (106 ) (369 ) (336 ) Total $ (24 ) $ 25 $ 9 $ 31 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments 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, impairment of goodwill and other intangibles and exit and restructuring costs. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Oct. 01, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On November 4, 2016, the Company made a principal payment of $42 million under its term loan. See Note 11 Long-Term Debt. |
Significant Accounting Polici25
Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Income Taxes | Income Taxes The Company’s interim period tax provision is determined as follows: • At the end of each fiscal quarter, the Company estimates the income tax provision that will be provided for the fiscal year. • The forecasted annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of each quarter to compute the year-to-date tax applicable to ordinary income (loss). The term ordinary income (loss) refers to income (loss) from continuing operations, before income taxes, excluding significant, unusual or infrequently occurring items. • The tax effects of significant, unusual or infrequently occurring items are recognized as discrete items in the interim periods in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about valuation allowances established in prior years, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant, unusual or infrequently occurring items. The determination of the forecasted annual effective tax rate is based upon a number of significant estimates and judgments, including the forecasted annual income (loss) before income taxes of the Company in each tax jurisdiction in which it operates, the development of tax planning strategies during the year, and the need for a valuation allowance. In addition, the Company’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. |
Recently Adopted and Issued But Not Yet Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncement In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-05, “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 as of January 1, 2016 and concluded that it does not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements 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, “ 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. In May 2016, the FASB issued ASU 2016-11, “ Rescission of SEC Guidance Because of ASU 2014-09 Pursuant to Staff Announcement at March 3, 2016 EITF Meeting, ” which rescinds certain SEC Staff Observer comments upon adoption of Topic 606. In May 2016, the FASB also issued ASU 2016-12, “ Narrow-Scope Improvements and Practical Expedients, ” which provides certain improvements and practical expedients in the interpretation and application of this topic. There are two transition methods available under the new standard, either cumulative effect or retrospective. These standards will be effective for the Company 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 the Company in the first quarter of 2017. 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 the Company 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. Earlier adoption is permitted. 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 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. With respect to the Company's consolidated financial statements, the most significant impact relates to the accounting for equity investments. This standard will be effective for the Company in the first quarter of 2018. Early adoption is prohibited for those provisions that apply to the Company. Amendments should be applied by means of cumulative effect adjustment to the consolidated 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 August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. ” This pronouncement provides clarification guidance on eight specific cash flow presentation issues that have developed due to diversity in practice. The issues include, but are not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and cash receipts from payments on beneficial interests in securitization transactions. The amendments in this ASU where practicable will be applied retrospectively. The standard will be effective for the Company in the first quarter of 2018. Earlier adoption is permitted. Management does not believe this pronouncement will have a material impact 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 consolidated balance sheet and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the consolidated balance sheet. The recognition, measurement, presentation and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, 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. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments-Credit Losses (Topic 326) -Measurement of Credit Losses on Financial Instruments. ” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management is currently assessing the impact of adoption on its consolidated financial statements. |
Fair Value Measurement | 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. |
Derivatives, Reporting of Derivative Activity | In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC 815, “Derivatives and Hedging.” The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes. In accordance with ASC 815, “ Derivative and Hedging ,” the Company recognizes derivative instruments as either assets or liabilities on the consolidated balance sheet and measures them at fair value. |
Debt | In accounting for the Refinancing Amendment, the Company applied the provisions of ASC Subtopic 470-50, Modifications and Extinguishments (“ASC 470-50”). The evaluation of the accounting under ASC 470-50 was done on a creditor by creditor basis in order to determine if the terms of the debt were substantially different and, as a result, whether to apply modification or extinguishment accounting. It was determined that the terms of the debt were not substantially different for approximately 96.6% of the lenders, and applied modification accounting. For the remaining 3.4% of the lenders, extinguishment accounting was applied. |
