10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-19406

Zebra Technologies Corporation

(Exact name of registrant as specified in its charter)

Delaware	36-2675536
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3 Overlook Point, Lincolnshire, IL 60069

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (847) 634-6700

Indicate by check mark whether the registrant: (1) 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 (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if smaller reporting company)	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

As of July 31, 2018, there were 53,692,395 shares of Class A Common Stock, $.01 par value, outstanding.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

QUARTER ENDED JUNE 30, 2018

INDEX

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017	3
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2018 and July 1, 2017	4
	Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2018 and July 1, 2017	5
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2018 and July 1, 2017	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
SIGNATURES		39

2

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

	June 30, 2018			December 31, 2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	46		$	62
Accounts receivable, net of allowances for doubtful accounts of $2 million and $3 million as of June 30, 2018 and December 31, 2017, respectively	502			479
Inventories, net	465			458
Income tax receivable	44			40
Prepaid expenses and other current assets	52			24
Total Current assets	1,109			1,063
Property, plant and equipment, net	254			264
Goodwill	2,462			2,465
Other intangibles, net	252			299
Long-term deferred income taxes	104			119
Other long-term assets	94			65
Total Assets	$	4,275		$	4,275
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	85		$	51
Accounts payable	442			424
Accrued liabilities	238			296
Deferred revenue	198			186
Income taxes payable	51			43
Total Current liabilities	1,014			1,000
Long-term debt	1,914			2,176
Long-term deferred revenue	150			148
Other long-term liabilities	124			117
Total Liabilities	3,202			3,441
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued	—			—
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares	1			1
Additional paid-in capital	273			257
Treasury stock at cost, 18,459,879 and 18,915,762 shares at June 30, 2018 and December 31, 2017, respectively	(617		)	(620		)
Retained earnings	1,446			1,248
Accumulated other comprehensive loss	(30		)	(52		)
Total Stockholders’ Equity	1,073			834
Total Liabilities and Stockholders’ Equity	$	4,275		$	4,275

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales:
Net sales of tangible products	$	889		$	779		$	1,728		$	1,514
Revenue from services and software	123			117			261			247
Total Net sales	1,012			896			1,989			1,761
Cost of sales:
Cost of sales of tangible products	450			408			873			787
Cost of services and software	90			77			179			162
Total Cost of sales	540			485			1,052			949
Gross profit	472			411			937			812
Operating expenses:
Selling and marketing	121			114			241			223
Research and development	109			99			210			195
General and administrative	93			68			164			143
Amortization of intangible assets	23			52			46			102
Acquisition and integration costs	—			19			2			46
Exit and restructuring costs	1			1			5			5
Total Operating expenses	347			353			668			714
Operating income	125			58			269			98
Other (expenses) income:
Foreign exchange (loss) gain	(4		)	2			(4		)	1
Interest expense, net	(23		)	(40		)	(34		)	(81		)
Other, net	2			(1		)	2			(1		)
Total Other expenses, net	(25		)	(39		)	(36		)	(81		)
Income before income tax expense	100			19			233			17
Income tax expense (benefit)	30			2			54			(8		)
Net income	$	70		$	17		$	179		$	25
Basic earnings per share	$	1.31		$	0.33		$	3.35		$	0.49
Diluted earnings per share	$	1.29		$	0.32		$	3.30		$	0.48
Basic weighted average shares outstanding	53,537,876			51,996,353			53,414,267			51,928,911
Diluted weighted average and equivalent shares outstanding	54,255,707			53,128,657			54,134,110			53,037,956

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net income	$	70		$	17		$	179		$	25
Other comprehensive income (loss), net of tax:
Unrealized gain(loss) on anticipated sales hedging transactions	23			(8		)	22			(14		)
Unrealized gain on forward interest rate swaps hedging transactions	2			—			7			2
Foreign currency translation adjustment	(9		)	—			(7		)	—
Comprehensive income	$	86		$	9		$	201		$	13

See accompanying Notes to Consolidated Financial Statements.

5

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended
	June 30, 2018			July 1, 2017
Cash flows from operating activities:
Net income	$	179		$	25
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	86			141
Amortization of debt issuance costs and discounts	9			10
Share-based compensation	24			15
Deferred income taxes	3			(10		)
Unrealized gain on forward interest rate swaps	(18		)	(1		)
Other, net	2			2
Changes in operating assets and liabilities:
Accounts receivable, net	(26		)	104
Inventories, net	(11		)	(68		)
Other assets	(9		)	15
Accounts payable	21			13
Accrued liabilities	(48		)	(21		)
Deferred revenue	22			20
Income taxes	24			(35		)
Other operating activities	8			(7		)
Net cash provided by operating activities	266			203
Cash flows from investing activities:
Purchases of property, plant and equipment	(33		)	(22		)
Proceeds from sale of long-term investments	2			—
Purchases of long-term investments	(2		)	—
Net cash used in investing activities	(33		)	(22		)
Cash flows from financing activities:
Payment of debt issuance costs and discounts	(2		)	—
Payments of long-term debt	(1,114		)	(240		)
Proceeds from issuance of long-term debt	879			—
Payments of debt extinguishment costs	(1		)	—
Proceeds from exercise of stock options and stock purchase plan purchases	6			7
Taxes paid related to net share settlement of equity awards	(10		)	(5		)
Net cash used in financing activities	(242		)	(238		)
Effect of exchange rate changes on cash	(7		)	(4		)
Net decrease in cash and cash equivalents	(16		)	(61		)
Cash and cash equivalents at beginning of period	62			156
Cash and cash equivalents at end of period	$	46		$	95
Supplemental disclosures of cash flow information:
Income taxes paid	$	21		$	43
Interest paid	$	52		$	70

See accompanying Notes to Consolidated Financial Statements.

6

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 Description of Business and Basis of Presentation

Zebra Technologies Corporation and its wholly-owned subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic identification and data capture solutions industry. We design, manufacture, and sell a broad range of products that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, and managed services, including cloud-based subscriptions. End-users of our products and services include those in retail and e-commerce, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. We provide our products and services globally through a direct sales force and an extensive network of channel partners.

Management prepared these condensed unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and notes. As permitted under Article 10 of Regulation S-X and the instructions of Form 10-Q, these condensed consolidated financial statements do not include all the information and notes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements, although management believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

The Company reclassified $41 million of costs from Accrued liabilities to Accounts payable on the Consolidated Balance Sheets for the period ended December 31, 2017 to conform to the current period presentation. A similar reclassification was made to the Consolidated Statements of Cash Flows resulting in a change to Accounts payable and Accrued liabilities within Net cash provided by operating activities for the period ended June 30, 2017.

In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to present fairly its Consolidated Balance Sheets as of June 30, 2018, the Consolidated Statements of Operations and Comprehensive Income for the three and six-months ended June 30, 2018 and July 1, 2017, and the Consolidated Statements of Cash Flows for the six-months ended June 30, 2018 and July 1, 2017. These results, however, are not necessarily indicative of the results expected for the full year ending December 31, 2018.

Note 2 Significant Accounting Policies

Revenue Recognition. Revenue includes sales of hardware, supplies and services (including repair services and product maintenance service contracts, which typically occur over time, and professional services such as installation, integration and provisioning, which typically occur in the early stages of a project). The average life of repair and maintenance service contracts is approximately three years. The duration of professional service arrangements ranges from a day to several weeks or months. We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

The Company elects to exclude from the transaction price sales and other taxes assessed by a governmental authority and collected by the Company from a customer. The Company also considers shipping and handling activities as part of the fulfillment costs, not as a separate performance obligation.

Recently Adopted Accounting Pronouncements

On January 1, 2018, we adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”) applying the modified retrospective method to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“ASC 605”). The adoption of ASC 606 did not have a material effect on the Company’s consolidated financial statements or results of operations.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet related to the adoption of ASC

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606 were as follows (in millions):

	As Reported December 31, 2017		Adjustment			As Adjusted January 1, 2018
Assets:
Inventories, net (1)	$	458	$	(3	)	$	455
Prepaid expenses and other current assets (2)	24		7			31
Long-term deferred income taxes (3)	119		(5		)	114
Other long-term assets (4)	65		12			77
Liabilities:
Deferred revenue (5)	186		(2		)	184
Long-term deferred revenue (6)	148		(6		)	142
Stockholders’ Equity:
Retained earnings	1,248		19			1,267

(1) Reflects an adjustment of $(3) million related to changes in revenue recognition patterns.

(2) Reflects an adjustment of $7 million related to changes in revenue recognition patterns.

(3) Reflects the income tax effect of $(5) million related to the adjustments made for the adoption of ASC 606.

(4) Reflects an adjustment of $12 million related to the capitalization of costs to obtain contracts (primarily comprised of sales commissions associated with longer term support service contracts).

(5) Reflects an adjustment of $(3) million related to reallocation of revenue between performance obligations and $1 million related to changes in the timing of revenue recognition.

(6) Reflects an adjustment of $(6) million related to reallocation of revenue between performance obligations.

Under the modified retrospective method of adoption, we are required to disclose the impact to the Consolidated Financial Statements had we continued to follow our accounting policies under the previous revenue recognition guidance. Had the Company applied the previous revenue recognition guidance, revenue would have been $3 million lower for the quarter ended June 30, 2018 and $2 million lower for the six-month period endedJune 30, 2018.

See Note 3, Revenues for further information.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” On January 1, 2018, the Company adopted this ASU. ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The adoption of this ASU did not have a material impact to the Company's consolidated financial statements or related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management has assessed the impact of adoption of the new standard and determined there are no material impacts to the Company's consolidated financial statements or disclosures resulting from the adoption of this ASU.

In February 2016, the FASB issued ASU 2016-02, “Leases (Subtopic 842).” This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the Consolidated Balance Sheets and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the Consolidated Balance Sheets. The recognition, measurement and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, with early adoption permitted. In transition, lessees

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and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply.  While Management is currently assessing the impact of adoption on its consolidated financial statements, we have identified and collected data on our significant leases, made progress in assessing practical expedients and policy elections we will make upon adoption, as well as, selected an accounting system to support future accounting and disclosure requirements.  At this time, we do not have an estimate of the expected increase in assets and liabilities on the Company’s consolidated balance sheet upon adoption of this ASU in the first quarter of 2019.

Note 3 Revenues

As prescribed in ASC 606, the Company recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

Performance Obligations

We enter into contract arrangements that may include various combinations of tangible products and services, which generally are capable of being distinct and accounted for as separate performance obligations. For these types of contract arrangements, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue recorded in the reporting period. We use the accounting guidance on “capable of being distinct” and “distinct within the context of the contract” to help with the aforementioned evaluation.

For contract arrangements that include multiple performance obligations, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for the products and/or services underlying each performance obligation. When the standalone selling prices are not directly observable, we estimate the standalone selling prices primarily based on the expected cost-plus margin approach. For arrangements comprised strictly of the sale of product and performance of maintenance type services where the standalone selling price of the maintenance service is not discernible, we estimate the standalone selling price of the maintenance contract through the use of the residual approach. When the residual approach cannot be applied, regional pricing, marketing strategies and business practices are evaluated and analyzed to derive the estimated standalone selling price through the use of a cost-plus margin methodology.

The Company recognizes revenue when transfer of control has occurred for the goods or services sold. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services sold. The Company uses judgment in the evaluation of the following criteria: 1) the customer simultaneously receives and consumes the benefits provided by the transfer of goods or service; 2) the performance creates or enhances an asset that is under control of the customer; 3) the performance does not create an asset with an alternative use to the customer and the Company has an enforceable right to payment, in order to determine whether control transfers at a point in time or over time. For each performance obligation satisfied over time, the Company measures its progress toward completion to determine the timing of revenue recognition. Judgment is also used in the evaluation of the following transfer of control criteria: 1) the Company has a present right to payment for the asset; 2) the legal title to the asset has transferred to the customer; 3) the customer has physical possession of the asset; 4) the customer has the significant risks and rewards of ownership of the asset; 5) the customer has accepted the asset, in order to determine when revenue should be recognized in a point in time revenue recognition pattern. Assuming all other criteria for revenue recognition have been met, for products and services sold on a standalone basis, revenue is generally recognized upon shipment and by using an output method or time-based method respectively. In cases where a bundle of products and services are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

The Company’s remaining obligations that are greater than one year in duration relate primarily to repair and support services. The aggregated transaction price allocated to remaining performance obligations related to these types of service arrangements is $430 million as of June 30, 2018. We expect to recognize these performance obligations over the approximate three-year average contract term.

For some of our transactions, products are sold with a right of return, and we may also provide other rebates, price protection, or incentives, which are accounted for as variable consideration. The Company estimates the amount of variable consideration by using the expected value or the most likely amount method and reduces the revenue by those estimated amounts, only to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur. These estimates are reviewed and updated, as necessary, at the end of each reporting period.

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Revenue recognized in the reporting period from performance obligations satisfied in previous periods was not material for the three and six-month periods ended June 30, 2018.

Disaggregation of Revenue

The following table presents our revenues disaggregated by product category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and six-months ended June 30, 2018 (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018						June 30, 2018
	Product Category						Product Category
Segment	Tangible Products		Services and Software		Total		Tangible Products		Services and Software		Total
AIT	$	322	$	29	$	351	$	635	$	68	$	703
EVM	567		94		661		1,093		193		1,286
Total	$	889	$	123	$	1,012	$	1,728	$	261	$	1,989

In addition, refer to Note 14, Segment Information for Net sales to customers by geographic region.

We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all of our revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time.

Contract Balances

Progress on satisfying performance obligations under contracts with customers and the related billings and cash collections are recorded on the Consolidated Balance Sheets in Accounts receivable, net and Prepaid expenses and other current assets. The opening and closing contract assets balances were $7 million and $5 million, as of January 1, 2018 and June 30, 2018, respectively, and were recorded within Prepaid expenses and other current assets on the Consolidated Balance Sheets. These contract assets result from timing differences between the billing schedule and the products and services delivery schedules, as well as, the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Our policy is to test these contract asset balances for impairment in accordance with ASC 310 Receivables. No impairment losses have been recorded for the three and six-month periods ended June 30, 2018.

Deferred revenue on the Consolidated Balance Sheets, consist of payments and billings in advance of our performance. The combined short-term and long-term Deferred revenue balances were $348 million and $334 million at June 30, 2018 and December 31, 2017, respectively. During the three-month and six-month period ended June 30, 2018, the Company recognized $55 million and $120 million in revenue respectively, which was previously included in the beginning balance of deferred revenue.

Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts do not include a significant financing component.

Costs to obtain a contract

Our incremental direct costs of obtaining a contract, which consist of sales commissions and incremental fringe benefits, are deferred and amortized over the weighted-average contract term, consistent with the guidance in ASC 340 Other Assets and Deferred Costs. The incremental costs to obtain a contract, which were previously expensed as incurred under ASC 605, and the determination of the amortization period are derived at a portfolio level and the amortization is recognized on a straight-line basis. The adoption of ASC 606 required the capitalization of these costs which resulted in an adjustment to increase retained earnings. The Company recorded $12 million to Other long-term assets on the Consolidated Balance Sheets as of January 1, 2018. The Company recognized amortization expense related to commissions during the three-month and six-month period ended June 30, 2018 of $3 million and $5 million, respectively. The ending balance of the deferred commissions was $12 million as of June 30, 2018. The Company elected a practical expedient permitted by ASC 606, whereby the incremental costs of obtaining a contract are expensed as incurred if the amortization period of the assets would otherwise be one year or less.

Note 4 Inventories

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Inventories are stated at the lower of a moving-average cost (which approximates cost on a first-in, first-out basis) and net realizable value. Manufactured inventory cost includes materials, labor, and manufacturing overhead. Purchased inventory cost also includes internal purchasing overhead costs.

Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values. Inventory provisions are based on forecasted demand, experience with specific customers, the age and nature of the inventory, and the ability to redistribute inventory to other programs or to rework into consumable inventory.

The components of Inventories, net are as follows (in millions): 

	June 30, 2018		December 31, 2017
Raw material	$	131	$	116
Work in process	2		1
Finished goods	332		341
Total	$	465	$	458

Note 5 Costs Associated with Exit and Restructuring Activities

In the first quarter of 2017, the Company’s executive leadership approved an initiative to continue the Company’s efforts to increase operational efficiency (the “Productivity Plan”). The Company expects the Productivity Plan to build upon the exit and restructuring initiatives specific to the acquisition of the Enterprise business (“Enterprise”) from Motorola Solutions, Inc. in October 2014, (the “Acquisition Plan”). The Company completed all initiatives under the Acquisition Plan as of December 31, 2017. Actions under the Productivity Plan include organizational design changes, process improvements and automation. Exit and restructuring costs are not included in the operating results of our segments as they are not deemed to impact the specific segment measures as reviewed by our Chief Operating Decision Maker and therefore are reported as a component of Corporate, eliminations. See Note 14, Segment Information.

Total exit and restructuring charges of $17 million life-to-date specific to the Productivity Plan have been recorded through June 30, 2018 and relate to severance and related benefits and other expenses. Exit and restructuring charges of $1 million and $5 million were recorded in the respective three and six-month periods ended June 30, 2018, respectively. Total remaining charges associated with this plan are expected to be less than $6 million with activities expected to be substantially complete by the end of fiscal 2018.

A roll forward of the exit and restructuring accruals is as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Balance at the beginning of the period	$	7		$	11		$	8		$	10
Charged to earnings, net	1			1			5			5
Cash paid	(4		)	(5		)	(9		)	(8		)
Balance at the end of the period	$	4		$	7		$	4		$	7

The $4 million accrual as of June 30, 2018 is reflected within the Consolidated Balance Sheet as $3 million within Accrued liabilities and $1 million within Other long-term liabilities. The long-term portion of the accrual relates to non-cancellable lease payments associated with exited facilities whose latest term expires May 2021.

Note 6 Fair Value Measurements

Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy in accordance with ASC Topic 820, “Fair Value Measurements.” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

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Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries & money market funds).

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value.

Financial assets and liabilities carried at fair value as of June 30, 2018, are classified below (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts (1)	$	1	$	16	$	—	$	17
Forward interest rate swap contracts (2)	—		7		—		7
Money market investments related to the deferred compensation plan	17		—		—		17
Total Assets at fair value	$	18	$	23	$	—	$	41
Liabilities:
Liabilities related to the deferred compensation plan	17		—		—		17
Total Liabilities at fair value	$	17	$	—	$	—	$	17

Financial assets and liabilities carried at fair value as of December 31, 2017, are classified below (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Money market investments related to the deferred compensation plan	$	15	$	—	$	—	$	15
Total Assets at fair value	$	15	$	—	$	—	$	15
Liabilities:
Forward interest rate swap contracts (2)	$	—	$	18	$	—	$	18
Foreign exchange contracts (1)	2		9		—		11
Liabilities related to the deferred compensation plan	15		—		—		15
Total Liabilities at fair value	$	17	$	27	$	—	$	44

(1) The fair value of the derivative contracts is calculated as follows:

a. Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts.

b. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.

c. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, there were $1 million of transfers from Level 2 to Level 1 as of June 30, 2018 and $2 million as of December 31, 2017.

(2) The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms. See gross balance reporting in Note 7, Derivative Instruments.

Note 7 Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC 815, Derivatives and Hedging. The Company

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formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes.

In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions):

	Asset (Liability) Derivatives
		Fair Values as of
	Balance Sheet Classification	June 30, 2018			December 31, 2017
Derivative instruments designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	16		$	—
Foreign exchange contracts	Accrued liabilities	—			(9		)
Forward interest rate swaps	Accrued liabilities	(1		)	(2		)
Forward interest rate swaps	Other long-term liabilities	(1		)	(8		)
Total derivative instruments designated as hedges		$	14		$	(19	)
Derivative instruments not designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	1		$	—
Forward interest rate swaps	Other long-term assets	12			—
Foreign exchange contracts	Accrued liabilities	—			(2		)
Forward interest rate swaps	Accrued liabilities	(3		)	(1		)
Forward interest rate swaps	Other long-term liabilities	—			(7		)
Total derivative instruments not designated as hedges		$	10		$	(10	)
Total net derivative asset (liability)		$	24		$	(29	)

The following table presents the gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):

	Gain (Loss) Recognized in Income
		Three Months Ended					Six Months Ended
	Statements of Operations Classification	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Derivative instruments not designated as hedges:
Foreign exchange contracts	Foreign exchange gain (loss) gain	$	1	$	(11	)	$	1	$	(16	)
Forward interest rate swaps	Interest expense, net	5		—			18		1
Total gain (loss) recognized in income		$	6	$	(11	)	$	19	$	(15	)

Credit and Market Risk Management

Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s credit risk counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

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Foreign Currency Exchange Risk Management

The Company conducts business on a multinational basis in a wide variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises from euro denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company realizes its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign exchange forward and option contracts.

The Company manages the exchange rate risk of anticipated euro denominated sales using put options, forward contracts, and participating forwards, all of which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Company’s Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized (losses) were $(1) million and $0 million for the quarter ending June 30, 2018, and July 1, 2017, respectively.  For the comparable six-month period endedJune 30, 2018, and July 1, 2017, realized (losses) or gains were $(6) million and $1 million, respectively. As of June 30, 2018, and December 31, 2017, the notional amounts of the Company’s foreign exchange cash flow hedges were €402 million and €389 million, respectively. The Company has reviewed cash flow hedges for effectiveness and determined they are highly effective.

The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to its Brazilian real, British pound, Canadian dollar, Czech koruna, Euro, Australian dollar, Swedish krona, Japanese yen, and Singapore dollars, Mexican Peso and Chinese Yuan denominated net assets. These forward contracts typically mature within one-month after execution. Monetary gains and losses on these forward contracts are recorded in income each quarter and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair value of these outstanding contracts are as follows (in millions):

	June 30, 2018		December 31, 2017
Notional balance of outstanding contracts:
British Pound/U.S. Dollar	£	16	£	13
Euro/U.S. Dollar	€	71	€	108
British Pound/Euro	£	5	£	5
Canadian Dollar/U.S. Dollar	$	7	$	12
Czech Koruna/U.S. Dollar	Kč	378	Kč	361
Brazilian Real/U.S. Dollar	R$	31	R$	34
Australian Dollar/U.S. Dollar	A$	50	A$	55
Swedish Krona/U.S. Dollar	kr	14	kr	13
Japanese Yen/U.S. Dollar	¥	144	¥	151
Singapore Dollar/U.S. Dollar	S$	6	S$	4
Mexican Peso/U.S. Dollar	Mex$	127	Mex$
Chinese Yuan/U.S. Dollar	¥	44	¥
Net fair value of asset (liability) of outstanding contracts	$	1	$	(2	)

Interest Rate Risk Management

The Company’s debt consists of borrowings under two term loans (“Term Loan A” and “Term Loan B”), the Revolving Credit Facility and the receivables financing facility which bear interest at variable rates plus an applicable margin. See Note 8, Long-Term Debt. As a result, the Company is exposed to market risk associated with the variable interest rate payments on both term loans.

The Company manages its exposure to changes in interest rates by utilizing interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions. The Company does not enter into derivative instruments for trading or speculative purposes.

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In December 2017, the Company entered into an $800 million forward long-term interest rate swap agreement to lock into a fixed LIBOR interest rate base for debt facilities subject to monthly interest payments, including Term Loan A, the Revolving Credit Facility and receivables financing facility. Under the terms of the agreement, $800 million in variable-rate debt will be swapped for a fixed interest rate with net settlement terms due effective in December 2018. The changes in fair value of these swaps are not designated as hedges and are recognized immediately as Interest expense, net on the Consolidated Statements of Operations.

The Company previously had a floating-to-fixed interest rate swap, which was designated as a cash flow hedge. This swap was terminated and the hedge accounting treatment discontinued in 2014. The terminated swap has approximately $3 million remaining to be amortized through AOCI on the Consolidated Balance Sheets and subsequently reclassified into net earnings through June 2021. Approximately $2 million is expected to be amortized and expensed in 2018. There was less than $1 million expensed by the Company in the second quarter of 2018 and $1 million expensed for the six-month period endedJune 30, 2018.

The Company has three interest rate swaps previously entered into for the purpose of converting floating-to-fixed rate debt. The first swap was entered into with a syndicated group of commercial banks for the purpose of moving from floating-to-fixed rate debt. The second swap largely offsets the first swap, moving from fixed-to-floating rate debt. Both of these instruments are not designated as hedges with the changes in fair value recognized in Interest expense, net on the Consolidated Statements of Operations. The third swap entered into is an interest rate swap converting floating-to-fixed rate debt which was designated as a cash flow hedge and receives hedge accounting treatment. All three swaps have a termination date in June 2021.

The changes in fair value of the active swap designated as a cash flow hedge are recognized in AOCI on the Consolidated Balance Sheets, with any ineffectiveness immediately recognized in earnings.

The notional amount of the interest rate swaps effective in each year of the cash flow hedge relationships does not exceed the principal amount of Term Loan B, which is hedged. The Company has reviewed the interest rate swap hedges for effectiveness and determined they are 100% effective.

At June 30, 2018, the Company estimated that approximately $1 million in losses on the forward interest rate swap designated as a cash flow hedge will be reclassified from AOCI on the Consolidated Balance Sheets into earnings during the next four quarters.

The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. The following table presents the (liability) asset gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at June 30, 2018 (in millions):

	Gross Fair Value			Offsetting Counterparty Fair Value			Net Fair Value in the Consolidated Balance Sheets
Counterparty A	$	(3	)	$	(1	)	$	(2	)
Counterparty B	(1		)	—			(1		)
Counterparty C	(1		)	—			(1		)
Counterparty D	(2		)	(1		)	(1		)
Counterparty E	(1		)	—			(1		)
Counterparty F	15			—			15
Counterparty G	(2		)	—			(2		)
Total	$	5		$	(2	)	$	7

The interest rate swaps have future maturities consisting of the following notional amounts per year (in millions):

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Year 2018	$	—
Year 2019	1,344
Year 2020	1,072
Year 2021	1,072
Year 2022	800
Notional balance of outstanding contracts	$	4,288

Note 8 Long-Term Debt

The following table summarizes the carrying value of the Company’s long-term debt (in millions):

	June 30, 2018			December 31, 2017
Term Loan B	$	810		$	1,160
Term Loan A	653			679
Revolving Credit Facility	433			275
Receivables Financing Facility	118			135
Total debt	$	2,014		$	2,249
Less: Debt issuance costs	(6		)	(7		)
Less: Unamortized discounts	(9		)	(15		)
Less: Current portion of long-term debt	(85		)	(51		)
Total long-term debt	$	1,914		$	2,176

At June 30, 2018, the future maturities of debt, excluding debt discounts and issuance costs, are as follows (in millions):

2018	$	37
2019	144
2020	54
2021	1,779
2022	—
Thereafter	—
Total future maturities of long-term debt	$	2,014

The estimated fair value of the Company’s long-term debt approximated $2.0 billion at June 30, 2018 and $2.2 billion at December 31, 2017. These fair value amounts represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the long-term debt will continue to vary each period based on fluctuations in market interest rates, as well as changes to the Company’s credit ratings. This methodology resulted in a Level 2 classification in the fair value hierarchy.

