Zebra Technologies (ZBRA) 8-K 2015 Third Quarter Financial Results

Exhibit 99.1

Zebra Technologies Announces

2015 Third Quarter Financial Results

Growth and Profitability Demonstrate Continued Execution on Acquisition Objectives

Lincolnshire, Ill., Nov. 10, 2015—Zebra Technologies Corporation (NASDAQ: ZBRA) today reported that net sales for the three months ended October 3, 2015, were $916.3 million, compared with $303.3 million for the third quarter of 2014. The GAAP net loss for the third quarter was $29.0 million, or $0.57 per share, compared with GAAP net income of $14.9 million, or $0.29 per share, for the third quarter of 2014.

Summary Financial Highlights (Unaudited)

$ in millions except per share data	3Q15			3Q14		Change
GAAP net sales	$	916.3		$	303.3		202.1	%
GAAP net (loss) income	$	(29.0	)	$	14.9		NM
GAAP (loss) earnings per share	$	(0.57	)	$	0.29		NM
Non-GAAP net income	$	72.4		$	41.6		73.9	%
Non-GAAP earnings per diluted share	$	1.39		$	0.81		71.2	%
Adjusted EBITDA (Non-GAAP)	$	159.4		$	74.5		114.1	%
Adjusted EBITDA (%)		17.3			24.6		(7.3	) pts.

Note: Reconciliations of GAAP to Non-GAAP financial results are available in the financial tables in this release.

Non-GAAP Financial Results(unaudited)

For the third quarter of 2015, sales excluding the impact of purchase accounting were $919.1 million. Non-GAAP net income was $72.4 million, or $1.39 per diluted share, compared with $41.6 million, or $0.81 per diluted share, for the third quarter of 2014. Adjusted EBITDA for the third quarter of 2015 were $159.4 million, or 17.3% of sales compared to $74.5 million, or 24.6% of sales for the third quarter of 2014.

The company’s calculation of non-GAAP results adjusts for certain items on a tax-effected basis. Please refer to the tables included in this press release for reconciliations of GAAP to non-GAAP financial results.

“Our third quarter results demonstrate the continued success of our focus on growth and execution. In the year since the acquisition closed, we have returned Enterprise to consistent growth and made progress toward achieving our long-term financial objectives,” said Anders Gustafsson, CEO of Zebra Technologies. “With the proliferation of connected devices and the expanding mobile workforce, organizations are increasingly choosing our technology to expand their competitive advantage and enable the smart, connected enterprise.”

Discussion and Analysis – Third Quarter

• Net sales were $916.3 million on a GAAP basis, and include a reduction of $2.8 million for a purchase accounting adjustment related to service contracts acquired with the Enterprise business. This reflects an increase of $613.0 million from the third quarter of 2014. Sales in the Enterprise business, excluding the purchase accounting adjustment noted above, accounted for $605.1 million of the increase. Pre-transaction

Zebra sales were $314.0 million compared to $303.3 million in the third quarter of 2014. On a constant currency basis, and excluding the purchase accounting adjustment, third quarter year-over-year sales growth inclusive of estimated 2014 Enterprise sales was 6% for total Zebra and 5% for Enterprise. Pre-transaction Zebra sales were up 8% in constant currency.

• Gross margin for the third quarter on a GAAP basis was 45.2% including the impact of purchase accounting adjustments associated with service contracts and costs of goods sold. Excluding purchase accounting adjustments, adjusted gross margin percentage for the quarter was 45.5%. Compared to 50.0% gross margin in the third quarter of 2014, gross margin percentage reflects the change in mix associated with the sale of Enterprise products which generally have a lower gross margin percentage than pre-transaction Zebra products and the impact of foreign currency movements, net of hedges.

• Operating expenses for the third quarter of 2015 of $389.0 million, increased by $264.5 million from the prior year’s third quarter, primarily as a result of the Enterprise acquisition. Operating expenses for the third quarter of 2015 include $42.7 million in acquisition, integration, exit and restructuring costs, versus $35.2 million in the prior year quarter, as well as $58.5 million for amortization of intangible assets, compared with $2.6 million for the third quarter of 2014.

• As of October 3, 2015, the company had cash of $258.0 million, accounts receivable of $625.8 million, inventories of $408.2 million, and long-term debt of $3.0 billion.

• Subsequent to the end of the quarter, the company made $65 million of scheduled interest payments and $20 million in additional term loan principal payments.