Business Divestiture (Tables)
Business Divestiture (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Assets and Liabilities Held for Sale | The assets and liabilities classified as held for sale reflected in the consolidated balance sheets related to the WLAN business are as follows (in millions): October 1, Accounts receivable, net $ 27 Inventories, net 14 Prepaid expenses and other current assets 2 Current assets held for sale 43 Property and equipment, net 3 Goodwill — Other intangibles, net 18 Other long-term assets 4 Total assets held for sale $ 68 Accrued liabilities $ 5 Current liabilities held for sale 5 Deferred revenue 15 Other long-term liabilities 1 Total liabilities held for sale $ 21 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Carried at Fair Value | Financial assets and liabilities carried at fair value as of October 1, 2016 , are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Investments related to the deferred compensation plan $ 11 $ — $ — $ 11 Total Assets at fair value $ 11 $ — $ — $ 11 Liabilities: Forward interest rate swap contracts (2) $ — $ 37 $ — $ 37 Derivative contracts-foreign currency (1) 3 5 — 8 Liabilities related to the deferred compensation plan 11 — — 11 Total Liabilities at fair value $ 14 $ 42 $ — $ 56 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 $3 million and $6 million as of October 1, 2016 and December 31, 2015, respectively. (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) | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Components of Inventories, Net | The components of inventories, net are as follows (in millions): October 1, December 31, Raw material $ 164 $ 178 Finished goods 249 274 Inventories, gross 413 452 Inventory reserves (68 ) (55 ) Inventories, net $ 345 $ 397 |
Other Long-Term Assets (Tables)
Other Long-Term Assets (Tables) | 9 Months Ended |
Oct. 01, 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): October 1, 2016 December 31, 2015 Long-term investments $ 26 $ 31 Long-term notes receivable 14 14 Other long-term assets 11 24 Investments related to the deferred compensation plan 11 9 Long-term trade receivables — 11 Deposits 3 2 Total other long-term assets $ 65 $ 91 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Payables and Accruals [Abstract] | |
Components of Accrued Liabilities | The components of accrued liabilities are as follows (in millions): October 1, December 31, Accrued other expenses $ 110 $ 131 Accrued compensation and related benefits 63 49 Accrued incentive compensation 42 68 Interest payable 42 36 Customer reserves 41 38 Accrued warranty 20 22 Restructuring liability 10 10 Foreign exchange contracts 8 — Interest rate swap liability 7 3 Accrued other taxes 4 10 Total accrued liabilities $ 347 $ 367 |
Costs Associated with Exit an31
Costs Associated with Exit and Restructuring Activities (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of Exit and Restructuring Costs Incurred | During the first nine months of 2016, the Company incurred exit and restructuring costs for these projects as follows (in millions): Cumulative costs incurred through December 31, 2015 Costs incurred for the nine months ended October 1, 2016 Cumulative costs incurred through October 1, 2016 Severance, stay bonus, and other employee-related expenses $ 37 $ 14 $ 51 Obligations for future non-cancellable lease payments 9 3 12 Total $ 46 $ 17 $ 63 |
Rollforward of Exit and Restructuring Accruals | A rollforward of the exit and restructuring accruals is as follows (in millions): Three Months Ended Nine Months Ended October 1, October 3, October 1, October 3, Balance at the beginning of the period $ 13 $ 18 $ 15 $ 7 Charged to earnings 7 6 17 35 Cash paid (4 ) (8 ) (16 ) (26 ) Reclassification to held for sale liabilities (2 ) — (2 ) — Balance at the end of the period $ 14 $ 16 $ 14 $ 16 |
Schedule of Liabilities Related to Exit and Restructuring Activities Included in Consolidated Balance Sheets | Liabilities related to exit and restructuring activities are included in the following accounts in the consolidated balance sheets (in millions): October 1, December 31, Accrued liabilities $ 10 $ 10 Other long-term liabilities 4 5 Total liabilities related to exit and restructuring activities $ 14 $ 15 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Assets and Liabilities | The following table presents the fair value of its derivative instruments (in millions): Asset (Liability) Derivatives Balance Sheet Classification Fair Value October 1, 2016 December 31, 2015 Derivative instruments designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 2 Foreign exchange contracts Accrued liabilities (5 ) — Forward interest rate swaps Accrued liabilities (4 ) (1 ) Forward interest rate swaps Other long-term liabilities (23 ) (14 ) Total derivative instruments designated as hedges $ (32 ) $ (13 ) Derivative instruments not designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 5 Foreign exchange contracts Accrued liabilities (3 ) — Forward interest rate swaps Accrued liabilities (3 ) (2 ) Forward interest rate swaps Other long-term liabilities (7 ) (9 ) Total derivative instruments not designated as hedges (13 ) (6 ) Total Net Derivative Liability $ (45 ) $ (19 ) |
Derivative Instruments, Gain (Loss) | The following table presents the gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions): Gain (Loss) Recognized in Income Three Months Ended Nine Months Ended Statement of Operations Classification October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Derivative instruments not designated as hedges: Foreign exchange contracts Foreign exchange (loss) gain $ (3 ) $ 3 $ (6 ) $ 6 Forward interest rate swaps Interest expense, net — 3 2 3 Total (loss) gain recognized in income $ (3 ) $ 6 $ (4 ) $ 9 |