Credit Facilities

On May 31, 2018, the Company entered into Amendment No.1. to the Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 replaced the existing Term Loan A with a new Term Loan A (“Amended Term Loan A”) of $670 million and increased the existing revolving credit facility from $500 million to $800 million (“Revolving Credit Facility”). In addition, as part of the Amendment No. 1, the Company entered into a partial early debt termination of $300 million and repricing of Term Loan B. Amendment No. 1 lowered the index rate spread for LIBOR loans from LIBOR + 200 bp to LIBOR + 175 bp.

In accounting for the impact of Amendment No. 1, the Company applied the provisions of ASC Subtopic 470-50, Modifications and Extinguishments (“ASC 470-50”), which resulted in the second quarter results including approximately $6 million in non-cash accelerated amortization of debt issuance costs and approximately $1 million of one-time pretax charges related to third party fees associated with the amendments, which are reflected as a component of Interest expense,net within the Company’s Consolidated Statements of Operations.

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In addition, the issuance of Amended Term Loan A and the increase to the revolving credit facility resulted in $2 million of one-time third party fees for arranger, legal, and other services, which were capitalized and will be amortized over the term of the credit facilities.

As of June 30, 2018, the Term Loan A interest rate was 3.84%, and the Term Loan B interest rate was 4.06%. Borrowings under Term Loan A and B bear interest at a variable rate. Term Loan B borrowings are subject to a floor of 2.75%. Interest payments are payable monthly or quarterly on Term Loan A and quarterly on Term Loan B. The Company has entered into interest rate swaps to manage interest rate risk on Term Loan B. See Note 7, Derivative Instruments.

Amendement No. 1 also requires the Company to prepay certain amounts in the event of certain circumstances or transactions. The Company may make prepayments against the Term Loans, in whole or in part, without premium or penalty. The borrowings under Amendment No. 1 will mature on July 27, 2021.

The Revolving Credit Facility is available for working capital and other general corporate purposes including letters of credit. As of June 30, 2018, the Company had issued letters of credit totaling $5 million, which reduced funds available for other borrowings under the agreement to $795 million. The Revolving Credit Facility will mature and the related commitments will terminate on July 27, 2021.

Borrowings under the Revolving Credit Facility bear interest at a variable rate plus an applicable margin. As of June 30, 2018, the Revolving Credit Facility had an average interest rate of 3.91%. Interest payments are payable monthly or quarterly for the Revolving Credit Facility.

Receivables Financing Facility

On December 1, 2017, a wholly-owned, bankruptcy-remote, special-purpose entity (“SPE”) of the Company entered into the Receivables Purchase Agreement, which provides for a receivables financing facility of up to $180 million. The SPE utilizes the receivables financing facility in the normal course of business as part of its management of cash flows. Under its committed receivables financing facility, a subsidiary of the Company sells its domestically originated accounts receivables at fair value, on a revolving basis, to the SPE which was formed for the sole purpose of buying the receivables. The SPE, in turn, pledges a valid and perfected first-priority security interest in the pool of purchased receivables to a financial institution for borrowing purposes. The subsidiary retains an ownership interest in the pool of receivables that are sold to the SPE and services those receivables. Accordingly, the Company has determined that these transactions do not qualify for sale accounting under ASC 860, Transfers and Servicing of Financial Assets, and has, therefore, accounted for the transactions as secured borrowings.

At June 30, 2018, the Company’s Consolidated Balance Sheets included $419 million of receivables that were pledged and $118 million of associated liabilities. The receivables financing facility will mature on November 29, 2019.

Borrowings under the receivables financing facility bear interest at a variable rate plus an applicable margin. As of June 30, 2018, the receivables financing facility had an average interest rate of 2.94% and requires monthly interest payments.

Both the Revolving Credit Facility and receivables financing facility include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

Certain domestic subsidiaries of the Company (the “Guarantor Subsidiaries”) guarantee the Term Loan A, Term Loan B, and the Revolving Credit Facility on a senior basis. For the six-month period ended June 30, 2018, the non-Guarantor Subsidiaries would have (a) accounted for 47.8% of our total revenue and (b) held 84.0% or $3.6 billion of our total assets and approximately 80.1% or $2.6 billion of our total liabilities including trade payables but excluding intercompany liabilities.

On June 30, 2018, the Company was in compliance with all covenants.

Note 9 Commitments and Contingencies

Warranties

In general, the Company provides warranty coverage of 1 year on mobile computers, printers and batteries. Advanced data capture products are warrantied from 1 to 5 years, depending on the product. Thermal printheads are warrantied for 6 months and battery-based products, such as location tags, are covered by a 90-day warranty. The provision for warranty expense is adjusted quarterly based on historical warranty experience.

The following table is a summary of the Company’s accrued warranty obligation (in millions):

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	Six Months Ended
	June 30, 2018			July 1, 2017
Balance at the beginning of the period	$	18		$	21
Warranty expense	16			13
Warranty payments	(16		)	(15		)
Balance at the end of the period	$	18		$	19

Contingencies

The Company is subject to a variety of investigations, claims, suits, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort, and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company’s view of these matters and its potential effects may change in the future. The Company establishes an accrued liability for loss contingencies related to legal matters when the loss is both probable and estimable. In addition, for some matters for which a loss is probable or reasonably possible, an estimate of the amount of loss or range of loss is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.

In connection with the acquisition of the Enterprise business from Motorola Solutions, Inc., the Company acquired Symbol Technologies, Inc., a subsidiary of Motorola Solutions (“Symbol”). A putative federal class action lawsuit, Waring v. Symbol Technologies, Inc., et al., was filed on August 16, 2005 against Symbol Technologies, Inc. and two of its former officers in the United States District Court for the Eastern District of New York by Robert Waring. After the filing of the Waring action, several additional purported class actions were filed against Symbol and the same former officers making substantially similar allegations (collectively, the New Class Actions”). The Waring action and the New Class Actions were consolidated for all purposes and on April 26, 2006, the Court appointed the Iron Workers Local # 580 Pension Fund as lead plaintiff and approved its retention of lead counsel on behalf of the putative class. On August 30, 2006, the lead plaintiff filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”), and named additional former officers and directors of Symbol as defendants. The lead plaintiff alleges that the defendants misrepresented the effectiveness of Symbol’s internal controls and forecasting processes, and that, as a result, all of the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the individual defendants violated Section 20(a) of the Exchange Act. The lead plaintiff alleges that it was damaged by the decline in the price of Symbol’s stock following certain purported corrective disclosures and seeks unspecified damages. The court has certified a class of investors that includes those that purchased Symbol common stock between March 12, 2004 and August 1, 2005. The parties completed fact and expert discovery. They also agreed to a schedule for the filing of dispositive motions, which the court so-ordered on February 12, 2018. However, by order entered on April 2, 2018, the court adjourned the deadlines for summary judgment briefing in light of the fact that the parties reached an agreement in principle to settle the matter at the mediation held on March 15, 2018. The settlement is subject to approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, and Zebra has reached agreements with certain of its insurers to fund the settlement. On April 30, 2018, the lead plaintiff commenced the process for obtaining the court’s approval of the settlement by filing a motion for preliminary approval of the class action settlement, and on May 22, 2018, the Court entered an order: (1) preliminarily approving the settlement with the hearing for final approval of the settlement terms set for October 30, 2018; (2) approving the notice provisions to be provided to the class; (3) appointing the settlementadministrator; and (4) setting forth the procedure and timing by which class members may elect to participate in, opt out of or object to the settlement.

Unclaimed Property Voluntary Disclosure Agreement (“VDA”) and Audits: The Company is currently under audit by several states related to its reporting of unclaimed property liabilities. Additionally, in December 2017, the Company entered into a VDA with the State of Delaware. The Company has engaged an outside consultant to facilitate the assessment of the estimated liability that may result from these activities. As of June 30, 2018, no significant contingency reserve has been recorded as it has not progressed sufficiently in its assessment to quantify and record a contingency reserve for any unreported unclaimed property liabilities is ongoing.

Note 10 Share-Based Compensation

On May 17, 2018, shareholders approved the Zebra Technologies 2018 Long-Term Incentive Plan (“2018 Plan”). The 2018 Plan superseded and replaced the 2015 Plan on the approval date, except that the 2015 Plan shall remain in effect with respect

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to outstanding awards under the 2015 Plan until such awards have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with their terms.

The 2018 plan provides for incentive compensation to the Company’s non-employee directors, officers and employees. The awards available under the 2018 Plan include Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock Awards (“RSAs”), Performance Share Awards (“PSAs”), Cash-settled Stock Appreciation Rights (“CSRs”), Restricted Stock Units (“RSUs”), and Performance Stock Units (“PSUs”). A total of 3,800,000 shares are authorized for delivery under the 2018 Plan.

A summary of the equity awards authorized and available for future grants under the 2018 Plan is as follows:

Available for future grants at December 31, 2017	—
Newly authorized shares	3,800,000
Granted	(925	)
Cancellation and forfeitures	—
Plan termination	—
Available for future grants at June 30, 2018	3,799,075

The Zebra Technologies Corporation Long-Term Incentive Plan (“2015 Plan”), provided for incentive compensation to the Company’s non-employee directors, officers and employees. The awards available under the 2015 Plan included SARs, RSAs, PSAs, Cash-settled Stock Appreciation Rights, RSUs, and PSUs. A total of 4 million shares were authorized for delivery under the 2015 Plan. Upon approval of the 2018 plan, there are no shares available for grant under the 2015 plan.

A summary of the equity awards authorized and available for future grants under the 2015 Plan is as follows:

Available for future grants at December 31, 2017	1,437,435
Newly authorized shares	—
Granted	(360,999	)
Cancellation and forfeitures	—
Plan termination	(1,076,436	)
Available for future grants at June 30, 2018	—

Pre-tax share-based compensation expense recognized in the Consolidated Statements of Operations was $28 million and $16 million for the six-month period ended June 30, 2018 and July 1, 2017, respectively. Tax related benefits of $5 million were also recognized for the each of the six-month periods ended June 30, 2018 and July 1, 2017, respectively. As of June 30, 2018, total unearned compensation costs related to the Company’s share-based compensation plans was $75 million, which will be amortized over the weighted average remaining service period of 2.13 years.

Stock Appreciation Rights (“SARs”)

A summary of the Company’s SARs outstanding under the 2015 Plan are as follows:

	Six Months Ended
	June 30, 2018
SARs	Shares		Weighted- Average Exercise  Price
Outstanding at beginning of year	1,817,991		$	65.73
Granted	87,310		149.57
Exercised	(384,528	)	58.18
Forfeited	(35,417	)	79.69
Expired	(438	)	108.20
Outstanding at end of period	1,484,918		$	72.28
Exercisable at end of period	797,045		$	58.20

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The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Company’s stock price over its entire stock history. Grants in the table below include SARs that will be settled in the Class A common stock or cash.

The following table shows the weighted-average assumptions used for grants of SARs, as well as the fair value of the grants based on those assumptions:

	June 30, 2018	July 1, 2017
Expected dividend yield	0%	0%
Forfeiture rate	8.40%	9.37%
Volatility	35.93%	35.49%
Risk free interest rate	2.96%	1.77%
Range of interest rates	1.68% - 3.00%	0.71% - 2.41%
Expected weighted-average life (in years)	4.11	4.13
Fair value of SARs granted (in millions)	$13	$12
Weighted-average grant date fair value of SARs granted (per underlying share)	$47.59	$29.84

The following table summarizes information about SARs outstanding at June 30, 2018:

	Outstanding		Exercisable
Aggregate intrinsic value (in millions)	$	106	$	68
Weighted-average remaining contractual term (in years)	5.86		5.01

The intrinsic value for SARs exercised during the six-months ended June 30, 2018 and July 1, 2017 was $34 million and $8 million, respectively. The total fair value of SARs vested during the period of June 30, 2018 and July 1, 2017 was $7 million and $6 million, respectively.

The Company’s SARs are expensed straight-line over the vesting period of the related award, which is typically 4 years.

Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”)

The Company’s restricted stock grants consist of time-vested restricted stock awards (“RSAs”) and performance vested restricted stock awards (“PSAs”). The RSAs and PSAs hold voting rights and therefore are considered participating securities. The outstanding RSAs and PSAs are included as part of the Company’s Class A Common Stock outstanding. The RSAs and PSAs vest at each vesting date subject to restrictions such as continuous employment except in certain cases as set forth in each stock agreement. The Company’s restricted stock awards are expensed straight-line over the vesting period of the related award, which is typically 3 years. The RSAs granted beginning in 2018 will grade vest over the 3-year vesting period. Some awards, including those granted annually to non-employee directors as an equity retainer fee, were vested upon grant. PSAs targets are set based on certain Company-wide financial metrics. Compensation cost is calculated as the market date fair value on grant date multiplied by the number of shares granted.

The Company also issues stock awards to non-employee directors. Each director receives an equity grant of shares every year during the month of May. The number of shares granted to each director is determined by dividing the value of the annual grant by the price of a share of common stock. During the first six months of 2018, there were 7,980 shares granted to non-employee directors compared to 12,488 shares in the first six months of prior year. The shares vest immediately upon the grant date.

A summary of information relative to the Company’s restricted stock awards is as follows:

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	Six Months Ended
	June 30, 2018
Restricted Stock Awards	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of year	628,642		$	77.70
Granted	199,025		149.41
Released	(144,957	)	109.21
Forfeited	(16,494	)	83.89
Outstanding at end of period	666,216		$	92.26

The fair value of each performance award granted includes assumptions around the Company’s performance goals. A summary of information relative to the Company’s performance awards is as follows:

	Six Months Ended
	June 30, 2018
Performance Share Awards	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of year	265,747		$	77.04
Granted	59,383		146.64
Released	(57,074	)	107.31
Forfeited	(6,518	)	80.17
Outstanding at end of period	261,538		$	86.24

Other Award Types

The Company also has cash-settled compensation awards including cash-settled Stock Appreciation Rights (“CSRs”), Restricted Stock Units (“RSUs”), and Performance Stock Units (“PSUs”) (the “Awards”) that are expensed over the vesting period of the related award, which is not more than 4 years. The RSUs granted beginning in 2018 will grade vest over the 3-year vesting period. Compensation cost is calculated as the market date fair value on grant date multiplied by the number of share-equivalents granted. The fair value is remeasured at the end of each reporting period. Cash settlement payments for these awards of $2.0 million and $1.0 million were made during the six-months ended June 30, 2018 and July 1, 2017, respectively. Share-equivalents issued under these programs totaled 17,253 and 45,781 during the six-months ended June 30, 2018 and July 1, 2017, respectively.

Non-qualified Stock Options

A summary of the Company’s options outstanding under the 2006 Plan is as follows:

	Six Months Ended
	June 30, 2018
Non-qualified Options	Shares		Weighted- Average Exercise Price
Outstanding at beginning of year	15,705		$	26.34
Exercised	(9,083	)	31.26
Expired	—		—
Outstanding at end of period	6,622		$	19.59
Exercisable at end of period	6,622		$	19.59

The following table summarizes information about non-qualified stock options outstanding at June 30, 2018:

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	Outstanding		Exercisable
Aggregate intrinsic value (in millions)	$	1	$	1
Weighted-average remaining contractual term (in years)	0.42		0.42

The intrinsic value for non-qualified options exercised during the six-months ended June 30, 2018 and July 1, 2017 was $1 million and $5 million, respectively.

Cash received from the exercise of non-qualified options during the six-months ended June 30, 2018 was less than $1 million compared to $3 million in the prior year period. The related tax benefit realized was $1 million during both the six-months ended June 30, 2018 and July 1, 2017.

Employee Stock Purchase Plan

The Zebra Technologies Corporation 2011 Employee Stock Purchase Plan (“2011 Plan”), which became effective in fiscal 2011, permits eligible employees to purchase common stock at 95% of the fair market value at the date of purchase. Employees may make purchases by cash or payroll deductions up to certain limits. The aggregate number of shares that may be purchased under this plan is 1,500,000 shares. At June 30, 2018, 869,514 shares were available for future purchase.

Note 11 Income Taxes

The Company’s effective tax rates for the three-month and six-month periods ended June 30, 2018 were 30.0% and 23.2%, respectively. The variance from the 2018 federal statutory rate of 21% for the three months and six months ended June 30, 2018 was attributable to increases related to foreign earnings subject to U.S. taxation, the U.S. impact of the Enterprise acquisition, partially offset by lower tax rates in foreign jurisdictions, and the generation of tax credits in the current year. The Company’s effective tax rate was further increased by additional uncertain tax positions, adjustments to provisional items related to the Tax Cuts and Jobs Act enacted in December 2017 (“U.S. Tax Reform” or “the Act”), and partially decreased by share-based compensation benefits. The increase in uncertain tax positions is related to interpretive guidance issued during the second quarter of 2018 that impacted management’s judgment with respect to prior year tax positions.

In the prior year, the effective tax rates for the three-month and six-month periods ended July 1, 2017 were 10.5% and (47.1)%, respectively. The variance from the 2017 federal statutory rate of 35% for the three months and six months ended July 1, 2017 was attributable to lower tax rates in foreign jurisdictions, the generation of tax credits and benefits for share-based compensation, which were partially offset by the U.S. impact of the Enterprise acquisition and state deferred tax expense due to changes in our business operations. The Company’s effective tax rate for the six months ended July 1, 2017 was further reduced by benefits associated with an intercompany sale of intellectual property and a rate decrease in Singapore.

Pre-tax earnings outside the United States are primarily generated in the United Kingdom, Singapore, and Luxembourg, with statutory rates of 19%, 17%, and 27%, respectively. During 2017, the Company received approval from the Singapore Economic Development Board for a tax rate of 10% with the Company’s commitment to make increased investments in Singapore. The Singapore incentivized rate expires on December 31, 2018.

Quarterly, Management evaluates all jurisdictions based on historical pre-tax earnings and taxable income to determine the need for valuation allowances. Based on this analysis, a valuation allowance has been recorded for any jurisdictions where, in the Company’s judgment, tax benefits will not be realized.

Uncertain Tax Positions

The Company is currently undergoing U.S. Federal income tax audits for the years 2013 through 2015, as well as UK income tax years 2012 and 2014. The tax years 2004 through 2016 remain open to examination by multiple foreign and U.S. state taxing jurisdictions. The Company continues to believe its positions are supportable, however, the Company anticipates that $22 million of uncertain tax benefits may be disallowed within the next twelve months and has reflected this liability as current within the Company’s Consolidated Balance Sheets. During the second quarter of 2018, the Company recorded a $13 million charge related to increases in income tax uncertainties for prior year tax positions. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlement of uncertain tax positions may change and the actual tax benefits may differ significantly from the estimates.

Impact of U.S. Tax Reform

Enacted on December 22, 2017, the Act reduces the U.S. federal corporate tax rate from 35% to 21%, and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Based on current operations, we estimate that the Company is subject to the Global Intangible Low-Taxed Income and the Deduction for

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Foreign-Derived Intangible Income provisions of the Act. We estimate that the new limitations which defer U.S. interest deductions in excess of 30% of Adjusted Taxable Income are not applicable. Additionally, the Company is no longer able to deduct performance-based compensation for its covered employees which exceeds the limitation under Internal Revenue Code Section 162(m). These impacts are included in the calculation of our annual estimated effective tax rate.

Provisional amounts

At June 30, 2018, we continue to analyze the accounting for the tax effects of enactment of the Act. The Company remeasured U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the remeasurement of deferred taxes requires further analysis regarding the state tax impacts of the remeasurement, the impact of the Act on the taxation of executive compensation arrangements, changes to tax capitalization provisions and other aspects of the Act that may impact our tax balances.

The Company recorded a provisional amount of $36 million in the December 31, 2017 financial statements for the one-time transition tax. The Internal Revenue Service issued Notice 2018-26 on April 2, 2018, which required an additional $8 million of tax expense to be recorded in the quarter ended June 30, 2018, increasing the total provisional amount to $44 million. The Company utilized $10 million of deferred tax assets for income tax credits available to offset the one-time transition tax, and estimates its cash tax liability to be $34 million, that will be remitted over the next eight years in annual amounts ranging from $3 to $8 million.

We continue to evaluate the transition charge based on guidance issued. The transition tax is based in part on the amount of those earnings held in cash and other specified assets. This calculation may change when we finalize the calculation of post-1986 foreign earnings and profit previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets.

The Company earns a significant amount of its operating income outside of the U.S. The Company’s policy considers its U.S. investment in directly-owned foreign affiliates to be indefinitely reinvested. Under the Act, future unremitted foreign earnings will no longer be subject to tax when repatriated to its U.S. parent, but may be subject to withholding taxes of the payor affiliate country. Additionally, gains and losses on taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. tax.

Note 12 Earnings per Share

Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock method and in periods of income, reflects the additional shares that would be outstanding if dilutive stock options were exercised for common shares during the period.

Earnings per share (in millions, except share data):

	Three Months Ended				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Basic:
Net income	$	70	$	17	$	179	$	25
Weighted-average shares outstanding	53,537,876		51,996,353		53,414,267		51,928,911
Basic earnings per share	$	1.31	$	0.33	$	3.35	$	0.49
Diluted:
Net income	$	70	$	17	$	179	$	25
Weighted-average shares outstanding	53,537,876		51,996,353		53,414,267		51,928,911
Dilutive shares	717,831		1,132,304		719,843		1,109,045
Diluted weighted-average shares outstanding	54,255,707		53,128,657		54,134,110		53,037,956
Diluted earnings per share	$	1.29	$	0.32	$	3.30	$	0.48

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Outstanding options to purchase common shares were anti-dilutive and excluded from the earnings per share calculations of 86,726 and 273,216 for the three-month periods ended June 30, 2018 and of July 1, 2017, respectively. Outstanding options to purchase common shares were anti-dilutive and excluded from the earnings per share calculations of 87,310 and 701,272 for the six-month periods ended June 30, 2018 and July 1, 2017, respectively. Anti-dilutive securities consist primarily of stock appreciation rights (“SARs”) with an exercise price greater than the average market closing price of the Class A common stock.

Note 13 Accumulated Other Comprehensive Income (Loss)

Stockholders’ equity includes certain items classified as Accumulated other comprehensive loss, including:

• Unrealized (loss) gain on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 7, Derivative Instruments for more details.

• Unrealized (loss) gain on forward interest rate swaps hedging transactions refers to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the Enterprise Acquisition. See Note 7, Derivative Instruments for more details.

• Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. The Company is required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of accumulated other comprehensive loss.

The components of Accumulated other comprehensive loss (“AOCI”) for the six months ended June 30, 2018 and July 1, 2017 are as follows (in millions):

	Unrealized (loss) gain on sales hedging			Unrealized (loss)/ gain on forward interest rate swaps			Currency translation adjustments			Total
Balance at December 31, 2016	$	6		$	(15	)	$	(36	)	$	(45	)
Other comprehensive (loss) income before reclassifications	(16		)	1			—			(15		)
Amounts reclassified from AOCI(1)	(1		)	1			—			—
Tax benefit	3			—			—			3
Other comprehensive (loss) income	(14		)	2			—			(12		)
Balance at July 1, 2017	$	(8	)	$	(13	)	$	(36	)	$	(57	)
Balance at December 31, 2017	$	(9	)	$	(9	)	$	(34	)	$	(52	)
Other comprehensive income (loss) before reclassifications	21			7			(7		)	21
Amounts reclassified from AOCI(1)	6			2			—			8
Tax (expense)	(5		)	(2		)	—			(7		)
Other comprehensive income (loss)	22			7			(7		)	22
Balance at June 30, 2018	$	13		$	(2	)	$	(41	)	$	(30	)

(1) See Note 7, Derivative Instruments regarding timing of reclassifications on forward interest rate swaps.

Note 14 Segment Information

The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”). The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability. Adjusted operating income excludes purchase accounting adjustments, amortization of intangible assets, acquisition and

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integration costs, and exit and restructuring costs. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

Financial information by segment is presented as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales:
AIT	$	351		$	313		$	703		$	635
EVM	661			584			1,286			1,128
Total segment net sales	1,012			897			1,989			1,763
Corporate, eliminations (1)	—			(1		)	—			(2		)
Total net sales	$	1,012		$	896		$	1,989		$	1,761
Operating income:
AIT(3)	$	77		$	61		$	169		$	135
EVM(3)	73			70			153			118
Total segment operating income	150			131			322			253
Corporate, eliminations (2)	(25		)	(73		)	(53		)	(155		)
Total operating income	$	125		$	58		$	269		$	98

(1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments related to the Enterprise Acquisition.

(2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, and exit and restructuring costs.

(3) Effective January 1, 2018, the Company changed its methodology for allocating certain operating expenses across its two reportable segments to more accurately reflect where these operating costs are being incurred. The reallocations relate primarily to information technology, marketing and human resources expenses. Prior year segment operating results have been recast for comparability with the current year presentation. For the quarter ended July 1, 2017, $2 million of operating expenses were reclassified from EVM to AIT. For the six-month period ended July 1, 2017, $5 million of operating expenses were reclassified from AIT to EVM. For the full year ended December 31, 2017, $14 million of operating expenses were reclassified from AIT to EVM. There was no impact to the Consolidated Financial Statements as a result of these reclassifications.

Information regarding the Company’s operations by geographic area is contained in the following table. These amounts are reported in the geographic area of the destination of the final sale.

Net sales to customers by geographic region were as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Europe, Middle East and Africa	$	337	$	279	$	686	$	566
Latin America	57		57		113		110
Asia-Pacific	134		123		249		231
North America	484		437		941		854
Total Net sales	$	1,012	$	896	$	1,989	$	1,761

Note 15 Subsequent Events

During the second quarter of 2018, the Company began settlement discussions associated with a pending commercial lawsuit.  On July 27, 2018, the Company and plaintiff executed an agreement resolving the lawsuit in its entirety. As a result, the Company recorded a $13 million pretax charge in the second quarter of 2018, which is reflected as a component of General and administrative expenses within the Consolidated Statements of Operations. 

