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

Exhibit 99.1

Zebra Technologies Announces

2015 Fourth Quarter Financial Results

Company Provides Outlook for First Quarter and Full Year 2016

Lincolnshire, Ill., Feb. 25, 2016—Zebra Technologies Corporation (NASDAQ: ZBRA) today reported that net sales for the three months ended December 31, 2015, were $952.7 million, compared with $790.6 million for the fourth quarter of 2014. The GAAP net loss for the fourth quarter was $6.8 million, or $0.13 per share, compared with GAAP net loss of $51.7 million, or $1.02 per share, for the fourth quarter of 2014. Financial results for the 2014 fourth quarter and full year include two months of results of the Enterprise business that the company acquired on October 27, 2014.

Summary Financial Highlights (Unaudited)
$ in millions except per share data	4Q15			4Q14			Change
GAAP net sales	$	952.7		$	790.6		20.5%
GAAP net (loss) income	$	(6.8)		$	(51.7)		NM
GAAP (loss) earnings per share	$	(0.13)		$	(1.02)		NM
Non-GAAP net income	$	78.5		$	62.1		26.4%
Non-GAAP earnings per diluted share	$	1.51		$	1.22		23.8%
Adjusted EBITDA (Non-GAAP)	$	165.2		$	145.2		13.7%
Adjusted EBITDA (%)		17.3	%		18.2	%	(0.9) pts.

Note: The Company’s calculation of non-GAAP results adjust 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.

Non-GAAP Financial Results(unaudited)

For the fourth quarter of 2015, sales excluding the impact of purchase accounting were $956.3 million. Non-GAAP net income was $78.5 million, or $1.51 per diluted share, compared with $62.1 million, or $1.22 per diluted share, for the fourth quarter of 2014. Adjusted EBITDA for the fourth quarter of 2015 were $165.2 million, or 17.3% of sales compared to $145.2 million, or 18.2% of sales for the fourth quarter of 2014.

“Our strong fourth quarter results were driven by solid growth in key markets and a focus on driving profitability. In 2015, we extended our leadership in Enterprise Asset Intelligence and made significant progress on integrating the transformational acquisition of the Enterprise business,” said Anders Gustafsson, CEO of Zebra Technologies. “As we enter 2016, we remain committed to our strategic priorities of driving profitable growth, executing on cost synergies, de-levering the balance sheet and operating as One Zebra. Our customers continue to invest in technology to improve efficiencies, and we are well positioned as their partner of choice. With a healthy pipeline of activity, we expect to gain momentum through the remainder of the year, enabling us to meet our growth goals for 2016 and longer-term.”

Discussion and Analysis – Fourth Quarter

• Net sales were $952.7 million on a GAAP basis, and include a reduction of $3.6 million for a purchase accounting adjustment related to service contracts acquired with the Enterprise business, reflecting an increase of $162.1 million from the fourth quarter of 2014. Excluding the purchase accounting adjustment noted above, sales in the Enterprise business accounted for $635.8 million compared to $482.2 million in the fourth quarter of 2014. Pre-transaction Zebra sales were $320.5 million compared to $314.6 million in the fourth quarter of 2014. On a constant currency basis, and excluding the purchase accounting adjustment, fourth quarter year-over-year sales growth inclusive of estimated 2014 Enterprise sales was 4% for total Zebra and 2% for Enterprise. Pre-transaction Zebra sales were up 7% in constant currency.

• Gross margin for the fourth quarter on a GAAP basis was 44.9% 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 45.1%, compared to 46.6% gross margin in the fourth quarter of 2014, reflecting 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 fourth quarter of 2015 of $405.5 million, increased by $44.2 million from the prior year’s fourth quarter, primarily as a result of the Enterprise acquisition. Operating expenses for the fourth quarter of 2015 include $53.6 million in acquisition, integration, exit and restructuring costs, versus $71.7 million in the prior year quarter, as well as $61.1 million for amortization of intangible assets, compared with $46.2 million for the fourth quarter of 2014.

Balance Sheet and Cash Flow

• As of December 31, 2015, the company had cash of $192.4 million, accounts receivable of $674.3 million, inventories of $393.8 million, and long-term debt of $3.0 billion.

• For the full year 2015, the company made $183 million of scheduled cash interest payments and $165 million in term loan principal payments. Subsequent to the end of 2015, the company paid an additional $80 million of term loan payments.

• For the full year 2015, the company generated $102.6 million of cash flow from operations and made capital expenditures of $114.3 million.

Outlook

Full Year 2016

The company expects full year 2016 net sales, excluding purchase accounting adjustments, to grow approximately 1% to 4% from the comparable net sales of $3,668 million for the full year 2015. This view reflects an expectation of year-over-year growth of 2% to 5% on a constant currency basis.