Financial Information Related to Hedging of Net Assets Included in Consolidated Statements of Operations | The notional values of these outstanding contracts are as follow: October 1, December 31, Notional balance of outstanding contracts (in millions): British Pound/US dollar £ 4 £ 5 Euro/US dollar € 128 € 133 British Pound/Euro £ 7 £ 7 Canadian Dollar/US dollar $ 7 $ 5 Czech Koruna/US dollar Kč 181 Kč 140 Brazilian Real/US dollar R$ 39 R$ 28 Malaysian Ringgit/US dollar RM 110 RM 13 Australian Dollar/US dollar $ 25 $ — Swedish Krona/US dollar kr 16 kr — Net fair value of outstanding contracts (in millions) $ — $ 1 |
Schedule of Gross and Net Amount Offset | Gross Fair Value Counterparty Offsetting Net Fair Value in the Consolidated Balance Sheets Counterparty A $ 18 $ 11 $ 7 Counterparty B 7 3 4 Counterparty C 7 3 4 Counterparty D 13 6 7 Counterparty E 6 2 4 Counterparty F 7 3 4 Counterparty G 7 — 7 Total $ 65 $ 28 $ 37 |
Warranty (Tables)
Warranty (Tables) | 9 Months Ended |
Oct. 01, 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): Nine Months Ended October 1, 2016 October 3, 2015 Balance at the beginning of the period $ 22 $ 25 Warranty expense 20 23 Warranty payments (22 ) (24 ) Balance at the end of the period $ 20 $ 24 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Carrying Value of Debt | The following table summarizes the carrying value of the Company’s long-term debt (in millions): October 1, 2016 December 31, 2015 7.25% Senior Notes due 2022 $ 1,050 $ 1,050 4.00% Term Loan due 2021 1,800 2,035 3.25% Revolving Credit Facility — — Less: debt issuance costs (23 ) (26 ) Less: unamortized discounts (39 ) (47 ) Long-term debt $ 2,788 $ 3,012 |
Loss per Share (Tables)
Loss per Share (Tables) | 9 Months Ended |
Oct. 01, 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 Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Weighted average shares: Basic weighted average shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Effect of dilutive securities outstanding — — — — Diluted weighted average and equivalent shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Net loss $ (83 ) $ (29 ) $ (154 ) $ (131 ) Basic per share amounts: Basic weighted average shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Per share amount $ (1.61 ) $ (0.57 ) $ (2.99 ) $ (2.56 ) Diluted per share amounts: Diluted weighted average shares outstanding 51,690,204 51,151,541 51,499,447 50,925,976 Per share amount $ (1.61 ) $ (0.57 ) $ (2.99 ) $ (2.56 ) |
Potentially Dilutive Securities Excluded from Earnings Per Share Calculation | Due to net losses in both the third quarter and first nine months 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 Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Potentially dilutive shares 1,340,123 1,435,155 1,366,130 1,492,882 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Oct. 01, 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: Nine Months Ended October 1, 2016 October 3, 2015 Expected dividend yield 0% 0% Forfeiture rate 9.01% 10.24% Volatility 43.14% 33.98% Risk free interest rate 1.29% 1.53% Range of interest rates 0.25% - 1.75% 0.02% - 2.14% Expected weighted-average life 5.33 years 5.32 years Fair value of SARs granted (in millions) $ 12 $ 12 Weighted-average grant date fair value of SARs granted $ 20.06 $ 35.25 |
Summary of Stock Awards Activity | The following table summarizes the stock awards activity: Nine Months Ended October 1, 2016 Stock Awards Shares Weighted- Outstanding at beginning of period 1,397,611 $ 56.68 Granted 618,866 51.83 Exercised (58,384 ) 39.71 Forfeited (52,858 ) 65.26 Expired (5,577 ) 81.27 Outstanding at end of period 1,899,658 55.22 Exercisable at end of period 933,358 43.92 Intrinsic value of exercised SARs (in millions) $ 2 |
Schedule of Outstanding and Exercisable Options | The following table summarizes information about stock awards outstanding at October 1, 2016 : Outstanding Exercisable Aggregate intrinsic value (in millions) $ 26 $ 20 Weighted-average remaining contractual term 7.1 years 5.2 years |
Summary of Restricted Stock Award Activity | A summary of the status of the Company's restricted stock awards, restricted stock units, performance stock awards and performance stock units activity was as follows: Nine Months Ended October 1, 2016 Restricted Stock Awards and Units Shares Weighted-Average Outstanding at beginning of period 605,193 $ 77.82 Granted Restricted Stock Awards 381,278 51.60 Restricted Stock Units 31,194 51.42 Total shares granted 412,472 Released (234,402 ) 56.46 Forfeited (28,112 ) 79.34 Outstanding at end of period 755,151 70.25 |
Summary of Performance Share Award Activity | Nine Months Ended October 1, 2016 Performance Stock Awards and Units Shares Weighted-Average Outstanding at beginning of period 341,703 $ 73.30 Granted Performance Stock Awards 178,378 50.34 Performance Stock Units — Total shares granted 178,378 Released (111,325 ) 46.58 Forfeited (6,819 ) 74.22 Outstanding at end of period 401,937 70.44 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive (Loss) Income (AOCI) | The components of accumulated other comprehensive loss ("AOCI") for the nine months ended October 1, 2016 and October 3, 2015 are as follows (in millions): Unrealized (loss) gain on sales hedging Unrealized (loss)/ gain on forward interest rate swaps (1) Currency translation adjustments Total Balance at December 31, 2014 $ 5 $ (8 ) $ (6 ) $ (9 ) Other comprehensive income (loss) before reclassifications 6 (18 ) (15 ) (27 ) Amounts reclassified from AOCI to income (12 ) 1 (7 ) (18 ) Tax benefit 1 7 — 8 Other comprehensive loss (5 ) (10 ) (22 ) (37 ) Balance at October 3, 2015 $ — $ (18 ) $ (28 ) $ (46 ) Balance at December 31, 2015 $ (1 ) $ (15 ) $ (32 ) $ (48 ) Other comprehensive loss before reclassifications (16 ) (12 ) (1 ) (29 ) Amounts reclassified from AOCI to income 10 2 — 12 Tax benefit 1 3 — 4 Other comprehensive loss (5 ) (7 ) (1 ) (13 ) Balance at October 1, 2016 $ (6 ) $ (22 ) $ (33 ) $ (61 ) (1) See Note 9 Derivative Instruments regarding timing of reclassifications. |
