-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8ITsNnvpinaF263eJFrf6/Y5thbFzxFZEuXhePuVQhP2zN9Y+9ACAAdLsn4iXOX IuEcPy+7qVA+v6HV6LPwHg== 0000877212-96-000004.txt : 19960515 0000877212-96-000004.hdr.sgml : 19960515 ACCESSION NUMBER: 0000877212-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZEBRA TECHNOLOGIES CORP/DE CENTRAL INDEX KEY: 0000877212 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 362675536 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19406 FILM NUMBER: 96562697 BUSINESS ADDRESS: STREET 1: 333 CORPORATE WOODS PKWY CITY: VERNON HILLS STATE: IL ZIP: 60061 BUSINESS PHONE: 7086346700 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 30, 1996 Commission File Number: O-19406 Zebra Technologies Corporation (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 36-2675536 (I.R.S. Employer Identification No.) 333 Corporate Woods Parkway, Vernon Hills, IL 60061 (Address of principal executive offices) (Zip Code) (847)634-6700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No As of May 10, 1996, there were the following shares outstanding: Class A Common Stock, $.01 par value: 16,882,348 Class B Common Stock, $.01 par value: 7,318,062 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES QUARTER ENDED MARCH 30, 1996 INDEX PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Independent Auditors' Review Report page 2 Consolidated Balance Sheets as of March 30, 1996 (unaudited) and December 31, 1995 page 3 Consolidated Statements of Earnings (unaudited) for the three months ended March 30, 1996 and April 1, 1995 page 4 Consolidated Statements of Cash Flows (unaudited) for the three months ended March 30, 1996 and April 1, 1995 page 5 Notes to Consolidated Financial Statements page 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations page 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K page 9 SIGNATURES page 11 Independent Auditors' Review Report The Board of Directors Zebra Technologies Corporation: We have reviewed the consolidated balance sheet of Zebra Technologies Corporation and subsidiaries as of March 30, 1996, and the related consolidated statements of earnings and cash flows for the three-month periods ended March 30, 1996 and April 1, 1995. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Zebra Technologies Corporation and subsidiaries as of December 31, 1995, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 13, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1995, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. KPMG Peat Markwick LLP Chicago, Illinois April 16, 1996 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) March 30, December 31, 1996 1995 (Unaudited) Assets Current assets: Cash and cash equivalents $8,393 $10,017 Investments and marketable securities 67,799 61,841 Accounts receivable, net of allowance 25,324 24,887 Inventories: Finished goods 9,593 9,519 Work-in-process 759 354 Raw materials 10,099 10,492 Total inventories 20,451 20,365 Deferred income taxes 0 787 Prepaid expenses 1,857 1,379 Total current assets 123,824 119,276 Machinery and equipment at cost, less accumulated depreciation and amortization 8,861 8,319 Other assets 3,171 3,476 Total assets $135,856 $131,071 Liabilities And Stockholders' Equity Current liabilities: Accounts payable $9,719 $11,268 Accrued liabilities 3,203 4,012 Short term note payable 241 37 Current portion of obligation under capitalized lease with related party 60 59 Income taxes payable 4,767 4,067 Total current liabilities 17,990 19,443 Obligation under capitalized lease with related party, less current portion 162 177 Long term liability 2,000 2,000 Deferred tax liability 689 1,124 Other 319 121 Total liabilities $21,160 $22,865 Stockholders' equity: Preferred stock, $.01 par value, 10,000,000 shares authorized, none outstanding Class A Common Stock, $.01 par value; 35,000,000 shares authorized, 16,878,348 and 16,865,500 shares issued and outstanding in 1996 and 1995, respectively 169 169 Class B Common Stock, $.01 par value; 35,000,000 shares authorized, 7,318,062 shares issued and outstanding in 1996 and 1995 73 73 Paid-in capital 29,990 29,645 Retained earnings 84,956 79,709 Unrealized holding loss on investments (82) (1,166) Cumulative translation adjustment (410) (224) Total stockholders' equity $114,696 $108,206 Total liabilities and stockholders' equity $135,856 $131,071 See accompanying Notes to Consolidated Financial Statements
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data) (Unaudited) Three Months Ended March 30, April 1, 1996 1995 Net sales $38,352 $34,392 Cost of sales 19,919 17,914 Gross profit 18,433 16,478 Operating expenses: Sales and marketing 4,640 3,035 Research and development 2,674 1,749 General and administrative 3,312 2,202 Acquired in-process technology 1,114 0 Total operating expenses 11,740 6,986 Income from operations 6,693 9,492 Other income (expense) Investment income 1,303 808 Interest expense (4) (3) Other, net (25) 44 Foreign exchange gain 5 108 Total other income $1,279 $957 Income before income taxes 7,972 10,449 Provision for income taxes 2,723 3,836 Net income $5,249 $6,613 Net income per share $0.22 $0.27 Average shares 24,189 24,071 See accompanying Notes to Consolidated Financial Statement
