Exhibit 99.1
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 Reports Record Fourth Quarter and Full-Year Financial Results
Vernon Hills, IL, February 9, 2005—Zebra Technologies Corporation (Nasdaq: ZBRA) today announced strong growth in net sales, net income and earnings per share to record levels for the fourth quarter and year that ended December 31, 2004. Quarterly net income increased 31.0% to $31,963,000, or $0.44 per diluted share, from $24,395,000, or $0.34 per diluted share, for the same period a year ago. Net sales for the fourth quarter of $174,874,000 topped the upper end of the company’s sales guidance range and were up 18.8% from $147,200,000 for the fourth quarter of 2003. Per-share figures were adjusted for a three-for-two stock split that was paid on August 25, 2004, in the form of a 50% stock dividend. Zebra also announced continued strong business momentum and a favorable outlook for the first quarter of 2005.
For 2004, annual net income increased 31.6% to a record $120,643,000, or $1.66 per diluted share, from 2003’s $91,696,000, or $1.28 per diluted share. Record net sales for 2004 were $663,054,000, up 23.6% from $536,397,000 for the prior year.
“High sales growth across all dimensions of our business – products, channels, geographic regions – helped sustain exceptional business strength throughout the year,” stated Edward Kaplan, Zebra’s chairman and chief executive officer. “Our performance is a direct result of pursuing a strategy to gain market share, extend global reach and deliver more solutions for established and high-growth specialty printing applications. We are serving international customers better with more Zebra representatives working with a more robust set of valued channel partners in strategic geographic territories. Our entire range of printer products is consistently meeting with strong market demand, as companies and organizations build infrastructure and enable enterprise mobility.”
Mr. Kaplan added, “We enter 2005 with positive business momentum, a stronger Zebra brand, better business execution and greatly extended competitive leadership. The trends that made for a successful 2004 will have an enduring effect this year and beyond: greater deployments of mobile and wireless printing, better coverage in high-growth international geographic regions including China, and a wider array of business improvement applications with robust thermal printer products. All of this, plus the growing opportunities in radio frequency identification and vertical market applications make us optimistic about further growth and success in building greater stockholder value in 2005.”
At December 31, 2004, Zebra had $557,993,000 in cash, investments and marketable securities, and no long-term debt. Inventories totaled $59,255,000 and accounts receivable were $96,881,000 to reflect the higher level of business.
Discussion and Analysis
For the fourth quarter of 2004, the company benefited from sales growth in all major product lines and geographic regions. All of the company’s international regions, which increased 20.6% overall, achieved record quarterly sales, with the highest percentage growth occurring in the Latin American region. The highest dollar sales growth occurred in the company’s North American region, which increased 17.2%. Gross profit margin of 52.0% increased 1.5 percentage points from the fourth quarter of 2003, primarily from higher capacity utilization related to the higher sales volume, cost reductions and favorable foreign exchange rates. Fourth quarter operating expenses increased 6.1%. Fourth quarter operating expenses reflect higher payroll and benefits from increased headcount to support sales and marketing activities and product development, including those related to RFID products, as well as higher
legal expenses related to litigation and increased work on intellectual property matters. Quarterly operating income increased 43.1% on margin expansion to 26.4% of net sales from 21.9% for the fourth quarter of 2003.
First Quarter Outlook
Zebra also announced its financial forecast for the first quarter of 2005. Net sales are expected within a range of $175,000,000 and $178,000,000, with earnings between $0.43 and $0.45 per diluted share.
Forward-looking Statement
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 first quarter of 2005 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,” “forecast,” 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, 2003.
Zebra Technologies Corp. delivers innovative and reliable on-demand printing solutions for business improvement and security applications in 90 countries around the world. More than 90 percent of Fortune 500 companies use Zebra-brand printers. A broad range of applications benefit from Zebra-brand thermal bar code, “smart” label, receipt, and card printers, resulting in enhanced security, increased productivity, improved quality, lower costs, and better customer service. The company has sold more than four million printers, including RFID printer/encoders and wireless mobile solutions, and also offers software, connectivity solutions and printing supplies. Information about Zebra bar code and RFID products can be found at http://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 fourth quarter of 2004. 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.zebra.com.