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On July 5, 2018, Zebra entered into a definitive agreement under which Zebra will acquire all outstanding common stock of Xplore Technologies Corporation for $6.00 per share in cash. Under the terms of the agreement, Zebra plans to effect the acquisition via a tender offer. The aggregate consideration of the transaction, including assumed indebtedness, is expected to be less than or equal to $90 million. Zebra expects to fund the transaction with a combination of cash on hand along with fully committed financing available under its Revolving Credit Facility. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2018. The tender offer was filed on July 17, 2018. The acquired business will become part of the EVM segment.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Zebra Technologies Corporation and its subsidiaries (“Zebra” or “Company”) is a global leader respected for innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic identification and data capture industry. We design, manufacture, and sell a broad range of products that capture and move data, including: mobile computers; barcode scanners and imagers; radio frequency identification device (“RFID”) readers; specialty printers for barcode labeling and personal identification; real-time location systems (“RTLS”); related accessories and supplies, such as self-adhesive labels and other consumables; and utilities and application software. We also provide a full range of services, including maintenance, technical support, repair, and managed services, including cloud-based subscriptions. End-users of our products and services include those in the retail, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. 

Our customers have traditionally benefited from proven solutions that increase productivity and improve efficiency and asset utilization. The Company is poised to drive and capitalize on the evolution of the data capture industry into the broader EAI industry, based on important technology trends like the Internet of Things (“IoT”), ubiquitous mobility, and cloud computing. EAI solutions offer additional benefits to our customers including real-time, data-driven insights that improve operational visibility and drive workflow optimization.

Segments

The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”). 

Asset Intelligence & Tracking

The AIT segment is an industry leader in barcode printing and asset tracking technologies. Its major product lines include barcode and card printers, supplies, services and location solutions. Industries served include retail and e-commerce, transportation and logistics, manufacturing, healthcare, and other end markets within the following regions: North America; Europe, Middle East, and Africa (“EMEA”); Asia-Pacific; and Latin America.

Enterprise Visibility & Mobility

The EVM segment is an industry leader in automatic information and data capture solutions. Its major product lines include mobile computing, data capture, RFID, and services. Industries served include retail and e-commerce, transportation and logistics, manufacturing, healthcare, and other end markets within the following regions: North America; EMEA; Asia-Pacific; and Latin America.

Geographic Information.For the six-months ended June 30, 2018, the Company recorded $1,989 million of net sales in its Consolidated Statements of Operations, of which approximately 47% were attributable to North America; approximately 35% were attributable to EMEA; and other foreign locations accounted for the remaining 18%.

Acquisition

On July 5, 2018, Zebra entered into a definitive agreement under which Zebra will acquire all outstanding common stock of Xplore Technologies Corporation for $6.00 per share in cash. Under the terms of the agreement, Zebra plans to effect the acquisition via a tender offer. The aggregate consideration of the transaction, including assumed indebtedness, is expected to be less than or equal to $90 million. Zebra expects to fund the transaction with a combination of cash on hand along with fully committed financing available under its credit facility. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2018. The tender offer was filed on July 17, 2018. The acquired business will become part of our EVM segment.

Legal Settlement

During the second quarter of 2018, the Company began settlement discussions associated with a pending commercial lawsuit. On July 27, 2018, the Company and plaintiff executed an agreement resolving the lawsuit in its entirety. As a result, the

26

Company recorded a $13 million pretax charge in the second quarter of 2018, which is reflected as a component of General and administrative expenses within the Consolidated Statements of Operations.

Uncertain Tax Positions

The Company is currently undergoing U.S. Federal income tax audits for the years 2013 through 2015, as well as UK income tax years 2012 and 2014. The tax years 2004 through 2016 remain open to examination by multiple foreign and U.S. state taxing jurisdictions. The Company continues to believe its positions are supportable, however, the Company anticipates that $22 million of uncertain tax benefits may be disallowed within the next twelve months and has reflected this liability as current within the Company’s Consolidated Balance Sheets. During the second quarter of 2018, the Company recorded a $13 million charge related to income tax uncertainties for prior year tax positions. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlement of uncertain tax positions may change and the actual tax benefits may differ significantly from the estimates.

Impact of U.S. Tax Reform

Enacted on December 22, 2017, the Act reduces the U.S. federal corporate tax rate from 35% to 21%, and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Based on current operations, we estimate that the Company is subject to the Global Intangible Low-Taxed Income and the Deduction for Foreign-Derived Intangible Income provisions of the Act. We estimate that the new limitations which defer U.S. interest deductions in excess of 30% of Adjusted Taxable Income are not applicable. Additionally, the Company is no longer able to deduct performance-based compensation for its covered employees which exceeds the limitation under Internal Revenue Code Section 162(m). These impacts are included in the calculation of our annual estimated effective tax rate.

Provisional amounts

At June 30, 2018, we continue to analyze the accounting for the tax effects of enactment of the Act. The Company remeasured U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the remeasurement of deferred taxes requires further analysis regarding the state tax impacts of the remeasurement, the impact of the Act on the taxation of executive compensation arrangements, changes to tax capitalization provisions and other aspects of the Act that may impact our tax balances.

The Company recorded a provisional amount of $36 million in the December 31, 2017 financial statements for the one-time transition tax. The Internal Revenue Service issued Notice 2018-26 on April 2, 2018, which required an additional $8 million of tax expense to be recorded in the quarter ended June 30, 2018, increasing the total provisional amount to $44 million. The Company utilized $10 million of deferred tax assets for income tax credits available to offset the one-time transition tax, and estimates its cash tax liability to be $34 million, that will be remitted over the next eight years in annual amounts ranging from $3 to $8 million.

See Note 11, Income Taxes of the Notes to Consolidated Financial Statementsfor further information.

Results of Operations

Consolidated Results of Operations

The following tables present key statistics for the Company’s operations for the three and six-months ended June 30, 2018 and July 1, 2017, respectively (in millions, except percentages):

	Three Months Ended											Six Months Ended
	June 30, 2018			July 1, 2017			$ Change			% Change		June 30, 2018			July 1, 2017			$ Change			% Change
Net sales	$	1,012		$	896		$	116		12.9	%	$	1,989		$	1,761		$	228		12.9	%
Gross profit	472			411			61			14.8	%	937			812			125			15.4	%
Operating expenses	347			353			(6		)	(1.7	)%	668			714			(46		)	(6.4	)%
Operating income	$	125		$	58		$	67		115.5	%	$	269		$	98		$	171		174.5	%
Gross margin	46.6		%	45.9		%						47.1		%	46.1		%

Net sales to customers by geographic region were as follows (in millions, except percentages):

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	Three Months Ended								Six Months Ended
	June 30, 2018		July 1, 2017		$ Change		% Change		June 30, 2018		July 1, 2017		$ Change		% Change
EMEA	$	337	$	279	$	58	20.8	%	$	686	$	566	$	120	21.2	%
Latin America	57		57		—		—	%	113		110		3		2.7	%
Asia-Pacific	134		123		11		8.9	%	249		231		18		7.8	%
Total International	528		459		69		15.0	%	1,048		907		141		15.5	%
North America	484		437		47		10.8	%	941		854		87		10.2	%
Total net sales	$	1,012	$	896	$	116	12.9	%	$	1,989	$	1,761	$	228	12.9	%

Operating expenses are summarized below (in millions, except percentages):

	Three Months Ended									Six Months Ended
	June 30, 2018		July 1, 2017		$ Change			% Change		June 30, 2018		July 1, 2017		$ Change			% Change
Selling and marketing	$	121	$	114	$	7		6.1	%	$	241	$	223	$	18		8.1	%
Research and development	109		99		10			10.1	%	210		195		15			7.7	%
General and administrative	93		68		25			36.8	%	164		143		21			14.7	%
Amortization of intangible assets	23		52		(29		)	(55.8	)%	46		102		(56		)	(54.9	)%
Acquisition and integration costs	—		19		(19		)	(100.0	)%	2		46		(44		)	(95.7	)%
Exit and restructuring costs	1		1		—			—	%	5		5		—			—	%
Total operating expenses	$	347	$	353	$	(6	)	(1.7	)%	$	668	$	714	$	(46	)	(6.4	)%

Consolidated Organic Net sales growth:

	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Reported GAAP Consolidated Net sales growth	12.9	%	12.9	%
Adjustments:
Impact of foreign currency translation (1)	(2.3	)%	(2.7	)%
Consolidated Organic Net sales growth	10.6	%	10.2	%

(1) Operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, we exclude the impact of the company’s foreign currency hedging program in both the current and prior year periods.

Second quarter 2018 compared to second quarter 2017

Net sales increased by $116 million or 12.9% compared with the prior year period, reflecting growth in EMEA, North America, and Asia-Pacific. The increase in net sales was primarily due to higher sales of data capture, barcode printing, and mobile computing products. Net sales growth was also positively impacted by currency changes, primarily in the EMEA region. Consolidated Organic Net Sales growth was 10.6%.

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Gross margin increased to 46.6% in the current period compared to 45.9% in the prior year period. Gross margin improvement included favorable foreign currency changes and was driven by higher margins in EVM, partially offset by a slight decline in AIT margins.

Operating expenses for the quarter ended June 30, 2018 and July 1, 2017, were $347 million and $353 million, or 34.3% and 39.4% of net sales, respectively. The reduction in operating expenses was primarily due to lower amortization expense and acquisition and integration charges being partially offset by higher compensation costs, including the impact of higher incentive-based compensation associated with financial performance as well as a $13 million pretax charge related to a legal settlement included within general and administrative expense in the current year. The lower amortization expense results from certain intangible assets that became fully amortized in the third quarter of fiscal 2017. Additionally, the Company had no acquisition and integration charges in the current period as a result of completing the integration activities associated with the October 2014 acquisition of the Enterprise business (the “Acquisition”) during the first quarter of fiscal 2018.

Operating income increased 115.5% to $125 million for the current period compared to $58 million for the prior year period. The increase was due to higher sales and gross profit and lower operating expenses.

Total Other expenses, net was $25 million for the quarter ended June 30, 2018, as compared to $39 million in the prior year quarter. The decrease versus the prior year quarter was primarily driven by a $17 million decrease in interest expense due to a $5 million gain from interest rate swaps, lower outstanding debt and interest rates, being partially offset by $7 million of accelerated debit issuance cost amortization and third-party fees related to debt restructuring activities in the current period.

In the quarter ending June 30, 2018, the Company recognized tax expense of $30 million compared to an expense of $2 million for the prior year quarter. The Company’s effective tax rates for the three-month periods ended June 30, 2018 and July 1, 2017 were 30.0% and 10.5%, respectively. The increase in the effective rate in 2018 versus the prior year is primarily due to discrete tax items offset by the impacts of U.S. Tax Reform.

Year to date 2018 compared to year to date 2017

Net sales increased by $228 million or 12.9% compared with the prior year period, reflecting growth across all regions, most notably EMEA, North America, and Asia-Pacific. The increase in net sales was primarily due to higher sales of mobile computing, barcode printing and data capture products. Net sales growth was also positively impacted by currency changes, primarily in the EMEA region. Consolidated Organic Net Sales growth was 10.2%.

Gross margin increased to 47.1% in the current period compared to 46.1% in the prior year period. Gross margin improvement included favorable foreign currency changes and was driven by higher margins in both the EVM and AIT segments primarily due to favorable business mix and improved business costs.

Operating expenses for the period ended June 30, 2018 and July 1, 2017, were $668 million and $714 million, or 33.6% and 40.5% of net sales, respectively. The reduction in operating expenses was primarily due to lower amortization expense and acquisition and integration charges being partially offset by higher compensation costs, including the impact of higher incentive-based compensation associated with financial performance as well as a $13 million pretax charge related to a legal settlement included within general and administrative expense in the current year. The lower amortization expense results from certain intangible assets that became fully amortized in the third quarter of fiscal 2017. Additionally, the Company had lower acquisition and integration charges in the current period as compared to the prior year period as a result of completing of the integration activities associated with the October 2014 acquisition of the Enterprise business (the “Acquisition”) during the first quarter of fiscal 2018.

Operating income increased 174.5% to $269 million for the current period compared to $98 million for the prior year period. The increase was primarily due to higher sales and gross profit and lower operating expenses.

Total Other expenses, net was $36 million for the period ended June 30, 2018, as compared to $81 million in the prior year period. The decrease versus the prior year period was primarily driven by a decrease in Interest expense, net of $47 million resulting from an $18 million gain from interest rate swaps, lower outstanding debt and interest rates, being partially offset by $7 million of accelerated debit issuance cost amortization and third party fees related to debt restructuring activities in the current period.

For the six-months ending June 30, 2018, the Company recognized a tax expense of $54 million compared to a tax benefit of $8 million for the prior year period. The Company’s effective tax rates for the six-month periods ended June 30, 2018 and

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July 1, 2017 were 23.2% and (47.1)%. The increase in the effective tax rate in 2018 versus the prior year is primarily due to discrete tax items offset by the impacts of U.S. Tax Reform. See Note 11, Income Taxes of the Notes to Consolidated Financial Statementsfor further information.

Results of Operations by Segment

The following commentary should be read in conjunction with the financial results of each operating business segment as detailed in Note 14, Segment Information in the Notes to the Consolidated Financial Statements. The segment results exclude purchase accounting adjustments, amortization, acquisition, integration, impairment of goodwill and other intangibles, and exit and restructuring costs.

Asset Intelligence & Tracking Segment (“AIT”)

(in millions, except percentages)

	Three Months Ended										Six Months Ended
	June 30, 2018			July 1, 2017			$ Change		% Change		June 30, 2018			July 1, 2017			$ Change		% Change
Net sales	$	351		$	313		$	38	12.1	%	$	703		$	635		$	68	10.7	%
Gross profit	173			155			18		11.6	%	356			317			39		12.3	%
Operating expenses	96			94			2		2.1	%	187			182			5		2.7	%
Operating income	$	77		$	61		$	16	26.2	%	$	169		$	135		34		25.2	%
Gross margin	49.3		%	49.5		%					50.6		%	49.9		%

AIT Organic Net sales growth:

	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
AIT Reported GAAP Net sales growth	12.1	%	10.7	%
Adjustments:
Impact of foreign currency translations (1)	(2.2	)%	(2.6	)%
AIT Organic Net sales growth	9.9	%	8.1	%

(1) Operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, we exclude the impact of the company’s foreign currency hedging program in both the current and prior year periods.

Second quarter 2018 compared to second quarter 2017

Net sales for AIT increased $38 million or 12.1% compared to the prior year period. The increase in net sales was primarily due to higher sales of barcode printing products and supplies. Barcode printer growth was broad based across all major product lines and primarily within North America and EMEA regions. Net sales growth was also positively impacted by currency changes, primarily in the EMEA region. AIT Organic Net Sales growth was 9.9%.

Gross margin decreased to 49.3% in the current period compared to 49.5% in the prior year period. The decrease primarily related to higher transitional costs incurred to insource our North America support services as well as a reduction of reserves in the prior year related to price concessions on certain product sales in China. These factors more than offset favorable product mix and the positive impact of currency changes.

Operating income for the period increased 26.2% primarily due to higher sales and gross profit.

Year to date 2018 compared to year to date 2017

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Net sales for AIT increased $68 million or 10.7% compared to the prior year period. The increase in net sales was primarily due to higher sales of barcode printing products. Barcode printer growth was broad based across all major product lines and primarily within North America, EMEA, and Asia-Pacific regions. Net sales growth was also positively impacted by currency changes, primarily in the EMEA region. AIT Organic Net sales growth was 8.1%.

Gross margin increased to 50.6% in the current period compared to 49.9% for the prior year period. The increase was primarily driven by favorable product mix and the favorable impact of currency changes.

Operating income for the current period increased 25.2% primarily due to higher sales and gross profit.

Enterprise Visibility & Mobility Segment (“EVM”)

(in millions, except percentages)

	Three Months Ended										Six Months Ended
	June 30, 2018			July 1, 2017			$ Change		% Change		June 30, 2018			July 1, 2017			$ Change		% Change
Net sales	$	661		$	584		$	77	13.2	%	$	1,286		$	1,128		$	158	14.0	%
Gross profit	299			257			42		16.3	%	581			497			84		16.9	%
Operating expenses	226			187			39		20.9	%	428			379			49		12.9	%
Operating income	$	73		$	70		$	3	4.3	%	$	153		$	118		35		29.7	%
Gross margin	45.2		%	44.0		%					45.2		%	44.1		%

EVM Organic Net sales growth:

	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
EVM Reported GAAP Net sales growth	13.2	%	14.0	%
Adjustments:
Impact of foreign currency translation (1)	(2.3	)%	(2.7	)%
EVM Organic Net sales growth	10.9	%	11.3	%

(1) Operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, the Company excludes the impact of the company’s foreign currency hedging program in both the current and prior year periods.

Second quarter 2018 compared to second quarter 2017

Net sales for EMV increased $77 million or 13.2% compared to prior year period. The increase in net sales was primarily attributable to strong global sales in both data capture and mobile computing products. Net sales growth was also positively impacted by currency changes, primarily in the EMEA region. EVM Organic Net Sales growth was 10.9%.

Gross margin increased to 45.2% in the current period compared to 44.0% in the prior year period. The increase was primarily due to favorable business mix and the positive impact of currency changes.

Operating income for the current period increased 4.3% due to higher sales and gross profit that were partially offset by higher operating expenses.

Year to date 2018 compared to year to date 2017

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Net sales for EVM increased $158 million or 14.0% compared to prior year period. The increase in net sales was primarily attributable to strong sales of data capture and mobile computing products, in EMEA, North America, and Asia-Pacific regions. Net sales growth was also positively impacted by currency changes, primarily in the EMEA region. EVM Organic Net Sales growth was 11.3%.

Gross margin increased to 45.2% in the current period compared to 44.1% in the prior year period. The increase was primarily due to favorable business mix and the positive impact of currency changes.

Operating income for the current period increased 29.7% due to higher sales and gross profit that were partially offset by higher operating expenses.

Liquidity and Capital Resources

The primary factors that influence our liquidity include, but are not limited to, the amount and timing of our revenues, cash collections from our customers, capital expenditures, repatriation of foreign cash and investments, and acquisitions of third-parties. Management believes that our existing capital resources and funds generated from operations are sufficient to meet anticipated capital requirements and service our indebtedness. The following table summarizes our cash flow activities for the periods indicated (in millions, except percentages):

	Six Months Ended
Cash flows provided by (used in) from:	June 30, 2018			July 1, 2017			$ Change			% Change
Operating activities	$	266		$	203		$	63		31.0	%
Investing activities	(33		)	(22		)	(11		)	50.0	%
Financing activities	(242		)	(238		)	(4		)	1.7	%
Effect of exchange rates on cash	(7		)	(4		)	(3		)	75.0	%
Net decrease in cash and cash equivalents	$	(16	)	$	(61	)	$	45		(73.8	)%

The change in the Company’s cash and cash equivalents balance as of June 30, 2018 is reflective of the following:

• Cash flow provided by operating activities increased by $63 million compared to the prior year period. The increase was primarily due to higher net income, lower cash payments for income taxes and interest as well as improved inventory management that was partially offset by timing of accounts receivable collections as well as unfavorable changes in accrued liabilities resulting from higher incentive compensation payments as compared to the prior year period.

• The increase in net cash used in investing activities was driven by higher capital expenditures.

• Net cash used in financing activities during the six-month period endedJune 30, 2018 consisted primarily of net debt repayments of $235 million compared to $240 million in the six-month period endedJuly 1, 2017.

The following table summarizes the carrying value of the Company’s long-term debt (in millions):

	June 30, 2018			December 31, 2017
Term Loan B	$	810		$	1,160
Term Loan A	653			679
Revolving Credit Facility	433			275
Receivables Financing Facility	118			135
Total debt	$	2,014		$	2,249
Less: Debt issuance costs	(6		)	(7		)
Less: Unamortized discounts	(9		)	(15		)
Less: Current portion of long-term debt	(85		)	(51		)
Total long-term debt	$	1,914		$	2,176

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At June 30, 2018, the future maturities of debt, excluding debt discounts and issuance costs, are as follows (in millions):

2018	$	37
2019	144
2020	54
2021	1,779
2022	—
Thereafter	—
Total future maturities of long-term debt	$	2,014

The estimated fair value of the Company’s long-term debt approximated $2.0 billion at June 30, 2018 and $2.2 billion at December 31, 2017. These fair value amounts represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the long-term debt will continue to vary each period based on fluctuations in market interest rates, as well as changes to the Company’s credit ratings. This methodology resulted in a Level 2 classification in the fair value hierarchy.

Credit Facilities

On May 31, 2018, the Company entered into Amendment No.1 to the Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 replaced the existing Term Loan A with a new Term Loan A (“Amended Term Loan A”) of $670 million and increased the existing revolving credit facility from $500 million to $800 million (“Revolving Credit Facility”). In addition, as part of the Amendment No. 1, the Company entered into a partial early debt termination of $300 million and repricing of Term Loan B. Amendment No. 1 lowered the index rate spread for LIBOR loans from LIBOR + 200 bp to LIBOR + 175 bp.

In accounting for the impact of Amendment No. 1, the Company applied the provisions of ASC Subtopic 470-50, Modifications and Extinguishments (“ASC 470-50”), which resulted in the second quarter results including approximately $6 million in non-cash accelerated amortization of debt issuance costs and approximately $1 million of one-time pretax charges related to third party fees associated with the amendments, which are reflected as a component of Interest expense,net within the Company’s Consolidated Statements of Operations.

In addition, the issuance of Amended Term Loan A and the increase to the revolving credit facility resulted in $2 million of one-time third party fees for arranger, legal, and other services, which were capitalized and will be amortized over the term of the credit facilities.

As of June 30, 2018, the Term Loan A interest rate was 3.84%, and the Term Loan B interest rate was 4.06%. Borrowings under Term Loan A and B bear interest at a variable rate. Term Loan B borrowings are subject to a floor of 2.75%. Interest payments are payable monthly or quarterly on Term Loan A and quarterly on Term Loan B. The Company has entered into interest rate swaps to manage interest rate risk on Term Loan B. See Note 7, Derivative Instruments.

Amendement No. 1 also requires the Company to prepay certain amounts in the event of certain circumstances or transactions. The Company may make prepayments against the Term Loans, in whole or in part, without premium or penalty. The borrowings under Amendment No. 1 will mature on July 27, 2021.

The Revolving Credit Facility is available for working capital and other general corporate purposes including letters of credit. As of June 30, 2018, the Company had issued letters of credit totaling $5 million, which reduced funds available for other borrowings under the agreement to $795 million. The Revolving Credit Facility will mature and the related commitments will terminate on July 27, 2021.

Borrowings under the Revolving Credit Facility bear interest at a variable rate plus an applicable margin. As of June 30, 2018, the Revolving Credit Facility had an average interest rate of 3.91%. Interest payments are payable monthly or quarterly for the Revolving Credit Facility.

Receivables Financing Facility

On December 1, 2017, a wholly-owned, bankruptcy-remote, special-purpose entity (“SPE”) of the Company entered into the Receivables Purchase Agreement, which provides for a receivables financing facility of up to $180 million. The SPE utilizes the receivables financing facility in the normal course of business as part of its management of cash flows. Under its committed

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receivables financing facility, a subsidiary of the Company sells its domestically originated accounts receivables at fair value, on a revolving basis, to the SPE which was formed for the sole purpose of buying the receivables. The SPE, in turn, pledges a valid and perfected first-priority security interest in the pool of purchased receivables to a financial institution for borrowing purposes. The subsidiary retains an ownership interest in the pool of receivables that are sold to the SPE and services those receivables. Accordingly, the Company has determined that these transactions do not qualify for sale accounting under ASC 860, Transfers and Servicing of Financial Assets, and has, therefore, accounted for the transactions as secured borrowings.

At June 30, 2018, the Company’s Consolidated Balance Sheets included $419 million of receivables that were pledged and $118 million of associated liabilities. The receivables financing facility will mature on November 29, 2019.

Borrowings under the receivables financing facility bear interest at a variable rate plus an applicable margin. As of June 30, 2018, the receivables financing facility had an average interest rate of 2.94% and requires monthly interest payments.

Both the Revolving Credit Facility and receivables financing facility include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

Certain domestic subsidiaries of the Company (the “Guarantor Subsidiaries”) guarantee the Term Loan A, Term Loan B, and the Revolving Credit Facility on a senior basis. For the six-month period ended June 30, 2018, the non-Guarantor Subsidiaries would have (a) accounted for 47.8% of our total revenue and (b) held 84.0% or $3.6 billion of our total assets and approximately 80.1% or $2.6 billion of our total liabilities including trade payables but excluding intercompany liabilities.

On June 30, 2018, the Company was in compliance with all covenants.

As of June 30, 2018, the Company’s cash position of $46 million included foreign cash and investments of $44 million.

Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements.

Significant Customers

The net sales to significant customers as a percentage of total net sales were as follows:

	Six Months Ended
	June 30, 2018						July 1, 2017
	AIT		EVM		Total		AIT		EVM		Total
Customer A	6.5	%	14.5	%	21.0	%	6.9	%	14.3	%	21.2	%
Customer B	5.5	%	10.2	%	15.7	%	4.6	%	8.5	%	13.1	%
Customer C	6.4	%	7.6	%	14.0	%	6.4	%	6.6	%	13.0	%

At June 30, 2018, the Company has three customers that each accounted for more than 10% of outstanding accounts receivable. The largest customers accounted for 34.1%, 22.1%, and 19.7% of outstanding accounts receivable. No other customer accounted for 10% or more of total net sales during these periods. The customers disclosed above are distributors (i.e. not end users) of the Company’s products.

Safe Harbor

Forward-looking statements contained in this filing are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are highly dependent upon a variety of important factors, which could cause actual results to differ materially from those expressed or implied in such forward-looking statements. When used in this document and documents referenced, the words “anticipate,” “believe,” “intend,” “estimate,” “will,” 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. The forward-looking statements include, but are not limited to, the Company’s financial outlook for the full year of 2018. These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in the Company’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include:

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• Market acceptance of the Company’s products and solution offerings and competitors’ offerings and the potential effects of technological changes,

• The effect of global market conditions, including North America; EMEA; Latin America; and Asia-Pacific regions in which we do business,

• The impact of foreign exchange rates due to the large percentage of our sales and operations being outside the United States (“U.S.”),

• Our ability to control manufacturing and operating costs,

• Risks related to the manufacturing of the Company’s products and conducting business operations in non-U.S. countries, including the risk of depending on key suppliers who are also in non-U.S. countries,

• The Company’s ability to purchase sufficient materials, parts, and components to meet customer demand, particularly in light of global economic conditions,

• The availability of credit and the volatility of capital markets, which may affect our suppliers, customers, and ourselves,

• Success of integrating acquisitions,

• Interest rate and financial market conditions,

• Access to cash and cash equivalents held outside the U.S.,

• The effect of natural disasters on our business,

• The impact of changes in foreign and domestic governmental policies, laws, or regulations,

• The outcome of litigation in which the Company may be involved, particularly litigation or claims related to infringement of third-party intellectual property rights, and

• The outcome of any future tax matters or tax law changes.