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Ended March 30, April 1, 1996 1995 Cash flows from operating activities: Net income $5,249 $6,613 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 752 430 (Increase) in accounts receivable (437) (2,222) (Increase) in inventories (86) (761) Decrease in other assets 305 1 Increase (decrease) in accounts payable (1,549) 1,065 Increase (decrease) in accrued expenses (611) 43 Increase in income taxes payable 700 2,435 Increase in deferred taxes 352 236 Net increase (decrease) in other operating activities (666) 311 Net purchases of investments and marketable securities (4,288) (8,437) Net cash used in operating activities (279) (286) Cash flows from investing activities: Purchases of machinery and equipment (1,294) (620) Net purchases of investments and marketable securities (586) (138) Net cash used in investing activities (1,880) (758) Cash flows from financing activities: Proceeds from exercise of stock options 345 347 Issuance of short-term notes payable 204 0 Payments for obligation under capital lease (14) (9) Net cash provided by financing activities 35 38 Net decrease in cash and cash equivalents (1,624) (706) Cash including cash equivalents at beginning of period 10,017 10,421 Cash including cash equivalents at end of period $8,393 $9,715 Supplemental disclosures of cash flow information: Interest paid $4 $3 Income taxes paid $1,685 $1,400 See accompanying Notes to Consolidated Financial Statements
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The consolidated financial statements included herein have been prepared by Zebra Technologies Corporation and subsidiaries (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest Annual Report to Stockholders (the "Annual Report") incorporated by reference into the Company's Form 10-K filed with the Securities and Exchange Commission. The consolidated balance sheet as of December 31, 1995 presented herein has been derived from the audited consolidated balance sheet contained in the Annual Report. The accompanying unaudited interim consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results for the full year. Note 2 - Acquisition Effective February 16, 1996, the Company purchased the assets of Fenestra Computer Services, a UK partnership, in exchange for $1,314,000 paid in the form of cash and Zebra Class A common stock. The transaction has been accounted for under the purchase method of accounting. Assets and liabilities, including software and hardware technology, and trade names have been recorded at their respective fair market values with $1,114,000 assigned to acquired in-process technology based on an independent third-party appraisal. The acquired in-process technology was expensed in the first quarter of 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations First Quarter of 1996 versus First Quarter of 1995 Net sales for the first quarter of 1996 increased 11.5% to $38,352,000 versus sales of $34,392,000 for the first quarter of 1995. The net sales increase for the quarter is attributed to unit growth in all product categories rather than price increases, as the average unit price of printer products has decreased due to product mix changes. Printer sales increased by 7.2% and supplies sales by 2.9% over the first quarter of 1995, bringing printer sales to 69.2% and supplies sales to 24.3% of consolidated net sales, respectively. The remaining 6.5% of net sales consisted of service and software revenue. Approximately 43.7% of first quarter net sales were derived from international sources as compared to 44.8% during the first quarter of 1995. Gross profit increased to $18,433,000 for the first quarter of 1996, a 11.9% gain over gross profit of $16,478,000 for the first quarter of 1995. As a percentage of net sales, gross profit increased 0.2% from 47.9% to 48.1%, due principally to favorable mix changes within the Company's printer product sales and a lower percentage of supplies sales. Sales and marketing expenses of $4,640,000 were up 52.9% for the first quarter of 1996 as compared to $3,035,000 for the first quarter of 1995. As a percentage of net sales, first quarter sales and marketing expenses were 12.1% compared to 8.8% for the same period last year. This increase is principally due to expenses required to develop the retail channel of distribution for the Company's software products developed by Zebra VTI, as well as increased staffing in the sales and marketing organizations at the Company's Vernon Hills and High Wycombe facilities that are necessary to support anticipated sales growth. These expense increases were offset in part by reductions in co-op advertising and outside consulting services in comparison to the first quarter of last year. Research and development expenses for the first quarter of 1996 increased by 52.9% to $2,674,000 (7.0% of net sales) as compared to $1,749,000 (5.1% of net sales) in the first quarter of 1995. The increase