Adjusted EBITDA margin is expected to be in the range of 17% to 18% for the full year 2016.

The company expects to pay down at least $300 million of debt principal in 2016.

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Additional full year 2016 assumptions include:

• Realization of approximately $50 million of incremental acquisition cost synergies compared to 2015

• Of the remaining $130-150 million of integration-related expenses and capital expenditures for 2016-2017, the vast majority are expected to be incurred in 2016

• Capital expenditures of approximately $70-75 million, including approximately $15-20 million related to acquisition integration

• Depreciation and amortization expense of approximately $310-315 million

First Quarter

The company expects first quarter 2016 net sales, excluding purchase accounting adjustments, to decline approximately (3)% to 0% from the comparable net sales of $899 million in the first quarter of 2015. This expectation reflects year-over-year growth of (1)% to +2% on a constant currency basis.

Adjusted EBITDA margin is expected to be in the range of 16% to 17% for the first quarter 2016. Non-GAAP earnings are expected to be in the range of $1.19 to $1.34 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 fourth quarter of 2015. The conference call will be held at 7:30 A.M. Central Time (8:30 A.M. Eastern Time) today. To view the webcast, visit the investor relations section of the company’s website atinvestors.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. 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, 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

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operations and increase the volatility of our financial results. 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. 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, including the company’s most recent Form 10-K.

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 enterprises need to simplify operations, know more about their businesses, and empower their mobile workforces. For more information, visitwww.zebra.com.

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.

Contacts

Investors	Media
Michael Steele , CFA	Therese Van Ryne
Vice President, Investor Relations	Director, Global PR and Industry Analyst Relations
+ 1 847 793 6707	+ 1 847 370 2317
msteele@zebra.com	therese.vanryne@zebra.com

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	December 31, 2015		December 31, 2014
Assets		(Unaudited)
Current assets:
Cash and cash equivalents	$	192,394	$	393,950
Investments and marketable securities		-		24,385
Accounts receivable, net		674,336		670,402
Inventories, net		393,848		394,176
Deferred income taxes		-		122,772
Income tax receivable		4,108		12,988
Prepaid expenses and other current assets		67,755		53,377
Total Current assets		1,332,441		1,672,050
Property and equipment at cost, less accumulated depreciation and amortization		297,601		255,092
Goodwill		2,493,265		2,489,510
Other intangibles, net		757,524		1,029,293
Long term deferred income taxes		51,609		-
Other long-term assets		92,030		93,121
Total Assets	$	5,024,470	$	5,539,066
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	289,349	$	326,524
Accrued liabilities		358,663		421,070
Deferred revenue		197,891		196,213
Current portion of long-term debt		24		4,209
Deferred income taxes		-		-
Income taxes payable		30,519		4,518
Total Current liabilities		876,446		952,534
Long-term debt		3,012,212		3,156,490
Long-term deferred tax liability		1,067		199,853
Long-term unearned revenue		123,415		115,847
Other long-term liabilities		98,461		74,434
Total Liabilities		4,111,601		4,499,158
Stockholders’ Equity:
Preferred stock		-		-
Class A Common Stock		722		722
Additional paid-in capital		194,300		147,090
Treasury stock		(631,458)		(634,664)
Retained earnings		1,397,974		1,535,307
Accumulated other comprehensive loss		(48,669)		(8,547)
Total Stockholders’ Equity		912,869		1,039,908
Total Liabilities and Stockholders’ Equity	$	5,024,470	$	5,539,066

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended				Twelve Months Ended
	December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Net sales
Net sales of tangible products	$	828,183	$	683,978	$	3,132,881	$	1,498,562
Revenue from services and software		124,558		106,633		519,091		172,010
Total net sales		952,741		790,611		3,651,972		1,670,572
Cost of sales
Cost of sales of tangible products		434,672		382,884		1,630,574		792,137
Cost of services and software		90,292		71,315		377,165		100,410
Total cost of sales		524,964		454,199		2,007,739		892,547
Gross profit		427,777		336,412		1,644,233		778,025
Operating expenses:
Selling and marketing		118,926		105,352		486,369		213,304
Research and development		98,267		79,311		394,111		151,103
General and administrative		73,626		58,761		276,656		138,214
Amortization of intangible assets		61,081		46,160		250,869		54,096
Acquisition and integration costs		49,139		66,094		143,646		126,711
Exit and restructuring costs		4,427		5,573		39,279		6,007
Total operating expenses		405,466		361,251		1,590,930		689,435
Operating (loss) income		22,311		(24,839)		53,303		88,590
Other (expense) income:
Foreign exchange income (loss)		(854)		(8,427)		(22,048)		(8,759)
Interest (expense)/income		(48,696)		(59,599)		(193,958)		(61,968)
Other, net		(12)		146		(920)		(1,234)
Total other (expenses)		(49,562)		(67,880)		(216,926)		(71,961)
(Loss) income from continuing operations before income taxes		(27,251)		(92,719)		(163,623)		16,629
Income tax expense (benefit)		(20,423)		(41,040)		(26,290)		(15,800)
Net (loss) income	$	(6,828)	$	(51,679)	$	(137,333)	$	32,429
Basic (loss) earnings per share	$	(0.13)	$	(1.02)	$	(2.69)	$	0.64
Diluted (loss) earnings per share	$	(0.13)	$	(1.02)	$	(2.69)	$	0.63
Basic weighted average shares outstanding		51,207		50,452		50,996		50,789
Diluted weighted average and equivalent shares outstanding		51,207		50,452		50,996		51,380