We encourage readers of this report to review Item 1A, “Risk Factors,” in this report for further discussion of issues that could affect the Company’s future results. We undertake 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 report.

Non-GAAP measures

The Company has provided reconciliations of the supplemental non-GAAP financial measures, as defined under the rules of the Securities and Exchange Commission, presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

These supplemental non-GAAP financial measures, Consolidated Organic Net Sales Growth, AIT Organic Net sales growth, and EVM Organic Net sales growth, are presented because our management has evaluated our financial results both including and excluding the adjusted items or the effects of foreign currency translation, as applicable, and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of our business from period to period and trends in our historical operating results. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in the Company’s market risk during the quarter ended June 30, 2018. For additional information on market risk, refer to the “Quantitative and Qualitative Disclosures About Market Risk” section of the Form 10-K for the year ended December 31, 2017.

In the normal course of business, portions of the Company’s operations are subject to fluctuations in currency values. The Company manages these risks using derivative financial instruments. See Note 7, Derivative Instruments to the Note to Consolidated Financial Statements included in this report for further discussion of derivative instruments.

Item 4. Controls and Procedures

Management’s Report on Disclosure Controls

Our management is responsible for establishing and maintaining adequate disclosure controls as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the

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SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management assessed the effectiveness of our disclosure controls as of June 30, 2018. Based on this assessment and those criteria, our management believes that, as of June 30, 2018, our disclosure controls are effective.

Changes in Internal Controls over Financial Reporting

During the second quarter ended June 30, 2018, there have been no changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Inherent Limitations on the Effectiveness of Controls

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the disclosure controls and procedures or the internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

See Note 9, Commitments and Contingencies to the Consolidated Financial Statements included in this report.

Item 1A. Risk Factors

In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2017, and the factors identified under “Safe Harbor” at the end of Item 2 of Part I of the Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, cash flows, or results of operations. The risks described in the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently considers immaterial also may materially adversely affect its business, financial condition, and/or operating results. There have been no material changes to the risk factors included in our Annual Report for the year ended December 31, 2017, other than as described below.

The impact of changes in customs duties and trade policies in the United States and corresponding actions by other countries in which the Company does business could adversely affect our financial performance. The U.S. government has imposed customs duties on various imports from China that are intended to address trade imbalances and encourage increased production in the United States. These actions will result in increased customs duties and will likely result in the renegotiation of some U.S. trade agreements. In response to such actions, China has instituted customs duties on certain U.S. goods. Other governments could also institute customs duties on U.S. goods similar to China’s actions in response to the U.S. government’s customs duties. The Company imports a significant percentage of our products into the United States and China, and an increase in customs duties with respect to these imports could negatively impact the Company’s financial performance. Such customs duties also may cause the U.S.’ trading partners, other than China, to take actions with respect to U.S. imports or U.S. investment activities in their respective countries. Any potential changes in trade policies in the United States and the potential corresponding actions by other countries in which the Company does business could adversely affect the Company’s financial performance. Given the level of uncertainty over which provisions will be enacted, the Company cannot predict with certainty the impact of the proposals.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Treasury Shares

We did not purchase shares of Zebra Class A common stock during the period ending June 30, 2018 as part of the purchase plan program.

In November 2011, our Board authorized the purchase of up to an additional 3,000,000 shares under the purchase plan program and the maximum number of shares that may yet be purchased under the program is 665,475. The November 2011 authorization does not have an expiration date.

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Item 6. Exhibits

10.1	Form of 2018 performance-vested restricted stock agreement for employees other than CEO
10.2	Form of 2018 stock appreciation rights agreement for employees other than CEO
10.3	Form of 2018 time-vested restricted stock agreement for employees other than CEO
10.4	Form of 2018 performance-vested restricted stock agreement for CEO
10.5	Form of 2018 stock appreciation rights agreement for CEO
10.6	Form of 2018 time-vested restricted stock agreement for CEO
10.7	Amendment No. 1 to Amended and Restated Credit Agreement
10.8	Employment Agreement dated as of June 1, 2018 between Zebra and Hugh Gagnier
31.1	Rule 13a-14(a)/15d-14(a) Certification
31.2	Rule 13a-14(a)/15d-14(a) Certification
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from Zebra Technologies Corporation Quarterly Report on Form 10-Q, for the quarter ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the consolidated balance sheets; (ii) the consolidated statements of operations; (iii) the consolidated statements of comprehensive (loss) income; (iv) the consolidated statements of cash flows; and (v) notes to consolidated financial statements.

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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: August 7, 2018	By:	/s/ Anders Gustafsson
		Anders Gustafsson
		Chief Executive Officer
Date: August 7, 2018	By:	/s/ Olivier Leonetti
		Olivier Leonetti
		Chief Financial Officer

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EX-10.1

Exhibit 10.1

PERFORMANCE-VESTED RESTRICTED STOCK AGREEMENT

This PERFORMANCE-VESTED RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of %%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (the “Participant”), relating to restricted stock granted under theZebra Technologies Corporation 2015 Long-Term Incentive Plan, as amended(the “Plan”). Capitalized terms used in this Stock Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

1. Grant of Restricted Stock.

(a)Grant.Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date %%TOTAL_SHARES_GRANTED,’999,999,999’%-%shares (the “Target Shares”) of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by E*TRADE or (ii) executing this Stock Agreement in the space provided below and returning it to the Company, in each case not later than June 29, 2018.

(b)Nontransferability.Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Period of Restriction set forth under Section 2 of this Stock Agreement.

2. Vesting of Restricted Stock.

i.Period of Restriction and Performance Goals.

i.The Restricted Stock shall be forfeitable and non-transferable during the Period of Restriction. The “Period of Restriction” with respect to the Restricted Stock shall begin on the Grant Date and end at 5:00 p.m., Central Time, on May 10, 2021 in accordance with Exhibit A. This Stock Agreement shall be settled in whole shares of the Company’s Common Stock (rounded down to the nearest whole share).

ii.Except as otherwise provided for under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the Period of Restriction.

a.Additional Vesting Rules. Notwithstanding Section 2(a), the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

i. Death or Disability. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to Participant’s death or Disability prior to December 31, 2020, a number of Shares equal to the greater of (x) the product of (1) the number

of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Participant’s termination of employment and (y) the number of Shares banked pursuant to Exhibit A as of the effective date of the Participant’s termination of employment, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. In the event the Participant’s employment with the Company and its Subsidiaries is terminated due to death or Disability on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021, a number of Shares equal to the greater of (x) the number of Shares determined in accordance with Exhibit Aand (y) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Disability” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Disability” has the meaning ascribed to such term in the Plan.

ii.Retirement; Termination by the Company or any Subsidiary other than for Cause. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated prior to December 31, 2020 due to Participant’s Retirement, or by the Company and/or any Subsidiary other than for Cause, a number of Shares equal to the product of (x) a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,096, multiplied by the greater of (y)(1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Participant’s termination of employment and (z) the number of Shares banked pursuant to Exhibit A as of effective date of the Participant’s termination of employment, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. In the event the Participant’s employment with the Company and its Subsidiaries is terminated on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 due to Participant’s Retirement, or by the Company and/or any Subsidiary other than for Cause, a number of Shares equal to the product of (x) a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,096, multiplied by the greater of (y)(1) the number of Shares determined in accordance with Exhibit Aand (2) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Retirement” means the Participant’s voluntary termination of employment with the Company and/or any Subsidiary on or after age sixty-five (65) or prior to age sixty-five (65) with the approval of the Senior Vice President, Chief Administrative Officer; and “Cause” has the meaning

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set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Cause” has the meaning, as determined by the Company in its sole discretion, set forth in the Plan.

a.Termination for Cause. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for Cause, any unvested Restricted Stock shall be forfeited to the Company as of the date of the event giving rise to the termination for Cause.

b.Other Termination of Employment. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii), any unvested Shares of Restricted Stock as of the effective date of the Participant’s termination of employment shall immediately be forfeited to the Company.

3. Rights While Holding Restricted Stock.

(a)Custody and Availability of Shares. The Company shall hold the Target Shares in uncertificated, book-entry form registered in the Participant’s name until any Target Shares shall have vested, in whole or in part, pursuant to Section 2. Subject to Section 4, if and to the extent shares of Restricted Stock, including Target Shares, become vested, the Company shall remove or cause the removal of the restrictions on transfer of such shares arising from this Stock Agreement. Such unrestricted shares shall be made available to the Participant in uncertificated, book-entry form registered in the Participant’s name.

(b)Rights as a Stockholder. During the period that Target Shares remain unvested, the Participant shall have all of the rights of a stockholder of the Company with respect to the Target Shares including, but not limited to, the right to receive dividends paid on the Target Shares and the full right to vote such shares.

(c)Section 83(b) Election. The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(d)Compliance with Federal and State Law. The Company may postpone issuing and delivering any Restricted Stock for so long as the Company reasonably determines to be necessary to satisfy the following:

(i)its completing or amending any securities registration or qualification of the Restricted Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule or regulation; and

(ii)the Participant complying with any federal, state or other tax withholding obligations.

4.Payment of Taxes. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the issuance or vesting of the Restricted Stock, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. The Participant

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acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the Restricted Stock and its vesting.

5.Change in Control. Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control prior to December 31, 2020 pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this Stock Agreement is assumed or provision is made for the continuation of this Stock Agreement, then subject to Section 4.3 of the Plan, a number of Shares equal to the greater of (x) the product of (1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Change in Control and (y) the number of Shares banked pursuant to Exhibit A as of the effective date of the Change in Control, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Change in Control and there shall be substituted for each Share of Restricted Stock then subject to this Stock Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. Notwithstanding any provision in this Agreement, in the event of a Change in Control on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this Stock Agreement is assumed or provision is made for the continuation of this Stock Agreement, then subject to Section 4.3 of the Plan, a number of Shares equal to the greater of (x) the number of Shares determined in accordance with Exhibit A and (y) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Change in Control and there shall be substituted for each Share of Restricted Stock then subject to this Stock Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control.

(b) Notwithstanding any provision in this Agreement, in the event of a Change in Control prior to December 31, 2020 pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control prior to December 31, 2020 pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this Stock Agreement shall be surrendered to the Company by the Participant, and this Stock Agreement shall immediately be canceled by the Company, and the Participant shall receive, within ten (10) days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the greater of (x) the product of (1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Change in Control and (y) the

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number of Shares banked pursuant to Exhibit A as of the effective date of the Change in Control, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control. Notwithstanding any provision in this Agreement, in the event of a Change in Control on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this Stock Agreement shall be surrendered to the Company by the Participant, and this Stock Agreement shall immediately be canceled by the Company, and the Participant shall receive, within ten (10) days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the greater of (x) the number of Shares determined in accordance with Exhibit A and (y) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, multiplied by (z) the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6.Confidentiality, Non-Solicitation and Non-Compete. The Participant agrees to, understands and acknowledges the following:

(a)Confidential Information. The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this Stock Agreement, “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation,

(i)information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;

(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;

(iii)the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of, but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;

(iv)the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and

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(v)other confidential and proprietary information or documents relating to the Company’s or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b)Non-Solicitation and Non-Compete. Notwithstanding any provision of this Stock Agreement, (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of vesting of all or any portion of the Restricted Stock, the Participant shall not, directly or indirectly:

(i)employ, recruit or solicit for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

(ii)accept employment or engage in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use, of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or

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(iii)solicit or encourage any customer, channel partner or vendor (or potential customer, channel partner or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a “potential customer” or “potential channel partner” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest.

(c)Enforceability of Restrictive Covenants. The scope and duration of the restrictive covenants contained in this Stock Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(d)Written Acknowledgement by Participant. The Committee, in its sole discretion, may require the Participant, as a condition to lapsing any restriction on the Restricted Stock, to acknowledge in writing that the Participant has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.

7. Right of Setoff; Recoupment.

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(a)Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law and which would not trigger tax under Code Section 409A, deduct from and set off against any amounts the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with the Stock Agreement, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or a Subsidiary, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any Restricted Stock granted hereunder, the Participant agrees to any deduction or setoff under this Section 7(a).

(b)Termination of the Stock Agreement; Recoupment. The Stock Agreement shall terminate automatically and be subject to clawback on the date the Participant violates the non-solicit, non-compete or confidentiality provisions in Sections 6(a) or 6(b) or commits an act of theft, embezzlement of funds or fraud involving money or property of the Company or any Subsidiary. Any outstanding Restricted Stock, whether vested or unvested, shall terminate automatically as of the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud and the Participant shall forfeit such Restricted Stock. With respect to any Restricted Stock that vested within the one-year period prior to the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud, the Participant shall pay the Company, within forty-five (45) days of receipt by the Participant of a written demand therefor, or pursuant to such other time frame as the Company, in its sole discretion, agrees to in writing with the Participant, an amount in cash determined by multiplying the number of such shares of Restricted Stock by the Fair Market Value of a Share on the date of such vesting.

(c)Injunctive Action. The Participant acknowledges that if he or she violates the terms of Sections 6 or 7, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this Stock Agreement (including any provision of Section 6(a) or (b) or 7(b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 7 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Section 6(a), 6(b) or 7(b), the Company will have the right to cancel this Stock Agreement.

(d)Attorneys’ Fees. In addition to the rights available to the Company and its Subsidiaries under Sections 7(b) and (c), if the Participant violates the terms of Sections 6 or 7 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 7. In addition to any injunctive relief sought under Section 7(c) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 7(d), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.

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8. Miscellaneous Provisions.

(a)No Service or Employment Rights. No provision of this Stock Agreement or of the Restricted Stock granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.

(b)Plan Document Governs. The Restricted Stock is granted pursuant to the Plan, and the Restricted Stock and this Stock Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Stock Agreement by reference or are expressly cited. Any inconsistency between the Stock Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.

(c)Administration. This Stock Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Stock Agreement, all of which shall be binding upon the Participant.

(d)No Vested Right in Future Awards. The Participant acknowledges and agrees (by accepting or executing this Stock Agreement) that the granting of Restricted Stock under this Stock Agreement is made on a fully discretionary basis by the Company and that this Stock Agreement does not lead to a vested right to further restricted stock or other awards in the future.

(e)Use of Personal Data. By accepting or executing this Stock Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position and details of all past Awards and current Awards outstanding under the Plan (“Data”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company, or its Subsidiaries, may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.

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(f)Severability. If a provision of this Stock Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this Stock Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this Stock Agreement.

(g)Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

(h)Notices. Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.

(i)Counterparts. This Stock Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

(j)Successors and Assigns. This Stock Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

(k)Governing Law. This Stock Agreement and the Restricted Stock granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.

(l)Entire Agreement. This Stock Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

(m)Amendment. Any amendment to this Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(n)Headings and Construction. The headings contained in this Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement. This Stock Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this Stock Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.

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IN WITNESS WHEREOF, the Company has caused this Stock Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has electronically accepted this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or hereunto set his or her hand, all as of the day and year first above written.

ZEBRA TECHNOLOGIES CORPORATION

By:

Name: Anders Gustafsson

Title: Chief Executive Officer

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Exhibit A

1. Net Sales CAGR and Adjusted EBITDA Margin Performance Goals.

Performance Goal and Percentage of Target Shares subject to Performance Goal	Below Threshold	Threshold	Target	Maximum
Compounded Annual Growth Rate of Net Sales (60%)	<2.50%	2.50%	4.00%	5.50%
Vested Percentage of Restricted Stock	0%	50.00%	100.00%	180%
2020 Adjusted EBITDA Margin of Zebra (40%)	<18.0%	18.0%	19.0%	Equal to or greater than 20.0%
Vested Percentage of Restricted Stock	0%	50.00%	100.00%	180%

“Net Sales” means, with respect to any period, the consolidated net sales of Zebra Technologies Corporation for that period (before adjustments for purchase accounting). Compounded Annual Growth Rate of Total Net Sales (“CAGR”) equals (A) the quotient obtained by dividing 2020 Net Sales of Zebra by $3.725 billion, (B) raised to the one-third power, minus (C) one. CAGR shall be rounded to the nearest one-hundredth of one percent.For a CAGR between threshold and target, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent. For a CAGR between target and maximum, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent.

Annual Net Sales Performance: The Participant is eligible for banking of a specific number of shares on an annual basis based upon an implied Net Sales annual growth rate. Unless the Committee or the Board otherwise determines in its sole discretion, the implied annual growth target will be the same as the three-year CAGR target of 4.0%. If, as of December 31 of each calendar year commencing December 31, 2018, the implied annual target is achieved, 20% of the number of Target Shares (rounded to the nearest whole Share) shall be banked. If the implied annual target for such year is not achieved, then no Shares shall be banked for such year. No interpolation or pro-ration is applied to the number of Shares if the implied annual target is not achieved and, if the implied annual target is exceeded, no additional Target Shares in respect of such year shall be banked.

“Adjusted EBITDA Margin” of Zebra means, with respect to any period, the ratio of the Adjusted EBITDA of Zebra Technologies Corporation for that period over the Net Sales of Zebra Technologies Corporation for that period. “Adjusted EBITDA” means earnings before interest income and expense, taxes, depreciation, amortization and Other Income/Expense of Zebra Technologies Corporation, adjusted to remove equity-based compensation expense, adjustments for purchase accounting, and Non-Recurring Charges. “Non-Recurring Charges”, as approved by the Compensation Committee, specifically include such items as (i) one-time charges, non-operating charges or expenses incurred that are not under the control of operations management; (ii) restructuring expenses; (iii) exit expenses; (iv) acquisition,

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integration and divestiture expenses; (v) gains or losses on the sale of assets; (vi) acquired in-process technology; (vii) impairment charges; and (viii) changes in Generally Accepted Accounting Principles. The above list is not exhaustive. For an Adjusted EBITDA Margin between threshold and target, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent. For an Adjusted EBITDA Margin between target and maximum, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent.

Annual Adjusted EBITDA Margin Performance: The Participant is eligible for banking of a specific number of shares on an annual basis based upon achieving or exceeding an Adjusted EBITDA Margin target for such year. Unless the Committee or the Board otherwise determines in its sole discretion, the Adjusted EBITDA Margin targets for each of 2018, 2019 and 2020 is 19.0%. If the Adjusted EBITDA Margin target for any of 2018, 2019 and 2020 is achieved, 13.3% of the number of Target Shares (rounded to the nearest whole Share) shall be banked. If the Adjusted EBITDA Margin target for such year is not achieved, then no Shares shall be banked for such year. No interpolation or pro-ration is applied to the number of Shares if the Adjusted EBITDA Margin target is not achieved and, if the Adjusted EBITDA Margin target is exceeded, no additional Target Shares in respect of such year shall be banked.

The sum of the banked shares, if any, in respect of each calendar year with respect to the annual Net Sales performance and the annual Adjusted EBITDA Margin performance shall be the “Minimum Vested Shares”.

As of December 31, 2020, the greater of either (1) the Minimum Vested Shares or (2) the number of Shares determined pursuant to the first paragraph in this Exhibit A shall be the number of Shares of Restricted Stock, if any, that vest and shall be rounded to the nearest whole Share (the “Vested Shares”). For purposes of subsection (2) in the immediately preceding sentence, the Vested Percentage of Restricted Stock in respect of the Net Sales and Adjusted EBITDA Margin performance goals shall be multiplied by the number of Target Shares and the percentage of the Target Shares subject to such performance goal to determine the number of Shares pursuant to the first paragraph in this Exhibit A.

Unless the Committee or the Board otherwise determines in its sole discretion, for purposes of calculating Net Sales and Adjusted EBITDA, (A) net sales and EBITDA derived from acquisitions shall be included and (B) divestitures of subsidiaries or businesses of Zebra shall be given effect as of the effective date of the divestiture.

Changes in accounting principles shall be consistently applied.

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EX-10.2

Exhibit 10.2

STOCK APPRECIATION RIGHTS AGREEMENT

(STOCK SETTLED)

This STOCK APPRECIATION RIGHTS AGREEMENT (this “SAR Agreement”), dated as of %%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (the “Participant”), relating to a stock appreciation right granted under theZebra Technologies Corporation 2015 Long-Term Incentive Plan, as amended (the “Plan”). Capitalized terms used in this SAR Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

1. Grant of Stock Appreciation Right.

(a) Grant. Subject to the provisions of this SAR Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date a stock appreciation right (the “SAR”) covering %%TOTAL_SHARES_GRANTED,’999,999,999’%-% shares (the “SAR Shares”) of the Company’s Class A Common Stock, $0.01 par value per share (the “Stock”), at a price of %%OPTION_PRICE,’$999,999,999.99’%- per share (the “SAR Price”). The SAR is not issued in tandem with an Option.This SAR Agreement shall be null and void unless the Participant accepts this SAR Agreement by either (i) electronically accepting this SAR Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this SAR Agreement in the space provided below and returning it to the Company, in each case not later than June 29, 2018.

(b) Term of the SAR. Unless the SAR terminates earlier pursuant to other provisions of the SAR Agreement, the SAR shall expire at 5:00 p.m., Central Time, on the seventh (7^th) anniversary of the Grant Date (the “Expiration Date”).

(c) Nontransferability. The SAR shall be nontransferable, except by will or the laws of descent and distribution, or as otherwise permitted under the Plan.

2. Vesting of the SAR.

(a) General Vesting Rule. Prior to the Expiration Date, the SAR shall become and be exercisable as follows:

Vesting Date Anniversary	Percentage of SAR Exercisable
Prior to the first anniversary of the Grant Date	0%
On and after the first anniversary of the Grant Date	25%
On and after the second anniversary of the Grant Date, an additional	25%
On and after the third anniversary of the Grant Date, an additional	25%
On and after the fourth anniversary of the Grant Date, an additional	25%

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provided, however, except as otherwise provided for under this SAR Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the applicable vesting dates.

(b) Additional Vesting Rules. Notwithstanding Section 2(a), the SAR shall be subject to the following additional vesting rules in the following circumstances:

a. Death or Disability. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to Participant’s death or Disability, any unvested portion of the SAR as of the effective date of the Participant’s termination of employment shall immediately become fully vested and exercisable as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment and, together with any unexercised vested portion of the SAR, shall remain exercisable until the earlier of:

(A) 5:00 p.m., Central Time, on the Expiration Date; or

(B) 5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to the Participant’s death or Disability.

In the event of the Participant’s death, the Participant’s beneficiary or estate may exercise all or any portion of the vested SAR. For purposes of this Stock Agreement, “Disability” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Disability” has the meaning ascribed to such term in the Plan.

b.Retirement or Termination by the Company or any Subsidiary other than for Cause. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to Participant’s Retirement, or by the Company and/or any Subsidiary other than for Cause, the number of SAR Shares that shall be vested and exercisable as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment shall equal the number obtained by (A) multiplying the total number of SAR Shares granted as of the Grant Date under Section 1(a) by a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,461 and (B) subtracting from such product the number, if any, of SAR Shares that vested in accordance with Section 2(a) and became exercisable prior to the effective date of the Participant’s termination of employment. Any unexercised vested portion of the SAR shall remain exercisable until the earlier of:

i. 5:00 p.m., Central Time, on the Expiration Date; or

ii. 5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to Retirement; or

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iii. 5:00 p.m., Central Time, on the date that is ninety (90) days after the effective date of the Participant’s termination of employment by the Company and/or any Subsidiary other than for Cause.

For purposes of this SAR Agreement, “Retirement” means the Participant’svoluntary termination of employment with the Company and/or any Subsidiary on or after age sixty-five (65) or prior to age sixty-five (65) with the approval of the Senior Vice President, Chief Administrative Officer; and “Cause” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Cause” has the meaning, as determined by the Company in its sole discretion, set forth in the Plan.

c. Termination for Cause. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for Cause, any unexercised SAR, whether vested or not, shall expire as of the date of the event giving rise to the termination for Cause, be forfeited, and be considered null and void.

d. Other Termination of Employment. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii), any unexercised vested portion of the SAR as of the effective date of the Participant’s termination of employment shall remain exercisable until the earliest of:

(1) 5:00 p.m., Central Time, on the Expiration Date; or

(2) 5:00 p.m., Central Time, on the date that is thirty (30) days after the effective date of the Participant’s termination of employment.

3.Exercise of SAR.

(a)Notice of Exercise. Prior to the Expiration Date, the vested portion of the SAR may be exercised, in whole or in part, by delivering written notice to the Company in accordance with Section 8(i) and in such form as the Company may require from time to time. Such notice of exercise shall specify the number of SAR Shares to be exercised.

(b)Payment. As of the date of exercise of the SAR, the Company shall settle the exercised portion of the SAR as provided in Section 6.6 of the Plan. The amount of the payment for each SAR Share exercised shall equal (i) the Fair Market Value of a share of Stock on the date of exercise, less (ii) the SAR Price for each such exercised SAR Share. The exercised SAR shall be settled in whole shares of Stock, and cash for the value of a fractional share of Stock.

(c)Payment of Taxes. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the exercise of the SAR, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. Alternatively, subject to Company approval, the Participant may elect to withhold a portion of the SAR exercise payment equal to the statutory tax that would be imposed on the exercise, as provided under Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the SAR and its exercise.

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(d)Death Prior to Exercise. In the event of the Participant’s death prior to the exercise of any vested portion of the SAR, the Participant’s beneficiary or estate may exercise the vested SAR.

4. Compliance with Federal and State Law. The Company reserves the right to delay the Participant’s exercise of any portion of the SAR if the Company’s issuance of Stock upon such exercise would violate any applicable federal or state securities laws or any other applicable laws or regulations. The Participant may not sell or otherwise dispose of any portion of the SAR or any Stock in violation of any applicable law. The Company may postpone issuing and delivering any Stock in payment for the exercise of any portion of the SAR for so long as the Company reasonably determines to be necessary to satisfy the following:

(i) its completing or amending any securities registration or qualification of the Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule or regulation;

(ii) its receiving proof it considers satisfactory that a person seeking to exercise the SAR after the Participant’s death is entitled to do so; and

(iii) the Participant complying with any federal, state or other tax withholding obligations.

