Cover
Cover - shares | 9 Months Ended | |
Sep. 28, 2019 | Oct. 22, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 28, 2019 | |
Document Transition Report | false | |
Entity File Number | 000-19406 | |
Entity Registrant Name | Zebra Technologies Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-2675536 | |
Entity Address, Address Line One | 3 Overlook Point | |
Entity Address, City or Town | Lincolnshire | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60069 | |
City Area Code | 847 | |
Local Phone Number | 634-6700 | |
Title of 12(b) Security | Class A Common Stock, par value $.01 per share | |
Trading Symbol | ZBRA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 53,921,478 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000877212 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 33 | $ 44 |
Accounts receivable, net of allowances for doubtful accounts of $2 million and $3 million as of September 28, 2019 and December 31, 2018, respectively | 588 | 520 |
Inventories, net | 468 | 520 |
Income tax receivable | 76 | 24 |
Prepaid expenses and other current assets | 66 | 54 |
Total Current assets | 1,231 | 1,162 |
Property, plant and equipment, net | 249 | 249 |
Right-of-use lease asset | 117 | |
Goodwill | 2,618 | 2,495 |
Other intangibles, net | 290 | 232 |
Long-term deferred income taxes | 83 | 114 |
Other long-term assets | 120 | 87 |
Total Assets | 4,708 | 4,339 |
Current liabilities: | ||
Current portion of long-term debt | 205 | 157 |
Accounts payable | 502 | 552 |
Accrued liabilities | 314 | 322 |
Deferred revenue | 230 | 210 |
Income taxes payable | 55 | 60 |
Total Current liabilities | 1,306 | 1,301 |
Long-term debt | 1,314 | 1,434 |
Long-term lease liabilities | 105 | |
Long-term deferred income taxes | 1 | 8 |
Long-term deferred revenue | 202 | 172 |
Other long-term liabilities | 86 | 89 |
Total Liabilities | 3,014 | 3,004 |
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 | 324 | 294 |
Treasury stock at cost, 18,104,739 and 18,280,673 shares as of September 28, 2019 and December 31, 2018, respectively | (663) | (613) |
Retained earnings | 2,063 | 1,688 |
Accumulated other comprehensive loss | (31) | (35) |
Total Stockholders’ Equity | 1,694 | 1,335 |
Total Liabilities and Stockholders’ Equity | $ 4,708 | $ 4,339 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2 | $ 3 |
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) | 18,104,739 | 18,280,673 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Net sales: | ||||
Total Net sales | $ 1,130 | $ 1,092 | $ 3,293 | $ 3,081 |
Cost of sales: | ||||
Total Cost of sales | 595 | 587 | 1,737 | 1,639 |
Gross profit | 535 | 505 | 1,556 | 1,442 |
Operating expenses: | ||||
Selling and marketing | 124 | 120 | 373 | 361 |
Research and development | 110 | 113 | 329 | 323 |
General and administrative | 78 | 75 | 244 | 239 |
Amortization of intangible assets | 26 | 25 | 84 | 71 |
Acquisition and integration costs | 12 | 6 | 20 | 8 |
Exit and restructuring costs | 0 | 4 | 2 | 9 |
Total Operating expenses | 350 | 343 | 1,052 | 1,011 |
Operating income | 185 | 162 | 504 | 431 |
Other expenses: | ||||
Foreign exchange gain (loss) | 2 | (1) | (2) | (5) |
Interest expense, net | (28) | (18) | (85) | (52) |
Other, net | 0 | 0 | 2 | 2 |
Total Other expenses, net | (26) | (19) | (85) | (55) |
Income before income tax | 159 | 143 | 419 | 376 |
Income tax expense | 23 | 16 | 44 | 70 |
Net income | $ 136 | $ 127 | $ 375 | $ 306 |
Basic earnings per share (USD per share) | $ 2.52 | $ 2.37 | $ 6.95 | $ 5.72 |
Diluted earnings per share (USD per share) | $ 2.50 | $ 2.34 | $ 6.87 | $ 5.64 |
Tangible products | ||||
Net sales: | ||||
Total Net sales | $ 981 | $ 959 | $ 2,868 | $ 2,687 |
Cost of sales: | ||||
Total Cost of sales | 497 | 495 | 1,456 | 1,368 |
Services and software | ||||
Net sales: | ||||
Total Net sales | 149 | 133 | 425 | 394 |
Cost of sales: | ||||
Total Cost of sales | $ 98 | $ 92 | $ 281 | $ 271 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Net income | $ 136 | $ 127 | $ 375 | $ 306 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustment | (5) | 0 | (3) | (7) |
Comprehensive income | 145 | 128 | 379 | 329 |
Foreign exchange contracts | ||||
Other comprehensive (loss) income, net of tax: | ||||
Changes in unrealized gain and losses on sales hedging transactions and forward interest rate swap hedging transactions (net of income taxes) | 15 | 0 | 7 | 22 |
Forward interest rate swaps | ||||
Other comprehensive (loss) income, net of tax: | ||||
Changes in unrealized gain and losses on sales hedging transactions and forward interest rate swap hedging transactions (net of income taxes) | $ (1) | $ 1 | $ 0 | $ 8 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Foreign exchange contracts | Foreign exchange contractsAccumulated Other Comprehensive Loss | Forward interest rate swaps | Forward interest rate swapsAccumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2017 | 53,236,095 | |||||||||
Beginning balance at Dec. 31, 2017 | $ 834 | $ 1 | $ 257 | $ (620) | $ 1,248 | $ (52) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations (in shares) | 634,363 | |||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations | 7 | (9) | 16 | |||||||
Shares withheld related to net share settlement (in shares) | (67,816) | |||||||||
Shares withheld related to net share settlement | (10) | (10) | ||||||||
Share-based compensation | 34 | 34 | ||||||||
Repurchase of common stock (in shares) | (101,062) | |||||||||
Repurchase of common stock | (20) | (20) | ||||||||
Net income | 306 | 306 | ||||||||
Changes in unrealized gain and losses on sales hedging transactions and forward interest rate swap hedging transactions (net of income taxes) | $ 22 | $ 22 | $ 8 | $ 8 | ||||||
Foreign currency translation adjustment | (7) | (7) | ||||||||
Ending balance (in shares) at Sep. 29, 2018 | 53,802,642 | |||||||||
Ending balance at Sep. 29, 2018 | 1,213 | $ 1 | 282 | (614) | 1,573 | (29) | ||||
Beginning balance (in shares) at Jun. 30, 2018 | 53,691,978 | |||||||||
Beginning balance at Jun. 30, 2018 | 1,073 | $ 1 | 273 | (617) | 1,446 | (30) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations (in shares) | 112,778 | |||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations | 2 | (1) | 3 | |||||||
Shares withheld related to net share settlement (in shares) | (2,114) | |||||||||
Share-based compensation | 10 | 10 | ||||||||
Net income | 127 | 127 | ||||||||
Changes in unrealized gain and losses on sales hedging transactions and forward interest rate swap hedging transactions (net of income taxes) | 0 | 0 | 1 | 1 | ||||||
Foreign currency translation adjustment | 0 | 0 | ||||||||
Ending balance (in shares) at Sep. 29, 2018 | 53,802,642 | |||||||||
Ending balance at Sep. 29, 2018 | 1,213 | $ 1 | 282 | (614) | 1,573 | (29) | ||||
Beginning balance (in shares) at Dec. 31, 2018 | 53,871,184 | |||||||||
Beginning balance at Dec. 31, 2018 | 1,335 | $ 1 | 294 | (613) | 1,688 | (35) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations (in shares) | 499,664 | |||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations | 7 | (6) | 13 | |||||||
Shares withheld related to net share settlement (in shares) | (222,668) | |||||||||
Shares withheld related to net share settlement | (43) | (43) | ||||||||
Share-based compensation | 36 | 36 | ||||||||
Net income | 375 | 375 | ||||||||
Changes in unrealized gain and losses on sales hedging transactions and forward interest rate swap hedging transactions (net of income taxes) | 7 | 7 | 0 | 0 | ||||||
Foreign currency translation adjustment | (3) | (3) | ||||||||
Ending balance (in shares) at Sep. 28, 2019 | 54,047,118 | |||||||||
Ending balance at Sep. 28, 2019 | 1,694 | $ 1 | 324 | (663) | 2,063 | (31) | ||||
Beginning balance (in shares) at Jun. 29, 2019 | 54,107,829 | |||||||||
Beginning balance at Jun. 29, 2019 | 1,559 | $ 1 | 314 | (643) | 1,927 | (40) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations (in shares) | 44,215 | |||||||||
Issuance of treasury shares upon exercise of stock options, purchases under stock purchase plan and grants of restricted stock awards, net of cancellations | (1) | (2) | 1 | |||||||
Shares withheld related to net share settlement (in shares) | (3,864) | |||||||||
Shares withheld related to net share settlement | (1) | (1) | ||||||||
Share-based compensation | 12 | 12 | ||||||||
Repurchase of common stock (in shares) | (101,062) | |||||||||
Repurchase of common stock | (20) | (20) | ||||||||
Net income | 136 | 136 | ||||||||
Changes in unrealized gain and losses on sales hedging transactions and forward interest rate swap hedging transactions (net of income taxes) | $ 15 | $ 15 | $ (1) | $ (1) | ||||||
Foreign currency translation adjustment | (5) | (5) | ||||||||
Ending balance (in shares) at Sep. 28, 2019 | 54,047,118 | |||||||||
Ending balance at Sep. 28, 2019 | $ 1,694 | $ 1 | $ 324 | $ (663) | $ 2,063 | $ (31) |
CONSOLDATED STATEMENTS OF CASH
CONSOLDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 375 | $ 306 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 139 | 131 |
Amortization of debt issuance costs and discounts | 6 | 12 |
Share-based compensation | 36 | 34 |
Deferred income taxes | 0 | 17 |
Unrealized loss (gain) on forward interest rate swaps | 28 | (24) |
Other, net | (4) | 3 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (73) | (93) |
Inventories, net | 65 | (16) |
Other assets | (20) | (10) |
Accounts payable | (51) | 69 |
Accrued liabilities | (62) | (5) |
Deferred revenue | 43 | 28 |
Income taxes | (58) | 2 |
Other operating activities | (4) | 6 |
Net cash provided by operating activities | 420 | 460 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (44) | (48) |
Acquisition of businesses, net of cash acquired | (255) | (72) |
Proceeds from sale of long-term investments | 10 | 2 |
Purchases of long-term investments | (21) | (2) |
Net cash used in investing activities | (310) | (120) |
Cash flows from financing activities: | ||
Payment of debt issuance costs and discounts | (5) | (2) |
Payments of long-term debt | (661) | (1,307) |
Proceeds from issuance of long-term debt | 593 | 961 |
Payments of debt extinguishment costs | (1) | (1) |
Payments for repurchases of common stock | (20) | 0 |
Payments of taxes related to net settlements of equity awards, net of proceeds from exercise of stock options and stock purchase plan purchases | (36) | (2) |
Other financing activities | 10 | 0 |
Net cash used in financing activities | (120) | (351) |
Effect of exchange rate changes on cash | (1) | (6) |
Net decrease in cash and cash equivalents | (11) | (17) |
Cash and cash equivalents at beginning of period | 44 | 62 |
Cash and cash equivalents at end of period | 33 | 45 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid | 102 | 46 |
Interest paid | $ 49 | $ 73 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 28, 2019 | |
