Exhibit 99
Zebra Technologies Corporation | |
333 Corporate Woods Parkway | |
Vernon Hills, Illinois 60061.3109 U.S.A. | |
Telephone +1.847.634.6700 | |
Facsimile +1.847.913.8766 | |
www.zebra.com |
FOR IMMEDIATE RELEASE
Zebra Technologies Records Strong Sales and Earnings
Growth for the Second Quarter of 2003
Vernon Hills, IL, July 28, 2003—Zebra Technologies Corporation (Nasdaq: ZBRA) today announced its fifth consecutive quarter of sales and earnings growth, with a 33.2% increase in diluted earnings per share on 12.0% growth in net sales. For the three months that ended June 28, 2003, the company recorded net income of $22,262,000, or $0.70 per diluted share, compared with $16,460,000, or $0.53 per diluted share, for the second quarter of 2002. Quarterly net sales of $129,863,000 advanced to the second-highest level in the company’s history from $115,951,000 for the same period a year ago. Both net sales and net income exceeded the upper levels of the company’s previously forecasted range.
Net sales for the second quarter of 2003 increased in all geographic regions, with proportionally higher growth recorded in international regions. Higher gross profit margin of 51.3%, compared with 48.1% for the second quarter of 2002, resulted from the higher sales volume, favorable foreign exchange rates and lower product costs. Higher selling and marketing expenses of 23.8% principally reflected the ongoing strategic investments to drive long-term growth. Even with these investments, second quarter operating income increased to 24.4% of net sales from 21.5%. Quarterly financial results also benefited from an increase in investment income to $3,017,000 from $1,188,000, as well as a decline in the effective income tax rate to 35% from 36%.
“Zebra’s strategic investments in geographic expansion, product development and delivering high-growth applications to vertical markets made over more than two years helped drive the robust results we are reporting today and position the company for further sales and earnings growth,” stated Edward Kaplan, Zebra’s chairman and chief executive officer. “Greater international sales representation is generating higher levels of business in emerging regions such as China, Eastern Europe and Latin America. Innovative new products are meeting customer needs by serving several new applications, including many mobile and wireless solutions. Investments in sales, marketing and technology resources have greatly extended Zebra’s market leadership and position the company to benefit from emerging trends in radio frequency identification, life sciences, Homeland Security, and others. We completed the first six months of 2003 with record results and look forward to continued growth in the second half of the year and as we move into 2004.”
For the first half of 2003, net income was a record $44,302,000, or $1.40 per diluted share, up 41.1% from $31,400,000, or $1.01 per diluted share, for the first half of 2002. Net sales for the first six months of 2003, also a record, increased 12.6% to $254,547,000 from $226,136,000 for the corresponding period a year ago.
At June 28, 2003, Zebra had $401,348,000 in cash, investments and marketable securities, and no long-term debt. Reflecting the higher business activity, inventories totaled $40,030,000 and accounts receivable were $79,555,000.
Zebra also announced its financial forecast for the third quarter of 2003. For the third quarter, net sales are expected within a range of $129,000,000 and $135,000,000, with earnings between $0.68 and $0.73 per diluted share.
This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company’s financial forecast for the third quarter of 2003 stated in the paragraph directly above. These statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in general industry and market conditions, of general domestic and international economic conditions, and other factors. Specifically, these factors include market
acceptance of the company’s products and product lines and competitors’ product offerings, as well as the speed of adoption of the company’s printing technologies and competing technologies. When used in this release and documents referenced, the words “anticipate,” “believe,” “estimate,” and “expect” and similar expressions, as they relate to the company or its management are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company’s future operations and results can be found in Zebra’s filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra’s Form 10-K for the year ended December 31, 2002.
Zebra Technologies Corporation delivers innovative and reliable on-demand printing solutions for business improvement and security applications in about 100 countries around the world. More than 90% of Fortune 500 companies use Zebra®-brand printers. A broad range of applications benefit from Zebra-brand thermal bar code, “smart” label and receipt printers, and Eltron®-brand card printers, resulting in enhanced security, increased productivity, improved quality, lower costs, and better customer service. The company has an installed base of approximately three million printers, including RFID printer/encoders and wireless mobile solutions, and also offers software, connectivity solutions, and printing supplies. Information about Zebra Technologies can be found at www.zebra.com.
Investors are invited to listen to a live Internet broadcast of Zebra’s conference call discussing the company’s financial results for the second quarter of 2003. The conference call will be held at 11:00 Eastern Time today. To listen to the call, visit the company’s Web site at www.zebracorporation.com.