5. Change in Control. Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this SAR Agreement is assumed or provision is made for the continuation of this SAR Agreement, then subject to Section 4.3 of the Plan, this SAR Agreement shall continue in accordance with its terms, and there shall be substituted for each SAR Share then subject to this SAR Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. In the event of any such substitution, the SAR Price shall be appropriately adjusted by the Board or Committee (whose determination shall be final, binding and conclusive), such adjustments to be made without an increase in the aggregate SAR Price. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated by the Participant for Good Reason or by Zebra or any Subsidiary other than for Cause on or after the date of such Change in Control, then any unvested portion of the SAR as of the effective date of the Participant’s termination of employment shall immediately become fully vested and exercisable and, together with any unexercised vested portion of the SAR, shall remain exercisable until the earlier of:

(i) 5:00 p.m., Central Time, on the Expiration Date; or

(ii) 5:00 p.m., Central Time, on the date that is ninety (90) days after the effective date of the Participant’s termination of employment.

For purposes of this SAR Agreement, “Good Reason” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or,

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if the Participant is not a party to such an agreement, “Good Reason” has the meaning set forth in the Plan.

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this SAR Agreement shall be surrendered to the Company by the Participant, and this SAR Agreement shall immediately be canceled by the Company, and the Participant shall receive, within ten (10) days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of SAR Shares then subject to this SAR, multiplied by the excess, if any, of the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control, over the SAR Price.

6. Confidentiality, Non-Solicitation and Non-Compete. The Participant agrees to, understands, and acknowledges the following:

(a) Confidential Information. The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this SAR Agreement, “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation:

(i) information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;

(ii) inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;

(iii) the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of, but not limited, to computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;

(iv) the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and

(v) other confidential and proprietary information or documents relating to the Company’s or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or

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documents that the Company and/or a Subsidiary reasonably regards as being confidential.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this SAR Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b) Non-Solicitation and Non-Compete. Notwithstanding any provision of this SAR Agreement, (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of exercise of all or any portion of the SAR, the Participant shall not, directly or indirectly:

(i) employ, recruit or solicit for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

(ii) accept employment or engage in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or

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(iii) solicit or encourage any customer, channel partner or vendor (or potential customer, channel partner, or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a “potential customer” or “potential channel partner” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest.

(c) Enforceability of Restrictive Covenants. The scope and duration of the restrictive covenants contained in this SAR Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(d) Written Acknowledgement by the Participant. The Committee, in its sole discretion, may require the Participant, as a condition to the exercise of this SAR, to acknowledge in writing that the Participant has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.

7.Right of Setoff; Recoupment.

(a)Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law and which would not trigger tax under Code Section 409A, deduct from and set off against any amounts the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with this SAR Agreement, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or a Subsidiary, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any SAR granted hereunder, the Participant agrees to any deduction or setoff under this Section 7(a).  

(b)Termination of the SAR; Recoupment. Any SAR granted under this SAR Agreement (including any amounts or benefits arising from such SARs), regardless of whether such SARs are otherwise vested, shall terminate automatically and be subject to clawback and recoupment on the date the Participant violates the non-solicit, non-compete or confidentiality provisions in Sections 6(a) or 6(b) or commits an act of theft, embezzlement of funds or fraud involving money or property of the Company or any Subsidiary. Any outstanding, unexercised SARs, whether vested or unvested, shall terminate automatically as of the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud and the Participant shall forfeit such SARs. With respect to any SARs that were exercised within the one-year period prior to the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud, the Participant shall pay the Company, within forty five (45) days of receipt by the Participant of a written demand therefor, or pursuant to such other time frame as the Company, in its sole discretion, agrees to in writing with the Participant, an amount in cash determined by multiplying the number of Shares as to which the SAR was exercised by the difference between (i) the Fair Market Value

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of a Share on the date of such exercise and (ii) the SAR Price per SAR (without reduction for any Shares withheld by the Company pursuant to Section 3(c)).

(c)Injunctive Action. The Participant acknowledges that if he or she violates the terms of Sections 6 or 7, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this SAR Agreement (including any provision of Section 6(a) or (b) or 7(b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this SAR Agreement, and the Company and/or Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 7 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Sections 6(a), 6(b) or 7(b), the Company will have the right to cancel this SAR Agreement.

(d)Attorneys’ Fees. In addition to the rights available to the Company and its Subsidiaries under Sections 7(b) and (c), if the Participant violates the terms of Sections 6 or 7 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 7. In addition to any injunctive relief sought under Section 7(c) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 7(d), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.

8. Miscellaneous Provisions.

(a)No Service or Employment Rights. No provision of this SAR Agreement or of the SAR granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.

(b)Stockholder Rights. Until the SAR shall have been duly exercised and Stock has been officially recorded as issued on the Company’s official stockholder records, no person or entity shall be entitled to vote, receive dividends or be deemed for any purpose the holder of such Stock, and adjustments for dividends or otherwise shall be made only if the record date thereof is subsequent to the date such shares are recorded and after the date of exercise and without duplication of any adjustment.

(c)Plan Document Governs. The SAR is granted pursuant to the Plan, and the SAR and this SAR Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this SAR Agreement by

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reference or are expressly cited. Any inconsistency between the SAR Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.

(d)Administration. This SAR Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this SAR Agreement, all of which shall be binding upon the Participant.

(e)No Vested Right in Future Awards. The Participant acknowledges and agrees (by accepting or executing this SAR Agreement) that the granting of the SAR under this SAR Agreement is made on a fully discretionary basis by the Company and that this SAR Agreement does not lead to a vested right to further SAR or other awards in the future.

(f)Use of Personal Data. By accepting or executing this SAR Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position, and details of all past Awards and current Awards outstanding under the Plan (“Data”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company or its Subsidiaries may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.

(g)Severability. If a provision of this SAR Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this SAR Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this SAR Agreement.

(h)Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

(i)Notices. Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s

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records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.

(j)Counterparts. This SAR Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

(k)Successors and Assigns. This SAR Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

(l)Governing Law. This SAR Agreement and the SAR granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.

(m)Entire Agreement. This SAR Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

(n)Amendment. Any amendment to this SAR Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(o)Headings and Construction. The headings contained in this SAR Agreement are for reference purposes only and shall not affect the meaning or interpretation of this SAR Agreement. This SAR Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this SAR Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.

IN WITNESS WHEREOF, the Company has caused this SAR Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has electronically accepted this SAR Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or hereunto set his or her hand, all as of the day and year first above written.

ZEBRA TECHNOLOGIES CORPORATION

By:

Name: Anders Gustafsson

Title: Chief Executive Officer

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EX-10.3

Exhibit 10.3

RESTRICTED STOCK AGREEMENT

This RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of %%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (the “Participant”), relating to restricted stock granted under theZebra Technologies Corporation 2015 Long-Term Incentive Plan, as amended(the “Plan”). Capitalized terms used in this Stock Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

1.Grant of Restricted Stock.

(a)Grant. Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date %%TOTAL_SHARES_GRANTED,’999,999,999’%-%shares of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this Stock Agreement in the space provided below and returning it to the Company, in each case not later than June 29, 2018.

(b)Nontransferability. Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Vesting Period set forth under Section 2 of this Stock Agreement.

2.Vesting of Restricted Stock.

(a)General Vesting Rule. Prior to vesting, Restricted Stock shall be forfeitable and non-transferable. The Restricted Stock shall vest over three (3) years (the “Vesting Period”), at a rate of one-third (1/3) of the Restricted Stock on each anniversary of the Grant Date, until the third anniversary of the Grant Date; provided, however, except as otherwise provided under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the applicable vesting dates. The Restricted Stock vesting on the first two anniversaries of the Grant Date shall be settled in whole shares of the Company’s Common Stock rounded down to the nearest whole share; and the restricted stock vesting on the third anniversary of the Grant Date shall be settled in whole shares of the Company’s Common Stock rounded down to the nearest whole share and cash for the value of any fractional share of Common Stock (rounded to the nearest hundredth).

(b)Additional Vesting Rules. Notwithstanding Section 2(a), the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

(i)Death or Disability. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to Participant’s death or Disability,any unvested portion of the Restricted Stock as of the effective date of the Participant’s termination of employment shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Disability” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Disability” has the meaning ascribed to such term in the Plan.

(ii)Retirement; Termination by the Company or any Subsidiary other than for Cause. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to Participant’s Retirement, or by the Company and/or any Subsidiary other than for Cause, the number of shares of Restricted Stock that shall be vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment shall equal the number obtained by (x) multiplying (1) the total number of shares of Restricted Stock granted as of the Grant Date under Section 1(a) multiplied by (2) a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,096 and (y) subtracting from such product the number, if any, of shares of Restricted Stock that vested in accordance with Section 2(a) prior to the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Retirement” means the Participant’s voluntary termination of employment with the Company and/or any Subsidiary on or after age sixty-five (65) or prior to age sixty-five (65) with the approval of the Senior Vice President, Chief Administrative Officer ; and “Cause” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Cause” has the meaning, as determined by the Company in its sole discretion, set forth in the Plan.

(iii)Termination for Cause. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for Cause, any unvested Restricted Stock shall be forfeited to the Company as of the date of the event giving rise to the termination for Cause.

(iv)Other Termination of Employment. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii), any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall immediately be forfeited to the Company.

3.Rights While Holding Restricted Stock.

(a)Custody and Availability of Shares. The Company shall hold the shares of Restricted Stock subject to this Agreement in uncertificated, book-entry form registered in the Participant’s nameuntil the Restricted Stock shall have vested, in whole or in part, pursuant to Section 2. Subject to Section 4, if and to the extent shares of Restricted Stock become vested, the Company shall remove or cause the removal of the restrictions on transfer of such shares arising from this Stock Agreement. Such unrestricted shares shall be made available to the Participant in uncertificated, book-entry form registered in the Participant’s name.

(b)Rights as a Stockholder. During the period that shares of Restricted Stock remain unvested, the Participant shall have all of the rights of a stockholder of the Company with respect to the

2

Restricted Stock including, but not limited to, the right to receive dividends paid on the shares of Restricted Stock and the full right to vote such shares.

(c)Section 83(b) Election. The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(d)Compliance with Federal and State Law. The Company may postpone issuing and delivering any Restricted Stock for so long as the Company reasonably determines to be necessary to satisfy the following:

(i)its completing or amending any securities registration or qualification of the Restricted Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule, or regulation; and

(ii)the Participant complying with any federal, state or other tax withholding obligations.

4.Payment of Taxes. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the issuance or vesting of the Restricted Stock, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the Restricted Stock and its vesting.

5.Change in Control. Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this Stock Agreement is assumed or provision is made for the continuation of this Stock Agreement, then subject to Section 4.3 of the Plan, this Stock Agreement shall continue in accordance with its terms, and there shall be substituted for each Share of Restricted Stock then subject to this Stock Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. In the event the Participant’s employment with the Company and Subsidiaries is terminated on or after the date of such Change in Control by the Participant for Good Reason or by Zebra or any Subsidiary other than for Cause, then any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Good Reason” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “Good Reason” has the meaning set forth in the Plan.

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this Stock Agreement shall be surrendered to the Company by the Participant, and this Stock Agreement shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of Shares of unvested Restricted Stock as of the effective date of the Change in Control, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction

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whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6.Confidentiality, Non-Solicitation and Non-Compete. The Participant agrees to, understands and acknowledges the following:

(a)Confidential Information. The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this Stock Agreement, “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation,

(i)information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;

(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;

(iii)the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of but, not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;

(iv)the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and

(v)other confidential and proprietary information or documents relating to the Company's or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a

4

Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b)Non-Solicitation and Non-Compete. Notwithstanding any provision of this Stock Agreement, (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of vesting of all or any portion of the Restricted Stock, the Participant shall not, directly or indirectly:

(i)employ, recruit or solicit for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

(ii)accept employment or engage in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use, of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or

(iii)solicit or encourage any customer, channel partner or vendor (or potential customer, channel partner or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a "potential customer" or “potential channel partner” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest.

(c)Enforceability of Restrictive Covenants. The scope and duration of the restrictive covenants contained in this Stock Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(d)Written Acknowledgement by Participant. The Committee, in its sole discretion, may require the Participant, as a condition to lapsing any restriction on the Restricted Stock, to acknowledge in writing that the Participant has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.

7.Right of Setoff; Recoupment.

(a)Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law and which would not trigger tax under Code Section 409A, deduct from and set off against any amounts

5

the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with the Stock Agreement, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or a Subsidiary, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any Restricted Stock granted hereunder, the Participant agrees to any deduction or setoff under this Section 7(a).

(b)Termination of the Stock Agreement; Recoupment. The Stock Agreement shall terminate automatically and be subject to clawback on the date the Participant violates the non-solicit, non-compete or confidentiality provisions in Sections 6(a) or 6(b) or commits an act of theft, embezzlement of funds or fraud involving money or property of the Company or any Subsidiary. Any outstanding Restricted Stock, whether vested or unvested, shall terminate automatically as of the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud and the Participant shall forfeit such Restricted Stock. With respect to any Restricted Stock that vested within the one-year period prior to the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud, the Participant shall pay the Company, within forty-five (45) calendar days of receipt by the Participant of a written demand therefor, or pursuant to such other time frame as the Company, in its sole discretion, agrees to in writing with the Participant, an amount in cash determined by multiplying the number of such shares of Restricted Stock by the Fair Market Value of a Share on the date of such vesting.

(c)Injunctive Action. The Participant acknowledges that if he or she violates the terms of Sections 6 or 7, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this Stock Agreement (including any provision of Section 6(a) or (b) or 7(b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 7 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Section 6(a), 6(b) or 7(b), the Company will have the right to cancel this Stock Agreement.

(d)Attorneys’ Fees. In addition to the rights available to the Company and its Subsidiaries under Sections 7(b) and (c), if the Participant violates the terms of Sections 6 or 7 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 7. In addition to any injunctive relief sought under Section 7(c) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 7(d), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.

8.Miscellaneous Provisions.

(a)No Service or Employment Rights. No provision of this Stock Agreement or of the Restricted Stock granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to

6

participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.

(b)Plan Document Governs. The Restricted Stock is granted pursuant to the Plan, and the Restricted Stock and this Stock Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Stock Agreement by reference or are expressly cited. Any inconsistency between the Stock Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.

(c)Administration. This Stock Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Stock Agreement, all of which shall be binding upon the Participant.

(d)No Vested Right in Future Awards. The Participant acknowledges and agrees (by accepting or executing this Stock Agreement) that the granting of Restricted Stock under this Stock Agreement is made on a fully discretionary basis by the Company and that this Stock Agreement does not lead to a vested right to further restricted stock or other awards in the future.

(e)Use of Personal Data. By accepting or executing this Stock Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position and details of all past Awards and current Awards outstanding under the Plan (“Data”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company, or its Subsidiaries, may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.

(f)Severability. If a provision of this Stock Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this Stock Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this Stock Agreement.

(g)Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

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(h)Notices. Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.

(i)Counterparts. This Stock Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

(j)Successors and Assigns. This Stock Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

(k)Governing Law. This Stock Agreement and the Restricted Stock granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.

(l)Entire Agreement. This Stock Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

(m)Amendment. Any amendment to this Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(n)Headings and Construction. The headings contained in this Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement. This Stock Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this Stock Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.

IN WITNESS WHEREOF, the Company has caused this Stock Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has electronically accepted this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or hereunto set his or her hand, all as of the day and year first above written.

ZEBRA TECHNOLOGIES CORPORATION

By:

Name: Anders Gustafsson

Title: Chief Executive Officer

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EX-10.4

Exhibit 10.4

PERFORMANCE-VESTED RESTRICTED STOCK AGREEMENT

This PERFORMANCE-VESTED RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of May 10, 2018 (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), and Anders Gustafsson (the “Participant”), relating to restricted stock granted under theZebra Technologies Corporation 2015 Long-Term Incentive Plan, as amended(the “Plan”). Capitalized terms used in this Stock Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

1. Grant of Restricted Stock.

(a)Grant.Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date _______ shares (the “Target Shares”) of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this Stock Agreement in the space provided below and returning it to the Company, in each case not later than June 29, 2018.

(b)Nontransferability.Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Period of Restriction set forth under Section 2 of this Stock Agreement.

2. Vesting of Restricted Stock.

i.Period of Restriction and Performance Goals.

i.The Restricted Stock shall be forfeitable and non-transferable during the Period of Restriction. The “Period of Restriction” with respect to the Restricted Stock shall begin on the Grant Date and end at 5:00 p.m., Central Time, on May 10, 2021 in accordance with Exhibit A. This Stock Agreement shall be settled in whole shares of the Company’s Common Stock (rounded down to the nearest whole share).

ii.Except as otherwise provided for under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the Period of Restriction.

a.Additional Vesting Rules. Notwithstanding Section 2(a) or the Employment Agreement between the Company and the Participant effective as of September 4, 2007, as amended (the “Employment Agreement”), and unless otherwise determined by the Board of Directors of the Company or the Compensation Committee of the Board of Directors, the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

a.Death or Disability. In the event the Participant’s employment with the Company is terminated due to Participant’s death or Disability prior to December 31,

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Exhibit 10.4

2020, a number of Shares equal to the greater of (x) the product of (1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Participant’s termination of employment and (y) the number of Shares banked pursuant to Exhibit A as of the effective date of the Participant’s termination of employment, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. In the event the Participant’s employment with the Company is terminated due to death or Disability on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021, a number of Shares equal to the greater of (x) the number of Shares determined in accordance with Exhibit Aand (y) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. “Disability” shall occur if the Participant is deemed disabled under the terms of the Employment Agreement.

b.Retirement, Good Reason or Termination by the Company other than for Cause. In the event the Participant’s employment with the Company is terminated prior to December 31, 2020 due to Participant’s Retirement, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, a number of Shares equal to the product of (x) a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,096, multiplied by the greater of (y)(1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Participant’s termination of employment and (z) the number of Shares banked pursuant to Exhibit A as of effective date of the Participant’s termination of employment, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. In the event the Participant’s employment with the Company is terminated on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 due to Participant’s Retirement, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, a number of Shares equal to the product of (x) a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,096, multiplied by the greater of (y)(1) the number of Shares determined in accordance with Exhibit Aand (2) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Good Reason” and “Cause” have the meanings assigned to them in the Employment Agreement; and “Retirement” means the Participant’s voluntary termination of employment with the Company on or after age sixty-five (65) or prior to

2

Exhibit 10.4

age sixty-five (65) with the approval of the Board of Directors of the Company or Compensation Committee of the Board of Directors.

c.Termination for Cause. In the event the Participant’s employment with the Company is terminated for Cause, any unvested Restricted Stock shall be forfeited to the Company as of the date of the event giving rise to the termination for Cause.

d.Other Termination of Employment. In the event the Participant’s employment with the Company is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii), any unvested Shares of Restricted Stock as of the effective date of the Participant’s termination of employment shall immediately be forfeited to the Company.

3. Rights While Holding Restricted Stock.

(a)Custody and Availability of Shares. The Company shall hold the Target Shares in uncertificated, book-entry form registered in the Participant’s name until any Target Shares shall have vested, in whole or in part, pursuant to Section 2. Subject to Section 4, if and to the extent shares of Restricted Stock, including Target Shares, become vested, the Company shall remove or cause the removal of the restrictions on transfer of such shares arising from this Stock Agreement. Such unrestricted shares shall be made available to the Participant in uncertificated, book-entry form registered in the Participant’s name.

(b)Rights as a Stockholder. During the period that Target Shares remain unvested, the Participant shall have all of the rights of a stockholder of the Company with respect to the Target Shares including, but not limited to, the right to receive dividends paid on the Target Shares and the full right to vote such shares.

(c)Section 83(b) Election. The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(d)Compliance with Federal and State Law. The Company may postpone issuing and delivering any Restricted Stock for so long as the Company reasonably determines to be necessary to satisfy the following:

(i)its completing or amending any securities registration or qualification of the Restricted Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule or regulation; and

(ii)the Participant complying with any federal, state or other tax withholding obligations.

4.Payment of Taxes. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the issuance or vesting of the Restricted Stock, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the Restricted Stock and its vesting.

3

Exhibit 10.4

5.Change in Control. Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control prior to December 31, 2020 pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this Stock Agreement is assumed or provision is made for the continuation of this Stock Agreement, then subject to Section 4.3 of the Plan, a number of Shares equal to the greater of (x) the product of (1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Change in Control and (y) the number of Shares banked pursuant to Exhibit A as of the effective date of the Change in Control, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Change in Control and there shall be substituted for each Share of Restricted Stock then subject to this Stock Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. Notwithstanding any provision in this Agreement, in the event of a Change in Control on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this Stock Agreement is assumed or provision is made for the continuation of this Stock Agreement, then subject to Section 4.3 of the Plan, a number of Shares equal to the greater of (x) the number of Shares determined in accordance with Exhibit A and (y) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Change in Control and there shall be substituted for each Share of Restricted Stock then subject to this Stock Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control

(b) Notwithstanding any provision in this Agreement, in the event of a Change in Control prior to December 31, 2020 pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control prior to December 31, 2020 pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this Stock Agreement shall be surrendered to the Company by the Participant, and this Stock Agreement shall immediately be canceled by the Company, and the Participant shall receive, within ten (10) days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the greater of (x) the product of (1) the number of Target Shares multiplied by (2) the vesting percentage used by the Company (determined in accordance with Exhibit A) when determining compensation expense under Generally Accepted Accounting Principles as of the most recent quarter end prior to the effective date of the Change in Control and (y) the number of Shares banked pursuant to Exhibit A as of the effective date of the Change in Control, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair

4

Exhibit 10.4

Market Value of a Share on the effective date of the Change in Control. Notwithstanding any provision in this Agreement, in the event of a Change in Control on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control on or after December 31, 2020 and on or prior to 5:00 p.m., Central Time, on May 10, 2021 pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this Stock Agreement shall be surrendered to the Company by the Participant, and this Stock Agreement shall immediately be canceled by the Company, and the Participant shall receive, within ten (10) days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the greater of (x) the number of Shares determined in accordance with Exhibit A and (y) the number of Shares banked as of December 31, 2020 pursuant to Exhibit A, multiplied by (z) the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6.Confidentiality, Non-Solicitation and Non-Compete. The Participant agrees to, understands and acknowledges the following:

(a)Confidential Information. The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this Stock Agreement, “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation,

(i)information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;

(ii)inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;

(iii)the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of, but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;

(iv)the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and

(v)other confidential and proprietary information or documents relating to the Company’s or Subsidiary’s products, business and marketing plans and techniques, sales

5

Exhibit 10.4

and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b)Non-Solicitation and Non-Compete. Notwithstanding any provision of this Stock Agreement, (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of vesting of all or any portion of the Restricted Stock, the Participant shall not, directly or indirectly:

(i)employ, recruit or solicit for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

(ii)accept employment or engage in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use, of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or

(iii)solicit or encourage any customer, channel partner or vendor (or potential customer, channel partner or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant

6

Exhibit 10.4

understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a “potential customer” or “potential channel partner” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest.

(c)Enforceability of Restrictive Covenants. The scope and duration of the restrictive covenants contained in this Stock Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(d)Written Acknowledgement by Participant. The Committee, in its sole discretion, may require the Participant, as a condition to lapsing any restriction on the Restricted Stock, to acknowledge in writing that the Participant has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.

7. Right of Setoff; Recoupment.

(a)Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law and which would not trigger tax under Code Section 409A, deduct from and set off against any amounts the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with the Stock Agreement, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or a Subsidiary, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any Restricted Stock granted hereunder, the Participant agrees to any deduction or setoff under this Section 7(a).

(b)Termination of the Stock Agreement; Recoupment. The Stock Agreement shall terminate automatically and be subject to clawback on the date the Participant violates the non-solicit, non-compete or confidentiality provisions in Sections 6(a) or 6(b) or commits an act of theft, embezzlement of funds or fraud involving money or property of the Company or any Subsidiary. Any outstanding Restricted Stock, whether vested or unvested, shall terminate automatically as of the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud and the Participant shall forfeit such Restricted Stock. With respect to any Restricted Stock that vested within the one-year period prior to the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud, the Participant shall pay the Company, within forty-five (45) days of receipt by the Participant of a written demand therefor, or pursuant to such other time frame as the Company, in its sole discretion, agrees to in writing with the Participant, an amount in cash determined by multiplying the number of such shares of Restricted Stock by the Fair Market Value of a Share on the date of such vesting.

(c)Injunctive Action. The Participant acknowledges that if he or she violates the terms of Sections 6 or 7, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this Stock Agreement (including any provision of Section 6(a) or (b) or 7(b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive

7

Exhibit 10.4

relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 7 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Section 6(a), 6(b) or 7(b), the Company will have the right to cancel this Stock Agreement.

(d)Attorneys’ Fees. In addition to the rights available to the Company and its Subsidiaries under Sections 7(b) and (c), if the Participant violates the terms of Sections 6 or 7 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 7. In addition to any injunctive relief sought under Section 7(c) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 7(d), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.

8. Miscellaneous Provisions.

(a)No Service or Employment Rights. No provision of this Stock Agreement or of the Restricted Stock granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.

(b)Plan Document Governs. The Restricted Stock is granted pursuant to the Plan, and the Restricted Stock and this Stock Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Stock Agreement by reference or are expressly cited. Any inconsistency between the Stock Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.

(c)Administration. This Stock Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Stock Agreement, all of which shall be binding upon the Participant.

(d)No Vested Right in Future Awards. The Participant acknowledges and agrees (by accepting or executing this Stock Agreement) that the granting of Restricted Stock under this Stock Agreement is made on a fully discretionary basis by the Company and that this Stock Agreement does not lead to a vested right to further restricted stock or other awards in the future.

8

Exhibit 10.4

(e)Use of Personal Data. By accepting or executing this Stock Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position and details of all past Awards and current Awards outstanding under the Plan (“Data”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company, or its Subsidiaries, may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.

(f)Severability. If a provision of this Stock Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this Stock Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this Stock Agreement.

(g)Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

(h)Notices. Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.

(i)Counterparts. This Stock Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

(j)Successors and Assigns. This Stock Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

9

Exhibit 10.4

(k)Governing Law. This Stock Agreement and the Restricted Stock granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.

(l)Entire Agreement. This Stock Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

(m)Amendment. Any amendment to this Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(n)Headings and Construction. The headings contained in this Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement. This Stock Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this Stock Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.

IN WITNESS WHEREOF, the Company has caused this Stock Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has electronically accepted this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or hereunto set his hand, all as of the day and year first above written.