Fourth Quarter Outlook

The company expects net sales in the fourth quarter of 2015 to be within a range of $945 million to $975 million excluding purchase accounting adjustments. This forecast reflects an expectation of year-over-year growth of 3.6% to 6.9% in constant currency, on an estimated historical basis for the Enterprise business. Non-GAAP earnings are expected in the range of $1.38 to $1.63 per share. Adjusted EBITDA are forecast within a range of $155 million to $170 million. Compared to the third quarter currency environment, the impacts on our fourth quarter outlook resulting from the most recent strengthening of the U.S. dollar against the Euro include reductions in top-line sales of approximately $6 million, EBITDA of approximately $5 million and Non-GAAP EPS of approximately five cents per share.

Conference Call Notification

Investors are invited to listen to a live webcast of Zebra’s conference call regarding the company’s financial results for the third quarter of 2015. The conference call will be held at 8:30 A.M. Eastern Time today. To listen to the call, visit the company’s website athttp://www.zebra.com.

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 outlook. Similarly, statements herein that describe the transaction between Zebra and Motorola Solutions including, its financial impact, and other statements of management’s beliefs, intentions, or goals are also forward-looking statements. When used in this release and documents referenced, the words “anticipate,” “believe,” “outlook,” 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. Actual results may differ from those expressed or implied in the company’s forward-looking

statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release.

These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra’s hardware and software products and competitors’ product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra’s ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. The success of integrating acquisitions, including the Enterprise business of Motorola Solutions, could also affect profitability, reported results and the company’s competitive position in it industry. These and other factors could have an adverse effect on Zebra’s sales, gross profit margins and results of operations and increase the volatility of our financial results. 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, 2014.

About Zebra Technologies

Zebra (NASDAQ: ZBRA) makes businesses as smart and connected as the world we live in. Zebra tracking and visibility solutions transform the physical to digital, creating the data streams businesses need in order to simplify operations, know more about their business, and empower their mobile workforce. For more information, visitwww.zebra.com/possibilities.

Use of Non-GAAP Financial Information

This press release contains certain non-GAAP financial measures, consisting of “EBITDA,” “Adjusted EBITDA,” “Non-GAAP net income” and “Non-GAAP earnings per share” in addition to measure our operating performance. Management presents these measures to focus on the on-going operations and believes it is useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its ongoing operations and how management views the business. Reconciliations of Operating Income to EBITDA, EBITDA to Adjusted EBITDA, and GAAP net income to Non-GAAP net income are included in the financial schedules contained in this press release. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.

Contact:
Investors:	Media:
Dean Lindroth	Therese Van Ryne
Vice President, Finance	Director, Global PR and Industry Analyst Relations
+ 1 847 793 5653	+ 1 847 370 2317
dlindroth@zebra.com	therese.vanryne@zebra.com

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	October 3, 2015			December 31, 2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	258,022		$	393,950
Investments and marketable securities		—			24,385
Accounts receivable, net		625,777			670,402
Inventories, net		408,158			394,176
Deferred income taxes		103,442			122,772
Income tax receivable		10,760			12,988
Prepaid expenses and other current assets		83,096			53,377
Total Current assets		1,489,255			1,672,050
Property and equipment at cost, less accumulated depreciation and amortization		291,754			255,092
Goodwill		2,488,501			2,489,510
Other intangibles, net		816,933			1,029,293
Other long-term assets		92,547			93,121
Total Assets	$	5,178,990		$	5,539,066
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	314,279		$	326,524
Accrued liabilities		379,261			421,070
Deferred revenue		203,792			196,213
Current portion of long-term debt		—			4,209
Income taxes payable		1,592			4,518
Total Current liabilities		898,924			952,534
Long-term debt		3,043,225			3,156,490
Long-term deferred tax liability		128,033			199,853
Long-term deferred revenue		109,203			115,847
Other long-term liabilities		85,577			74,434
Total Liabilities		4,264,962			4,499,158
Stockholders’ Equity:
Preferred stock		—			—
Class A common stock		722			722
Additional paid-in capital		187,091			147,090
Treasury stock		(632,231	)		(634,664	)
Retained earnings		1,404,802			1,535,307
Accumulated other comprehensive loss		(46,356	)		(8,547	)
Total Stockholders’ Equity		914,028			1,039,908
Total Liabilities and Stockholders’ Equity	$	5,178,990		$	5,539,066