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Amounts in thousands)

(Unaudited)

	Three months ended				Twelve Months Ended
	December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Net (loss) income	$	(6,828)	$	(51,679)	$	(137,333)	$	32,429
Unrealized (loss) gain on anticipated sales hedging transactions, net of tax		(260)		1,449		(6,024)		7,190
Unrealized gain (loss) on forward interest rate swaps hedging transactions, net of tax		3,593		(7,699)		(6,854)		(7,699)
Unrealized holding (loss) gain on investments, net of taxes		-		(311)		(272)		425
Foreign currency translation adjustment		(5,664)		1,704		(26,971)		1,318
Comprehensive (loss) income	$	(9,159)	$	(56,536)	$	(177,454)	$	33,663

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Twelve Months Ended
	December 31,		December 31,
	2015		2014
Cash flows from operating activities:
Net (loss) income	$	(137,333)	$	32,429
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		319,879		81,371
Amortization of debt issuance cost and discount		16,513		2,113
Share-based compensation		31,470		19,891
Impairment of long-term investment		-		2,333
Excess tax benefit from share-based compensation		(11,793)		(6,127)
Loss on sale of property and equipment		1,692		1,793
Deferred income taxes		(123,504)		(44,340)
(Gain) loss on forward interest rate swaps		(3,763)		4,649
All other, net		12,154		-
Changes in assets and liabilities, net of businesses acquired:
Accounts receivable, net		(6,447)		(69,628)
Inventories, net		(9,826)		(2,398)
Other assets		(6,724)		(12,947)
Accounts payable		(29,322)		62,188
Accrued liabilities		(12,777)		164,269
Deferred revenue		16,740		10,034
Income taxes		37,957		(5,691)
Other operating activities		7,663		8,386
Net cash provided by operating activities		102,579		248,325
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired		(51,889)		(3,398,600)
Purchases of property and equipment		(114,254)		(39,291)
Proceeds from sale of long-term investments		3,039		-
Purchases of long-term investments		(348)		(2,454)
Purchases of investments and marketable securities		(726)		(651,698)
Maturities of investments and marketable securities		-		336,329
Proceeds from sales of investments and marketable securities		24,852		644,378
Net cash used in investing activities		(139,326)		(3,111,336)
Cash flows from financing activities:
Payment of debt issuance costs		-		(24,473)
Payment of debt		(165,000)		-
Proceeds from issuance of long-term debt		-��		3,188,855
Proceeds from exercise of stock options and stock purchase plan purchases		17,265		26,477
Taxes paid related to net share settlement of equity awards		(13,228)		(4,752)
Excess tax benefit from share-based compensation		11,793		6,127
Net cash (used in) provided by financing activities		(149,170)		3,192,234
Effect of exchange rate changes on cash		(15,639)		1,900
Net (decrease) increase in cash and cash equivalents		(201,556)		331,123
Cash and cash equivalents at beginning of period		393,950		62,827
Cash and cash equivalents at end of period	$	192,394	$	393,950
Supplemental disclosures of cash flow information:
Income taxes paid, net		37,675		17,443
Interest paid		182,813		-