ZEBRA TECHNOLOGIES CORPORATION

By:

_____________________________________

Name: Michael Terzich

Title: Senior Vice President, Chief Administrative Officer

10

Exhibit 10.4

Exhibit A

1. Net Sales CAGR and Adjusted EBITDA Margin Performance Goals.

Performance Goal and Percentage of Target Shares subject to Performance Goal	Below Threshold	Threshold	Target	Maximum
Compounded Annual Growth Rate of Net Sales (60%)	<2.50%	2.50%	4.00%	5.50%
Vested Percentage of Restricted Stock	0%	50.00%	100.00%	180%
2020 Adjusted EBITDA Margin of Zebra (40%)	<18.0%	18.0%	19.0%	Equal to or greater than 20.0%
Vested Percentage of Restricted Stock	0%	50.00%	100.00%	180%

“Net Sales” means, with respect to any period, the consolidated net sales of Zebra Technologies Corporation for that period (before adjustments for purchase accounting). Compounded Annual Growth Rate of Total Net Sales (“CAGR”) equals (A) the quotient obtained by dividing 2020 Net Sales of Zebra by $3.725 billion, (B) raised to the one-third power, minus (C) one. CAGR shall be rounded to the nearest one-hundredth of one percent.For a CAGR between threshold and target, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent. For a CAGR between target and maximum, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent.

Annual Net Sales Performance: The Participant is eligible for banking of a specific number of shares on an annual basis based upon an implied Net Sales annual growth rate. Unless the Committee or the Board otherwise determines in its sole discretion, the implied annual growth target will be the same as the three-year CAGR target of 4.0%. If, as of December 31 of each calendar year commencing December 31, 2018, the implied annual target is achieved, 20% of the number of Target Shares (rounded to the nearest whole Share) shall be banked. If the implied annual target for such year is not achieved, then no Shares shall be banked for such year. No interpolation or pro-ration is applied to the number of Shares if the implied annual target is not achieved and, if the implied annual target is exceeded, no additional Target Shares in respect of such year shall be banked.

“Adjusted EBITDA Margin” of Zebra means, with respect to any period, the ratio of the Adjusted EBITDA of Zebra Technologies Corporation for that period over the Net Sales of Zebra Technologies Corporation for that period. “Adjusted EBITDA” means earnings before interest income and expense, taxes, depreciation, amortization and Other Income/Expense of Zebra Technologies Corporation, adjusted to remove equity-based compensation expense, adjustments for purchase accounting, and Non-Recurring Charges. “Non-Recurring Charges”, as approved by the Compensation Committee, specifically include such items as (i) one-time charges, non-operating charges or expenses incurred that are not under the control of operations management; (ii) restructuring expenses; (iii) exit expenses; (iv) acquisition,

11

Exhibit 10.4

integration and divestiture expenses; (v) gains or losses on the sale of assets; (vi) acquired in-process technology; (vii) impairment charges; and (viii) changes in Generally Accepted Accounting Principles. The above list is not exhaustive. For an Adjusted EBITDA Margin between threshold and target, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent. For an Adjusted EBITDA Margin between target and maximum, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent.

Annual Adjusted EBITDA Margin Performance: The Participant is eligible for banking of a specific number of shares on an annual basis based upon achieving or exceeding an Adjusted EBITDA Margin target for such year. Unless the Committee or the Board otherwise determines in its sole discretion, the Adjusted EBITDA Margin targets for each of 2018, 2019 and 2020 is 19.0%. If the Adjusted EBITDA Margin target for any of 2018, 2019 and 2020 is achieved, 13.3% of the number of Target Shares (rounded to the nearest whole Share) shall be banked. If the Adjusted EBITDA Margin target for such year is not achieved, then no Shares shall be banked for such year. No interpolation or pro-ration is applied to the number of Shares if the Adjusted EBITDA Margin target is not achieved and, if the Adjusted EBITDA Margin target is exceeded, no additional Target Shares in respect of such year shall be banked.

The sum of the banked shares, if any, in respect of each calendar year with respect to the annual Net Sales performance and the annual Adjusted EBITDA Margin performance shall be the “Minimum Vested Shares”.

As of December 31, 2020, the greater of either (1) the Minimum Vested Shares or (2) the number of Shares determined pursuant to the first paragraph in this Exhibit A shall be the number of Shares of Restricted Stock, if any, that vest and shall be rounded to the nearest whole Share (the “Vested Shares”). For purposes of subsection (2) in the immediately preceding sentence, the Vested Percentage of Restricted Stock in respect of the Net Sales and Adjusted EBITDA Margin performance goals shall be multiplied by the number of Target Shares and the percentage of the Target Shares subject to such performance goal to determine the number of Shares pursuant to the first paragraph in this Exhibit A.

Unless the Committee or the Board otherwise determines in its sole discretion, for purposes of calculating Net Sales and Adjusted EBITDA, (A) net sales and EBITDA derived from acquisitions shall be included and (B) divestitures of subsidiaries or businesses of Zebra shall be given effect as of the effective date of the divestiture.

Changes in accounting principles shall be consistently applied.

12

EX-10.5

Exhibit 10.5

STOCK APPRECIATION RIGHTS AGREEMENT

(STOCK SETTLED)

This STOCK APPRECIATION RIGHTS AGREEMENT (this “SAR Agreement”), dated as of May 10, 2018 (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), and Anders Gustafsson (the “Participant”), relating to a stock appreciation right granted under theZebra Technologies Corporation 2015 Long-Term Incentive Plan, as amended (the “Plan”). Capitalized terms used in this SAR Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

1. Grant of Stock Appreciation Right.

(a) Grant. Subject to the provisions of this SAR Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date a stock appreciation right (the “SAR”) covering _______shares (the “SAR Shares”) of the Company’s Class A Common Stock, $0.01 par value per share (the “Stock”), at a price of $_____ per share (the “SAR Price”). The SAR is not issued in tandem with an Option.This SAR Agreement shall be null and void unless the Participant accepts this SAR Agreement by either (i) electronically accepting this SAR Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this SAR Agreement in the space provided below and returning it to the Company, in each case not later than June 29, 2018.

(b) Term of the SAR. Unless the SAR terminates earlier pursuant to other provisions of the SAR Agreement, the SAR shall expire at 5:00 p.m., Central Time, on the seventh (7^th) anniversary of the Grant Date (the “Expiration Date”).

(c) Nontransferability. The SAR shall be nontransferable, except by will or the laws of descent and distribution, or as otherwise permitted under the Plan.

2. Vesting of the SAR.

(a) General Vesting Rule.Prior to the Expiration Date, the SAR shall become and be exercisable as follows:

1

Exhibit 10.5

Vesting Date AnniversaryPercentage of SAR Exercisable

Prior to the first anniversary    0%

of the Grant Date

On and after the first anniversary    25%

of the Grant Date

On and after the second anniversary    25%

of the Grant Date, an additional

On and after the third anniversary    25%

of the Grant Date, an additional

On and after the fourth anniversary    25%

of the Grant Date, an additional

provided, however, except as otherwise provided for under this SAR Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the applicable vesting dates.

(b) Additional Vesting Rules. Notwithstanding Section 2(a) or the Employment Agreement between the Company and the Participant effective as of September 4, 2007, as amended (the “Employment Agreement”), and unless otherwise determined by the Board of Directors of the Company or the Compensation Committee of the Board of Directors, the SAR shall be subject to the following additional vesting rules in the following circumstances:

a.Death or Disability. In the event the Participant’s employment with the Company is terminated due to Participant’s death or Disability, any unvested portion of the SAR as of the effective date of the Participant’s termination of employment shall immediately become fully vested and exercisable as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment, and, together with any unexercised vested portion of the SAR, shall remain exercisable until the earlier of:

i.5:00 p.m., Central Time, on the Expiration Date; or

ii. 5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to the Participant’s death or Disability.

“Disability” shall occur if the Participant is deemed disabled under the terms of Participant’s Employment Agreement. In the event of the Participant’s death, the Participant’s beneficiary or estate may exercise all or any portion of the vested SAR.

b.Retirement, Good Reason or Termination by the Company other than for Cause. In the event the Participant’s employment with the Company is terminated due to Participant’s Retirement, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, the number of SAR Shares that shall be vested and exercisable as of 5:00 p.m., Central Time, on the effective date of the

2

Exhibit 10.5

Participant’s termination of employment shall equal the number obtained by (A) multiplying the total number of SAR Shares granted as of the Grant Date under Section 1(a) by a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,461 and (B) subtracting from such product the number, if any, of SAR Shares that vested in accordance with Section 2(a) and became exercisable prior to the effective date of the Participant’s termination of employment. Any unexercised vested portion of the SAR shall remain exercisable until the earlier of:

i. 5:00 p.m., Central Time, on the Expiration Date; or

ii. 5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to Retirement; or

iii. 5:00 p.m., Central Time, on the date that is ninety (90) days after the effective date of the Participant’s termination of employment by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause.

For purposes of this SAR Agreement, “Good Reason” and “Cause” have the meanings assigned to them in the Employment Agreement, and “Retirement” means the Participant’svoluntary termination of employment with the Company on or after age sixty-five (65) or prior to age sixty-five (65) with the approval of the Board of Directors of the Company or Compensation Committee of the Board of Directors.

c.Termination for Cause. In the event the Participant’s employment with the Company is terminated for Cause, any unexercised SAR, whether vested or not, shall expire as of the date of the event giving rise to the termination for Cause, be forfeited, and be considered null and void.

d.Other Termination of Employment. In the event the Participant’s employment with the Company is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii), any unexercised vested portion of the SAR as of the effective date of the Participant’s termination of employment shall remain exercisable until the earliest of:

a. 5:00 p.m., Central Time, on the Expiration Date; or

b. 5:00 p.m., Central Time, on the date that is thirty (30) days after the effective date of the Participant’s termination of employment.

3.Exercise of SAR.

(a)Notice of Exercise. Prior to the Expiration Date, the vested portion of the SAR may be exercised, in whole or in part, by delivering written notice to the Company in accordance with Section 8(i) and in such form as the Company may require from time to time. Such notice of exercise shall specify the number of SAR Shares to be exercised.

3

Exhibit 10.5

(b)Payment. As of the date of exercise of the SAR, the Company shall settle the exercised portion of the SAR as provided in Section 6.6 of the Plan. The amount of the payment for each SAR Share exercised shall equal (i) the Fair Market Value of a share of Stock on the date of exercise, less (ii) the SAR Price for each such exercised SAR Share. The exercised SAR shall be settled in whole shares of Stock, and cash for the value of a fractional share of Stock.

(c)Payment of Taxes. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the exercise of the SAR, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. Alternatively, subject to Company approval, the Participant may elect to withhold a portion of the SAR exercise payment equal to the statutory tax that would be imposed on the exercise, as provided under Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the SAR and its exercise.

(d)Death Prior to Exercise. In the event of the Participant’s death prior to the exercise of any vested portion of the SAR, the Participant’s beneficiary or estate may exercise the vested SAR.

4.Compliance with Federal and State Law. The Company reserves the right to delay the Participant’s exercise of any portion of the SAR if the Company’s issuance of Stock upon such exercise would violate any applicable federal or state securities laws or any other applicable laws or regulations. The Participant may not sell or otherwise dispose of any portion of the SAR or any Stock in violation of any applicable law. The Company may postpone issuing and delivering any Stock in payment for the exercise of any portion of the SAR for so long as the Company reasonably determines to be necessary to satisfy the following:

(i)     its completing or amending any securities registration or qualification of the Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule or regulation;

(ii)its receiving proof it considers satisfactory that a person seeking to exercise the SAR after the Participant’s death is entitled to do so; and

(iii)the Participant complying with any federal, state or other tax withholding obligations.

5. Change in Control. Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this SAR Agreement is assumed or provision is made for the continuation of this SAR Agreement, then subject to Section 4.3 of the Plan, this SAR Agreement shall continue in accordance with its terms, and there shall be substituted for each SAR Share then subject to this SAR Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. In the event of any such substitution, the SAR Price shall be appropriately adjusted by the Board or Committee (whose determination shall be final, binding and conclusive), such adjustments to be made without an increase in the aggregate

4

Exhibit 10.5

SAR Price. In the event the Participant’s employment with the Company is terminated by the Participant for Good Reason or by Zebra other than for Cause on or after the date of such Change in Control, then any unvested portion of the SAR as of the effective date of the Participant’s termination of employment shall immediately become fully vested and exercisable and, together with any unexercised vested portion of the SAR, shall remain exercisable until the earlier of:

(i)     5:00 p.m., Central Time, on the Expiration Date; or

(ii)    5:00 p.m., Central Time, on the date that is ninety (90) days after the effective date of the Participant’s termination of employment.

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this SAR Agreement shall be surrendered to the Company by the Participant, and this SAR Agreement shall immediately be canceled by the Company, and the Participant shall receive, within ten (10) days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of SAR Shares then subject to this SAR, multiplied by the excess, if any, of the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control, over the SAR Price.

6. Confidentiality, Non-Solicitation and Non-Compete. The Participant agrees to, understands, and acknowledges the following:

(a) Confidential Information. The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this SAR Agreement, “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation:

(i) information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;

(ii) inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;

(iii) the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of, but not limited, to computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including

5

Exhibit 10.5

programs and documentation in incomplete stages of design or research and development;

(iv) the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and

(v) other confidential and proprietary information or documents relating to the Company’s or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this SAR Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b) Non-Solicitation and Non-Compete. Notwithstanding any provision of this SAR Agreement, (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after

6

Exhibit 10.5

the date of exercise of all or any portion of the SAR, the Participant shall not, directly or indirectly:

(i) employ, recruit or solicit for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

(ii) accept employment or engage in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or

(iii) solicit or encourage any customer, channel partner or vendor (or potential customer, channel partner or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a “potential customer” or “potential channel partner” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest.

(c)Enforceability of Restrictive Covenants. The scope and duration of the restrictive covenants contained in this SAR Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(d)Written Acknowledgement by the Participant. The Committee, in its sole discretion, may require the Participant, as a condition to the exercise of this SAR, to acknowledge in writing that the Participant has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.

7.Right of Setoff; Recoupment.

(a)Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law and which would not trigger tax under Code Section 409A, deduct from and set off against any amounts the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with this SAR Agreement, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or a Subsidiary, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any SAR granted hereunder, the Participant agrees to any deduction or setoff under this Section 7(a).

(b)Termination of the SAR; Recoupment. Any SAR granted under this SAR Agreement (including any amounts or benefits arising from such SARs), regardless of whether such SARs are otherwise vested, shall terminate automatically and be subject to clawback and recoupment on the date the Participant violates the non-solicit, non-compete or confidentiality provisions in

7

Exhibit 10.5

Sections 6(a) or 6(b) or commits an act of theft, embezzlement of funds or fraud involving money or property of the Company or any Subsidiary. Any outstanding, unexercised SARs, whether vested or unvested, shall terminate automatically as of the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud and the Participant shall forfeit such SARs. With respect to any SARs that were exercised within the one year period prior to the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud, the Participant shall pay the Company, within forty five (45) calendar days of receipt by the Participant of a written demand therefor, or pursuant to such other time frame as the Company, in its sole discretion, agrees to in writing with the Participant, an amount in cash determined by multiplying the number of Shares as to which the SAR was exercised by the difference between (i) the Fair Market Value of a Share on the date of such exercise and (ii) the SAR Price per SAR (without reduction for any Shares withheld by the Company pursuant to Section 3(c)).

(c)Injunctive Action. The Participant acknowledges that if he or she violates the terms of Sections 6 or 7, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this SAR Agreement (including any provision of Section 6(a) or (b) or 7(b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this SAR Agreement, and the Company and/or Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 7 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Sections 6(a), 6(b) or 7(b), the Company will have the right to cancel this SAR Agreement.

(d)Attorneys’ Fees. In addition to the rights available to the Company and its Subsidiaries under Sections 7(b) and (c), if the Participant violates the terms of Sections 6 or 7 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 7. In addition to any injunctive relief sought under Section 7(c) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 7(d), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.

8. Miscellaneous Provisions.

(a) No Service or Employment Rights. No provision of this SAR Agreement or of the SAR granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.

8

Exhibit 10.5

(b) Stockholder Rights. Until the SAR shall have been duly exercised and Stock has been officially recorded as issued on the Company’s official stockholder records, no person or entity shall be entitled to vote, receive dividends or be deemed for any purpose the holder of such Stock, and adjustments for dividends or otherwise shall be made only if the record date thereof is subsequent to the date such shares are recorded and after the date of exercise and without duplication of any adjustment.

(c) Plan Document Governs. The SAR is granted pursuant to the Plan, and the SAR and this SAR Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this SAR Agreement by reference or are expressly cited. Any inconsistency between the SAR Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.

(d) Administration. This SAR Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this SAR Agreement, all of which shall be binding upon the Participant.

(e) No Vested Right in Future Awards. The Participant acknowledges and agrees (by accepting or executing this SAR Agreement) that the granting of the SAR under this SAR Agreement is made on a fully discretionary basis by the Company and that this SAR Agreement does not lead to a vested right to further SAR or other awards in the future.

(f) Use of Personal Data. By accepting or executing this SAR Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position, and details of all past Awards and current Awards outstanding under the Plan (“Data”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company or its Subsidiaries may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.

9

Exhibit 10.5

(g) Severability. If a provision of this SAR Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this SAR Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this SAR Agreement.

(h) Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

(i) Notices. Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.

(j) Counterparts. This SAR Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

(k) Successors and Assigns. This SAR Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

(l) Governing Law. This SAR Agreement and the SAR granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.

(m) Entire Agreement. This SAR Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

(n) Amendment. Any amendment to this SAR Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(o) Headings and Construction. The headings contained in this SAR Agreement are for reference purposes only and shall not affect the meaning or interpretation of this SAR Agreement. This SAR Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this SAR Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.

10

Exhibit 10.5

IN WITNESS WHEREOF, the Company has caused this SAR Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has electronically accepted this SAR Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or hereunto set his hand, all as of the day and year first above written.

ZEBRA TECHNOLOGIES CORPORATION

By:

_____________________________________

Name: Michael Terzich

Title: Senior Vice President, Chief Administrative Officer

11

EX-10.6

Exhibit 10.6

RESTRICTED STOCK AGREEMENT

This RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of May 10, 2018 (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), and Anders Gustafsson (the “Participant”), relating to restricted stock granted under theZebra Technologies Corporation 2015 Long-Term Incentive Plan, as amended(the “Plan”). Capitalized terms used in this Stock Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

1.Grant of Restricted Stock.

(a)Grant. Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date ______shares of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this Stock Agreement in the space provided below and returning it to the Company, in each case not later than June 29, 2018.

(b)Nontransferability. Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Vesting Period set forth under Section 2 of this Stock Agreement.

2.Vesting of Restricted Stock.

(a)General Vesting Rule. Prior to vesting, Restricted Stock shall be forfeitable and non-transferable. The Restricted Stock shall vest over three (3) years (the “Vesting Period”), at a rate of one-third (1/3) of the Restricted Stock on each anniversary of the Grant Date, until the third anniversary of the Grant Date; provided, however, except as otherwise provided under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the applicable vesting dates. The Restricted Stock vesting on the first two anniversaries of the Grant Date shall be settled in whole shares of the Company’s Common Stock rounded down to the nearest whole share; and the restricted stock vesting on the third anniversary of the Grant Date shall be settled in whole shares of the Company’s Common Stock rounded down to the nearest whole share and cash for the value of any fractional share of Common Stock (rounded to the nearest hundredth).

(b)Additional Vesting Rules. Notwithstanding Section 2(a) or the Employment Agreement between the Company and the Participant effective as of September 4, 2007, as amended (the “Employment Agreement”), and unless otherwise determined by the Board of Directors of the Company or the Compensation Committee of the Board of Directors, the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

(i)    Death or Disability. In the event the Participant’s employment with the Company is terminated due to Participant’s death or Disability,any unvested portion of the Restricted Stock as of the effective date of the Participant’s termination of employment shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment. “Disability” shall occur if the Participant is deemed disabled under the terms of the Employment Agreement.

1

Exhibit 10.6

(ii)    Retirement, Good Reason or Termination by the Company other than for Cause. In the event the Participant’s employment with the Company is terminated due to Participant’s Retirement, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, the number of shares of Restricted Stock that shall be vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment shall equal the number obtained by (x) multiplying (1) the total number of shares of Restricted Stock granted as of the Grant Date under Section 1(a) multiplied by (2) a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1,096 and (y) subtracting from such product the number, if any, of shares of Restricted Stock that vested in accordance with Section 2(a) prior to the effective date of the Participant’s termination of employment. For purposes of this Stock Agreement, “Good Reason” and “Cause” have the meanings assigned to them in the Employment Agreement; and “Retirement” means the Participant’s voluntary termination of employment with the Company on or after age sixty-five (65) or prior to age sixty-five (65) with the approval of the Board of Directors of the Company or Compensation Committee of the Board of Directors.

(iii)    Termination for Cause. In the event the Participant’s employment with the Company is terminated for Cause, any unvested Restricted Stock shall be forfeited to the Company as of the date of the event giving rise to the termination for Cause.

(iv)    Other Termination of Employment. In the event the Participant’s employment with the Company is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii), any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall immediately be forfeited to the Company.

3.Rights While Holding Restricted Stock.

(a)Custody and Availability of Shares. The Company shall hold the shares of Restricted Stock subject to this Agreement in uncertificated, book-entry form registered in the Participant’s nameuntil the Restricted Stock shall have vested, in whole or in part, pursuant to Section 2. Subject to Section 4, if and to the extent shares of Restricted Stock become vested, the Company shall remove or cause the removal of the restrictions on transfer of such shares arising from this Stock Agreement. Such unrestricted shares shall be made available to the Participant in uncertificated, book-entry form registered in the Participant’s name.

(b)Rights as a Stockholder. During the period that shares of Restricted Stock remain unvested, the Participant shall have all of the rights of a stockholder of the Company with respect to the Restricted Stock including, but not limited to, the right to receive dividends paid on the shares of Restricted Stock and the full right to vote such shares.

(c)Section 83(b) Election. The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(d)Compliance with Federal and State Law. The Company may postpone issuing and delivering any Restricted Stock for so long as the Company reasonably determines to be necessary to satisfy the following:

2

Exhibit 10.6

(i)    its completing or amending any securities registration or qualification of the Restricted Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule, or regulation; and

(ii)    the Participant complying with any federal, state or other tax withholding obligations.

4.Payment of Taxes. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the issuance or vesting of the Restricted Stock, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the Restricted Stock and its vesting.

5.Change in Control. Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this Stock Agreement is assumed or provision is made for the continuation of this Stock Agreement, then subject to Section 4.3 of the Plan, this Stock Agreement shall continue in accordance with its terms, and there shall be substituted for each Share of Restricted Stock then subject to this Stock Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. Notwithstanding the Employment Agreement, and unless otherwise determined by the Board of Directors of the Company or the Compensation Committee of the Board of Directors, in the event the Participant’s employment with the Company is terminated on or after the date of such Change in Control by reason of the Participant’s resignation for Good Reason or by Zebra other than for Cause, then any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment.

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this Stock Agreement shall be surrendered to the Company by the Participant, and this Stock Agreement shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of Shares of unvested Restricted Stock as of the effective date of the Change in Control, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6.Confidentiality, Non-Solicitation and Non-Compete. The Participant agrees to, understands and acknowledges the following:

(a)Confidential Information. The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this Stock Agreement, “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation,

3

Exhibit 10.6

(i)    information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;

(ii)    inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;

(iii)    the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of but, not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;

(iv)    the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and

(v)    other confidential and proprietary information or documents relating to the Company's or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

4

Exhibit 10.6

(b)Non-Solicitation and Non-Compete. Notwithstanding any provision of this Stock Agreement, (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of vesting of all or any portion of the Restricted Stock, the Participant shall not, directly or indirectly:

(i)    employ, recruit or solicit for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

(ii)    accept employment or engage in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use, of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or

(iii)    solicit or encourage any customer, channel partner or vendor (or potential customer, channel partner or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a "potential customer" or “potential channel partner” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest.

(c)Enforceability of Restrictive Covenants. The scope and duration of the restrictive covenants contained in this Stock Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(d)Written Acknowledgement by Participant. The Committee, in its sole discretion, may require the Participant, as a condition to lapsing any restriction on the Restricted Stock, to acknowledge in writing that the Participant has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.

7.Right of Setoff; Recoupment.

(a)Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law and which would not trigger tax under Code Section 409A, deduct from and set off against any amounts the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with the Stock Agreement, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or a Subsidiary, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any Restricted Stock granted hereunder, the Participant agrees to any deduction or setoff under this Section 7(a).

(b)Termination of the Stock Agreement; Recoupment. The Stock Agreement shall terminate automatically and be subject to clawback on the date the Participant violates the non-solicit, non-compete or confidentiality provisions in Sections 6(a) or 6(b) or commits an act of theft, embezzlement of funds

5

Exhibit 10.6

or fraud involving money or property of the Company or any Subsidiary. Any outstanding Restricted Stock, whether vested or unvested, shall terminate automatically as of the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud and the Participant shall forfeit such Restricted Stock. With respect to any Restricted Stock that vested within the one-year period prior to the date of such violation of Sections 6(a) or 6(b) or commission of an act of theft, embezzlement or fraud, the Participant shall pay the Company, within forty-five (45) calendar days of receipt by the Participant of a written demand therefor, or pursuant to such other time frame as the Company, in its sole discretion, agrees to in writing with the Participant, an amount in cash determined by multiplying the number of such shares of Restricted Stock by the Fair Market Value of a Share on the date of such vesting.

(c)Injunctive Action. The Participant acknowledges that if he or she violates the terms of Sections 6 or 7, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this Stock Agreement (including any provision of Section 6(a) or (b) or 7(b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 7 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Section 6(a), 6(b) or 7(b), the Company will have the right to cancel this Stock Agreement.

(d)Attorneys’ Fees. In addition to the rights available to the Company and its Subsidiaries under Sections 7(b) and (c), if the Participant violates the terms of Sections 6 or 7 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 7. In addition to any injunctive relief sought under Section 7(c) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 7(d), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.

8.Miscellaneous Provisions.

(a)No Service or Employment Rights. No provision of this Stock Agreement or of the Restricted Stock granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.

(b)Plan Document Governs. The Restricted Stock is granted pursuant to the Plan, and the Restricted Stock and this Stock Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Stock Agreement by reference or are expressly cited. Any inconsistency between the Stock Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.

6

Exhibit 10.6

(c)Administration. This Stock Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Stock Agreement, all of which shall be binding upon the Participant.

(d)No Vested Right in Future Awards. The Participant acknowledges and agrees (by accepting or executing this Stock Agreement) that the granting of Restricted Stock under this Stock Agreement is made on a fully discretionary basis by the Company and that this Stock Agreement does not lead to a vested right to further restricted stock or other awards in the future.

(e)Use of Personal Data. By accepting or executing this Stock Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position and details of all past Awards and current Awards outstanding under the Plan (“Data”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company, or its Subsidiaries, may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.

(f)Severability. If a provision of this Stock Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this Stock Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this Stock Agreement.