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 the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic identification and data capture solutions industry. We design, manufacture, and sell a broad range of products that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, and managed services, including cloud-based subscriptions. End-users of our products and services include those in retail and e-commerce, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. We provide our products and services globally through a direct sales force and an extensive network of channel partners. 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. As permitted under Article 10 of Regulation S-X and the instructions of Form 10-Q, these consolidated financial statements do not include all the information and notes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements, although management believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2018. In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to fairly present its Consolidated Balance Sheet as of September 28, 2019 , the Consolidated Statements of Operations, Comprehensive Income, and Stockholders’ Equity for the three and nine months ended September 28, 2019 and September 29, 2018 , and the Consolidated Statements of Cash Flows for the nine months ended September 28, 2019 and September 29, 2018 . These results, however, are not necessarily indicative of the results expected for the full fiscal year ending December 31, 2019 . |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Recently Adopted Accounting Pronouncements On January 1, 2019, the Company adopted Accounting Standards Codification 842, Leases (“ASC 842”), which increases the transparency and comparability of organizations by recognizing Right-of-Use (“ROU”) assets and lease liabilities on the Consolidated Balance Sheets and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the ROU assets and lease liabilities arising from operating leases were not previously recognized on the Consolidated Balance Sheet. Results for reporting periods beginning after January 1, 2019 are reported under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 840, Leases (“ASC 840”). In transition, we elected a number of practical expedients, including the election to not reassess existing or expired contracts to determine if they contain a lease or if the lease classification would differ, as well as the election to not separate lease and non-lease components for arrangements where the Company is a lessee. The impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions): As Reported December 31, 2018 Adjustment As Adjusted January 1, 2019 Assets: Prepaid expenses and other current assets (1) $ 54 $ (1 ) $ 53 Right-of-use assets — 110 110 Liabilities: Accrued liabilities (2) 322 28 350 Long-term lease liabilities — 103 103 Other long-term liabilities (1) 89 (22 ) 67 (1) Reflects an adjustment related to prepaid and accrued rent balances, which are included in the measurement of ROU assets. (2) Reflects the current portion of the lease liabilities. As a result of the transition, there was no impact to the Company’s Consolidated Statements of Operations or Cash Flows for the nine months ended September 28, 2019 , compared to what would have been reported in accordance with ASC 840. The Company recognizes ROU assets and lease liabilities for its lease commitments with terms greater than one year. Contractual options to extend or terminate lease agreements are reflected in the lease term when they are reasonably certain to be exercised. Subsequent to transition, the initial measurements of new ROU assets and lease liabilities are based on the present value of future lease payments over the lease term as of the commencement date. As the Company’s leases normally do not provide an implicit interest rate, we apply the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. Relevant information used in determining the Company’s incremental borrowing rate includes the duration of the lease, transaction currency of the lease, and the Company’s credit risk relative to risk-free market rates. The ROU assets also include any initial direct costs incurred and exclude lease incentives. Our lease agreements do not contain any material residual value guarantees or restrictive covenants. All leases of the Company are classified as operating leases, with lease expense being recognized on a straight-line basis. In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This ASU clarifies existing guidance related to implementation costs incurred in cloud computing arrangements, including the recognition, subsequent measurement, and financial statement presentation of such costs. The standard was early adopted prospectively by the Company during the second quarter of 2019 and did not have a material impact to the Company’s consolidated financial statements or disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The ASU 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. With respect to the Company’s financial instruments, a cumulative effect transition approach will be applied. The standard will be effective for the Company in the first quarter of 2020. Management has assessed the impact of adoption of the new standard and determined, based on current operations, that there will be no material impacts to the Company's consolidated financial statements or disclosures. |
Revenues
Revenues | 9 Months Ended |
Sep. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues The Company recognizes 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. Disaggregation of Revenue The following table presents our Net sales disaggregated by product category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and nine months ended September 28, 2019 and September 29, 2018 (in millions): Three Months Ended September 28, 2019 September 29, 2018 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 337 $ 36 $ 373 $ 325 $ 28 $ 353 EVM 644 113 757 634 105 739 Total $ 981 $ 149 $ 1,130 $ 959 $ 133 $ 1,092 Nine Months Ended September 28, 2019 September 29, 2018 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 1,001 $ 99 $ 1,100 $ 960 $ 96 $ 1,056 EVM 1,867 326 2,193 1,727 298 2,025 Total $ 2,868 $ 425 $ 3,293 $ 2,687 $ 394 $ 3,081 In addition, refer to Note 15 , Segment Information & Geographic Data for Net sales to customers by geographic region. We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time. Performance Obligations The Company’s remaining obligations that are greater than one year in duration relate primarily to repair and support services. The aggregated transaction price allocated to remaining performance obligations for these types of service arrangements, inclusive of deferred revenue, was $665 million and $489 million as of September 28, 2019 and December 31, 2018 , respectively. These remaining performance obligations as of September 28, 2019 and December 31, 2018 are expected to be recognized over a period of approximately two years . Contract Balances Progress on satisfying performance obligations under contracts with customers is recorded on the Consolidated Balance Sheets in Accounts receivable, net and Prepaid expenses and other current assets for billed and unbilled revenues, respectively. The contract asset balances for unbilled revenues were $9 million and $5 million as of September 28, 2019 and December 31, 2018 , respectively. These contract assets result from timing differences between the billing and delivery schedules of products, services and software, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Deferred revenue on the Consolidated Balance Sheets consist of payments and billings in advance of our performance. The combined short-term and long-term deferred revenue balances were $432 million and $382 million as of September 28, 2019 and December 31, 2018, respectively. During the three and nine months ended September 28, 2019 the Company recognized $41 million and $168 million in revenue, respectively, which was previously included in the beginning balance of deferred revenue as of December 31, 2018. During the three and nine months ended September 29, 2018 the Company recognized $32 million and $152 million in revenue, respectively, which was previously included in the beginning balance of deferred revenue as of December 31, 2017. |
Inventories
Inventories | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of Inventories, net are as follows (in millions): September 28, December 31, Raw material $ 138 $ 125 Work in process 4 3 Finished goods 326 392 Total $ 468 $ 520 |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
Sep. 28, 2019 | |
Business Combinations [Abstract] | |
Business Acquisitions | Business Acquisitions Profitect On May 31, 2019, the Company acquired 100% of the equity interests of Profitect, Inc. (“Profitect”), a provider of prescriptive analytics primarily for the retail industry. In acquiring Profitect, the Company seeks to enhance its existing software solutions within the retail industry, with possible future applications in other industries, markets and product offerings. The Profitect acquisition was accounted for under the acquisition method of accounting for business combinations. The total purchase consideration was $79 million , which consisted of $75 million in cash paid, net of cash on-hand, and the fair value of the Company’s existing ownership interest in Profitect of $4 million , as remeasured upon acquisition. During the third quarter of 2019, we revised our determination of the purchase price to exclude $11 million of payments to settle Profitect employee stock option awards, whose vesting was accelerated at the discretion of Profitect contemporaneously with the acquisition. Those payments, as well as $2 million of other acquisition-related costs primarily related to third-party transaction and advisory fees, are included within Acquisition and integration costs on the Consolidated Statements of Operations. Prior to the acquisition, the Company held a minority ownership interest in Profitect. Upon completion of the step acquisition, the Company remeasured its previously held ownership interest to fair value resulting in a $4 million gain in the second quarter reflected within Other, net in the Consolidated Statements of Operations. The Company utilized estimated fair values as of May 31, 2019 to allocate the total purchase consideration to the net tangible and intangible assets acquired and liabilities assumed. The fair value of the net assets acquired was based on a number of estimates and assumptions as well as customary valuation procedures and techniques, principally the excess earnings methodology. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. The primary fair value estimates considered preliminary include identifiable intangible assets and income tax-related items. Reflected in the preliminary purchase price allocation for Profitect was a decrease to identifiable intangible assets of $7 million and a decrease to goodwill of $4 million , which were recorded in conjunction with the purchase price revision during the third quarter of 2019. The operating results of Profitect have been included in the Company’s Consolidated Balance Sheet and Statement of Operations beginning May 31, 2019. The Company has not included unaudited pro forma results, as if Profitect had been acquired as of January 1, 2018, as doing so would not yield materially different results. The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions): Identifiable intangible assets $ 35 Other assets acquired 4 Deferred tax liabilities (4 ) Other liabilities assumed (10 ) Net Assets Acquired $ 25 Goodwill on acquisition 54 Total purchase consideration $ 79 The $54 million of goodwill, which will be non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned expansion of the Profitect software offerings and technologies into current and new markets, industries, and product offerings. The preliminary purchase price allocation to identifiable intangible assets acquired was: Fair Value (in millions) Useful Life (in years) Current technology $ 33 8 Customer relationships 2 1 Total identifiable intangible assets $ 35 Temptime On February 21, 2019, the Company acquired 100% of t he equity interests of Temptime Corporation (“Temptime”), a developer and manufacturer of temperature-monitoring labels and devices. The Company intends for the acquisition of Temptime to expand its product offerings within the healthcare industry, with possible future applications in other industries involving temperature-sensitive products. The Temptime acquisition was accounted for under the acquisition method of accounting for business combinations. The Company paid $180 million in cash, net of cash on-hand, to acquire Temptime. Additionally, we incurred $2 million of cash acquisition-related costs, which primarily included third-party transaction and advisory fees that were included within Acquisition and integration costs on the Consolidated Statements of Operations. The Company utilized estimated fair values as of February 21, 2019 to allocate the total consideration paid to the net tangible and intangible assets acquired and liabilities assumed. The fair value of the net assets acquired was based on a number of estimates and assumptions as well as customary valuation procedures and techniques, including relief from royalty and excess earnings methodologies. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. The primary fair value estimates considered preliminary include identifiable intangible assets and income tax-related items. The operating results of Temptime were included in the Company’s Consolidated Balance Sheet and Statement of Operations beginning February 21, 2019. The Company has not included unaudited pro forma results, as if Temptime had been acquired as of January 1, 2018, as doing so would not yield materially different results. The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions): Inventory $ 14 Property, plant and equipment 10 Identifiable intangible assets 106 Other assets acquired 13 Deferred tax liabilities (24 ) Other liabilities assumed (12 ) Net Assets Acquired $ 107 Goodwill on acquisition 73 Total purchase consideration $ 180 The $ 73 million of goodwill, which will be non-deductible for tax purposes, has been allocated to the AIT segment and principally relates to the planned expansion of the Temptime product offerings and technologies into current and new markets and industries. The preliminary purchase price allocation to identifiable intangible assets acquired was: Fair Value (in millions) Useful Life (in years) Customer and other relationships $ 79 8 Current technology 25 8 Trade Names 2 3 Total identifiable intangible assets $ 106 Reflected in the preliminary purchase price allocation for Temptime was an increase to Other assets acquired of $2 million and a decrease to Other liabilities assumed of $1 million as a result of measurement period adjustments made during the second quarter of 2019. The purchase price also increased by $1 million during the second quarter of 2019 resulting from the finalization of acquired working capital positions. These adjustments, relating to facts and circumstances existing as of the acquisition date, resulted in a $2 million reduction of Goodwill. Xplore On August 14, 2018, the Company acquired Xplore Technologies Corporation (“Xplore”). The Company recorded measurement period adjustments relating to facts and circumstances existing as of the acquisition date, primarily an increase in deferred tax assets and a corresponding decrease in goodwill of $5 million and $1 million during the first and second quarters of 2019, respectively. The Xplore purchase price allocation was finalized in the second quarter of 2019. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are measured using inputs from three 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 three 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 (e.g. U.S. Treasuries & money market funds). 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 to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. The Company’s financial assets and liabilities carried at fair value as of September 28, 2019 , are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts (1) $ — $ 24 $ — $ 24 Money market investments related to the deferred compensation plan 22 — — 22 Total Assets at fair value $ 22 $ 24 $ — $ 46 Liabilities: Foreign exchange contracts (1) $ 1 $ — $ — $ 1 Forward interest rate swap contracts (2) — 22 — 22 Liabilities related to the deferred compensation plan 22 — — 22 Total Liabilities at fair value $ 23 $ 22 $ — $ 45 The Company’s financial assets and liabilities carried at fair value as of December 31, 2018, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts (1) $ 1 $ 15 $ — $ 16 Forward interest rate swap contracts (2) — 5 — 5 Money market investments related to the deferred compensation plan 17 — — 17 Total Assets at fair value $ 18 $ 20 $ — $ 38 Liabilities: Liabilities related to the deferred compensation plan $ 17 $ — $ — $ 17 Total Liabilities at fair value $ 17 $ — $ — $ 17 (1) The fair value of the foreign exchange contracts is calculated as follows: a. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. b. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). (2) |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 28, 2019 | |
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 (“ASC 815”). 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, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions): Asset (Liability) Fair Values as of Balance Sheet Classification September 28, December 31, Derivative instruments designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ 24 $ 15 Total derivative instruments designated as hedges $ 24 $ 15 Derivative instruments not designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 1 Forward interest rate swaps Prepaid expenses and other current assets — 2 Forward interest rate swaps Other long-term assets — 3 Foreign exchange contracts Accrued liabilities (1 ) — Forward interest rate swaps Accrued liabilities (5 ) — Forward interest rate swaps Other long-term liabilities (17 ) — Total derivative instruments not designated as hedges $ (23 ) $ 6 Total net derivative asset $ 1 $ 21 The following table presents the (losses) gains from changes in fair values of derivatives that are not designated as hedges (in millions): (Loss) Gain Recognized in Income Three Months Ended Nine Months Ended Statements of Operations Classification September 28, September 29, September 28, 2019 September 29, 2018 Derivative instruments not designated as hedges: Foreign exchange Foreign exchange gain (loss) $ (1 ) $ 1 $ (4 ) $ 2 Forward interest rate Interest expense, net (4 ) 6 (27 ) 24 Total (loss) gain recognized in income $ (5 ) $ 7 $ (31 ) $ 26 Activities related to derivative instruments are reflected within Net cash provided by operating activities within the Consolidated Statements of Cash Flows. 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 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 policies are designed to mitigate concentrations of credit risk with any single customer. 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. We present the assets and liabilities of our derivative financial instruments, for which we have net settlement agreements in place, on a net basis on the Consolidated Balance Sheets. If these derivative financial instruments had been presented gross on the Consolidated Balance Sheets, the asset and liability positions each would have been increased by $0 million and $1 million as of September 28, 2019 and December 31, 2018 , respectively. Foreign Currency Exchange Risk Management The Company conducts business on a multinational basis in a 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 manages 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, as deemed appropriate. The Company manages the exchange rate risk of anticipated Euro-denominated sales using forward contracts which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized gains reclassified to Net sales were $10 million and $7 million for the three months ended September 28, 2019 and September 29, 2018 , respectively. For the nine months ended September 28, 2019 , and September 29, 2018 , realized gains were $32 million and $1 million , respectively. As of September 28, 2019 , and December 31, 2018 , the notional amounts of the Company’s foreign exchange cash flow hedges were €575 million and €496 million , respectively. The Company has reviewed its cash flow hedges for effectiveness and determined they are highly effective . The Company uses forward contracts, which are not designated as hedging instruments, to manage its balance sheet exposures related to net assets denominated in foreign currencies. These forward contracts typically mature within one month after execution. Monetary gains and losses on these forward contracts are recorded in income and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair value of these outstanding contracts are as follows (in millions): September 28, December 31, Notional balance of outstanding contracts: British Pound/U.S. Dollar £ 15 £ 1 Euro/U.S. Dollar € 33 € 45 British Pound/Euro £ — £ 6 Canadian Dollar/U.S. Dollar C$ 2 C$ 6 Australian Dollar/U.S. Dollar A$ 58 A$ 47 Japanese Yen/U.S. Dollar ¥ 202 ¥ 396 Singapore Dollar/U.S. Dollar S$ 6 S$ 7 Mexican Peso/U.S. Dollar Mex$ 121 Mex$ 225 Chinese Yuan/U.S. Dollar ¥ 83 ¥ 71 South African Rand/U.S. Dollar R 42 R 42 Net fair value of (liabilities) assets of outstanding contracts $ (1 ) $ 1 The Company’s use of non-designated forward contracts to manage Euro currency exposure is limited, as Euro-denominated borrowings under the Revolving Credit Facility naturally hedge part of such risk. See Note 8 , Long-Term Debt for further discussion of Euro-denominated borrowings. Interest Rate Risk Management The Company’s debt consists of borrowings under a term loan (“Term Loan A”), Revolving Credit Facility and Receivables Financing Facilities, which bear interest at variable rates plus an applicable margin. See Note 8 , Long-Term Debt for further details about these borrowings. The Company manages its exposure to changes in interest rates by utilizing interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions. In December 2017, the Company entered into a long-term forward interest rate swap agreement with a notional amount of $800 million to lock into a fixed LIBOR interest rate base for its debt facilities subject to monthly interest payments. Under the terms of the agreement, $800 million in variable-rate debt will be swapped for a fixed interest rate with net settlement terms due effective starting in December 2018 and ending in December 2022. During the third quarter of 2019, the Company entered into additional long-term forward interest rate swap agreements with a total notional amount of $800 million , containing net settlements effective starting in December 2022 and ending in August 2024. The additional interest rate swap agreements effectively extend the risk management initiative of the Company to coincide with the maturities of Term Loan A and the Revolving Credit Facility, as amended. The Company’s interest rate swaps are not designated as hedges and changes in fair value are recognized immediately as Interest expense, net on the Consolidated Statements of Operations. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following table shows the carrying value of the Company’s debt (in millions): September 28, December 31, Term Loan A $ 1,000 $ 608 Term Loan B — 445 Revolving Credit Facility 292 408 Receivables Financing Facilities 236 139 Total debt $ 1,528 $ 1,600 Less: Debt issuance costs (6 ) (5 ) Less: Unamortized discounts (3 ) (4 ) Less: Current portion of debt (205 ) (157 ) Total long-term debt $ 1,314 $ 1,434 As of September 28, 2019 , the future maturities of debt, excluding debt discounts and issuance costs, were as follows (in millions): 2019 $ 80 2020 150 2021 119 2022 56 2023 81 Thereafter 1,042 Total future debt maturities $ 1,528 All borrowings as of September 28, 2019 were denominated in U.S. Dollars, except for €92 million under the Revolving Credit Facility that was borrowed in Euros. The estimated fair value of the Company’s debt approximated $1.5 billion and $1.6 billion as of September 28, 2019 and December 31, 2018 , respectively. These fair value amounts, developed based on inputs classified as Level 2 within the fair value hierarchy, represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these liabilities to the Company. The fair value of the debt will continue to vary each period based on a number of factors including fluctuations in market interest rates, as well as changes to the Company’s credit ratings. Credit Facilities On August 9, 2019, the Company entered into Amendment No. 2 to the Amended and Restated Credit Agreement (“Amendment No. 2”). Amendment No. 2 increased the Company’s borrowing under Term Loan A from $608 million to $1 billion and increased the Company’s borrowing capacity under the Revolving Credit Facility from $800 million to $1 billion . Term Loan A and the Revolving Credit Facility will continue to bear interest at variable rates plus an applicable margin. The maturities of Term Loan A and the Revolving Credit Facility were each extended to August 9, 2024. In conjunction with entering into Amendment No. 2, a payment of $445 million was made to fully pay off Term Loan B. As of September 28, 2019 , the Company has no further obligations under Term Loan B. As amended, the principal on Term Loan A is due in quarterly installments starting in the fourth quarter of 2019, with the majority due upon its August 9, 2024 maturity. The Company may make prepayments against the amended Term Loan A, in whole or in part, without premium or penalty. The Company would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of September 28, 2019 , the Term Loan A interest rate was 3.55% . Interest payments are made monthly. The Revolving Credit Facility is available for working capital and other general corporate purposes, including letters of credit. As of September 28, 2019 , the Company had letters of credit totaling $5 million , which reduced funds available for borrowings under the agreement from $1 billion to $995 million . As of September 28, 2019 , the Revolving Credit Facility had an average interest rate of 3.00% . Interest payments are made monthly. All remaining principal is due upon the Revolving Credit Facility’s maturity on August 9, 2024 . The refinancing of the Company’s debt during the third quarter of 2019 resulted in non-cash accelerated amortization of debt discount and debt issuance costs of $4 million and one-time charges of $3 million , which included certain third party fees and the accelerated amortization of losses on terminated interest rate swaps released from AOCI. These items are included in Interest Expense, net on the Consolidated Statements of Operations. Additionally, issuance costs of $6 million incurred related to this debt refinancing were capitalized and will be amortized over the remaining term of Term Loan A and the Revolving Credit Facility. On May 31, 2018 , the Company entered into Amendment No. 1 to the Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 resulted in a new Term Loan A with principal of $670 million and increased the Revolving Credit Facility from $500 million to $800 million . Also, as part of Amendment No. 1, the Company had a partial early debt termination of $300 million and repricing of its Term Loan B. Amendment No. 1 resulted in $6 million of non-cash accelerated amortization of debt issuance costs and $1 million of one-time charges related to third party fees associated with the Amendment, both of which were reflected in Interest Expense, net on the Consolidated Statements of Operations during the second quarter of 2018. Receivables Financing Facilities The Company has a Receivables Financing Facility with a financial institution that has a borrowing limit of up to $180 million . As collateral, the Company pledges a perfected first-priority security interest in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under the Receivables Financing Facility as secured borrowings. As amended during the second quarter of 2019, the Receivables Financing Facility will mature on March 29, 2021 . During the second quarter of 2019, the Company entered into an Additional Receivable Financing Facility with another financial institution, which allows for additional borrowings of up to $100 million , and thus total borrowings of up to $280 million , using U.S. domestically originated accounts receivables as collateral. The Company has also accounted for transactions under this Additional Receivables Financing Facility as secured borrowings. The Additional Receivables Financing Facility will mature on May 18, 2020 . As of September 28, 2019 , the Company’s Consolidated Balance Sheets included $439 million of receivables that were pledged under the two Receivables Financing Facilities, of which $236 million had been borrowed against. Borrowings under the Receivables Financing Facilities bear interest at a variable rate plus an applicable margin. As of September 28, 2019 , the Receivables Financing Facilities had an average interest rate of 2.95% and require monthly interest payments. Both the Revolving Credit Facility and Receivables Financing Facilities include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. The Company uses interest rate swaps to manage the interest rate risk associated with its debt. See Note 7 , Derivative Instruments for further information. As of September 28, 2019 , the Company was in compliance with all debt covenants. |
Leases
Leases | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company leases certain manufacturing facilities, distribution centers, sales and administrative offices, equipment, and vehicles which are accounted for as operating leases. Remaining lease terms are up to 12 years , with certain leases containing renewal options. The following table presents activities associated with our operating leases during the three and nine months ended September 28, 2019 (in millions): Three Months Ended Nine Months Ended September 28, 2019 September 28, 2019 Fixed lease expenses $ 10 $ 28 Variable lease expenses 7 20 Total lease expenses $ 17 $ 48 Cash paid for leases $ 17 $ 49 ROU assets obtained in exchange for lease obligations $ 11 $ 28 The variable lease expenses incurred during the period were not included in the measurement of the Company’s ROU assets and lease liabilities. Cash payments for operating leases are included within Net cash provided by operating activities on the Consolidated Statements of Cash Flows. As of September 28, 2019 , the weighted average remaining term of the Company’s operating leases was approximately 5 years , and the weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 6% . Future minimum lease payments under non-cancellable operating leases as of September 28, 2019 were as follows (in millions): 2019 $ 10 2020 40 2021 34 2022 24 2023 18 Thereafter 37 Total future minimum lease payments $ 163 Less: Interest (25 ) Present value of lease liabilities $ 138 Reported as of September 28, 2019: Current portion of lease liabilities $ 33 Long-term lease liabilities 105 Present value of lease liabilities $ 138 The current portion of lease liabilities is included within Accrued liabilities on the Consolidated Balance Sheet. Revenues earned from lease arrangements under which the Company is a lessor were not significant during the three and nine months ended September 28, 2019 . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Warranties The following table is a summary of the Company’s accrued warranty obligation (in millions): Nine Months Ended September 28, September 29, Balance at the beginning of the period $ 22 $ 18 Warranty expense 18 25 Warranties fulfilled (18 ) (23 ) Balance at the end of the period $ 22 $ 20 Contingencies |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three and nine months ended September 28, 2019 was 14.5% and 10.5% , respectively. The variances from the 2019 federal statutory rate of 21% for the current period were attributable to the benefits of lower tax rates on foreign earnings and U.S. tax credits. These benefits were partially offset by the impacts of foreign earnings and deemed royalties taxed in the U.S. The Company’s effective tax rate also benefited from certain discrete items, primarily related to share-based compensation. The Company’s effective tax rate for the three and nine months ended September 29, 2018 was 11.2% and 18.6% , respectively. The variances from the 2018 federal statutory rate of 21% for the prior period were attributable to the effect of lower tax rates in foreign jurisdictions and the generation of tax credits. These benefits were partially offset by increases related to foreign earnings subject to U.S. taxation, the U.S. impact of the acquisition of the Enterprise business of Motorola Solutions, Inc. and certain discrete items. The discrete items included the favorable impacts of share-based compensation, adjustments to the one-time transition tax related to the Tax Cuts and Jobs Act enacted in December 2017 (“U.S. Tax Reform” or “the Act”) offset by audit settlements with the U.S. Internal Revenue Service for fiscal years 2013, 2014, and 2015 and an increase in uncertain tax positions resulting from interpretative guidance issued during the second quarter of 2018. For the three and nine months ended September 28, 2019 , and September 29, 2018 , foreign earnings taxed in the U.S. included the impacts of the Global Intangible Low-Taxed Income, the Deduction for Foreign-Derived Intangible Income, and the Base Erosion Anti-Avoidance Tax (“BEAT”) provisions of the U.S. Tax Reform. The Company has included the rate impacts of these provisions in its annual forecasted rate relying on all currently available guidance. It is anticipated that the U.S. Treasury will provide further guidance throughout the year. Pre-tax earnings outside the U.S. are primarily generated in the United Kingdom, Singapore, and Luxembourg, with statutory rates of 19% , 17% , and 26% , respectively. During 2018, the Company applied for and was granted a second extension of its incentivized tax rate by the Singapore Economic Development Board. The incentive reduces the income tax rate to 10.5% from the statutory rate of 17% and is effective for calendar years 2019 to 2023. The Company has committed to making additional investments in Singapore over the period 2019 to 2022; should the Company not make these investments in accordance with the agreement, any incentive benefit would have to be repaid to the Singapore tax authorities. The Company earns a significant amount of its operating income outside of the U.S. The Company’s policy considers its U.S. investments in directly-owned foreign affiliates to be indefinitely reinvested. As a result of U.S. Tax Reform, future remittance of dividends from foreign subsidiaries to the U.S. parent will generally no longer be subject to U.S. tax when repatriated but may be subject to withholding taxes of the payor affiliate country. Additionally, gains and losses on taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. tax. Quarterly, management evaluates all jurisdictions based on historical pre-tax earnings and taxable income to determine the need for valuation allowances. Based on this analysis, a valuation allowance has been recorded for any jurisdictions where, in the Company’s judgment, tax benefits are not expected to be realized. Uncertain Tax Positions The Company is currently undergoing U.S. federal income tax audits for the tax years 2016 and 2017, as well as a UK income tax audit for fiscal years 2012 through 2014, and 2016. Fiscal years 2004 through 2018 remain open to examination by multiple foreign and U.S. state taxing jurisdictions. Subsequent to September 28, 2019 , the Company settled a tax dispute for $19 million . The settlement was reflected in Current liabilities within the Company’s Consolidated Balance Sheets. The settlement did not have a significant impact to the current quarter’s Income tax expense. No other significant uncertain tax positions are expected to be settled within the next twelve months. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlement of other uncertain tax positions may change and the actual tax benefits may differ significantly from the estimates. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock method and, in periods of income, reflects the additional shares that would be outstanding if dilutive stock options were exercised for common shares during the period. Earnings per share (in millions, except share data): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Basic: Net income $ 136 $ 127 $ 375 $ 306 Weighted-average shares outstanding 54,085,500 53,740,174 53,999,044 53,516,859 Basic earnings per share $ 2.52 $ 2.37 $ 6.95 $ 5.72 Diluted: Net income $ 136 $ 127 $ 375 $ 306 Weighted-average shares outstanding 54,085,500 53,740,174 53,999,044 53,516,859 Dilutive shares 552,323 684,706 611,047 720,694 Diluted weighted-average shares outstanding 54,637,823 54,424,880 54,610,091 54,237,553 Diluted earnings per share $ 2.50 $ 2.34 $ 6.87 $ 5.64 Anti-dilutive options to purchase common shares are excluded from diluted earnings per share calculations. Anti-dilutive options consist primarily of stock appreciation rights (“SARs”) with an exercise price greater than the average market closing price of the Class A Common Stock. There were 92,014 and 1,139 anti-dilutive shares for the three months ended September 28, 2019 and September 29, 2018 , respectively. There were 53,356 and 87,458 anti-dilutive shares for the nine months ended September 28, 2019 and September 29, 2018 , respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 28, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Stockholders’ equity includes certain items classified as AOCI, including: • Unrealized gain (loss) on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 7 , Derivative Instruments for more details. • Unrealized gain (loss) on forward interest rate swaps hedging transactions refers to the hedging of the interest rate risk exposure associated with the Company’s variable rate debt. As a result of the Company’s debt refinancing during the third quarter of 2019, remaining losses associated with terminated interest rate swaps were recognized as a component of Interest expense, net on the Consolidated Statements of Operations. See Note 8 , Long-Term Debt for more information regarding the Company’s debt refinancing. • Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company is required to translate the subsidiary functional currency financial statements to U.S. Dollars using a combination of historical, period end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI. The components of AOCI for the nine months ended September 28, 2019 and September 29, 2018 are as follows (in millions): Unrealized gain (loss) on sales hedging Unrealized gain (loss) on forward interest rate swaps Currency translation adjustments Total Balance at December 31, 2017 $ (9 ) $ (9 ) $ (34 ) $ (52 ) Other comprehensive income (loss) before reclassifications 27 7 (7 ) 27 Amounts reclassified from AOCI (1) (1 ) 3 — 2 Tax effect (4 ) (2 ) — (6 ) Other comprehensive income (loss), net of tax 22 8 (7 ) 23 Balance at September 29, 2018 $ 13 $ (1 ) $ (41 ) $ (29 ) Balance at December 31, 2018 $ 12 $ — $ (47 ) $ (35 ) Other comprehensive income (loss) before reclassifications 41 — (3 ) 38 Amounts reclassified from AOCI (1) (32 ) 2 — (30 ) Tax effect (2 ) (2 ) — (4 ) Other comprehensive (loss) income, net of tax 7 — (3 ) 4 Balance at September 28, 2019 $ 19 $ — $ (50 ) $ (31 ) (1) See Note 7 , Derivative Instruments |
Accounts Receivable Factoring
Accounts Receivable Factoring | 9 Months Ended |
Sep. 28, 2019 | |
Transfers and Servicing [Abstract] | |
Accounts Receivable Factoring | Accounts Receivable Factoring In 2018, the Company entered into a Receivables Factoring arrangement, pursuant to which certain receivables originated from the Europe, Middle East, and Africa (“EMEA”) region are sold to a bank in exchange for cash. In the third quarter of 2019, the Company entered into an additional Receivables Factoring arrangement, which provides for additional sales of EMEA-originated receivables to a bank under similar terms. Under these Receivables Factoring arrangements, the Company does not maintain any beneficial interest in the receivables sold. The banks’ purchase of eligible receivables is subject to a maximum of $125 million of uncollected receivables. The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables. Transactions under the Receivables Factoring arrangements are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets with related cash flows reflected in operating cash flows. As of September 28, 2019 and December 31, 2018 there were $70 million and $33 million , respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheet. Fees incurred in connection with these arrangements were insignificant. |
Segment Information & Geographi
Segment Information & Geographic Data | 9 Months Ended |
Sep. 28, 2019 | |
Segment Reporting [Abstract] | |
Segment Information & Geographic Data | Segment Information & Geographic Data The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”). The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability. To the extent applicable, segment operating income excludes purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below. Financial information by segment is presented as follows (in millions): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Net sales: AIT $ 373 $ 353 $ 1,100 $ 1,056 EVM 757 739 2,193 2,025 Total Net sales $ 1,130 $ 1,092 $ 3,293 $ 3,081 Operating income: AIT (1) $ 93 $ 81 $ 269 $ 241 EVM (1) 133 117 347 279 Total segment operating income 226 198 616 520 Corporate, eliminations (2) (41 ) (36 ) (112 ) (89 ) Total Operating income $ 185 $ 162 $ 504 $ 431 (1) AIT and EVM segment operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense attributable to AIT and EVM are proportionate to each segment’s Net sales. (2) To the extent applicable, amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs. Information regarding the Company’s operations by geographic area is contained in the following table. These amounts are reported in the geographic area of the destination of the final sale. We manage our business based on regions rather than by individual countries. Geographic data for Net sales is as follows (in millions): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, North America $ 591 $ 542 $ 1,641 $ 1,483 EMEA 346 348 1,082 1,034 Asia-Pacific 133 140 399 389 Latin America 60 62 171 175 Total Net sales $ 1,130 $ 1,092 $ 3,293 $ 3,081 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements On January 1, 2019, the Company adopted Accounting Standards Codification 842, Leases (“ASC 842”), which increases the transparency and comparability of organizations by recognizing Right-of-Use (“ROU”) assets and lease liabilities on the Consolidated Balance Sheets and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the ROU assets and lease liabilities arising from operating leases were not previously recognized on the Consolidated Balance Sheet. Results for reporting periods beginning after January 1, 2019 are reported under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 840, Leases (“ASC 840”). In transition, we elected a number of practical expedients, including the election to not reassess existing or expired contracts to determine if they contain a lease or if the lease classification would differ, as well as the election to not separate lease and non-lease components for arrangements where the Company is a lessee. The impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions): As Reported December 31, 2018 Adjustment As Adjusted January 1, 2019 Assets: Prepaid expenses and other current assets (1) $ 54 $ (1 ) $ 53 Right-of-use assets — 110 110 Liabilities: Accrued liabilities (2) 322 28 350 Long-term lease liabilities — 103 103 Other long-term liabilities (1) 89 (22 ) 67 (1) Reflects an adjustment related to prepaid and accrued rent balances, which are included in the measurement of ROU assets. (2) Reflects the current portion of the lease liabilities. As a result of the transition, there was no impact to the Company’s Consolidated Statements of Operations or Cash Flows for the nine months ended September 28, 2019 , compared to what would have been reported in accordance with ASC 840. The Company recognizes ROU assets and lease liabilities for its lease commitments with terms greater than one year. Contractual options to extend or terminate lease agreements are reflected in the lease term when they are reasonably certain to be exercised. Subsequent to transition, the initial measurements of new ROU assets and lease liabilities are based on the present value of future lease payments over the lease term as of the commencement date. As the Company’s leases normally do not provide an implicit interest rate, we apply the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. Relevant information used in determining the Company’s incremental borrowing rate includes the duration of the lease, transaction currency of the lease, and the Company’s credit risk relative to risk-free market rates. The ROU assets also include any initial direct costs incurred and exclude lease incentives. Our lease agreements do not contain any material residual value guarantees or restrictive covenants. All leases of the Company are classified as operating leases, with lease expense being recognized on a straight-line basis. In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This ASU clarifies existing guidance related to implementation costs incurred in cloud computing arrangements, including the recognition, subsequent measurement, and financial statement presentation of such costs. The standard was early adopted prospectively by the Company during the second quarter of 2019 and did not have a material impact to the Company’s consolidated financial statements or disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The ASU 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. With respect to the Company’s financial instruments, a cumulative effect transition approach will be applied. The standard will be effective for the Company in the first quarter of 2020. Management has assessed the impact of adoption of the new standard and determined, based on current operations, that there will be no material impacts to the Company's consolidated financial statements or disclosures. |
Revenue Recognition | The Company recognizes 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. Contract Balances Progress on satisfying performance obligations under contracts with customers is recorded on the Consolidated Balance Sheets in Accounts receivable, net and Prepaid expenses and other current assets for billed and unbilled revenues, respectively. The contract asset balances for unbilled revenues were $9 million and $5 million as of September 28, 2019 and December 31, 2018 , respectively. These contract assets result from timing differences between the billing and delivery schedules of products, services and software, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time. Performance Obligations |
Fair Value Measurements | Financial assets and liabilities are measured using inputs from three 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 three 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 (e.g. U.S. Treasuries & money market funds). 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 to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value. |