Reclassification Out of AOCI to Earnings | Reclassifications out of AOCI to earnings during the three and nine months ended October 1, 2016 and October 3, 2015 were as follows (in millions): Three Months Ended Nine Months Ended October 1, October 3, October 1, October 3, Comprehensive Income Components Financial Statement Line Item Unrealized losses (gains) on sales hedging: Total before tax Net sales of tangible products $ 4 $ (1 ) $ 10 $ (12 ) Tax (benefit) expense (1 ) 1 (2 ) 3 Net of taxes 3 — 8 (9 ) Unrealized losses (gains) on forward interest rate swaps: Total before tax Interest expense, net 1 1 2 1 Tax benefit (1 ) — (1 ) — Net of taxes — 1 1 1 Currency translation adjustments Foreign exchange loss — — — (7 ) Total amounts reclassified from AOCI $ 3 $ 1 $ 9 $ (15 ) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Segment Reporting [Abstract] | |
Segment Information by Reportable Segments | Financial information by segment is presented as follows (in millions): Three Months Ended Nine Months Ended October 1, October 3, October 1, October 3, Net sales: Legacy Zebra $ 301 $ 314 $ 920 $ 966 Enterprise 605 605 1,720 1,746 Total segment 906 919 2,640 2,712 Corporate, eliminations (1) (2 ) (3 ) (8 ) (13 ) Total $ 904 $ 916 $ 2,632 $ 2,699 Operating (loss) income: Legacy Zebra $ 50 $ 67 $ 178 $ 206 Enterprise 89 64 200 161 Total segment 139 131 378 367 Corporate, eliminations (2) (163 ) (106 ) (369 ) (336 ) Total $ (24 ) $ 25 $ 9 $ 31 (1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments 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, impairment of goodwill and other intangibles and exit and restructuring costs. |
Business Divestiture (Details)
Business Divestiture (Details) - Wireless LAN (WLAN) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - USD ($) $ in Millions | Sep. 13, 2016 | Oct. 01, 2016 | Oct. 01, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from divestiture of businesses | $ 55 | ||
Loss on write-down | $ 62 | ||
Goodwill impairment | 32 | ||
Revenue from sale of assets | $ 76 | ||
Gross profit from sale of assets | $ 37 | ||
Other Intangible Assets | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of intangible assets | $ 30 |
Business Divestiture - Assets a
Business Divestiture - Assets and Liabilities Held for Sale (Details) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Disposal Group, Including Discontinued Operation, Assets, Current [Abstract] | ||
Current assets held for sale | $ 68 | $ 0 |
Disposal Group, Including Discontinued Operation, Liabilities, Current [Abstract] | ||
Current liabilities held for sale | 21 | $ 0 |
Wireless LAN (WLAN) | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||
Disposal Group, Including Discontinued Operation, Assets, Current [Abstract] | ||
Accounts receivable, net | 27 | |
Inventories, net | 14 | |
Prepaid expenses and other current assets | 2 | |
Current assets held for sale | 43 | |
Disposal Group, Including Discontinued Operation, Assets, Noncurrent [Abstract] | ||
Property and equipment, net | 3 | |
Goodwill | 0 | |
Other intangibles, net | 18 | |
Other long-term assets | 4 | |
Total assets held for sale | 68 | |
Disposal Group, Including Discontinued Operation, Liabilities, Current [Abstract] | ||
Accrued liabilities | 5 | |
Current liabilities held for sale | 5 | |
Disposal Group, Including Discontinued Operation, Liabilities, Noncurrent [Abstract] | ||
Deferred revenue | 15 | |
Other long-term liabilities | 1 | |
Total liabilities held for sale | $ 21 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Carried at Fair Value (Detail) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | $ 11 | $ 16 |
Total Liabilities at fair value | 56 | 35 |
Long-term debt, fair value | 3,000 | 3,100 |
Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Liabilities at fair value | 37 | 26 |
Derivative contracts-foreign currency | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 7 | |
Total Liabilities at fair value | 8 | |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 11 | 15 |
Total Liabilities at fair value | 14 | 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] | ||
Assets, fair value disclosure | 6 | |
Total Liabilities at fair value | 3 | |
Level 1 | Forward Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, assets, Level 2 to Level 1 transfers, amount | 3 | 6 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 1 |
Total Liabilities at fair value | 42 | 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 | 37 | 26 |
Level 2 | Derivative contracts-foreign currency | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 1 | |
Total Liabilities at fair value | 5 | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 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] | ||
Assets, fair value disclosure | 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] | ||
Assets, fair value disclosure | 11 | 9 |
Investments related to the deferred compensation plan | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 11 | 9 |
Investments related to the deferred compensation plan | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Investments related to the deferred compensation plan | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 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 | 11 | 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 | 11 | 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 | Oct. 01, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 164 | $ 178 |
Finished goods | 249 | 274 |
Inventories, gross | 413 | 452 |
Inventory reserves | (68) | (55) |
Inventories, net | $ 345 | $ 397 |
Other Long-Term Assets - Compon
Other Long-Term Assets - Components of Other Long-Term Assets (Detail) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Long-term investments | $ 26 | $ 31 |