(g)Waiver; Cumulative Rights. The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

(h)Notices. Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.

(i)Counterparts. This Stock Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

7

Exhibit 10.6

(j)Successors and Assigns. This Stock Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

(k)Governing Law. This Stock Agreement and the Restricted Stock granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.

(l)Entire Agreement. This Stock Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

(m)Amendment. Any amendment to this Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(n)Headings and Construction. The headings contained in this Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement. This Stock Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this Stock Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.

IN WITNESS WHEREOF, the Company has caused this Stock Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has electronically accepted this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or hereunto set his hand, all as of the day and year first above written.

ZEBRA TECHNOLOGIES CORPORATION

By:

_____________________________________

Name: Michael Terzich

Title: Senior Vice President, Chief Administrative Officer

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EX-10.7

Exhibit 10.7

AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT

AMENDMENT NO. 1 dated as of May 31, 2018 (this “Amendment”) to the Amended and Restated Credit Agreement dated as of July 26, 2017 (originally dated as of October 27, 2014) (the “Existing Credit Agreement” and, as amended by the Amendment, the “Credit Agreement”) among Zebra Technologies Corporation (the “U.S. Borrower”), Zebra Diamond Holdings Limited (the “U.K. Borrower”, together with the U.S. Borrower, the “Borrowers”), the Lenders party thereto, JPMorgan Chase Bank, N.A., as Tranche A Term Loan Administrative Agent, Revolving Facility Administrative Agent and Collateral Agent, and Morgan Stanley Senior Funding, Inc., as Tranche B Term Loan Administrative Agent. Capitalized terms used but not defined herein are used as defined in the Credit Agreement.

RECITALS:

1.    The Borrowers wish to obtain Other Revolving Commitments (the “Refinancing Revolving Commitments”; the loans thereunder, “Refinancing Revolving Loans”; and the Persons making such commitments and loans, the “Refinancing Revolving Lenders”) as Credit Agreement Refinancing Indebtedness under the Credit Agreement to replace in full the Revolving Commitments existing immediately prior to the Amendment No. 1 Effective Date (as defined below) (such existing Revolving Commitments, the “Refinanced Revolving Commitment”; the loans thereunder, the “Refinanced Revolving Loans”) pursuant to a Refinancing Amendment under the Credit Agreement, and the Refinancing Revolving Lenders are willing to provide the Refinancing Revolving Commitments on and subject to the terms and conditions set forth herein and in the Credit Agreement.

2.    The Borrowers wish to obtain Incremental Revolving Commitments in an aggregate principal amount of $300,000,000 (the “Incremental Revolving Commitments”; the loans thereunder, the “Incremental Revolving Loans”; and the Persons making such commitments and loans, the “Incremental Revolving Lenders”) (collectively with Refinancing Revolving Commitments, the Refinancing Revolving Loans and the Refinancing Revolving Lenders, the “New Revolving Commitments”, the “New Revolving Loans” and the “New Revolving Lenders”, respectively) pursuant to an Incremental Facility Amendment under the Credit Agreement, and the Incremental Revolving Lenders are willing to provide the Incremental Revolving Commitments on and subject to the terms and conditions set forth herein and in the Credit Agreement. The Incremental Revolving Commitments are being provided pursuant to the leverage-based incurrence test set forth in Section 2.20(a)(ii) of the Credit Agreement.

3.    The U.K. Borrower wishes to obtain Other Term Loans (the “Refinancing Tranche A Term Loans”; and the Persons making such loans, the “Refinancing Tranche A Term Lenders”) as Credit Agreement Refinancing Indebtedness under the Credit Agreement to refinance all outstanding Tranche A Term Loans (collectively, the “Refinanced Tranche A Term Loans”) pursuant to a Refinancing Amendment under the Credit Agreement, and the Refinancing Tranche A Term Lenders are willing to provide the Refinancing Tranche A Term Loans on and subject to the terms and conditions set forth herein and in the Credit Agreement.

4.    Refinancing Tranche A Term Lenders will be comprised of, and Refinancing Tranche A Term Loans will be made by Tranche A Term Lenders who hold Refinanced Tranche

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A Term Loans and who agree to continue all of their Refinanced Tranche A Term Loans as Refinancing Tranche A Term Loans by executing and delivering a signature page to this Agreement in the form of Annex I hereto.

5.    The U.S. Borrower wishes to obtain Other Term Loans (the “Refinancing Tranche B Term Loans”; and the Persons making such loans, the “Refinancing Tranche B Term Lenders”) (collectively with Refinancing Tranche A Term Loans and Refinancing Tranche A Term Lenders, the “Refinancing Term Loans” and the “Refinancing Term Lenders”, respectively) as Credit Agreement Refinancing Indebtedness under the Credit Agreement to refinance all outstanding Tranche B Term Loans (collectively, the “Refinanced Tranche B Term Loans”) pursuant to a Refinancing Amendment under the Credit Agreement, and the Refinancing Tranche B Term Lenders are willing to provide the Refinancing Tranche B Term Loans on and subject to the terms and conditions set forth herein and in the Credit Agreement.

6.    Refinancing Tranche B Term Lenders will be comprised of, and Refinancing Tranche B Term Loans will be made by:

(i)     in part, Tranche B Term Lenders who hold Refinanced Tranche B Term Loans and who agree to convert, exchange or “cashless roll” all of their Refinanced Tranche B Term Loans to or for Refinancing Tranche B Term Loans by executing and delivering a signature page to this Agreement in the form of Annex II hereto and selecting the “Cashless Settlement Option”; and

(ii) in part, Persons providing new Refinancing Tranche B Term Loans the proceeds of which will be used to repay holders of Refinanced Tranche B Term Loans that will not be so converted, exchanged or rolled.

7.    Therefore,in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto (which Lenders party hereto constitute the Required Lenders, both immediately prior to and after giving effect to this Amendment) agree as follows:

Section 1. Amendmentsto the Credit Agreement. Each of the parties hereto agrees that, effective on the Amendment No. 1 Effective Date, the Existing Credit Agreement shall be amended as follows:

i. The Existing Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Annex III hereto.

ii.Schedule 2.01(a) to the Existing Credit Agreement is hereby deleted in its entirety and replaced with Schedule 2.01(a) to this Amendment.

iii.Schedule 2.01(b) to the Existing Credit Agreement is hereby deleted in its entirety and replaced with Schedule 2.01(b) to this Amendment.

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iv.Schedule 2.17(f) to this Amendment is hereby added to the Schedules to the Existing Credit Agreement.

v.Exhibits A, B, C, F-1, F-2, G and J to the Existing Credit Agreement are hereby deleted in their entirety and replaced with the Exhibits A, B, C, F-1, F-2, G and J to this Amendment.

vi.Exhibit L to this Amendment is hereby added to the Exhibits to the Existing Credit Agreement.

Section 2.    Conditions to Effectiveness of this Amendment.This Amendment shall become effective as of May 31, 2018 (the “Amendment No. 1 Effective Date”) when:

i.this Amendment shall have been executed and delivered by the Borrowers, the Subsidiary Loan Parties, each New Revolving Lender, each Refinancing Term Lender and the Administrative Agents;

ii.the Administrative Agents shall have received a certificate of a Responsible Officer of each Loan Party dated the date hereof certifying (w) that attached thereto is a true and complete copy of the Organizational Documents of such Loan Party and, to the extent applicable, certified as of a recent date by the appropriate governmental official, (x) that attached thereto is a good standing certificate (to the extent such concept is known in the relevant jurisdiction) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation dated a recent date prior to the Amendment No. 1 Effective Date, (y) that attached is a true and complete copy of the resolutions duly adopted by the board of directors or similar governing body of each Loan Party, or duly constituted committee thereof (including, with regard to the U.K. Borrower, shareholder resolutions), authorizing the execution, delivery and performance of this Amendment, all documents executed in connection therewith, the borrowings thereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on such date and (z) as to the incumbency and specimen signature of each Responsible Officer executing this Amendment and any document executed in connection therewith and countersigned by another officer as to the incumbency and specimen signature of the Responsible Officer executing such certificate which shall also include a certification that (A) borrowing or guaranteeing or securing, as appropriate, the aggregate Commitments under the Credit Agreement and any other Loan Document would not cause any borrowing, guarantee, security or similar limit binding on a Loan Party to be exceeded, as applicable and (B) each copy document relating to it specified in this Section 2 is correct, complete and in full force and effect and has not been amended or superseded as at a date earlier than the Amendment No. 1 Effective Date;

iii.the applicable Administrative Agent shall have received notices of borrowing of Refinancing Term Loans and New Revolving Loans, if applicable, and notices of prepayment relating to the Refinanced Term Loans;

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iv.the applicable Administrative Agent shall have received a promissory note in form and substance reasonably acceptable to the applicable Administrative Agent executed by the applicable Borrower in favor of each Lender that requests such a promissory note at least three (3) Business Days in advance of the Amendment No. 1 Effective Date;

v.the representations and warranties set forth in Article 3 of the Credit Agreement and in each other Loan Document shall be true and correct in all material respects on and as of the date hereof (both before and after giving effect to the transactions contemplated by this Amendment) with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date;

vi.the representations and warranties in Section 4 of this Amendment shall be true and correct in all material respects as of the date hereof;

vii.each New Revolving Lender, Refinancing Term Lender and the Administrative Agents shall have received at least two (2) Business Days prior to the date hereof all documentation and other information about the Borrowers and the Subsidiary Loan Parties required under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act that has been requested in writing at least five (5) Business Days prior to the date hereof;

viii.the applicable Administrative Agents shall have received, on behalf of themselves and the applicable Lenders, a favorable written opinion from each of Kirkland & Ellis, LLP, New York and Illinois counsel for the Loan Parties and Davis Polk & Wardwell London LLP, U.K. counsel for the Tranche A Term Loan Administrative Agent and Revolving Facility Administrative Agent, in each case, (A) dated the date hereof, (B) addressed to the applicable Administrative Agents and the applicable Lenders and (C) in form and substance reasonably satisfactory to the applicable Administrative Agents and covering such other matters relating to this Amendment as the applicable Administrative Agents shall reasonably request;

ix.no Default or Event of Default shall exist on the date hereof before or after giving effect to the Refinancing Term Loans and any New Revolving Loans and the use of proceeds thereof;

x.all fees and expenses required to be paid by (or on behalf of) the Borrowers to the Administrative Agent pursuant to any written agreement with any Borrower entered into on or before the Amendment No. 1 Effective Date and invoiced at least two (2) Business Days prior to the Amendment No. 1 Effective Date shall have been paid in full in cash;

xi.the Tranche A Term Loan Administrative Agent and Revolving Facility Administrative Agent shall have received a Parent Guaranty executed by the U.S.

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Borrower, the Tranche A Term Loan Administrative Agent and Revolving Facility Administrative Agent, in form and substance reasonably acceptable to the Tranche A Term Loan Administrative Agent and Revolving Facility Administrative Agent; and

xii.at least two (2) days prior to the date hereof, any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Borrower.

The Borrowing of the Refinancing Term Loans and any New Revolving Loans shall be deemed to constitute a representation and warranty by the applicable Borrower on the Amendment No. 1 Effective Date as to the matters specified in paragraphs (e) and (i) above.

Section 3. Amendment Transactions. This Amendment concurrently (a) amends the Existing Credit Agreement to add the U.K Borrower as a Borrower in respect of the Revolving Credit Facility and the Tranche A Term Loan Facility under the Credit Agreement and (b) constitutes a Refinancing Amendment and an Incremental Facility Amendment under the Credit Agreement. Subject to the satisfaction of the conditions set forth in Section 2 hereof, (a)(i) each Refinancing Term Lender will make (or, if applicable, convert, exchange or roll its Refinanced Term Loans to or for) Refinancing Term Loans in an amount set forth opposite its name on Schedule 2.01(a), (ii) the U.S. Borrower will prepay (in cash or through delivery by the Borrowers of Refinancing Term Loans, as applicable) the entire remaining amount of the Refinanced Term Loans, together with accrued and unpaid interest thereon and (iii) each Refinancing Tranche A Term Loan shall be deemed to be a “Tranche A Term Loan” under the Credit Agreement and each Refinancing Tranche B Term Loan shall be deemed to be a “Tranche B Term Loan” under the Credit Agreement and (b)(i) each New Revolving Lender will make available to each of the U.S. Borrower and the U.K. Borrower New Revolving Commitments in an amount equal to the amount set forth opposite its name on Schedule 2.01(b) hereto, (ii) the Refinanced Revolving Commitments will be continued as Refinancing Revolving Commitments and the Refinanced Revolving Loans will be continued as Refinancing Revolving Loans and (iii) each New Revolving Commitment and New Revolving Loan shall be deemed to be a “Revolving Commitment” and a “Revolving Loan”, respectively, under the Credit Agreement.

Section 4. Representations and Warranties. By its execution of this Amendment, each Borrower hereby certifies thatthis Amendment (including, without limitation, Annex III hereto) has been duly authorized by all necessary corporate, shareholder or other organizational action by such Borrower and constitutes a legal, valid and binding obligation of such Borrower, enforceable in accordance with the terms hereof, (i) subject to

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applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and (ii) subject also, in the case of the U.K. Borrower, to the U.K. Legal Reservations and U.K. Perfection Requirements.

Section 5. Certain Acknowledgements.(a) The U.S. Borrower and each Subsidiary Loan Party hereby expressly acknowledges the terms of this Amendment and reaffirms, as of the date hereof, (i) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated hereby and (ii) its guarantee of the Obligations (including, without limitation, the New Revolving Loans and the Refinancing Term Loans) under the Subsidiary Guaranty and its grant of Liens on the Collateral to secure the Obligations (including, without limitation, the Obligations with respect to the New Revolving Loans and the Refinancing Term Loans) pursuant to the Security Documents.

(b)    After giving effect to this Amendment, neither the modification of the Existing Credit Agreement effected pursuant to this Amendment nor the execution, delivery, performance or effectiveness of this Amendment (i) impairs the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document, and such Liens continue unimpaired with the same priority to secure repayment of all Obligations, whether heretofore or hereafter incurred; or (ii) requires that any new filings be made or other action taken to perfect or to maintain the perfection of such Liens.

Section 6. Amendment, Modifications and Waiver. This Amendment may not be amended, modified or waived except in writing executed by all parties hereto.

Section 7. Representations to the Agents and Lead Arrangers.Each New Revolving Lender andRefinancing Term Lender, solely for the benefit of each Administrative Agent and each Joint Lead Arranger, hereby (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment; (ii) agrees that it will, independently and without reliance upon any Administrative Agent or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; and (iii) agrees that it shall be bound by the terms of the Credit Agreement as a Lender thereunder and it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

Section 8.     Miscellaneous.

(a)    Entire Agreement. This Amendment, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties hereto with respect to the subject matter hereof. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver or novation of, or otherwise affect the rights and remedies of any party under, the Credit Agreement, nor alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which (as amended hereby) are ratified and affirmed in all respects and shall continue in full force and effect. It is understood and agreed that each reference in each Loan

6

Document to the Existing Credit Agreement, whether direct or indirect, shall hereafter be deemed to be a reference to the Credit Agreement and that this Amendment is a Loan Document.

(b)     Reference to Credit Agreement. Sections 1.03, 1.04, 9.06, 9.07, 9.09, 9.10, and 9.11 of the Credit Agreement are hereby incorporated herein, mutatis mutandis.

[Signature Pages Follow]

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Amendment as of the date first written above.

ZEBRA TECHNOLOGIES CORPORATION

By /s/ Michael Dennen

Name:    Michael Dennen

Title:    Authorized Signatory

ZEBRA DIAMOND HOLDINGS LIMITED

By/s/ John Ragland

Name:    John Ragland

Title:    Director

ZIH CORP.

By /s/ Colleen M. O’Sullivan

Name:    Colleen M. O’Sullivan

Title:    Vice President and Treasurer

ZEBRA TECHNOLOGIES INTERNATIONAL, LLC

By /s/ Michael Dennen

Name:    Michael Dennen

Title:    Vice President and Vice-Treasurer

ZEBRA TECHNOLOGIES ENTERPRISE CORPORATION

By /s/ John Ragland

Name:    John Ragland

Title:    President

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ZEBRA RETAIL SOLUTIONS, LLC

By/s/ Colleen M. O’Sullivan

Name:    Colleen M. O’Sullivan

Title:    Vice President and Treasurer

LASER BAND, LLC

By /s/ Jim L. Kaput

Name:    Jim L. Kaput

Title:    Vice President and Secretary

JPMORGAN CHASE BANK, N.A.,as Tranche A Term Loan Administrative Agent, Revolving Facility Administrative Agent and Collateral Agent

By /s/ Justin Burton

Name:    Justin Burton

Title:    Vice President

[Signature Page to Amendment No. 1 to the Amended and Restated Credit Agreement]

MORGAN STANLEY SENIOR FUNDING, INC.,as Tranche B Term Loan Administrative Agent

By /s/ Jonathan Rauen

Name:    Jonathan Rauen

Title:    Authorized Signatory

EX-10.8

Exhibit 10.8

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by and between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company"), and Hugh Gagnier (the "Employee") as of June 1, 2018 (the “Effective Date”).

RECITALS

A.The Company and Employee are parties to an employment agreement dated December 12, 2007, as amended (the “Prior Agreement”).

B.The Company and Employee wish to terminate the Prior Agreement as of the Effective Date (as defined below) and enter into this Agreement, which provides for the continued employment of the Employee upon the terms and conditions set forth in this Agreement.

C.The Employee desires to continue the Employee’s employment with the Company upon the terms and condition set forth in this Agreement.

NOW, THEREFORE, in consideration of the above premises and the following mutual covenants and conditions, the parties agree as follows:

1.Continued Employment and Term. Beginning as of the Effective Date and continuing through the close of business, Pacific time, on December 31, 2018 (the “Transition Period”), the Employee shall continue the Employee’s employment as Senior Vice President, Global Supply Chain at his current annual base salary of $437,750 and incentive compensation pay rates and benefits, including medical, dental and vision benefits. Beginning as of the close of business on December 31, 2018 and continuing through the close of business, Pacific time, on June 30, 2021 (the “Executive Consultancy Period”), the Employee shall cease serving as Senior Vice President, Global Supply Chain at his current compensation and benefits and the Company shall employ the Employee as a Vice President of the Company at the compensation and benefits terms set forth in Section 4 below. The Employee understands and agrees that the Employee is an at-will employee, and the Employee and the Company can, and shall have the right to, terminate the employment relationship, including in either the Transition Period or Executive Consultancy Period, at any time for any or no reason, with or without notice, and with or without cause, subject to the provisions contained in Paragraph 7 of this Agreement. Nothing contained in this Agreement or any other agreement shall alter the at-will relationship.

2.Duties. During the Transition Period, the Employee shall continue to perform his current job duties as Senior Vice President, Global Supply Chain and shall solely report to, and follow the direction of, the Chief Executive Officer of the Company (the “CEO”) and assist the Company with smooth transition of those duties. During the Executive Consultancy Period, the Employee shall solely report to, and follow the direction of, the CEO. During the Executive Consultancy Period, the Employee will not be required to maintain regular work hours but shall make himself available to work on a part-time basis as reasonably requested by the CEO. The Employee shall diligently, competently, and faithfully perform all duties assigned to Employee and will use the Employee’s best efforts to promote the interests of the Company. It shall not be considered a violation of the foregoing for the Employee to serve on business, industry, civic, religious or charitable boards or committees. Furthermore, it shall not be considered a violation of the foregoing for the Employee to engage in other employment during the Executive Consultancy Period provided that such employment does not conflict with or violate the other provisions of this Agreement, including but not limited to the Non-Solicitation and Non-Competition provisions of Paragraph 8(B); provided further that should Employee become eligible for health insurance coverage under another group health plan that does not impose preexisting condition limitations, the Company shall be relieved of any obligation under this Agreement to provide or subsidize health insurance coverage and any payment or portion of any payment to be provided by the Company under this Agreement attributable to providing or subsidizing health insurance shall cease. For the avoidance of doubt, Employee shall consult with the Company prior to accepting any outside employment during the Executive Consultancy Period to ensure that such employment will not create an actual or perceived conflict with any of Employee’s obligations under this Agreement.

3.Loyalty. The Employee expressly agrees that during the term of the Employee’s employment, the Employee shall not engage, directly or indirectly, as a partner, officer, director, member, manager, stockholder, supplier, advisor, agent, employee, or in any other form or capacity, in any other business similar to that of the Company. The foregoing notwithstanding, and except as otherwise set forth in Paragraph 8, nothing herein contained shall be deemed to prevent the Employee from (1) managing the Employee’s personal investments and financial affairs or (2) investing the Employee’s money in the capital stock or other securities of any corporation whose stock or securities are publicly traded on any securities exchange, so long as the Employee does not beneficially own more than one percent (1%) of the outstanding capital stock of any such corporation.

4.Executive Consultancy Period Compensation & Benefits.

A.Base Salary. Commencing January 1, 2019, the Employee’s Base Salary shall be reduced to an annual rate of $15,000, payable in substantially equal installments in accordance with the Company's payroll policy from time to time in effect. The Base Salary shall be subject to any payroll or other deductions as may be required to be made pursuant to law, government order, or by agreement with, or consent of, the Employee. The Base Salary during the Executive Consultancy Period may be reviewed by the CEO and may be increased (but not decreased) as shall be determined by the CEO. If and when increased, the annual rate of salary shall thereafter be treated for all purposes of this Agreement as the Employee’s Base Salary.

B.Incentive Pay. The Employee shall be eligible to earn a cash performance incentive under the Zebra Technologies Corporation 2018 Incentive Plan (the “2018 ZIP”). The performance goals and targets under the 2018 ZIP shall be the same goals and targets as those set for executive officers of the Company, other than any personal performance goals and targets of an executive officer. The Employee’s 2018 ZIP incentive shall be targeted at eighty percent (80%) of the Base Salary (the “Target Incentive”), with the actual incentive (“Incentive”) earned to be calculated on that portion of the Base Salary actually earned during 2018 and in accordance with the 2018 ZIP as established by the Board. The Incentive, if any, for 2018 may be below, at or above the Target Incentive and shall be paid in March 2019. Except as otherwise set forth in Paragraph 7B, the Employee must be employed by the Company and in good standing as of the date that the 2018 Incentive is paid. The Employee shall not participate in any cash incentive plan of the Company for any plan year after 2018.

C.Equity. The Employee shall not be eligible to be granted any equity award under any equity incentive plan of the Company during 2018 or throughout the remainder of the Employee’s employment with the Company. This Agreement shall not affect the terms and conditions of any equity awards granted by the Company to Employee prior to the Effective Date, which awards shall continue in accordance with their terms.

D.    Employee Benefits. During the Executive Consultancy Period, the Company shall include the Employee in any benefit plans or programs maintained by the Company for the benefit of its employees and as to which the Employee is eligible to participate; provided, it is understood that during the Executive Consultancy Period, the Employee shall not be eligible to participate in the Company’s paid time off program, which shall cease accruing as of the close of business on December 31, 2018; provided, further, that beginning on January 1, 2019, the Employee shall not be eligible to participate in (1) any Company excess benefit or supplemental executive retirement plans provided or that may be provided to executive officers of the Company, (2) any Company disability insurance plans or programs, or (3) any Company medical, dental or vision insurance, except as set forth in this Agreement or as may be provided through continuation coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Subject to Paragraph 7, in the period commencing January 1, 2019 through the end of the Employee’s employment, the Employee shall be entitled to medical, dental and vision coverage of the Employee and the Employee’s dependents in medical, dental and vision insurance plans sponsored by the Company for U.S. employees (or equivalent or substantially equivalent plans to those sponsored by the Company for U.S. employees) and the Company shall pay for such coverage except to the extent that the Employee shall be required to pay or contribute at the same rate that the Company’s U.S. employees pay for equivalent or substantially equivalent medical, dental and vision insurance coverage under the Company’s group health plan for active U.S. employees through the earlier of (a) June 30, 2021 and (b) the date the Employee becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations. Nothing in this Agreement shall be construed to limit, condition, or otherwise encumber the rights of the Company, in its sole discretion, to amend, discontinue, substitute or maintain any benefit plan, program, or perquisite.

5.    Expenses. While employed by the Company, the Employee shall be entitled to receive prompt reimbursement for all reasonable and necessary business expenses incurred by the Employee, in accordance with the practices and policies of the Company, including travel expenses incurred in connection with the performance of the Employee’s duties.  To receive reimbursement, the Employee shall submit to the Company such vouchers or expense statements that reasonably evidence expenses incurred in accordance with the Company’s travel and expense reimbursement policy.

6.    Termination. The Employee's employment shall terminate on the earlier of: (1) the close of business, Pacific time, on June 30, 2021, or (2) the first to occur of the following events:

A.Death or Disability. Upon the Employee's date of death or the date the Employee is given written notice that the Employee has been determined by the Company to be disabled. For purposes of this Agreement, the Employee shall be deemed to be disabled if the Employee, as a result of illness or incapacity, shall be unable to perform substantially the Employee’s required duties for a period of one hundred eighty (180) consecutive days with or without accommodation; provided, however, that if the Employee, after being unable to perform substantially the Employee’s required duties for a period of less than one hundred eighty (180) consecutive days as a result of illness or incapacity, returns to active duty for less than thirty (30) days, the period of such active duty will be disregarded in determining whether the 180 consecutive day threshold has been accumulated (although it will not be accumulated as part of the 180-day period). A termination of the Employee's employment by the Company for disability shall be communicated to the Employee by written notice and shall be effective on the tenth (10th) business day after receipt of such notice by the Employee, unless the Employee returns to full-time performance of the Employee’s duties before such tenth (10th) business day.

B.Termination for Cause. On or as of the date the Company provides the Employee with written notice that the Employee is being terminated for Cause. For purposes of this Agreement, and as determined by the CEO in the CEO’s sole discretion, the Employee shall be deemed terminated for “Cause” if the CEO terminates the Employee after the Employee:

(1)shall have committed, been indicted of, or been convicted of, or admitted, plea bargained, entered a plea of no contest or nolo contendere to, any felony of any kind or a misdemeanor, or violated any laws, involving fraud, dishonesty or an act of moral turpitude;

(2)shall have materially breached this Agreement or any other agreement to which the Employee and the Company are parties;

(3)shall have materially violated any written Company policy, regardless of whether within or outside the scope of the Employee’s authority;

(4)shall have committed willful or intentional misconduct, gross negligence, or dishonest, fraudulent or unethical behavior, or other conduct involving serious moral turpitude in the performance of the Employee’s duties hereunder;

(5)shall have failed or refused to materially comply (to the best of the Employee’s ability) with a specific direction of the Company, unless the Employee reasonably and in good faith believes such specific direction to be unlawful (in which case the Company’s termination of the Employee’s employment shall not be for Cause under this provision); or

(6)engages in any conduct which breaches the Employee’s fiduciary duty to the Company, which materially injures the integrity, character or reputation of the Company or which impugns Employee's own integrity, character or reputation so as to cause Employee to be unfit to act in the capacity of an officer of the Company.