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

NET SALES BY PRODUCT CATEGORY

	Three Months Ended
	December 31,		December 31,		Percent	Percent of		Percent of
Product category	2015		2014		Change	Net Sales 2015		Net Sales 2014
Hardware	$	763,182	$	614,529	24.2		80.1		77.8
Supplies		65,001		70,750	-8.1		6.8		8.9
Service and software		124,558		105,332	18.3		13.1		13.3
Total net sales	$	952,741	$	790,611	20.5		100.0		100.0
	Twelve Months Ended
	December 31,		December 31,		Percent	Percent of		Percent of
Product category	2015		2014		Change	Net Sales 2015		Net Sales 2014
Hardware	$	2,864,615	$	1,233,386	132.3		78.4		73.8
Supplies		268,266		265,176	1.2		7.4		15.9
Service and software		519,091		172,010	201.8		14.2		10.3
Total net sales	$	3,651,972	$	1,670,572	118.6		100.0		100.0
NET SALES BY GEOGRAPHIC REGION
	Three Months Ended
	December 31,		December 31,		Percent	Percent of		Percent of
Geographic region	2015		2014		Change	Net Sales 2015		Net Sales 2014
Europe, Middle East and Africa	$	324,259	$	302,991	7.0		34.0		38.3
Latin America		56,469		54,734	3.4		5.9		6.9
Asia-Pacific		116,917		91,904	27.2		12.3		11.6
Total International		497,745		449,629	10.7		52.2		56.8
North America		454,996		340,982	33.4		47.8		43.2
Total net sales	$	952,741	$	790,611	20.5		100.0		100.0
	Twelve Months Ended
	December 31,		December 31,		Percent	Percent of		Percent of
Geographic region	2015		2014		Change	Net Sales 2015		Net Sales 2014
Europe, Middle East and Africa	$	1,193,934	$	583,005	104.8		32.7		34.9
Latin America		220,280		134,638	63.6		6.0		8.1
Asia-Pacific		462,474		215,911	114.2		12.7		12.9
Total International		1,876,688		933,554	101.0		51.4		55.9
North America		1,775,284		737,018	140.9		48.6		44.1
Total net sales	$	3,651,972	$	1,670,572	118.6		100.0		100.0

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Amounts in thousands, except per-share data)

(Unaudited)

	Three Months Ended				Twelve Months Ended
	December 31,		December 31,		December 31,		December 31,
	2015		2014		2015		2014
Net (loss) income	$	(6,828)	$	(51,679)	$	(137,333)	$	32,429
Income tax (benefit) expense		(20,423)		(41,040)		(26,290)		(15,800)
Share-based compensation		6,251		9,587		32,654		19,891
Acquisition and integration costs		49,139		66,094		143,646		126,711
Exit and restructuring costs		4,427		5,573		39,279		6,007
Loss on minority investment								2,333
Purchase accounting adjustments		3,569		34,634		19,562		34,634
Foreign exchange loss (income)		854		8,427		22,048		8,759
Amortization of intangible assets		61,081		46,160		250,869		54,096
Amortization of debt issuance cost and discount		3,987		2,113		16,513		2,113
Forward interest rate swaps (loss) gain		(366)		2,401		(3,763)		4,649
Tax effects		(23,216)		(20,206)		(80,545)		(74,918)
Total adjustments	$	85,303	$	113,743	$	413,973	$	168,475
Non-GAAP net income	$	78,475	$	62,064	$	276,640	$	200,904
GAAP (loss) earnings per share
Basic	$	(0.13)	$	(1.02)	$	(2.69)	$	0.64
Diluted	$	(0.13)	$	(1.02)	$	(2.69)	$	0.63
Non-GAAP earnings per share
Basic	$	1.53	$	1.23	$	5.42	$	3.96
Diluted	$	1.51	$	1.22	$	5.31	$	3.91
Basic weighted average shares outstanding		51,207		50,452		50,996		50,789
Diluted weighted average and equivalent shares outstanding		51,978		50,983		52,096		51,380

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATION

(Amounts in thousands)

(Unaudited)

	Three Months Ended				Twelve Months Ended
	December 31,		December 31,		December 31,		December 31,
	2015		2014		2015		2014
Net (Loss) Income to EBITDA and Adjusted EBITDA
Net (loss) income		($6,828)		($51,679)		($137,333)		$32,429
Income tax expense (benefit)		(20,423)		(41,040)		(26,290)		(15,800)
Total other expense (income)		49,562		67,880		216,926		71,961
Operating (loss) income	$	22,311	$	(24,839)	$	53,303	$	88,590
Depreciation		18,381		7,988		69,010		27,275
Amortization of intangible assets		61,081		46,160		250,869		54,096
EBITDA (Non-GAAP)	$	101,773	$	29,309	$	373,182	$	169,961
Acquisition and integration costs		49,139		66,094		143,646		126,711
Purchase accounting adjustments		3,569		34,634		19,562		34,634
Exit and restructuring costs		4,427		5,573		39,279		6,007
Share-based compensation		6,251		9,587		32,654		19,891
Adjusted EBITDA (Non-GAAP)	$	165,159	$	145,197	$	608,323	$	357,204
Adjusted EBITDA % of Non-GAAP Sales		17.3%		18.2%		16.6%		21.3%

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