For Information, Contact:
Charles R. Whitchurch
Chief Financial Officer
Phone: 847.634.6700
Fax: 847.821.2545
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
|
| December 31, |
| December 31, |
| ||
|
| (Unaudited) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 17,983 |
| $ | 14,266 |
|
Investments and marketable securities |
| 540,010 |
| 433,582 |
| ||
Accounts receivable, net |
| 96,881 |
| 81,867 |
| ||
Inventories |
| 59,255 |
| 42,781 |
| ||
Deferred income taxes |
| 6,625 |
| 4,507 |
| ||
Prepaid expenses |
| 3,884 |
| 4,415 |
| ||
Total current assets |
| 724,638 |
| 581,418 |
| ||
|
|
|
|
|
| ||
Property and equipment at cost, less accumulated depreciation and amortization |
| 46,283 |
| 39,286 |
| ||
Goodwill |
| 61,793 |
| 61,150 |
| ||
Other intangibles, net |
| 6,517 |
| 9,031 |
| ||
Other assets |
| 22,991 |
| 10,726 |
| ||
Total assets |
| $ | 862,222 |
| $ | 701,611 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 24,130 |
| $ | 16,238 |
|
Accrued liabilities |
| 29,248 |
| 26,938 |
| ||
Current portion of obligation under capital lease |
| 54 |
| 153 |
| ||
Income taxes payable |
| 6,144 |
| 2,273 |
| ||
Total current liabilities |
| 59,576 |
| 45,602 |
| ||
|
|
|
|
|
| ||
Obligation under capital lease, less current portion |
| 117 |
| 452 |
| ||
Deferred income taxes |
| 417 |
| 723 |
| ||
Deferred rent |
| 564 |
| 518 |
| ||
Other long-term liabilities |
| 3,894 |
| 2,401 |
| ||
Total liabilities |
| 64,568 |
| 49,696 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Preferred stock |
| ¾ |
| ¾ |
| ||
Class A Common Stock |
| 718 |
| 711 |
| ||
Additional paid-in capital |
| 84,180 |
| 61,929 |
| ||
Retained earnings |
| 706,489 |
| 585,846 |
| ||
Accumulated other comprehensive income |
| 6,267 |
| 3,429 |
| ||
Total stockholders’ equity |
| 797,654 |
| 651,915 |
| ||
Total liabilities and stockholders’ equity |
| $ | 862,222 |
| $ | 701,611 |
|
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| ||||
Net sales |
| $ | 174,874 |
| $ | 147,200 |
| $ | 663,054 |
| $ | 536,397 |
|
Cost of sales |
| 83,979 |
| 72,803 |
| 319,895 |
| 263,320 |
| ||||
Gross profit |
| 90,895 |
| 74,397 |
| 343,159 |
| 273,077 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling and marketing |
| 22,615 |
| 19,506 |
| 77,062 |
| 66,635 |
| ||||
Research and development |
| 9,368 |
| 8,722 |
| 37,093 |
| 31,759 |
| ||||
General and administrative |
| 11,959 |
| 11,456 |
| 49,097 |
| 41,892 |
| ||||
Amortization of intangible assets |
| 647 |
| 527 |
| 2,569 |
| 1,640 |
| ||||
Acquired in-process technology |
| ¾ |
| 692 |
| 22 |
| 692 |
| ||||
Exit costs |
| 146 |
| 1,232 |
| 2,100 |
| 1,232 |
| ||||
Merger costs |
| ¾ |
| 9 |
| 46 |
| 9 |
| ||||
Total operating expenses |
| 44,735 |
| 42,144 |
| 167,989 |
| 143,859 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 46,160 |
| 32,253 |
| 175,170 |