Long-term notes receivable | 14 | 14 |
Other long-term assets | 11 | 24 |
Investments related to the deferred compensation plan | 11 | 9 |
Long-term trade receivable | 0 | 11 |
Deposits | 3 | 2 |
Total | $ 65 | $ 91 |
Other Long-Term Assets - Additi
Other Long-Term Assets - Additional Information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended |
Oct. 01, 2016USD ($) | Oct. 01, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Other than temporary impairment | $ 5 | $ 5.5 |
Fair value of cost method investments | $ 1 | $ 1 |
Enterprise Business | Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Percentage of interest acquired | 0.40% | |
Enterprise Business | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Percentage of interest acquired | 10.30% |
Accrued Liabilities - Component
Accrued Liabilities - Components of Accrued Liabilities (Detail) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued other expenses | $ 110 | $ 131 |
Accrued compensation and related benefits | 63 | 49 |
Accrued incentive compensation | 42 | 68 |
Interest payable | 42 | 36 |
Customer reserves | 41 | 38 |
Accrued warranty | 20 | 22 |
Restructuring liability | 10 | 10 |
Foreign exchange contracts | 8 | 0 |
Interest rate swap liability | 7 | 3 |
Accrued other taxes | 4 | 10 |
Total | $ 347 | $ 367 |
Costs Associated with Exit an46
Costs Associated with Exit and Restructuring Activities - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Oct. 01, 2016 | Oct. 01, 2016 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||
Exit and restructuring charges, incurred life to date | $ 63,000,000 | $ 63,000,000 | |
Legacy Zebra | |||
Restructuring Cost and Reserve [Line Items] | |||
Exit and restructuring charges, incurred life to date | 13,000,000 | 13,000,000 | |
Exit and restructuring charges | 1,000,000 | 4,000,000 | |
Enterprise | |||
Restructuring Cost and Reserve [Line Items] | |||
Exit and restructuring charges, incurred life to date | 50,000,000 | 50,000,000 | |
Exit and restructuring charges | 6,000,000 | 13,000,000 | |
Scenario, Forecast | Minimum | |||
Restructuring Cost and Reserve [Line Items] | |||
Exit and restructuring charges | $ 20,000,000 | ||
Scenario, Forecast | Maximum | |||
Restructuring Cost and Reserve [Line Items] | |||
Exit and restructuring charges | $ 30,000,000 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | Wireless LAN (WLAN) | |||
Restructuring Cost and Reserve [Line Items] | |||
Exit and restructuring charges | $ 4,000,000 | $ 4,000,000 |
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 | 9 Months Ended | 14 Months Ended | 23 Months Ended |
Oct. 01, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||
Severance, stay bonus, and other employee-related expenses | $ 14 | $ 37 | $ 51 |
Obligations for future non-cancellable lease payments | 3 | 9 | 12 |
Total | $ 17 | $ 46 | $ 63 |
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 | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | $ 13 | $ 18 | $ 15 | $ 7 |
Charged to earnings | 7 | 6 | 17 | 35 |
Cash paid | (4) | (8) | (16) | (26) |
Reclassification to held for sale liabilities | (2) | 0 | (2) | 0 |
Balance at the end of the period | $ 14 | $ 16 | $ 14 | $ 16 |
Cost Associated with Exit and R
Cost Associated with Exit and Restructuring Activities - Liabilities Included in the Balance Sheet (Details) - USD ($) $ in Millions | Oct. 01, 2016 | Jul. 02, 2016 | Dec. 31, 2015 | Oct. 03, 2015 | Jul. 04, 2015 | Dec. 31, 2014 |
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Reserve | $ 14 | $ 13 | $ 15 | $ 16 | $ 18 | $ 7 |
Accrued liabilities | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Reserve | 10 | 10 | ||||
Other long-term liabilities | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring Reserve | $ 4 | $ 5 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2015 |
Derivative [Line Items] | ||
Total Net Derivative Liability | $ (45) | $ (19) |
Derivative instruments designated as hedges: | ||
Derivative [Line Items] | ||
Total Net Derivative Liability | (32) | (13) |
Derivative instruments not designated as hedges: | ||
Derivative [Line Items] | ||
Total Net Derivative Liability | (13) | (6) |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments designated as hedges: | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 0 | 2 |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments not designated as hedges: | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 0 | 5 |
Accrued liabilities | Foreign exchange contracts | Derivative instruments designated as hedges: | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (5) | 0 |
Accrued liabilities | Foreign exchange contracts | Derivative instruments not designated as hedges: | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (3) | 0 |
Accrued liabilities | Forward interest rate swaps | Derivative instruments designated as hedges: | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (4) | (1) |
Accrued liabilities | Forward interest rate swaps | Derivative instruments not designated as hedges: | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (3) | (2) |
Other long-term liabilities | Forward interest rate swaps | Derivative instruments designated as hedges: | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (23) | (14) |
Other long-term liabilities | Forward interest rate swaps | Derivative instruments not designated as hedges: | ||
Derivative [Line Items] | ||
Derivative liability, fair value | $ (7) | $ (9) |
Derivative Instruments - Deriva
Derivative Instruments - Derivative Instruments Gain (Loss) (Details) - Derivative instruments not designated as hedges: - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain recognized in income | $ (3) | $ 6 | $ (4) | $ 9 |
Foreign exchange contracts | Foreign exchange (loss) gain | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain recognized in income | (3) | 3 | (6) | 6 |