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 (“ASC 815”). 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. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
The Impact of the Adoption of ASC 842 on the Balance Sheet | The impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions): As Reported December 31, 2018 Adjustment As Adjusted January 1, 2019 Assets: Prepaid expenses and other current assets (1) $ 54 $ (1 ) $ 53 Right-of-use assets — 110 110 Liabilities: Accrued liabilities (2) 322 28 350 Long-term lease liabilities — 103 103 Other long-term liabilities (1) 89 (22 ) 67 (1) Reflects an adjustment related to prepaid and accrued rent balances, which are included in the measurement of ROU assets. (2) Reflects the current portion of the lease liabilities. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue By Product Category And Segment | The following table presents our Net sales disaggregated by product category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and nine months ended September 28, 2019 and September 29, 2018 (in millions): Three Months Ended September 28, 2019 September 29, 2018 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 337 $ 36 $ 373 $ 325 $ 28 $ 353 EVM 644 113 757 634 105 739 Total $ 981 $ 149 $ 1,130 $ 959 $ 133 $ 1,092 Nine Months Ended September 28, 2019 September 29, 2018 Segment Tangible Products Services and Software Total Tangible Products Services and Software Total AIT $ 1,001 $ 99 $ 1,100 $ 960 $ 96 $ 1,056 EVM 1,867 326 2,193 1,727 298 2,025 Total $ 2,868 $ 425 $ 3,293 $ 2,687 $ 394 $ 3,081 In addition, refer to Note 15 , Segment Information & Geographic Data for Net sales to customers by geographic region. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Components of Inventories, Net | The components of Inventories, net are as follows (in millions): September 28, December 31, Raw material $ 138 $ 125 Work in process 4 3 Finished goods 326 392 Total $ 468 $ 520 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Business Combinations [Abstract] | |
Schedule of Preliminary Purchase Price Allocation to Assets Acquired and Liabilities Assumed | The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions): Inventory $ 14 Property, plant and equipment 10 Identifiable intangible assets 106 Other assets acquired 13 Deferred tax liabilities (24 ) Other liabilities assumed (12 ) Net Assets Acquired $ 107 Goodwill on acquisition 73 Total purchase consideration $ 180 The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions): Identifiable intangible assets $ 35 Other assets acquired 4 Deferred tax liabilities (4 ) Other liabilities assumed (10 ) Net Assets Acquired $ 25 Goodwill on acquisition 54 Total purchase consideration $ 79 |
Schedule of Preliminary Purchase Price Allocation to Indentifiable Intangible Assets Acquired | The preliminary purchase price allocation to identifiable intangible assets acquired was: Fair Value (in millions) Useful Life (in years) Current technology $ 33 8 Customer relationships 2 1 Total identifiable intangible assets $ 35 The preliminary purchase price allocation to identifiable intangible assets acquired was: Fair Value (in millions) Useful Life (in years) Customer and other relationships $ 79 8 Current technology 25 8 Trade Names 2 3 Total identifiable intangible assets $ 106 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Carried at Fair Value | The Company’s financial assets and liabilities carried at fair value as of September 28, 2019 , are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts (1) $ — $ 24 $ — $ 24 Money market investments related to the deferred compensation plan 22 — — 22 Total Assets at fair value $ 22 $ 24 $ — $ 46 Liabilities: Foreign exchange contracts (1) $ 1 $ — $ — $ 1 Forward interest rate swap contracts (2) — 22 — 22 Liabilities related to the deferred compensation plan 22 — — 22 Total Liabilities at fair value $ 23 $ 22 $ — $ 45 The Company’s financial assets and liabilities carried at fair value as of December 31, 2018, are classified below (in millions): Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts (1) $ 1 $ 15 $ — $ 16 Forward interest rate swap contracts (2) — 5 — 5 Money market investments related to the deferred compensation plan 17 — — 17 Total Assets at fair value $ 18 $ 20 $ — $ 38 Liabilities: Liabilities related to the deferred compensation plan $ 17 $ — $ — $ 17 Total Liabilities at fair value $ 17 $ — $ — $ 17 (1) The fair value of the foreign exchange contracts is calculated as follows: a. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points. b. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). (2) |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
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) Fair Values as of Balance Sheet Classification September 28, December 31, Derivative instruments designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ 24 $ 15 Total derivative instruments designated as hedges $ 24 $ 15 Derivative instruments not designated as hedges: Foreign exchange contracts Prepaid expenses and other current assets $ — $ 1 Forward interest rate swaps Prepaid expenses and other current assets — 2 Forward interest rate swaps Other long-term assets — 3 Foreign exchange contracts Accrued liabilities (1 ) — Forward interest rate swaps Accrued liabilities (5 ) — Forward interest rate swaps Other long-term liabilities (17 ) — Total derivative instruments not designated as hedges $ (23 ) $ 6 Total net derivative asset $ 1 $ 21 |
Schedule of Gains (Losses) from Changes in Fair Values of Derivatives | The following table presents the (losses) gains from changes in fair values of derivatives that are not designated as hedges (in millions): (Loss) Gain Recognized in Income Three Months Ended Nine Months Ended Statements of Operations Classification September 28, September 29, September 28, 2019 September 29, 2018 Derivative instruments not designated as hedges: Foreign exchange Foreign exchange gain (loss) $ (1 ) $ 1 $ (4 ) $ 2 Forward interest rate Interest expense, net (4 ) 6 (27 ) 24 Total (loss) gain recognized in income $ (5 ) $ 7 $ (31 ) $ 26 |
Schedule of Notional Values and Net Fair Value of Forward Contracts | The notional values and the net fair value of these outstanding contracts are as follows (in millions): September 28, December 31, Notional balance of outstanding contracts: British Pound/U.S. Dollar £ 15 £ 1 Euro/U.S. Dollar € 33 € 45 British Pound/Euro £ — £ 6 Canadian Dollar/U.S. Dollar C$ 2 C$ 6 Australian Dollar/U.S. Dollar A$ 58 A$ 47 Japanese Yen/U.S. Dollar ¥ 202 ¥ 396 Singapore Dollar/U.S. Dollar S$ 6 S$ 7 Mexican Peso/U.S. Dollar Mex$ 121 Mex$ 225 Chinese Yuan/U.S. Dollar ¥ 83 ¥ 71 South African Rand/U.S. Dollar R 42 R 42 Net fair value of (liabilities) assets of outstanding contracts $ (1 ) $ 1 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Carrying Value of Long-term Debt | The following table shows the carrying value of the Company’s debt (in millions): September 28, December 31, Term Loan A $ 1,000 $ 608 Term Loan B — 445 Revolving Credit Facility 292 408 Receivables Financing Facilities 236 139 Total debt $ 1,528 $ 1,600 Less: Debt issuance costs (6 ) (5 ) Less: Unamortized discounts (3 ) (4 ) Less: Current portion of debt (205 ) (157 ) Total long-term debt $ 1,314 $ 1,434 |
Schedule of Future Maturities of Long-term Debt | As of September 28, 2019 , the future maturities of debt, excluding debt discounts and issuance costs, were as follows (in millions): 2019 $ 80 2020 150 2021 119 2022 56 2023 81 Thereafter 1,042 Total future debt maturities $ 1,528 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Activities Associated with Operating Leases | The following table presents activities associated with our operating leases during the three and nine months ended September 28, 2019 (in millions): Three Months Ended Nine Months Ended September 28, 2019 September 28, 2019 Fixed lease expenses $ 10 $ 28 Variable lease expenses 7 20 Total lease expenses $ 17 $ 48 Cash paid for leases $ 17 $ 49 ROU assets obtained in exchange for lease obligations $ 11 $ 28 |
Future Minimum Lease Payments Under Non-cancellable Operating Leases | Future minimum lease payments under non-cancellable operating leases as of September 28, 2019 were as follows (in millions): 2019 $ 10 2020 40 2021 34 2022 24 2023 18 Thereafter 37 Total future minimum lease payments $ 163 Less: Interest (25 ) Present value of lease liabilities $ 138 Reported as of September 28, 2019: Current portion of lease liabilities $ 33 Long-term lease liabilities 105 Present value of lease liabilities $ 138 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Accrued Warranty Obligation | The following table is a summary of the Company’s accrued warranty obligation (in millions): Nine Months Ended September 28, September 29, Balance at the beginning of the period $ 22 $ 18 Warranty expense 18 25 Warranties fulfilled (18 ) (23 ) Balance at the end of the period $ 22 $ 20 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
Computation of Earnings per Share | Earnings per share (in millions, except share data): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Basic: Net income $ 136 $ 127 $ 375 $ 306 Weighted-average shares outstanding 54,085,500 53,740,174 53,999,044 53,516,859 Basic earnings per share $ 2.52 $ 2.37 $ 6.95 $ 5.72 Diluted: Net income $ 136 $ 127 $ 375 $ 306 Weighted-average shares outstanding 54,085,500 53,740,174 53,999,044 53,516,859 Dilutive shares 552,323 684,706 611,047 720,694 Diluted weighted-average shares outstanding 54,637,823 54,424,880 54,610,091 54,237,553 Diluted earnings per share $ 2.50 $ 2.34 $ 6.87 $ 5.64 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss (AOCI) | The components of AOCI for the nine months ended September 28, 2019 and September 29, 2018 are as follows (in millions): Unrealized gain (loss) on sales hedging Unrealized gain (loss) on forward interest rate swaps Currency translation adjustments Total Balance at December 31, 2017 $ (9 ) $ (9 ) $ (34 ) $ (52 ) Other comprehensive income (loss) before reclassifications 27 7 (7 ) 27 Amounts reclassified from AOCI (1) (1 ) 3 — 2 Tax effect (4 ) (2 ) — (6 ) Other comprehensive income (loss), net of tax 22 8 (7 ) 23 Balance at September 29, 2018 $ 13 $ (1 ) $ (41 ) $ (29 ) Balance at December 31, 2018 $ 12 $ — $ (47 ) $ (35 ) Other comprehensive income (loss) before reclassifications 41 — (3 ) 38 Amounts reclassified from AOCI (1) (32 ) 2 — (30 ) Tax effect (2 ) (2 ) — (4 ) Other comprehensive (loss) income, net of tax 7 — (3 ) 4 Balance at September 28, 2019 $ 19 $ — $ (50 ) $ (31 ) (1) See Note 7 , Derivative Instruments regarding timing of reclassifications to operating results. |
Segment Information & Geograp_2
Segment Information & Geographic Data (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Segment Reporting [Abstract] | |
Financial Information by Segments | Financial information by segment is presented as follows (in millions): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Net sales: AIT $ 373 $ 353 $ 1,100 $ 1,056 EVM 757 739 2,193 2,025 Total Net sales $ 1,130 $ 1,092 $ 3,293 $ 3,081 Operating income: AIT (1) $ 93 $ 81 $ 269 $ 241 EVM (1) 133 117 347 279 Total segment operating income 226 198 616 520 Corporate, eliminations (2) (41 ) (36 ) (112 ) (89 ) Total Operating income $ 185 $ 162 $ 504 $ 431 (1) AIT and EVM segment operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense attributable to AIT and EVM are proportionate to each segment’s Net sales. (2) To the extent applicable, amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs. |