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Net sales:
Net sales of tangible products	$	787,441		$	282,643		$	2,304,698		$	814,584
Revenue from services and software		128,832			20,629			394,533			65,377
Total Net sales		916,273			303,272			2,699,231			879,961
Cost of sales:
Cost of sales of tangible products		403,520			141,842			1,195,902			409,253
Cost of services and software		98,697			9,924			286,873			29,095
Total Cost of sales		502,217			151,766			1,482,775			438,348
Gross profit		414,056			151,506			1,216,456			441,613
Operating expenses:
Selling and marketing		120,217			36,781			367,443			107,952
Research and development		100,340			25,225			295,844			71,792
General and administrative		67,235			24,741			203,030			79,453
Amortization of intangible assets		58,499			2,597			189,788			7,936
Acquisition and integration costs		37,010			35,326			94,507			60,617
Exit and restructuring costs		5,734			(120	)		34,852			434
Total Operating expenses		389,035			124,550			1,185,464			328,184
Operating income		25,021			26,956			30,992			113,429
Other (expense) income:
Foreign exchange (loss)		(5,255	)		(83	)		(21,194	)		(332	)
Interest (expense)/income		(45,002	)		171			(145,262	)		(2,368	)
Other, net		(306	)		(2,238	)		(908	)		(1,381	)
Total Other (expenses)		(50,563	)		(2,150	)		(167,364	)		(4,081	)
(Loss) income before income taxes		(25,542	)		24,806			(136,372	)		109,348
Income tax expense (benefit)		3,408			9,861			(5,867	)		25,240
Net (loss) income	$	(28,950	)	$	14,945		$	(130,505	)	$	84,108
Basic (loss) earnings per share	$	(0.57	)	$	0.29		$	(2.56	)	$	1.66
Diluted (loss) earnings per share	$	(0.57	)	$	0.29		$	(2.56	)	$	1.64
Basic weighted average shares outstanding		51,152			50,835			50,926			50,615
Diluted weighted average and equivalent shares outstanding		51,152			51,461			50,926			51,251

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Amounts in thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Net (loss) income	$	(28,950	)	$	14,945		$	(130,505	)	$	84,108
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on anticipated sales hedging transactions		(2,812	)		5,133			(5,763	)		6,522
Unrealized gain (loss) on forward interest rate swaps hedging transactions		(6,560	)		(781	)		(10,447	)		(781	)
Unrealized holding (loss) gain on investments		(254	)		240			(272	)		736
Foreign currency translation adjustment		(11,083	)		(191	)		(21,327	)		(387	)
Comprehensive (loss) income	$	(49,659	)	$	19,346		$	(168,314	)	$	90,198

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months Ended
	October 3, 2015				September 27, 2014
Cash flows from operating activities:
Net (loss) income	$	(130,505	)		$	84,108
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		240,418				27,223
Amortization of debt issuance cost and discount		12,526				—
Equity-based compensation		25,270		��		10,304
Impairment of long term investment		—				2,333
Excess tax benefit from equity-based compensation		(11,463	)			(5,779	)
Deferred income taxes		(37,661	)			4,509
Unrealized (gain) loss on forward interest rate swaps		(3,397	)			2,248
All other, net		11,793				135
Changes in assets and liabilities, net of businesses acquired:
Accounts receivable		41,027				(10,810	)
Inventories		(25,953	)			(18,606	)
Other assets		(32,796	)			(10,859	)
Accounts payable		8,169				7,975
Accrued liabilities		2,470				21,160
Deferred revenue		7,495				2,667
Income taxes		12,619				6,664
Other operating activities		(4,151	)			6,406
Net cash provided by operating activities		115,861				129,678
Cash flows from investing activities:
Purchases of property and equipment		(87,371	)			(20,023	)
Acquisition of businesses, net of cash acquired		(51,889	)			—
Proceeds from sale of long-term investments		3,009				—
Purchases of long-term investments		(168	)			(1,870	)
Purchases of investments and marketable securities		(726	)			(384,134	)
Maturities of investments and marketable securities		—				44,158
Proceeds from sales of investments and marketable securities		24,852				211,975
Net cash used in investing activities		(112,293	)			(149,894	)
Cash flows from financing activities:
Payment of debt		(130,000	)			—
Proceeds from exercise of stock options and stock purchase plan purchases		14,357				13,090
Taxes paid related to net share settlement of equity awards		(13,028	)			(1,126	)
Excess tax benefit from equity-based compensation		11,463				5,779
Net cash (used in) provided by financing activities		(117,208	)			17,743
Effect of exchange rate changes on cash		(22,288	)			(140	)
Net (decrease) increase in cash and cash equivalents		(135,928	)			(2,613	)
Cash and cash equivalents at beginning of period		393,950				62,827
Cash and cash equivalents at end of period	$	258,022			$	60,214
Supplemental disclosures of cash flow information:
Income taxes paid, net	$	31,593			$	12,656
Interest paid		118,151				—