Forward interest rate swaps | Interest expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain recognized in income | $ 0 | $ 3 | $ 2 | $ 3 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) € in Millions | 9 Months Ended | |||
Oct. 01, 2016USD ($) | Oct. 01, 2016EUR (€) | Dec. 31, 2015EUR (€) | Oct. 31, 2014USD ($) | |
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Foreign currency cash flow hedge derivative | € | € 409 | € 193 | ||
Forward interest rate swaps, term | 1 year | |||
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. | $ 16,000,000 | |||
Revolving Credit Facility | ||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Revolving credit facility maximum borrowing capacity | $ 250,000,000 | |||
Term Loan | Line of Credit | ||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Revolving credit facility maximum borrowing capacity | $ 2,200,000,000 | |||
Line of Credit | Revolving Credit Facility | ||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||
Revolving credit facility maximum borrowing capacity | $ 250,000,000 |
Derivative Instruments - Financ
Derivative Instruments - Financial Information Related to Hedging of Net Assets Included in Consolidated Statements of Operations (Detail) € in Millions, £ in Millions, MYR in Millions, CZK in Millions, CAD in Millions, BRL in Millions, $ in Millions | Oct. 01, 2016USD ($) | Oct. 01, 2016CAD | Oct. 01, 2016BRL | Oct. 01, 2016GBP (£) | Oct. 01, 2016CZK | Oct. 01, 2016EUR (€) | Oct. 01, 2016MYR | Dec. 31, 2015USD ($) | Dec. 31, 2015CAD | Dec. 31, 2015BRL | Dec. 31, 2015GBP (£) | Dec. 31, 2015CZK | Dec. 31, 2015EUR (€) | Dec. 31, 2015MYR |
Derivative [Line Items] | ||||||||||||||
Net fair value of outstanding contracts (in millions) | $ | $ 0 | $ 1 | ||||||||||||
British Pound/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | £ | £ 4 | £ 5 | ||||||||||||
Euro/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | € | € 128 | € 133 | ||||||||||||
British Pound/Euro | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | £ | £ 7 | £ 7 | ||||||||||||
Canadian Dollar/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | CAD | CAD 7 | CAD 5 | ||||||||||||
Czech Koruna/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | CZK | CZK 181 | CZK 140 | ||||||||||||
Brazilian Real/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | BRL | BRL 39 | BRL 28 | ||||||||||||
Malaysian Ringgit/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | MYR 110 | MYR 13 | ||||||||||||
Australian Dollar/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | 25 | 0 | ||||||||||||
Swedish Krona/US dollar | Foreign Exchange Forward | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Notional balance of outstanding contracts (in millions): | MYR 16 | MYR 0 |
Derivative Instruments - Sche54
Derivative Instruments - Schedule of Gross and Net Amount Offset (Detail) - Balance Sheet Offsetting $ in Millions | Oct. 01, 2016USD ($) |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | $ 65 |
Counterparty Offsetting | 28 |
Net Fair Value in the Consolidated Balance Sheets | 37 |
Counterparty A | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 18 |
Counterparty Offsetting | 11 |
Net Fair Value in the Consolidated Balance Sheets | 7 |
Counterparty B | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 7 |
Counterparty Offsetting | 3 |
Net Fair Value in the Consolidated Balance Sheets | 4 |
Counterparty C | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 7 |
Counterparty Offsetting | 3 |
Net Fair Value in the Consolidated Balance Sheets | 4 |
Counterparty D | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 13 |
Counterparty Offsetting | 6 |
Net Fair Value in the Consolidated Balance Sheets | 7 |
Counterparty E | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 6 |
Counterparty Offsetting | 2 |
Net Fair Value in the Consolidated Balance Sheets | 4 |
Counterparty F | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 7 |
Counterparty Offsetting | 3 |
Net Fair Value in the Consolidated Balance Sheets | 4 |
Counterparty G | |
Change in unrealized gain (loss) on anticipated sales hedging: | |
Gross Fair Value | 7 |
Counterparty Offsetting | 0 |
Net Fair Value in the Consolidated Balance Sheets | $ 7 |
Warranty - Additional Informati
Warranty - Additional Information (Detail) | 9 Months Ended |
Oct. 01, 2016 | |
Mobile Products | Enterprise | |
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 | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at the beginning of the period | $ 22 | $ 25 |
Warranty expense | 20 | 23 |
Warranty payments | (22) | (24) |
Balance at the end of the period | $ 20 | $ 24 |
Long-Term Debt - Summary of Car
Long-Term Debt - Summary of Carrying Value of Debt (Detail) - USD ($) | Oct. 01, 2016 | Dec. 31, 2015 | Oct. 15, 2014 |
Debt Instrument [Line Items] | |||
Less: debt issuance costs | $ (23,000,000) | $ (26,000,000) | |
Less: unamortized discounts | (39,000,000) | (47,000,000) | |
Long-term debt | 2,788,000,000 | 3,012,000,000 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Interest rate on senior notes, percent | 3.25% | ||
Debt instrument, carrying amount | 0 | 0 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Interest rate on senior notes, percent | 4.00% | ||
Debt instrument, carrying amount | 1,800,000,000 | 2,035,000,000 | |
Long-term debt | 2,200,000,000 | ||
7.25 % Senior Notes Due 2022 | |||
Debt Instrument [Line Items] | |||
Interest rate on senior notes, percent | 7.25% | ||
Debt instrument, carrying amount | $ 1,050,000,000 | $ 1,050,000,000 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | Oct. 27, 2021 | Nov. 04, 2016 | Jul. 02, 2016 | Oct. 01, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||||
Long-term debt | $ 2,788,000,000 | $ 3,012,000,000 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility maximum borrowing capacity | $ 250,000,000 | ||||
Interest rate at period end | 3.25% | ||||
Letters of credit | $ 4,000,000 | ||||