Net Sales to Customers by Geographic Region | Geographic data for Net sales is as follows (in millions): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, North America $ 591 $ 542 $ 1,641 $ 1,483 EMEA 346 348 1,082 1,034 Asia-Pacific 133 140 399 389 Latin America 60 62 171 175 Total Net sales $ 1,130 $ 1,092 $ 3,293 $ 3,081 |
Significant Accounting Polici_4
Significant Accounting Policies - Impact of Adoption of ASC 842 to Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other current assets | $ 66 | $ 53 | $ 54 |
Right-of-use assets | 117 | 110 | |
Accrued liabilities | 314 | 350 | 322 |
Long-term lease liabilities | 105 | 103 | |
Other long-term liabilities | $ 86 | 67 | $ 89 |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other current assets | (1) | ||
Right-of-use assets | 110 | ||
Accrued liabilities | 28 | ||
Long-term lease liabilities | 103 | ||
Other long-term liabilities | $ (22) |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue By Product Category And Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | $ 1,130 | $ 1,092 | $ 3,293 | $ 3,081 |
Tangible products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 981 | 959 | 2,868 | 2,687 |
Services and software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 149 | 133 | 425 | 394 |
AIT | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 373 | 353 | 1,100 | 1,056 |
AIT | Tangible products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 337 | 325 | 1,001 | 960 |
AIT | Services and software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 36 | 28 | 99 | 96 |
EVM | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 757 | 739 | 2,193 | 2,025 |
EVM | Tangible products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | 644 | 634 | 1,867 | 1,727 |
EVM | Services and software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net sales | $ 113 | $ 105 | $ 326 | $ 298 |
Revenues - Remaining Performanc
Revenues - Remaining Performance Obligation (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligation | $ 665 | $ 489 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-09-29 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, expected recognition period | 2 years |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 31, 2018 | |
Capitalized Contract Cost [Line Items] | |||||
Increase driven by payments received or due in advance of satisfying performance obligations | $ 432 | $ 432 | $ 382 | ||
Revenue recognized that was included in contract liability | 41 | $ 32 | 168 | $ 152 | |
Prepaid expenses and other current assets | |||||
Capitalized Contract Cost [Line Items] | |||||
Contract assets recorded in prepaids and other current assets | $ 9 | $ 9 | $ 5 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 138 | $ 125 |
Work in process | 4 | 3 |
Finished goods | 326 | 392 |
Total | $ 468 | $ 520 |
Business Acquisitions - Narrati
Business Acquisitions - Narrative (Details) - USD ($) $ in Millions | May 31, 2019 | Feb. 21, 2019 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||||||
Cash paid, net | $ 255 | $ 72 | |||||||
Acquisition related costs | $ 12 | $ 6 | 20 | $ 8 | |||||
Goodwill | 2,618 | 2,618 | $ 2,495 | ||||||
Profitect Inc | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage of equity interests acquired | 100.00% | ||||||||
Purchase consideration | $ 79 | ||||||||
Cash paid, net | 75 | ||||||||
Existing ownership interest | 4 | ||||||||
Business combination, purchase price adjustment | $ 11 | ||||||||
Acquisition related costs | 2 | ||||||||
Step acquisition, remeasurement gain | 4 | ||||||||
Decrease to intangible assets acquired | 7 | ||||||||
Goodwill measurement period adjustments | 4 | ||||||||
Goodwill | $ 54 | ||||||||
Temptime Corporation | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage of equity interests acquired | 100.00% | ||||||||
Purchase consideration | $ 180 | ||||||||
Cash paid, net | 180 | ||||||||
Acquisition related costs | 2 | ||||||||
Goodwill measurement period adjustments | $ 2 | ||||||||
Goodwill | $ 73 | ||||||||
Purchase price adjustment to other assets | 2 | ||||||||
Purchase adjustment, other liabilities | $ 1 | ||||||||
Purchase price adjustment, cash payment | 1 | ||||||||
Xplore Technologies Corporation | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill measurement period adjustments | 0 | $ (5) | |||||||
Measurement period adjustment deferred tax assets | $ 1 | $ 5 |
Business Acquisitions - Prelimi
Business Acquisitions - Preliminary Purchase Price Allocation to Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | May 31, 2019 | Feb. 21, 2019 | Sep. 28, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||
Goodwill on acquisition | $ 2,618 | $ 2,495 | ||
Profitect Inc | ||||
Business Acquisition [Line Items] | ||||
Identifiable intangible assets | $ 35 | |||
Other assets acquired | 4 | |||
Deferred tax liabilities | (4) | |||
Other liabilities assumed | (10) | |||
Net Assets Acquired | 25 | |||
Goodwill on acquisition | 54 | |||
Total purchase consideration | $ 79 | |||
Temptime Corporation | ||||
Business Acquisition [Line Items] | ||||
Inventory | $ 14 | |||
Property, plant and equipment | 10 | |||
Identifiable intangible assets | 106 | |||
Other assets acquired | 13 | |||
Deferred tax liabilities | (24) | |||
Other liabilities assumed | (12) | |||
Net Assets Acquired | 107 | |||
Goodwill on acquisition | 73 | |||
Total purchase consideration | $ 180 |
Business Acquisitions - Preli_2
Business Acquisitions - Preliminary Purchase Price Allocation to Intangible Assets Acquired (Details) - USD ($) $ in Millions | May 31, 2019 | Feb. 21, 2019 |
Profitect Inc | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 35 | |
Profitect Inc | Customer and other relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 2 | |
Useful Life (in years) | 1 year | |
Profitect Inc | Current technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 33 | |
Useful Life (in years) | 8 years | |
Temptime Corporation | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 106 | |
Temptime Corporation | Customer and other relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 79 | |
Useful Life (in years) | 8 years | |
Temptime Corporation | Current technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 25 | |
Useful Life (in years) | 8 years | |
Temptime Corporation | Trade Names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets acquired | $ 2 | |
Useful Life (in years) | 3 years |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | $ 46 | $ 38 |
Total Liabilities at fair value | 45 | 17 |
Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 24 | 16 |
Total Liabilities at fair value | 1 | |
Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 22 | 17 |
Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 5 | |
Total Liabilities at fair value | 22 | |
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 | 22 | 17 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 22 | 18 |
Total Liabilities at fair value | 23 | 17 |
Level 1 | Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 1 |
Total Liabilities at fair value | 1 | |
Level 1 | Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 22 | 17 |
Level 1 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | |
Total Liabilities at fair value | 0 | |
Level 1 | 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 | 22 | 17 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 24 | 20 |
Total Liabilities at fair value | 22 | 0 |
Level 2 | Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 24 | 15 |
Total Liabilities at fair value | 0 | |
Level 2 | Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Level 2 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 5 | |
Total Liabilities at fair value | 22 | |
Level 2 | 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 | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Total Liabilities at fair value | 0 | 0 |
Level 3 | Foreign exchange contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Total Liabilities at fair value | 0 | |
Level 3 | Money market investments related to the deferred compensation plan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | 0 |
Level 3 | Forward interest rate swap contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets at fair value | 0 | |
Total Liabilities at fair value | 0 | |
Level 3 | 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 | $ 0 | $ 0 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Derivative [Line Items] | ||
Total net derivative asset | $ 1 | $ 21 |
Derivative instruments designated as hedges | ||
Derivative [Line Items] | ||
Total net derivative asset | 24 | 15 |
Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Total net derivative asset | (23) | 6 |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments designated as hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 24 | 15 |
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 0 | 1 |
Prepaid expenses and other current assets | Forward interest rate swaps | Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 0 | 2 |
Other long-term assets | Forward interest rate swaps | Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 0 | 3 |
Accrued liabilities | Foreign exchange contracts | Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (1) | 0 |
Accrued liabilities | Forward interest rate swaps | Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Derivative liability, fair value | (5) | 0 |
Other long-term liabilities | Forward interest rate swaps | Derivative instruments not designated as hedges | ||
Derivative [Line Items] | ||
Derivative liability, fair value | $ (17) | $ 0 |
Derivative Instruments - (Loss)
Derivative Instruments - (Loss) Gain Recognized In Income (Details) - Derivative instruments not designated as hedges - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain recognized in income | $ (5) | $ 7 | $ (31) | $ 26 |
Foreign exchange contracts | Foreign exchange gain (loss) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain recognized in income | (1) | 1 | (4) | 2 |
Forward interest rate swaps | Interest expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total (loss) gain recognized in income | $ (4) | $ 6 | $ (27) | $ 24 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019EUR (€) | Dec. 31, 2018USD ($) | Dec. 31, 2018EUR (€) | Dec. 31, 2017USD ($) | |
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Derivative, gain | $ 32 | $ 1 | ||||||
Foreign currency cash flow hedge derivative | € | € 575 | € 496 | ||||||
Net Sales | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Derivative, gain | $ 10 | $ 7 | ||||||
Derivative instruments designated as hedges | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Maturity period, month(s) | 12 months | |||||||
Foreign exchange contracts | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Derivative, increase in asset and gross liability | 0 | $ 0 | $ 1 | |||||
Foreign exchange forward | Derivative instruments not designated as hedges | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Maturity period, month(s) | 1 month | |||||||
Forward interest rate swaps | Derivative instruments designated as hedges | ||||||||
Change in unrealized gain (loss) on anticipated sales hedging: | ||||||||
Derivative, notional amount | $ 800 | $ 800 | $ 800 |
Derivative Instruments - Notion
Derivative Instruments - Notional Values and Net Fair Value of Outstanding Contracts (Details) € in Millions, ¥ in Millions, ¥ in Millions, £ in Millions, R in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions | Sep. 28, 2019USD ($) | Sep. 28, 2019CAD ($) | Sep. 28, 2019AUD ($) | Sep. 28, 2019JPY (¥) | Sep. 28, 2019GBP (£) | Sep. 28, 2019MXN ($) | Sep. 28, 2019CNY (¥) | Sep. 28, 2019EUR (€) | Sep. 28, 2019SGD ($) | Sep. 28, 2019ZAR (R) | Dec. 31, 2018USD ($) | Dec. 31, 2018CAD ($) | Dec. 31, 2018AUD ($) | Dec. 31, 2018JPY (¥) | Dec. 31, 2018GBP (£) | Dec. 31, 2018MXN ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018EUR (€) | Dec. 31, 2018SGD ($) | Dec. 31, 2018ZAR (R) |