in research and development expenses for the quarter on both a dollar and percentage basis was primarily the result of increased staffing and project costs to support new product development as well as the acquisition of Vertical Technologies, Inc. General and administrative expenses for the first quarter of 1996 increased by 50.4% to $3,312,000 (8.6% of net sales) as compared to $2,202,000 (6.4% of net sales) for the same period last year. The increase in general and administrative expenses for the quarter on both a dollar and percentage basis was primarily the result of increases in staffing, recruiting, depreciation, and mainframe computer expenses. The expenses were offset in part by reductions in outside consulting services. Also included is $137,000 for amortization of intangible assets and goodwill resulting from the Company's acquisition of Vertical Technologies, Inc. This amount is currently not deductible for income tax purposes. In addition, $17,000 is included for amortization of intangible assets and goodwill resulting from the Company's acquisition of the assets of Fenestra Computer Services, as described in the Liquidity and Capital Resources section below. This amount is deductible for income tax purposes. During the first quarter of 1996, the Company recorded a non-recurring write- off of acquired in-process technology in the amount of $1,114,000 as a result of the Company's acquisition of the assets of Fenestra Computer Services. The increased level of operating expenses in the first quarter combined with the write-off of acquired in-process technology caused income from operations for the first quarter of 1996 to decrease by $2,799,000 or 29.5% to $6,693,000 (17.5% of net sales) compared to $9,492,000 (27.6% of net sales) for the first quarter of 1995. Investment income for the first quarter of 1996 increased by $495,000 or 61.3% to $1,303,000 versus $808,000 for the first quarter of last year. This increase was the result of larger average investment balances, combined with higher rates of return within the portfolio. Income before income taxes was $7,972,000 in the first quarter of 1996 compared to $10,449,000 in the same quarter of last year, a decrease of $2,477,000 or 23.7%. Income taxes were provided at a rate of 34.2% in the first quarter of 1996, resulting in net income of $5,249,000 or 13.7% of net sales and net income per share of $0.22 on 24,189,000 average outstanding shares. In the first quarter of 1995, the provision for income taxes was 36.7% resulting in net income of $6,613,000 or 19.2% of net sales, and net income per share of $0.27 on 24,071,000 average outstanding shares. Liquidity and Capital Resources The Company's principal sources of liquidity continue to be cash generated from operations. At the end of the first quarter, the Company had $76,192,000 in cash and marketable securities versus $71,858,000 at the end of 1995. Effective February 16, 1996, the Company purchased the assets of Fenestra Computer Services, a UK partnership, in exchange for $1,314,000 in the form of cash and Zebra Class A common stock. The transaction has been accounted for under the purchase method of accounting. Assets and liabilities, including software and hardware technology, and trade names have been recorded at their respective fair market values with $1,114,000 assigned to acquired in-process technology based on an independent third-party appraisal. Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements. The Company has no commitments or agreements with respect to acquisitions or other significant capital expenditures. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 23.1 Acknowledgment of Independent Certified Public Accountants Regarding Independent Auditors' Review Report (b) Reports. No reports on Form 8-K have been filed by the Registrant for the quarterly period covered by this report. Exhibit 23.1 Acknowledgment of Independent Certified Public Accountants Regarding Independent Auditors' Review Report Zebra Technologies Corporation 333 Corporate Woods Parkway Vernon Hills, Illinois 60061-3109 Ladies and Gentlemen: With respect to the registration statements (No. 33-44706 and No. 33-72774) on Form S-8, we acknowledge our awareness of the use therein of our report dated April 16, 1996 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. Very truly yours, KPMG Peat Marwick LLP Chicago, Illinois May 10, 1996 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ZEBRA TECHNOLOGIES CORPORATION Date: May 10, 1996 By: Edward L. Kaplan Chief Executive Officer Date: May 10, 1996 By: Charles R. Whitchurch Chief Financial Officer EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT MARCH 30, 1996 AND CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE MONTH PERIOD ENDED MARCH 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA. 3-MOS DEC-31-1996 MAR-30-1996 8,393 67,799 25,614 (467) 20,451 123,824 17,310 (8,449) 135,856 17,990 0 0 0 242 114,454 135,856 38,352 38,352 19,919 19,919 11,618 122 (4) 7,972 2,723 5,249 0 0 0 5,249 0.22 0.22
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