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

NET SALES BY PRODUCT CATEGORY

	Three Months Ended
Product category	October 3, 2015		September 27, 2014		Percent Change		Percent of Net Sales 2015		Percent of Net Sales 2014
Hardware	$	718,660	$	217,000		231.2		78.4		71.6
Supplies		68,781		65,643		4.8		7.5		21.6
Service and software		128,832		20,629		524.5		14.1		6.8
Total net sales	$	916,273	$	303,272		202.1		100.0		100.0
	Nine Months Ended
Product category	October 3, 2015		September 27, 2014		Percent Change		Percent of Net Sales 2015		Percent of Net Sales 2014
Hardware	$	2,101,433	$	620,158		238.9		77.9		70.5
Supplies		203,265		194,426		4.5		7.5		22.1
Service and software		394,533		65,377		503.5		14.6		7.4
Total net sales	$	2,699,231	$	879,961		206.7		100.0		100.0

NET SALES BY GEOGRAPHIC REGION

	Three Months Ended
Geographic region	October 3, 2015		September 27, 2014		Percent Change		Percent of Net Sales 2015		Percent of Net Sales 2014
Europe, Middle East and Africa	$	275,749	$	94,375		192.2		30.1		31.1
Latin America		55,264		29,060		90.2		6.0		9.6
Asia-Pacific		121,708		45,705		166.3		13.3		15.1
Total International		452,721		169,140		167.7		49.4		55.8
North America		463,552		134,132		245.6		50.6		44.2
Total net sales	$	916,273	$	303,272		202.1		100.0		100.0
	Nine Months Ended
Geographic region	October 3, 2015		September 27, 2014		Percent Change		Percent of Net Sales 2015		Percent of Net Sales 2014
Europe, Middle East and Africa	$	869,675	$	280,015		210.6		32.2		31.8
Latin America		163,711		79,904		104.9		6.1		9.1
Asia-Pacific		345,557		124,007		178.7		12.8		14.1
Total International		1,378,943		483,926		184.9		51.1		55.0
North America		1,320,288		396,035		233.4		48.9		45.0
Total net sales	$	2,699,231	$	879,961		206.7		100.0		100.0

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Amounts in thousands, except per-share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	October 3,			September 27,			October 3,			September 27,
	2015			2014			2015			2014
Net (loss) income	$	(28,950	)	$	14,945		$	(130,505	)	$	84,108
Income tax expense (benefit)		3,408			9,861			(5,867	)		25,240
Equity/liability awards		8,884			3,194			26,403			10,304
Acquisition and integration costs		37,010			35,326			94,507			60,617
Exit and restructuring costs		5,734			(120	)		34,852			434
Purchase accounting adjustments		4,230			—			15,993			—
Foreign exchange loss (income)		5,255			83			21,194			332
Amortization of intangible assets		58,499			2,597			189,788			7,936
Amortization of debt issuance cost and discount		2,864			—			12,526			—
Forward interest rate swaps (gain) loss		(3,361	)		—			(3,397	)		2,248
Tax effects		(21,166	)		(24,239	)		(57,307	)		(53,895	)
Total adjustments		101,357			26,702			328,692			53,216
Non-GAAP net income	$	72,407		$	41,647		$	198,187		$	137,324
GAAP (loss) earnings per share
Basic	$	(0.57	)	$	0.29		$	(2.56	)	$	1.66
Diluted	$	(0.57	)	$	0.29		$	(2.56	)	$	1.64
Non-GAAP earnings per share
Basic	$	1.42		$	0.82		$	3.89		$	2.71
Diluted	$	1.39		$	0.81		$	3.80		$	2.68
Basic weighted average shares outstanding		51,152			50,835			50,926			50,615
Diluted weighted average and equivalent shares outstanding		52,255			51,461			52,088			51,251

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATION

(Amounts in thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	October 3,			September 27,			October 3,			September 27,
	2015			2014			2015			2014
Net (Loss) Income to EBITDA and Adjusted EBITDA
Net (loss) income	$	(28,950	)	$	14,945		$	(130,505	)	$	84,108
Income tax expense (benefit)		3,408			9,861			(5,867	)		25,240
Total other expense		50,563			2,150			167,364			4,081
Operating income		25,021			26,956			30,992			113,429
Depreciation		20,054			6,530			50,630			19,287
Amortization of intangible assets		58,499			2,597			189,788			7,936
EBITDA (Non-GAAP)		103,574			36,083			271,410			140,652
Acquisition and integration costs		37,010			35,326			94,507			60,617
Purchase accounting adjustments		4,230			—			15,993			—
Exit and restructuring costs		5,734			(120	)		34,852			434
Equity/liability awards		8,884			3,194			26,403			10,304
Adjusted EBITDA (Non-GAAP)	$	159,432		$	74,483		$	443,165		$	212,007
Adjusted EBITDA % of Sales		17.3	%		24.6	%		16.3	%		24.1	%