Derivative [Line Items] | ||||||||||||||||||||
Net fair value of (liabilities) assets of outstanding contracts | $ | $ (1) | $ 1 | ||||||||||||||||||
Foreign Exchange Forward | U.S. dollar | ||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||
Notional balance of outstanding contracts | $ 2 | $ 58 | ¥ 202 | £ 15 | $ 121 | ¥ 83 | € 33 | $ 6 | R 42 | $ 6 | $ 47 | ¥ 396 | £ 1 | $ 225 | ¥ 71 | € 45 | $ 7 | R 42 | ||
Foreign Exchange Forward | Euro | ||||||||||||||||||||
Derivative [Line Items] | ||||||||||||||||||||
Notional balance of outstanding contracts | £ | £ 0 | £ 6 |
Long-Term Debt - Summary of Car
Long-Term Debt - Summary of Carrying Value of Debt (Details) € in Millions, $ in Millions | Sep. 28, 2019USD ($) | Sep. 28, 2019EUR (€) | Dec. 31, 2018USD ($) | May 31, 2018USD ($) |
Debt Instrument [Line Items] | ||||
Total debt | $ 1,528 | $ 1,600 | ||
Less: debt issuance costs | (6) | (5) | ||
Less: unamortized discounts | (3) | (4) | ||
Less: Current portion of debt | (205) | (157) | ||
Total long-term debt | 1,314 | 1,434 | ||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total debt | 292 | € 92 | 408 | |
Term Loan | Term Loan A | ||||
Debt Instrument [Line Items] | ||||
Total debt | 1,000 | 608 | $ 670 | |
Term Loan | Term Loan B | ||||
Debt Instrument [Line Items] | ||||
Total debt | 0 | |||
Secured Debt | Receivables Financing Facilities | ||||
Debt Instrument [Line Items] | ||||
Total debt | $ 236 | $ 139 |
Long-Term Debt - Future Maturit
Long-Term Debt - Future Maturities of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2019 | $ 80 | |
2020 | 150 | |
2021 | 119 | |
2022 | 56 | |
2023 | 81 | |
Thereafter | 1,042 | |
Total future debt maturities | $ 1,528 | $ 1,600 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) € in Millions, $ in Millions | Sep. 28, 2019USD ($) | Sep. 28, 2019EUR (€) | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | |||
Total debt borrowed ( 92 in Euros) | $ 1,528 | $ 1,600 | |
Long-term debt, fair value | 1,500 | 1,600 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Total debt borrowed ( 92 in Euros) | $ 292 | € 92 | $ 408 |
Long-Term Debt - Credit Facilit
Long-Term Debt - Credit Facilities (Details) € in Millions | Aug. 09, 2019USD ($) | May 31, 2018USD ($) | Sep. 28, 2019USD ($) | Jun. 30, 2018USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019EUR (€) | Jun. 29, 2019USD ($) | Dec. 31, 2018USD ($) | Mar. 31, 2018USD ($) |
Line of Credit Facility [Line Items] | ||||||||||
Amortization of debt discount and debt issuance costs | $ 6,000,000 | $ 12,000,000 | ||||||||
Debt principal | $ 1,528,000,000 | 1,528,000,000 | $ 1,600,000,000 | |||||||
Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Letters of credit | $ 5,000,000 | $ 5,000,000 | ||||||||
Average interest rate | 3.00% | 3.00% | 3.00% | |||||||
One-time fees associated with debt refinancing | $ 6,000,000 | |||||||||
Debt principal | $ 292,000,000 | 292,000,000 | € 92 | 408,000,000 | ||||||
Revolving Credit Facility | Amended and Restated Credit Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Revolving credit facility maximum borrowing capacity | $ 1,000,000,000 | $ 800,000,000 | $ 800,000,000 | $ 500,000,000 | ||||||
Funds available for other borrowing | 995,000,000 | 995,000,000 | ||||||||
Amortization of debt discount and debt issuance costs | $ 4,000,000 | |||||||||
Terminated interest rate swap fees | $ 3,000,000 | |||||||||
Term Loan | Term Loan A | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Revolving credit facility maximum borrowing capacity | 1,000,000,000 | $ 608,000,000 | ||||||||
Percentage bearing variable interest, percentage rate | 3.55% | 3.55% | 3.55% | |||||||
Debt principal | 670,000,000 | $ 1,000,000,000 | $ 1,000,000,000 | $ 608,000,000 | ||||||
Term Loan | Term Loan B | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Extinguishment of debt, amount | $ 445,000,000 | $ 300,000,000 | ||||||||
Debt principal | $ 0 | $ 0 | ||||||||
Amortization of debt issuance costs | $ 6,000,000 | |||||||||
Fees associated with amendment of debt agreement | $ 1,000,000 |
Long-Term Debt - Receivable Fin
Long-Term Debt - Receivable Financing Facility (Details) | 9 Months Ended | |
Sep. 28, 2019USD ($)facility | Jun. 29, 2019USD ($) | |
Line of Credit Facility [Line Items] | ||
Accounts receivable pledged | $ 439,000,000 | |
Number of Receivable Financing Facilities | facility | 2 | |
Borrowings under Receivables Financing Facilities | $ 236,000,000 | |
Secured Debt | Receivables Financing Facility | ||
Line of Credit Facility [Line Items] | ||
Receivable financing facility, up to | $ 180,000,000 | |
Average interest rate | 2.95% | |
Secured Debt | Receivable Financing Facility 2019 | ||
Line of Credit Facility [Line Items] | ||
Receivable financing facility, up to | $ 100,000,000 | |
Secured Debt | Receivables Financing Facilities | ||
Line of Credit Facility [Line Items] | ||
Borrowing available | $ 280,000,000 |
Leases - Additional Information
Leases - Additional Information (Details) | Sep. 28, 2019 |
Leases [Abstract] | |
Lease term | 12 years |
Weighted average remaining lease term (approximately) | 5 years |
Weighted average discount rate used to measure ROU assets and lease liabilities (approximately) | 6.00% |
Leases - Activities Associated
Leases - Activities Associated with Operating Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019 | Sep. 28, 2019 | |
Leases [Abstract] | ||
Fixed lease expenses | $ 10 | $ 28 |
Variable lease expenses | 7 | 20 |
Total lease expenses | 17 | 48 |
Cash paid for leases | 17 | 49 |
ROU assets obtained in exchange for lease obligations | $ 11 | $ 28 |
Leases - Future Minimum lease P
Leases - Future Minimum lease Payments Under Non-cancellable Leases (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
2019 | $ 10 | |
2020 | 40 | |
2021 | 34 | |
2022 | 24 | |
2023 | 18 | |
Thereafter | 37 | |
Total future minimum lease payments | 163 | |
Less: Interest | (25) | |
Present value of lease liabilities | 138 | |
Current portion of lease liabilities | 33 | |
Long-term lease liabilities | $ 105 | $ 103 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Accrued Warranty Obligation (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at the beginning of the period | $ 22 | $ 18 |
Warranty expense | 18 | 25 |
Warranties fulfilled | (18) | (23) |
Balance at the end of the period | $ 22 | $ 20 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 31, 2018 | Oct. 31, 2019 | |
Income Tax Contingency [Line Items] | ||||||
Effective tax rate | 14.50% | 11.20% | 10.50% | 18.60% | ||
Subsequent Event | ||||||
Income Tax Contingency [Line Items] | ||||||
Uncertain tax benefits that may be paid within the next twelve months | $ 19 | |||||
United Kingdom | ||||||
Income Tax Contingency [Line Items] | ||||||
Statutory tax rate | 19.00% | |||||
Singapore | ||||||
Income Tax Contingency [Line Items] | ||||||
Statutory tax rate | 17.00% | 17.00% | ||||
Luxembourg | ||||||
Income Tax Contingency [Line Items] | ||||||
Statutory tax rate | 26.00% | |||||
Singapore Economic Development Board | ||||||
Income Tax Contingency [Line Items] | ||||||
Statutory tax rate | 10.50% |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Basic: | ||||
Net income | $ 136 | $ 127 | $ 375 | $ 306 |
Weighted-average shares outstanding (in shares) | 54,085,500 | 53,740,174 | 53,999,044 | 53,516,859 |
Basic earnings per share (USD per share) | $ 2.52 | $ 2.37 | $ 6.95 | $ 5.72 |
Diluted: | ||||
Net income | $ 136 | $ 127 | $ 375 | $ 306 |
Weighted-average shares outstanding (in shares) | 54,085,500 | 53,740,174 | 53,999,044 | 53,516,859 |
Dilutive shares (in shares) | 552,323 | 684,706 | 611,047 | 720,694 |
Diluted weighted-average shares outstanding (in shares) | 54,637,823 | 54,424,880 | 54,610,091 | 54,237,553 |
Diluted earnings per share (USD per share) | $ 2.50 | $ 2.34 | $ 6.87 | $ 5.64 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Earnings Per Share [Abstract] | ||||
Potentially dilutive shares (in shares) | 92,014 | 1,139 | 53,356 | 87,458 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | $ 1,335 | $ 834 |
Other comprehensive income (loss) before reclassifications | 38 | 27 |
Amounts reclassified from AOCI | (30) | 2 |
Tax effect | (4) | (6) |
Other comprehensive income (loss), net of tax | 4 | 23 |
Ending balance | 1,694 | 1,213 |
Unrealized gain (loss) on sales hedging | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | 12 | (9) |
Other comprehensive income (loss) before reclassifications | 41 | 27 |
Amounts reclassified from AOCI | (32) | (1) |
Tax effect | (2) | (4) |
Other comprehensive income (loss), net of tax | 7 | 22 |
Ending balance | 19 | 13 |
Unrealized gain (loss) on forward interest rate swaps | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | 0 | (9) |
Other comprehensive income (loss) before reclassifications | 0 | 7 |
Amounts reclassified from AOCI | 2 | 3 |
Tax effect | (2) | (2) |
Other comprehensive income (loss), net of tax | 0 | 8 |
Ending balance | 0 | (1) |
Currency translation adjustments | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | (47) | (34) |
Other comprehensive income (loss) before reclassifications | (3) | (7) |
Amounts reclassified from AOCI | 0 | 0 |
Tax effect | 0 | 0 |
Other comprehensive income (loss), net of tax | (3) | (7) |
Ending balance | (50) | (41) |
Total | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | (35) | (52) |
Ending balance | $ (31) | $ (29) |
Accounts Receivable Factoring (
Accounts Receivable Factoring (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Dec. 31, 2018 |
Transfers and Servicing [Abstract] | ||
Maximum uncollected receivables available | $ 125 | |
Accounts receivables sold | $ 70 | $ 33 |
Segment Information & Geograp_3
Segment Information & Geographic Data - Additional Information (Details) | 9 Months Ended |
Sep. 28, 2019segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information & Geograp_4
Segment Information & Geographic Data - Financial Information by Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 1,130 | $ 1,092 | $ 3,293 | $ 3,081 |
Total Operating income | 185 | 162 | 504 | 431 |
AIT | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 373 | 353 | 1,100 | 1,056 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Operating income | 226 | 198 | 616 | 520 |
Operating Segments | AIT | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 373 | 353 | 1,100 | 1,056 |
Total Operating income | 93 | 81 | 269 | 241 |
Operating Segments | EVM | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 757 | 739 | 2,193 | 2,025 |
Total Operating income | 133 | 117 | 347 | 279 |
Corporate, eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total Operating income | $ (41) | $ (36) | $ (112) | $ (89) |
Segment Information & Geograp_5
Segment Information & Geographic Data - Geographic Data for Net Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 1,130 | $ 1,092 | $ 3,293 | $ 3,081 |
North America | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 591 | 542 | 1,641 | 1,483 |
EMEA | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 346 | 348 | 1,082 | 1,034 |
Asia-Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | 133 | 140 | 399 | 389 |
Latin America | ||||
Segment Reporting Information [Line Items] | ||||
Total Net sales | $ 60 | $ 62 | $ 171 | $ 175 |
Uncategorized Items - zbra-2019
Label | Element | Value |
Accounting Standards Update 2016-16 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 19,000,000 |
Accounting Standards Update 2016-16 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 19,000,000 |