| 129,218 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Investment income |
| 2,949 |
| 4,079 |
| 10,628 |
| 8,553 |
| ||||
Interest expense |
| (5 | ) | (38 | ) | (44 | ) | (154 | ) | ||||
Foreign exchange gains (losses) |
| (9 | ) | (304 | ) | 485 |
| (552 | ) | ||||
Other, net |
| (457 | ) | (524 | ) | (1,691 | ) | (1,073 | ) | ||||
Total other income |
| 2,478 |
| 3,213 |
| 9,378 |
| 6,774 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 48,638 |
| 35,466 |
| 184,548 |
| 135,992 |
| ||||
Income taxes |
| 16,675 |
| 11,071 |
| 63,905 |
| 44,296 |
| ||||
Net income |
| $ | 31,963 |
| $ | 24,395 |
| $ | 120,643 |
| $ | 91,696 |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings per share |
| $ | 0.45 |
| $ | 0.34 |
| $ | 1.69 |
| $ | 1.30 |
|
Diluted earnings per share |
| $ | 0.44 |
| $ | 0.34 |
| $ | 1.66 |
| $ | 1.28 |
|
|
|
|
|
|
|
|
|
|
| ||||
Basic weighted average shares outstanding |
| 71,773 |
| 70,990 |
| 71,556 |
| 70,647 |
| ||||
Diluted weighted average and equivalent shares outstanding |
| 72,719 |
| 71,993 |
| 72,539 |
| 71,495 |
|
Note: Share and per-share figures were adjusted for a three-for-two stock split that was paid in the form of a 50% stock dividend on August 25, 2004.
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
|
| Twelve Months Ended |
| ||||
|
| December 31, |
| December 31, |
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net income |
| $ | 120,643 |
| $ | 91,696 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 12,255 |
| 11,580 |
| ||
Tax benefit from exercise of options |
| 6,965 |
| 4,987 |
| ||
Acquired in-process technology |
| 22 |
| 692 |
| ||
Deferred income taxes |
| (2,358 | ) | (697 | ) | ||
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
| ||
Accounts receivable, net |
| (11,491 | ) | (5,141 | ) | ||
Inventories |
| (15,456 | ) | (1,659 | ) | ||
Other assets |
| (11,492 | ) | 350 |
| ||
Accounts payable |
| 6,420 |
| (3,156 | ) | ||
Accrued liabilities |
| 1,974 |
| 6,909 |
| ||
Income taxes payable |
| 3,720 |
| (962 | ) | ||
Other operating activities |
| 54 |
| (2,196 | ) | ||
Net cash provided by operating activities |
| 111,256 |
| 102,403 |
| ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Purchases of property and equipment |
| (16,243 | ) | (8,407 | ) | ||
Acquisition of Atlantek, Inc., net of cash acquired |
| ¾ |
| (13,680 | ) | ||
Purchases of investments and marketable securities |
| (1,287,388 | ) | (1,055,125 | ) | ||
Sales of investments and marketable securities |
| 1,180,960 |
| 951,702 |
| ||
Net cash used in investing activities |
| (122,671 | ) | (125,510 | ) | ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Proceeds from exercise of stock options and stock purchase plan purchases |
| 15,531 |
| 17,762 |
| ||
Payments for obligation under capital lease |
| (434 | ) | (200 | ) | ||
Other financing activities |
| (238 | ) | (142 | ) | ||