For Information, Contact:
Charles R. Whitchurch
Chief Financial Officer
Phone: 847.634.6700
Fax: 847.821.2545
2
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
|
| June 28, |
| December 31, |
| ||
|
| (Unaudited) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 19,117 |
| $ | 18,418 |
|
Investments and marketable securities |
| 382,231 |
| 330,159 |
| ||
Accounts receivable, net |
| 79,555 |
| 71,299 |
| ||
Inventories |
| 40,030 |
| 38,066 |
| ||
Deferred income taxes |
| 4,899 |
| 4,107 |
| ||
Prepaid expenses |
| 5,855 |
| 2,531 |
| ||
Total current assets |
| 531,687 |
| 464,580 |
| ||
|
|
|
|
|
| ||
Property and equipment at cost, less accumulated depreciation and amortization |
| 39,162 |
| 39,462 |
| ||
Long-term deferred income taxes |
| 1,255 |
| 1,722 |
| ||
Excess of cost over fair value of net assets acquired |
| 54,455 |
| 54,455 |
| ||
Other intangibles |
| 2,813 |
| 3,556 |
| ||
Other assets |
| 9,742 |
| 9,313 |
| ||
Total assets |
| $ | 639,114 |
| $ | 573,088 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 16,492 |
| $ | 15,447 |
|
Accrued liabilities |
| 16,918 |
| 17,661 |
| ||
Short-term note payable |
| 626 |
| 275 |
| ||
Current portion of obligation under capital lease with related party |
| 166 |
| 145 |
| ||
Income taxes payable |
| 7,499 |
| 3,376 |
| ||
Total current liabilities |
| 41,701 |
| 36,904 |
| ||
|
|
|
|
|
| ||
Obligation under capital lease with related party, less current portion |
| 379 |
| 605 |
| ||
Deferred rent |
| 467 |
| 416 |
| ||
Other long-term liabilities |
| 1,855 |
| 1,008 |
| ||
Total liabilities |
| 44,402 |
| 38,933 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Preferred stock, $.01 par value; 10,000,000 shares authorized, none outstanding |
| — |
| — |
| ||
Class A Common Stock, $.01 par value; 50,000,000 shares authorized, 28,363,734 and 27,660,466 shares issued, and 28,298,640 and 27,282,087 shares outstanding in 2003 and 2002, respectively |
| 283 |
| 276 |
| ||
Class B Common Stock, $.01 par value; 28,358,189 shares authorized, 3,182,782 and 3,886,050 shares issued and outstanding in 2003 and 2002, respectively |
| 32 |
| 39 |
| ||
Additional paid-in capital |
| 57,599 |
| 56,478 |
| ||
Treasury stock, at cost (65,094 shares and 378,379 shares, respectively) |
| (2,913 | ) | (16,760 | ) | ||
Retained earnings |
| 538,452 |
| 494,150 |
| ||
Accumulated other comprehensive income (loss) |
| 1,259 |
| (28 | ) | ||
Total stockholders’ equity |
| 594,712 |
| 534,155 |
| ||
Total liabilities and stockholders’ equity |
| $ | 639,114 |
| $ | 573,088 |
|
3
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| June 28, |
| June 29, |
| June 28, |
| June 29, |
| ||||
Net sales |
| $ | 129,863 |
| $ | 115,951 |
| $ | 254,547 |
| $ | 226,136 |
|
Cost of sales |
| 63,305 |
| 60,202 |
| 123,640 |
| 118,376 |
| ||||
Gross profit |
| 66,558 |
| 55,749 |
| 130,907 |
| 107,760 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling and marketing |
| 16,754 |
| 13,531 |
| 31,257 |
| 25,479 |
| ||||
Research and development |
| 7,560 |
| 7,472 |
| 15,139 |
| 14,927 |
| ||||
General and administrative |
| 10,248 |
| 9,413 |
| 20,500 |
| 18,742 |
| ||||
Amortization of intangible assets |
| 371 |
| 367 |
| 742 |
| 735 |
| ||||
Costs related to terminated acquisition |
| — |
| — |
| — |
| 3,300 |
| ||||
Merger costs |
| — |
| — |
| — |
| 73 |
| ||||
Total operating expenses |
| 34,933 |
| 30,783 |
| 67,638 |
| 63,256 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 31,625 |
| 24,966 |
| 63,269 |
| 44,504 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Investment income |
| 3,017 |
| 1,188 |
| 5,456 |
| 5,355 |
| ||||
Interest expense |
| (14 | ) | (32 | ) | (52 | ) | (87 | ) | ||||
Other, net |
| (379 | ) | (413 | ) | (516 | ) | (726 | ) | ||||
Total other income |
| 2,624 |
| 743 |
| 4,888 |
| 4,542 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 34,249 |
| 25,709 |
| 68,157 |
| 49,046 |
| ||||
Income taxes |
| 11,987 |
| 9,249 |
| 23,855 |
| 17,646 |
| ||||
Net income |
| $ | 22,262 |
| $ | 16,460 |
| $ | 44,302 |
| $ | 31,400 |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings per share |
| $ | 0.71 |
| $ | 0.53 |
| $ | 1.42 |
| $ | 1.02 |
|
Diluted earnings per share |
| $ | 0.70 |