Funds available for other borrowings | 246,000,000 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 2,200,000,000 | ||||
Debt Instrument, Basis Spread on Variable Rate | 4.00% | ||||
Percentage bearing variable interest, percentage rate | 4.09% | ||||
Line of credit facility payment | $ 235,000,000 | ||||
Extinguishment of debt, percent of debt not substantially affected | 96.60% | ||||
Extinguishment of debt, percent of debt substantially affected | 3.40% | ||||
Gains (losses) on extinguishment of debt | $ 2,700,000 | ||||
Debt instrument, unamortized discount | $ 4,900,000 | ||||
Subsequent Event | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility payment | $ 42,000,000 | ||||
Scenario, Forecast | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility payment | $ 1,800,000,000 |
Contingencies (Details)
Contingencies (Details) | Oct. 01, 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 | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Weighted average shares: | ||||
Basic weighted average shares outstanding (in shares) | 51,690,204 | 51,151,541 | 51,499,447 | 50,925,976 |
Effect of dilutive securities outstanding (in shares) | 0 | 0 | 0 | 0 |
Diluted weighted average and equivalent shares outstanding (in shares) | 51,690,204 | 51,151,541 | 51,499,447 | 50,925,976 |
Net loss | $ (83) | $ (29) | $ (154) | $ (131) |
Basic per share amounts: | ||||
Basic weighted average shares outstanding (in shares) | 51,690,204 | 51,151,541 | 51,499,447 | 50,925,976 |
Per share amount (USD per share) | $ (1.61) | $ (0.57) | $ (2.99) | $ (2.56) |
Diluted per share amounts: | ||||
Diluted weighted average and equivalent shares outstanding (in shares) | 51,690,204 | 51,151,541 | 51,499,447 | 50,925,976 |
Per share amount (USD per share) | $ (1.61) | $ (0.57) | $ (2.99) | $ (2.56) |
Loss per Share - Potentially Di
Loss per Share - Potentially Dilutive Securities Excluded from Earnings Per Share Calculation (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Earnings Per Share [Abstract] | ||||
Potentially dilutive shares (in shares) | 1,340,123 | 1,435,155 | 1,366,130 | 1,492,882 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pre-tax share-based compensation expense recognized | $ 21 | $ 26 |
Tax related benefits recognized | $ 7 | $ 9 |
Shares, granted (in shares) | 0 | |
Total unearned compensation costs related to performance share awards | $ 54 | |
Total unearned compensation costs amortization period | 2 years 7 months | |
Stock Appreciation Rights (SARs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares, granted (in shares) | 618,866 |
Share-Based Compensation - Weig
Share-Based Compensation - Weighted-Average Assumptions Used for Grants of Stock Options and SARs (Detail) - Stock Option and Stock Appreciation Rights (SARs) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |
Oct. 01, 2016 | Oct. 01, 2016 | Oct. 03, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | |
Forfeiture rate | 9.01% | 10.24% | |
Volatility | 43.14% | 33.98% | |
Risk free interest rate | 1.29% | 1.53% | |
Risk free interest rate, minimum | 0.25% | 0.02% | |
Risk free interest rate, maximum | 1.75% | 2.14% | |
Expected weighted-average life | 5 years 3 months 30 days | 5 years 3 months 25 days | |
Fair value of SARs granted (in millions) | $ 12 | $ 12 | |
Weighted-average grant date fair value of SARs granted (per underlying share) | $ 20.06 | $ 35.25 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock Award Activity (Detail) $ / shares in Units, $ in Millions | 9 Months Ended |
Oct. 01, 2016USD ($)$ / sharesshares | |
Stock Awards | |
Shares, Granted (in shares) | 0 |
Stock Appreciation Rights (SARs) | |
Stock Awards | |
Shares, Outstanding at beginning of period (in shares) | 1,397,611 |
Shares, Granted (in shares) | 618,866 |
Shares, Exercised (in shares) | (58,384) |
Shares, Forfeited (in shares) | (52,858) |
Shares, Expired (in shares) | (5,577) |
Shares, Outstanding at end of period (in shares) | 1,899,658 |
Shares, Exercisable at end of period (in shares) | 933,358 |
Intrinsic value of exercised options (in millions) | $ | $ 2 |
Weighted- Average Exercise Price | |
Weighted-Average Exercise Price, Outstanding at beginning of year (USD per share) | $ / shares | $ 56.68 |
Weighted-Average Exercise Price, Granted (USD per share) | $ / shares | 51.83 |
Weighted-Average Exercise Price, Exercised (USD per share) | $ / shares | 39.71 |
Weighted-Average Exercise Price, Forfeited (USD per share) | $ / shares | 65.26 |
Weighted-Average Exercise Price, Expired (USD per share) | $ / shares | 81.27 |
Weighted-Average Exercise Price, Outstanding at end of period (USD per share) | $ / shares | 55.22 |
Weighted-Average Exercise Price, Exercisable at end of period (USD per share) | $ / shares | $ 43.92 |
Aggregate intrinsic value, Outstanding | $ | $ 26 |
Aggregate intrinsic value, Exercisable | $ | $ 20 |
Weighted-average remaining contractual term, Outstanding | 7 years 1 month 12 days |
Weighted-average remaining contractual term, Exercisable | 5 years 2 months 12 days |
Share-Based Compensation - Su65
Share-Based Compensation - Summary of Restricted Stock Award Activity (Detail) | 9 Months Ended |
Oct. 01, 2016$ / sharesshares | |
Restricted Stock | |
Restricted Stock Awards and Units | |
Shares, Outstanding at beginning of period (in shares) | 605,193 |
Shares, Granted (in shares) | 412,472 |
Shares, Released (in shares) | (234,402) |
Shares, Forfeited (in shares) | (28,112) |
Shares, Outstanding at end of period (in shares) | 755,151 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Outstanding at beginning of year (USD per share) | $ / shares | $ 77.82 |
Weighted-Average Grant Date Fair Value, Released (USD per share) | $ / shares | 56.46 |
Weighted-Average Grant Date Fair Value, Forfeited (USD per share) | $ / shares | 79.34 |
Weighted-Average Grant Date Fair Value, Outstanding at end of period (USD per share) | $ / shares | $ 70.25 |
Restricted Stock Awards | |