Net cash provided by financing activities |
| 14,859 |
| 17,420 |
| ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash |
| 273 |
| 1,535 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and cash equivalents |
| 3,717 |
| (4,152 | ) | ||
Cash and cash equivalents at beginning of year |
| 14,266 |
| 18,418 |
| ||
Cash and cash equivalents at end of year |
| $ | 17,983 |
| $ | 14,266 |
|
|
|
|
|
|
| ||
Supplemental disclosures of cash flow information: |
|
|
|
|
| ||
Interest paid |
| $ | 44 |
| $ | 154 |
|
Income taxes paid |
| 56,055 |
| 38,779 |
| ||
|
|
|
|
|
| ||
Supplemental disclosures of non-cash transactions: |
|
|
|
|
| ||
Conversion of Class B Common Stock to Class A Common Stock |
| — |
| 87 |
|
ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)
Sales by Product Category
|
| Three Months Ended |
|
|
|
|
| ||||
|
| December 31, |
| December 31, |
| Percent |
| Percent of |
| ||
Hardware |
| $ | 137,529 |
| $ | 113,263 |
| 21.4 |
| 78.6 |
|
Supplies |
| 30,895 |
| 26,738 |
| 15.5 |
| 17.7 |
| ||
Service and software |
| 6,083 |
| 6,165 |
| (1.3 | ) | 3.5 |
| ||
Shipping and handling |
| 1,444 |
| 1,184 |
| 22.0 |
| 0.8 |
| ||
Cash flow from hedging activities |
| (1,077 | ) | (150 | ) | ¾ |
| (0.6 | ) | ||
Total sales |
| $ | 174,874 |
| $ | 147,200 |
| 18.8 |
| 100.0 |
|
Sales by Geographic Region
|
| Three Months Ended |
|
|
|
|
| ||||
|
| December 31 |
| December 31, |
| Percent |
| Percent of |
| ||
Europe, Middle East and Africa |
| $ | 59,398 |
| $ | 47,893 |
| 24.0 |
| 34.0 |
|
Latin America |
| 10,597 |
| 7,978 |
| 32.8 |
| 6.1 |
| ||
Asia-Pacific |
| 14,534 |
| 14,215 |
| 2.2 |
| 8.3 |
| ||
Total international |
| 84,529 |
| 70,086 |
| 20.6 |
| 48.4 |
| ||
North America |
| 90,345 |
| 77,114 |
| 17.2 |
| 51.6 |
| ||
Total sales |
| $ | 174,874 |
| $ | 147,200 |
| 18.8 |
| 100.0 |
|
Sales by Product Category
|
| Twelve Months Ended |
|
|
|
|
| ||||
|
| December 31, |
| December 31, |
| Percent |
| Percent of |
| ||
Hardware |
| $ | 518,556 |
| $ | 409,144 |
| 26.7 |
| 78.2 |
|
Supplies |
| 116,849 |
| 98,519 |
| 18.6 |
| 17.6 |
| ||
Service and software |
| 24,338 |
| 24,355 |
| (0.1 | ) | 3.7 |
| ||
Shipping and handling |
| 4,950 |
| 4,113 |
| 20.4 |
| 0.7 |
| ||
Cash flow from hedging activities |
| (1,639 | ) | 266 |
| ¾ |
| (0.2 | ) | ||
Total sales |
| $ | 663,054 |
| $ | 536,397 |
| 23.6 |
| 100.0 |
|
Sales by Geographic Region
|
| Twelve Months Ended |
|
|
|
|
| ||||
|
| December 31, |
| December 31, |
| Percent |
| Percent of |
| ||
Europe, Middle East and Africa |
| $ | 213,559 |
| $ | 170,544 |
| 25.2 |
| 32.2 |
|
Latin America |
| 38,119 |
| 29,406 |
| 29.6 |
| 5.7 |
| ||
Asia-Pacific |
| 52,302 |
| 43,904 |
| 19.1 |
| 7.9 |
| ||
Total international |
| 303,980 |
| 243,854 |
| 24.7 |
| 45.8 |
| ||
North America |
| 359,074 |
| 292,543 |
| 22.7 |
| 54.2 |
| ||
Total sales |
| $ | 663,054 |
| $ | 536,397 |
| 23.6 |
| 100.0 |
|