| $ | 0.53 |
| $ | 1.40 |
| $ | 1.01 |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic weighted average shares outstanding |
| 31,358 |
| 30,932 |
| 31,281 |
| 30,887 |
| ||||
Diluted weighted average and equivalent shares outstanding |
| 31,708 |
| 31,229 |
| 31,608 |
| 31,181 |
|
4
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
|
| Six Months Ended |
| ||||
|
| June 28, |
| June 29, |
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net income |
| $ | 44,302 |
| $ | 31,400 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 5,783 |
| 6,024 |
| ||
Tax benefit from exercise of options |
| 2,858 |
| — |
| ||
Appreciation in market value of investments and marketable securities |
| — |
| 653 |
| ||
Write-down of long-term investments |
| — |
| 193 |
| ||
Deferred income taxes |
| (315 | ) | (2,422 | ) | ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Accounts receivable, net |
| (7,479 | ) | (4,343 | ) | ||
Inventories |
| (1,697 | ) | 650 |
| ||
Other assets |
| 357 |
| 4,127 |
| ||
Accounts payable |
| 535 |
| 1,593 |
| ||
Accrued liabilities |
| (797 | ) | (2,378 | ) | ||
Income taxes payable |
| 4,077 |
| 914 |
| ||
Other operating activities |
| (3,376 | ) | 749 |
| ||
Investments and marketable securities |
| — |
| (49,908 | ) | ||
Net cash provided by (used in) operating activities |
| 44,248 |
| (12,748 | ) | ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Purchases of property and equipment |
| (4,547 | ) | (4,111 | ) | ||
Purchases of investments and marketable securities |
| (771,137 | ) | — |
| ||
Sales of investments and marketable securities |
| 719,065 |
| — |
| ||
Net cash used in investing activities |
| (56,619 | ) | (4,111 | ) | ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Proceeds from exercise of stock options |
| 12,110 |
| 6,445 |
| ||
Issuance of notes payable |
| 408 |
| 620 |
| ||
Payments for obligation under capital lease, with related party |
| (229 | ) | (165 | ) | ||
Net cash provided by financing activities |
| 12,289 |
| 6,900 |
| ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash |
| 781 |
| 684 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and cash equivalents |
| 699 |
| (9,275 | ) | ||
Cash and cash equivalents at beginning of period |
| 18,418 |
| 26,328 |
| ||
Cash and cash equivalents at end of period |
| $ | 19,117 |
| $ | 17,053 |
|
|
|
|
|
|
| ||
Supplemental disclosures of cash flow information: |
|
|
|
|
| ||
Interest paid |
| $ | 52 |
| $ | 87 |
|
Income taxes paid |
| 19,130 |
| 9,935 |
| ||
|
|
|
|
|
| ||
Supplemental disclosures of non-cash transactions: |
|
|
|
|
| ||
Conversion of Class B Common Stock to Class A Common Stock |
| 7 |
| 7 |
|
5
ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)
Sales by Product Category
|
| Three Months Ended |
|
|
|
|
| ||||
|
| June 28, |
| June 29, |
| Percent |
| Percent of |
| ||
Hardware |
| $ | 98,565 |
| $ | 87,323 |
| 12.9 |
| 75.9 |
|
Supplies |
| 24,206 |
| 21,705 |
| 11.5 |
| 18.6 |
| ||
Service and software |
| 6,085 |
| 5,999 |
| 1.4 |
| 4.7 |
| ||
Freight revenue |
| 1,007 |
| 924 |
| 9.0 |
| 0.8 |
| ||
Total sales |
| $ | 129,863 |
| $ | 115,951 |
| 12.0 |
| 100.0 |
|
Sales by Product Category
|
| Six Months Ended |
|
|
|
|
| ||||
|
| June 28, |
| June 29, |
| Percent |
| Percent of |
| ||
Hardware |
| $ | 193,117 |
| $ | 169,495 |
| 13.9 |
| 75.9 |
|
Supplies |
| 47,345 |
| 42,603 |
| 11.1 |
| 18.6 |
| ||
Service and software |
| 12,122 |
| 11,736 |
| 3.3 |
| 4.7 |
| ||
Freight revenue |
| 1,963 |
| 2,302 |
| (14.7 | ) | 0.8 |
| ||
Total sales |
| $ | 254,547 |
| $ | 226,136 |
| 12.6 |
| 100.0 |
|
Sales by Geographic Region
|
| Three Months Ended |
|
|
|
|
| ||||
|
| June 28, |
| June 29, |
| Percent |
| Percent of |
| ||
International |
| $ | 59,750 |
| $ | 51,271 |
| 16.5 |
| 46.0 |
|
North America |
| 70,113 |
| 64,680 |
| 8.4 |
| 54.0 |
| ||
Total sales |
| $ | 129,863 |
| $ | 115,951 |
| 12.0 |
| 100.0 |
|
Sales by Geographic Region
|
| Six Months Ended |
|
|
|
|
| ||||
|
| June 28, |
| June 29, |
| Percent |
| Percent of |
| ||
International |
| $ | 114,877 |
| $ | 97,010 |
| 18.4 |
| 45.1 |
|
North America |
| 139,670 |
| 129,126 |
| 8.2 |
| 54.9 |
| ||
Total sales |
| $ | 254,547 |
| $ | 226,136 |
| 12.6 |
| 100.0 |
|
6