Restricted Stock Awards and Units | |
Shares, Granted (in shares) | 381,278 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Granted (USD per share) | $ / shares | $ 51.60 |
Restricted Stock Units | |
Restricted Stock Awards and Units | |
Shares, Granted (in shares) | 31,194 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Granted (USD per share) | $ / shares | $ 51.42 |
Share-Based Compensation - Su66
Share-Based Compensation - Summary of Performance Share Award Activity (Detail) | 9 Months Ended |
Oct. 01, 2016$ / sharesshares | |
Performance Shares | |
Performance Stock Awards | |
Shares, Outstanding at beginning of period (in shares) | 341,703 |
Shares, Granted (in shares) | 178,378 |
Shares, Released (in shares) | (111,325) |
Shares, Forfeited (in shares) | (6,819) |
Shares, Outstanding at end of period (in shares) | 401,937 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Outstanding at beginning of year (USD per share) | $ / shares | $ 73.30 |
Weighted-Average Grant Date Fair Value, Released (USD per share) | $ / shares | 46.58 |
Weighted-Average Grant Date Fair Value, Forfeited (USD per share) | $ / shares | 74.22 |
Weighted-Average Grant Date Fair Value, Outstanding at end of period (USD per share) | $ / shares | $ 70.44 |
Performance Stock Awards | |
Performance Stock Awards | |
Shares, Granted (in shares) | 178,378 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Granted (USD per share) | $ / shares | $ 50.34 |
Performance Stock Units | |
Performance Stock Awards | |
Shares, Granted (in shares) | 0 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | (3.40%) | 3.70% |
Statutory tax rate | 35.00% | |
Reduction in tax rate | 32.00% |
Accumulated Other Comprehensi68
Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive (Loss) Income (AOCI) (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Unrealized (loss) gain on sales hedging | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | $ (1) | $ 5 |
Other comprehensive income (loss) before reclassifications | (16) | 6 |
Amounts reclassified from AOCI to income | 10 | (12) |
Tax benefit | 1 | 1 |
Other comprehensive loss | (5) | (5) |
Ending Balance | (6) | 0 |
Unrealized (losses)/ gains on forward interest rate swaps | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (15) | (8) |
Other comprehensive income (loss) before reclassifications | (12) | (18) |
Amounts reclassified from AOCI to income | 2 | 1 |
Tax benefit | 3 | 7 |
Other comprehensive loss | (7) | (10) |
Ending Balance | (22) | (18) |
Currency translation adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (32) | (6) |
Other comprehensive income (loss) before reclassifications | (1) | (15) |
Amounts reclassified from AOCI to income | 0 | (7) |
Tax benefit | 0 | 0 |
Other comprehensive loss | (1) | (22) |
Ending Balance | (33) | (28) |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (48) | (9) |
Other comprehensive income (loss) before reclassifications | (29) | (27) |
Amounts reclassified from AOCI to income | 12 | (18) |
Tax benefit | 4 | 8 |
Other comprehensive loss | (13) | (37) |
Ending Balance | $ (61) | $ (46) |
Accumulated Other Comprehensi69
Accumulated Other Comprehensive Loss - Reclassification Out of AOCI to Earnings (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Unrealized losses (gains) on sales hedging: | ||||
Tax (benefit) expense | $ (6) | $ (4) | $ (5) | $ 5 |
Unrealized losses (gains) on forward interest rate swaps: | ||||
Tax (benefit) expense | (6) | (4) | (5) | 5 |
Reclassification Out of AOCI to Earnings | ||||
Unrealized losses (gains) on forward interest rate swaps: | ||||
Currency translation adjustments | 0 | 0 | 0 | (7) |
Total amounts reclassified from AOCI | 3 | 1 | 9 | (15) |
Commodity Contract | Reclassification Out of AOCI to Earnings | Unrealized (loss) gain on sales hedging | ||||
Unrealized losses (gains) on sales hedging: | ||||
Total before tax | 4 | (1) | 10 | (12) |
Tax (benefit) expense | (1) | 1 | (2) | 3 |
Net of taxes | 3 | 0 | 8 | (9) |
Unrealized losses (gains) on forward interest rate swaps: | ||||
Total before tax | 4 | (1) | 10 | (12) |
Tax (benefit) expense | (1) | 1 | (2) | 3 |
Net of taxes | 3 | 0 | 8 | (9) |
Interest Rate Contract | Reclassification Out of AOCI to Earnings | Unrealized losses (gains) on forward interest rate swaps: | ||||
Unrealized losses (gains) on sales hedging: | ||||
Total before tax | 1 | 1 | 2 | 1 |
Tax (benefit) expense | (1) | 0 | (1) | 0 |
Net of taxes | 0 | 1 | 1 | 1 |
Unrealized losses (gains) on forward interest rate swaps: | ||||
Total before tax | 1 | 1 | 2 | 1 |
Tax (benefit) expense | (1) | 0 | (1) | 0 |
Net of taxes | $ 0 | $ 1 | $ 1 | $ 1 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 9 Months Ended |
Oct. 01, 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 | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Net sales: | ||||
Net sales | $ 904 | $ 916 | $ 2,632 | $ 2,699 |
Operating (loss) income: | ||||
Operating income | (24) | 25 | 9 | 31 |
Operating Segments | ||||
Net sales: | ||||
Net sales | 906 | 919 | 2,640 | 2,712 |
Operating (loss) income: | ||||
Operating income | 139 | 131 | 378 | 367 |
Corporate, Eliminations | ||||
Net sales: | ||||
Net sales | (2) | (3) | (8) | (13) |
Operating (loss) income: | ||||
Operating income | (163) | (106) | (369) | (336) |
Legacy Zebra | Operating Segments | ||||
Net sales: | ||||
Net sales | 301 | 314 | 920 | 966 |
Operating (loss) income: | ||||
Operating income | 50 | 67 | 178 | 206 |
Enterprise | Operating Segments | ||||
Net sales: | ||||
Net sales | 605 | 605 | 1,720 | 1,746 |
Operating (loss) income: | ||||
Operating income | $ 89 | $ 64 | $ 200 | $ 161 |
Subsequent Event (Details)
Subsequent Event (Details) - Term Loan - USD ($) $ in Millions | Nov. 04, 2016 | Oct. 01, 2016 |
Subsequent Event [Line Items] | ||
Line of credit facility payment | $ 235 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Line of credit facility payment | $ 42 |