A termination of employment by the Company for Cause under subparagraphs 6B(2), (3), (4), (5) or (6) shall be effectuated by the CEO or the CEO’s designee giving the Employee written notice of the termination within thirty (30) days of the event constituting Cause or the CEO having actual knowledge of the event constituting Cause, or such longer period as the parties may agree, setting forth in reasonable detail the specific conduct of the Employee that constitutes Cause, the specific provisions of this Agreement on which the Company relies and, to the extent such Cause is susceptible to cure, providing the Employee with a thirty (30) day cure period. If such Cause is susceptible to cure and the Employee fails to remedy the condition within such thirty (30) day cure period, the Company may terminate the Employee’s employment within thirty (30) days after the expiration of the cure period, and if the Company fails to so terminate the Employee’s employment, any subsequent termination based upon the same underlying facts shall not constitute a termination for Cause under this subparagraph 6B.

C.Termination by the Company. On the date the Company terminates the Employee's employment for any reason, other than a reason otherwise set forth in this Paragraph 6.

D.Good Reason Termination. On the date the Employee terminates the Employee’s employment for Good Reason. The term “Good Reason” means the occurrence of a material breach by the Company of any material provision of this Agreement, the Indemnification Agreement dated as of February 15, 2017 between the Company and Employee (the “Indemnification Agreement”) or any equity award agreement between the Employee and the Company.

A termination of employment by the Employee for Good Reason under this subparagraph 6D shall be effectuated by giving the Company written notice of the termination within thirty (30) days of the event constituting Good Reason, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provisions of this Agreement or the Indemnification Agreement on which Employee relies and providing the Company with a thirty (30) day period during which it may remedy the condition constituting Good Reason. If the Company fails to remedy the condition within such thirty (30) day period, the Employee must terminate the Employee’s employment within thirty (30) days after the expiration of the cure period, and if the Employee fails to so terminate the Employee’s employment, any subsequent termination based upon the same underlying facts shall not constitute a termination for Good Reason under this subparagraph 6D.

E.Resignation. On the date the Employee terminates the Employee’s employment for any reason (other than Good Reason), provided that the Employee shall give the CEO thirty (30) days written notice prior to such date of the Employee’s intention to terminate such employment. The CEO may, in the CEO’s sole discretion, waive such thirty (30) day notice requirement.

7.    Compensation Upon Termination.

A.Final Payments and Benefits.

(1)Payments. If the Employee's employment is terminated on or prior to June 30, 2021 pursuant to Paragraph 6, the Employee shall be entitled to the Employee’s salary through the Employee’s final date of active employment plus any accrued but unused paid time off.

(2)Benefits Upon Termination During Transition Period. If the Employee’s employment is terminated during the Transition Period pursuant to Paragraph 6, the Employee (and the Employee’s dependents) shall be entitled to any benefits mandated under COBRA, and the Employee shall pay for any medical, dental or vision coverage through the earlier of (a) the last day of the period mandated by COBRA and (b) the date the Employee becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations; provided, that if the Employee’s employment is terminated during the Transition Period pursuant to Paragraph 6A, 6C or 6D, the Employee (and the Employee’s dependents) shall be entitled to medical, dental and vision coverage of the Employee and the Employee’s dependents in medical, dental and vision insurance plans sponsored by the Company for U.S. employees (or equivalent or substantially equivalent plans to those sponsored by the Company for U.S. employees) and the Company shall pay for such coverage except to the extent that the Employee (dependents) shall be required to pay or contribute at the same rate that the Company’s U.S. employees pay or contribute for equivalent or substantially equivalent medical, dental and vision insurance coverage under the Company’s group health plan for active U.S. employees through the earlier of (a) June 30, 2021 and (b) the date the Employee (or dependent) becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations; provided, further, that nothing herein shall be construed to extend the period of time over which such COBRA continuation coverage may be provided to the Employee and the Employee’s dependents beyond that mandated by law.

(3)Benefits Upon Termination During the Executive Consultancy Period. If the Employee’s employment is terminated during the Executive Consultancy Period pursuant to Paragraph 6, the Employee (and the Employee’s dependents) shall be entitled, to medical, dental and vision coverage of the Employee and the Employee’s dependents in medical, dental and vision insurance plans sponsored by the Company for U.S. employees (or equivalent or substantially equivalent plans to those sponsored by the Company for U.S. employees) and the Employee shall pay for such coverage through the earlier of (a) June 30, 2021 and (b) the date the Employee becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations; provided, that if the Employee’s employment is terminated during the Executive Consultancy Period pursuant to Paragraph 6A, 6C or 6D, the Company shall pay for such coverage except to the extent that the Employee shall be required to pay or contribute at the same rate that the Company’s U.S. employees pay or contribute for equivalent or substantially equivalent medical, dental and vision insurance coverage under the Company’s group health plan for active U.S. employees through the earlier of (a) June 30, 2021 and (b) the date the Employee (or dependent) becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations.

(4)Other Benefits. If the Employee’s employment is terminated pursuant to Paragraph 6 prior to June 30, 2021, the Employee shall be entitled to any benefits pursuant to the terms of any death, disability, life insurance, or retirement plan, program, or agreement provided by the Company and to which the Employee is a party or in which the Employee is a participant.

B.Severance Benefits.

(1)Cash Payments Upon Termination During Transition Period. In addition to the salary and benefits described in Paragraph 7A, and in lieu of any severance benefits whether under any Company severance plan or otherwise, if the Employee's employment is terminated during the Transition Period pursuant to Paragraph 6C or 6D, the Employee shall be entitled to the following: (i) the continuation of the Employee’s Base Salary of $437,750 for a period ending on the one-year anniversary of the effective date of the Employee’s termination of employment (the “Severance Period”), payable commencing on the first regularly scheduled payroll date after the date the Employee’s employment is terminated and continuing thereafter on each subsequent payroll date throughout the Severance Period in accordance with the Company’s payroll policy from time to time in effect and subject to the limitations imposed under subparagraph 7B(3); (ii) a pro rata portion of the Incentive under the 2018 ZIP based on the number of days employed in 2018, if such Incentive would have been earned had the Employee been employed and in good standing as of the date the Incentive otherwise is paid to U.S. employees of the Company, and payable at the time the Incentive is paid to U.S. employees of the Company; (iii) a payment equal to $350,200, to be paid not later than March 15, 2019; and (iv) equity compensation, if any, subject to the terms of the Employee’s respective award agreements; provided, that if the Employee’s employment is terminated during the Transition Period pursuant to Paragraph 6C or 6D and a "Change in Control" is completed on or prior to April 30, 2019, the Employee shall be entitled to a cash payment, in lieu of any payments otherwise set forth in Paragraph 7B(1)(i), and payable within sixty (60) days following the later of the Change in Control or the termination, subject, however, to the limitations imposed under subparagraph 7B(3) and (4), equal to $1,575,400.

(2)Cash Payments Upon Termination During the Executive Consultancy Period. In addition to the salary and benefits described in Paragraph 7A, and in lieu of any severance benefits whether under any Company severance plan or otherwise, if the Employee's employment is terminated during the Executive Consultancy Period pursuant to Paragraph 6C or 6D, the Employee shall be entitled to the following: (i) the continuation until June 30, 2021 of the Employee’s Base Salary at the annual salary rate then in effect, payable commencing on the first regularly scheduled payroll date after the date the Employee’s employment is terminated and continuing thereafter on each subsequent payroll date through June 30, 2021 in accordance with the Company’s payroll policy from time to time in effect and subject to the limitations imposed under subparagraph 7B(3); (ii) any unpaid portion of the Incentive under the 2018 ZIP, if such Incentive would have been earned had the Employee been employed and in good standing as of the date the Incentive otherwise is paid to U.S. employees of the Company, and payable at the time the Incentive is paid to U.S. employees of the Company; and (iii) equity compensation, if any, subject to the terms of the Employee’s respective award agreements.

(3)Notwithstanding the foregoing, if the Employee is a “specified employee” as such term is defined under Section 409A of the Code and the regulations and guidance promulgated thereunder, any payments described in this Paragraph 7B to the extent applicable shall be delayed for a period of six (6) months following the Employee’s separation of employment to the extent and up to an amount necessary to ensure such payments are not subject to the penalties and interest under Section 409A of the Code. The payments to be made under this Paragraph 7B shall be further conditioned upon the Employee’s execution of an agreement acceptable to the Company that (i) waives any rights the Employee may otherwise have against the Company, and (ii) releases the Company from actions, suits, claims, proceedings and demands related to the period of employment and/or the termination of employment. Such agreement shall be provided to the Employee prior to or promptly following the Employee’s termination of employment, and must be executed by the Employee and returned to the Company within the time prescribed in such agreement (but in no event later than the sixtieth (60th) day following termination of employment). No payments shall be made pursuant to Paragraph 7B unless and until the Company shall have received such agreement and any period during which the Employee may revoke such agreement shall have expired without revocation. In the event such period spans two (2) calendar years, payment will not commence until the second calendar year and after the severance agreement and general release of claims has become effective. Any payments which the Employee would have otherwise received prior to the end of such revocation period shall be paid, in a single lump sum without interest, as soon as practical after the revocation period expires, but in no event later than March 15 of the year following the year in which the termination of employment occurs. For purposes of this Paragraph 7B, "Change in Control" shall be as defined under the 2015 Long-Term Incentive Plan, as in effect on the date hereof, which definition is incorporated herein by reference; provided, however, the definition of Change in Control as set forth herein is not intended to be broader than the definition of a “change in control event” as defined by reference to the regulations under Section 409A of the Code, and the payments described in Paragraph 7B(2) shall not be payable unless the applicable Change in Control constitutes a change in control event in accordance with Section 409A of the Code and the regulations and guidance promulgated thereunder.

(4)Each installment of Base Salary and Incentive paid under Section 7B is designated as a separate payment for purposes of the short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F) and the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii). As a result, the following payments are intended to be exempt from Section 409A of the Code: (1) payments that are made on or before the 15^th day of the third month of the calendar year following the calendar year in which the Employee terminates employment, and (2) subsequent payments made on or before the last day of the second calendar year following the year of the Employee’s termination that do not exceed the lesser of two times the Employee’s annual rate of pay in the year prior to the Employee’s termination or two times the limit under Section 401(a)(17) of the Internal Revenue Code then in effect. In the event that any provision of this Agreement is deemed to be subject to Section 409A of the Code, the Company shall administer this Agreement in accordance with the requirements set forth in Section 409A of the Code and any rules and regulations issued thereunder. If any provision of this Agreement does not comply with the requirements of Section 409A of the Code, the Company, in exercise of its sole discretion and without consent of the Employee, may amend or modify this Agreement in any manner to the extent necessary to meet the requirements of Section 409A of the Code; provided, that any such amendment or modification shall not reduce or diminish the amount or value of any payment to be made to Employee under this Agreement.

8.    Restrictive Covenants.

A.Confidentiality.

(1)Confidential Information. The Employee understands that the Company possesses Confidential Information which is important to its business, the Company devotes significant financial, human and other resources to the development of its products, its customer base and the general goodwill associated with its business and the Company diligently maintains the secrecy and confidentiality of its Confidential Information. For purposes of this Agreement, Confidential Information is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company, which has commercial value in the Company’s business. “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company that is confidential and proprietary to the Company, including without limitation, (i) information relating to the Company’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information; (ii) inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company; (iii) the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development; (iv) the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and (v) other confidential and proprietary information or documents relating to the Company’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents which the Company reasonably regards as being confidential.

(2)Company Materials. Employee understands that the Company possesses or will possess Company Materials which are important to its business. For purposes of this Agreement, “Company Materials” are documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company, whether such documents have been prepared by the Employee or by others.

(3)Treatment of Confidential Information and Company Property. In consideration of the Employee’s employment by the Company, the compensation received by the Employee from the Company, and the Company’s agreement to give Employee access to certain Confidential Information, the Employee agrees as follows:

(a)All Confidential Information and trade secret rights, and other intellectual property and rights (collectively “Rights”) in connection therewith will be the sole property of the Company. At all times, both during the Employee’s employment by the Company and after its termination for any reason, Employee will keep in confidence and trust and will not use or disclose any Confidential Information or anything relating to it without the prior written consent of the CEO, except as may be necessary and appropriate in the ordinary course of performing the Employee’s duties to the Company.

(a)All Company Materials will be the sole property of the Company. The Employee agrees that during the Employee’s employment by the Company, the Employee will not remove any Company Materials from the business premises of the Company or deliver any Company Materials to any person or entity outside the Company, except in connection with performing the duties of the Employee’s employment. The Employee further agrees that, immediately upon the termination of the Employee’s employment by the Employee or by the Company for any reason, or during the Employee’s employment if so requested by the Company, the Employee will return all Company Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only the Employee’s copy of this Agreement.

(1)No Limitation on Reporting of Violations or Protected Disclosures.Notwithstanding any of the foregoing or any other provisions in this Agreement, nothing in this Agreement prohibits the Employee from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of Zebra or its CEO, Legal Department or anyone else to make any such reports or disclosures and I am not required to notify Zebra that I have made such reports or disclosures.

B.Non-Solicitation and Non-Competition. In consideration for the compensation and benefits granted by the Company to Employee under this Agreement, and in further consideration of Employee’s continued employment by the Company, the Employee hereby agrees that during the Employee’s employment by the Company, the Employee will not directly or indirectly:

(1)Contact, solicit, interfere with or divert any of the Company’s or its subsidiaries’ customers or channel partners by disclosing, divulging, using or relying on Confidential Information, proprietary information or trade secrets acquired during the Employee’s employment with the Company;

(2)Accept employment or engage in a competing business, or engage in any activity that may result in the disclosure, divulging or otherwise use of Confidential Information acquired during the Employee’s employment with the Company; and

(3)Solicit any person who is employed by the Company or any subsidiary of the Company for the purpose of encouraging that employee to cease employment with the Company or join Employee as a partner, agent, employee or otherwise in any business activity which is competitive with the Company or any subsidiary of the Company.

C.Nondisparagement. While employed by the Company and for a one year period thereafter, the Employee shall refrain from (1) making any false statement about the Company, and (2) all conduct, verbal or otherwise, that disparages or damages or could disparage or damage the reputation, goodwill, or standing in the community of the Company or any of its subsidiaries or affiliates, or any of their officers, directors, employees and stockholders, or that could have a deleterious effect upon the Company’s or any of its subsidiaries’ or affiliates’ business; provided, however, that nothing contained in this Paragraph 8C or any other paragraph of this Agreement shall preclude the Employee from making any statement in good faith that is required or protected by law or order of any court or regulatory commission.

D.Forfeitures. In the event that the Employee breaches any of the restrictions in this Paragraph 8, the Employee shall forfeit all of the applicable payments and benefits under this Agreement, including but not limited to such payments and benefits pursuant to Paragraph 7 (except those contained in Paragraph 7A or as otherwise prohibited by law), and the Company shall have the right to recapture and seek repayment of any such applicable payments and benefits under this Agreement. The Company and the Employee acknowledge that the remedy set forth hereunder is not to be considered a form of liquidated damages and the forfeiture, recapture or repayment shall not be the exclusive remedy hereunder.

E.Intellectual Property. The Company has adopted a policy on Inventions intended to encourage research and inventions by its employees, to appraise and determine relative rights and equities of all parties concerned, to facilitate patent applications, licensing, and the generation of royalties, if any, and to provide a uniform procedure in patent matters when the Company has a right or equity. “Inventions” includes all improvements, inventions, designs, formulas, works of authorship, trade secrets, technology, computer programs, compositions, ideas, processes, techniques, know-how and data, whether or not patentable, made or conceived or reduced to practice or developed by the Employee, either alone or jointly with others, during the term of the Employee’s employment, including during any period prior to the date of this Agreement.

(1)Ownership and Assignment. Except as defined in this Agreement, all Inventions which the Employee makes, conceives, reduces to practice or develops (in whole or in part, either alone or jointly with others) during the Employee’s employment will be the sole property of the Company to the maximum extent permitted by law. The Employee agrees to assign such Inventions and all Rights in them to the Company. Exemptions from this Agreement to assign may be authorized in those circumstances where the mission of the Company is better served by such action, provided that overriding obligations to other parties are met and such exemptions are not inconsistent with other Company policies. Further, the Employee may petition the Company for license to make, market or sell a particular Invention. The Company may release patent rights to the inventor in those circumstances when:

(a)the Company provides the Employee with notification in writing that it elects not to file a patent application and the inventor is prepared to do so at the Employee’s expense, or

(b)at the Company’s discretion, the equity of the situation indicates that such release should be given, provided in either case that no further research or development to develop that invention will be conducted involving Company support or facilities, and provided further that a shop right is granted to the Company and, at the Company’s discretion, the Company shall have a royalty-free, assignable license to the Invention and any intellectual property rights related to it.

The provisions of Paragraph 8E(1) do not apply to an Invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on the Employee’s own time, unless (a) the Invention relates (1) to the business of the Company, or (2) to the Company’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by the Employee for the Company.

(2)Disclosure to the Company. The Employee promptly will disclose in writing to the CEO, with a copy to the General Counsel of the Company, all Inventions. The Employee also will disclose to the General Counsel of the Company all things that would be Inventions if made during the term of the Employee’s employment, conceived, reduced to practice, or developed by the Employee within six months after the termination of the Employee’s employment with the Company, unless the Employee can demonstrate that the Invention has been conceived and first reduced to practice by the Employee following the termination of the Employee’s employment with the Company. Such disclosures will be received by the Company in confidence (to the extent they are not assigned in this Paragraph and do not extend the assignment made in this Paragraph.) The Employee will not disclose Inventions to any person outside the Company unless requested to do so by the CEO or the General Counsel of the Company.

(3)Assistance with Rights. The Employee agrees to perform, during and after employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing Rights with respect to such Inventions and improvements in any and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. The Employee agrees to execute such declarations, assignments, or other documents as may be necessary in the course of Invention evaluation, patent prosecution, or protection of patent or analogous property rights, to assure that title in such Inventions will be held by the Company or by such other parties designated by the Company as may be appropriate under the circumstances. The Employee irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Employee’s agents and attorneys-in-fact to act for and on the Employee’s behalf and instead of the Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by the Employee.

(4)Moral Rights. Any assignment of copyright pursuant to this Agreement includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, Employee hereby waives such Moral Rights and consents to any action of the Company that would violate such Moral Rights in the absence of such consent. The Employee will confirm any such waivers and consents from time to time as requested by the Company.

F.No Conflicts. The execution and delivery of this Agreement by the Employee does not conflict with, or result in a breach of or constitute a default under, any agreement or contract, whether oral or written, to which the Employee is a party or by which the Employee may be bound. In addition, the Employee has informed the Company of, and provided the Company with copies of, any non-competition, confidentiality, work-for-hire or similar agreements to which the Employee is subject or may be bound.

G.Disclosure. The Employee acknowledges and agrees that the scope described above is necessary and reasonable in order to protect the Company in the conduct of its business and that, if the Employee becomes employed by another employer, the Employee shall be required to disclose the existence of this Paragraph 8 to such employer and the Employee hereby consents to and the Company is hereby given permission to disclose the existence of this Paragraph 8 to such Company.

H.Market Information. The Employee acknowledges that the Employee may become aware of "material" nonpublic information relating to the Company’s vendors, suppliers, alliance and/or joint venture partners, customers, channel partners or competitors (each, a “Business Partner”) whose stocks are publicly traded. The Employee acknowledges that the Employee is prohibited by law as well as by Company policy from trading in the shares of such Business Partners while in possession of such information or directly or indirectly disclosing such information to any other persons so that they may trade in these shares. For purposes of this Paragraph H, "material" information may include any information, positive or negative, which might be of significance to an investor in determining whether to purchase, sell or hold the stock of publicly traded customers. Information may be significant for this purpose even if it would not alone determine the investor's decision. Examples include a potential business acquisition, internal financial information that departs in any way from what the market would expect, the acquisition or loss of a major contract, or an important financing transaction.

I.Unauthorized Material. The Company does not wish to incorporate any unlicensed or unauthorized material into its products or services or those of its subsidiaries. Therefore, the Employee agrees that the Employee will not knowingly disclose to the Company, use in the Company's business, or cause the Company to use, any information or material which is confidential or proprietary to any third party including, but not limited to, any former employer, competitor or client, unless the Company has a right to receive and use such information. The Employee will not incorporate into the Employee’s work any material which is subject to the copyrights of any third party unless the Company has a written agreement with such third party or otherwise has the right to receive and use such information.

J.Injunctive Relief. It is agreed that any breach or anticipated or threatened breach of any of the Employee's covenants contained in this Paragraph 8 will result in irreparable harm and continuing damages to the Company and its business and that the Company's remedy at law for any such breach or anticipated or threatened breach will be inadequate and, accordingly, in addition to any and all other remedies that may be available to the Company at law or in equity in such event, any court of competent jurisdiction may issue a decree of specific performance or issue a temporary and permanent injunction, without the necessity of the Company posting bond or furnishing other security and without proving special damages or irreparable injury, enjoining and restricting the breach, or threatened breach, of any such covenant, including, but not limited to, any injunction restraining the Employee from disclosing, in whole or part, any Confidential Information. The Employee further agrees to pay all of the Company's costs and expenses, including reasonable attorneys' and accountants' fees, incurred in successfully enforcing such covenants.

9.    Notices. Any and all notices required in connection with this Agreement shall be deemed adequately given only if in writing and (a) personally delivered, or sent by first class, registered or certified mail, postage prepaid, return receipt requested, or by recognized overnight courier, (b) sent by electronic mail, provided a hard copy is mailed on that date to the party for whom such notices are intended, or (c) sent by other means at least as fast and reliable as first class mail. A written notice shall be deemed to have been given to the recipient party on the earlier of (a) the date it shall be delivered to the address required by this Agreement; (b) the date delivery shall have been refused at the address required by this Agreement; (c) with respect to notices sent by mail or overnight courier, the date as of which the Postal Service or overnight courier, as the case may be, shall have indicated such notice to be undeliverable at the address required by this Agreement; or (d) with respect to electronic mail, the date on which the electronic mail is sent and receipt of which is confirmed. Any and all notices referred to in this Agreement, or which either party desires to give to the other, shall be addressed to the Employee’s residence in the case of the Employee, or, if to the Company, to:

General Counsel

Zebra Technologies Corporation

3 Overlook Point

Lincolnshire, IL 60069

Either party may from time to time designate a new address by notice given in accordance with this Paragraph 9.

10.    Waiver of Breach. A waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver or estoppel of any subsequent breach by such other party. No waiver shall be valid unless in writing and signed by an authorized officer of the Company or by the Employee, as the case may be.

11.    Assignment. The Employee acknowledges that the services to be rendered by the Employee are unique and personal. Accordingly, the Employee may not assign any of the Employee’s duties or obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Employee, the Employee’s estate and beneficiaries. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.

12.    Entire Agreement. Except as set forth in this Section, this Agreement, together with any agreements referred to herein, sets forth the entire and final agreement and understanding of the parties and contains all of the agreements made between the parties with respect to the subject matter hereof. This Agreement supersedes the Prior Agreement and any and all other agreements, either oral or in writing, between the parties hereto, with respect to the subject matter hereof; provided, however, that (1) the Indemnification Agreement, (2) the stock appreciation rights awards granted on May 5, 2011, April 30, 2012, May 3, 2013, and May 8, 2014, and the related agreements, and (3) the stock appreciation rights awards, time-vested restricted stock awards and performance-vested restricted stock awards granted to Employee on each of May 15, 2015, May 12, 2016, May 11, 2017, and the related agreements, shall not be affected by this Agreement. No change or modification of this Agreement shall be valid unless in writing and signed by the Company and the Employee.

13.    Severability. If any provision of this Agreement shall be found invalid or unenforceable for any reason, in whole or in part, then such provision shall be deemed modified, restricted, or reformulated to the extent and in the manner necessary to render the same valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified, restricted, or reformulated or as if such provision had not been originally incorporated herein, as the case may be. The parties further agree to seek a lawful substitute for any provision found to be unlawful; provided, that, if the parties are unable to agree upon a lawful substitute, the parties desire and request that a court or other authority called upon to decide the enforceability of this Agreement modify those restrictions in this Agreement that, once modified, will result in an agreement that is enforceable to the maximum extent permitted by the law in existence at the time of the requested enforcement.

14.    Headings. The headings in this Agreement are inserted for convenience only and are not to be considered a construction of the provisions hereof.

15.    Execution of Agreement. This Agreement may be executed in several counterparts, each of which shall be considered an original, but which when taken together, shall constitute one agreement.

16.    Recitals. The recitals to this Agreement are incorporated herein as an integral part hereof and shall be considered as substantive and not precatory language.

17.    Governing Law; Choice of Forum. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, without reference to its conflict of law provisions. of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Lake or Cook County, Illinois. In addition, the Employee waives any right Further, the Employee waives any right the Employee may otherwise have to a trial by jury in any action to enforce the terms of this Agreement.

18.    Indemnification. The Company shall obtain and maintain for the Employee directors’ and officers’ liability insurance coverage and shall indemnify the Employee to the extent permitted under the Company’s By-Laws and/or Certificate of Incorporation and/or the Indemnification Agreement.

19.    No Mitigation.     The Employee shall have no obligation or duty to seek subsequent employment or engagement as an employee (including self-employment) or as a consultant or otherwise mitigate the Company’s obligation under this Agreement. Payments and benefits due under Paragraph 7 of this Agreement shall not be reduced by any compensation earned by the Employee as an employee or consultant from any employment or consulting arrangement after the Employee’s termination of employment.

IN WITNESS WHEREOF, the parties have set their signatures on the date set forth below.

ZEBRA TECHNOLOGIES CORPORATION:    EMPLOYEE:

By: /s/ Anders Gustafsson        By: /s/ Hugh Gagnier

Anders Gustafsson, CEO             Hugh Gagnier

Date signed: May 17, 2018        Date signed: May 17, 2018

1

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Anders Gustafsson, certify that:

1. I have reviewed this report on Form 10-Q of Zebra Technologies Corporation (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     August 7, 2018    By: /s/ Anders Gustafsson    

Anders Gustafsson

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Olivier Leonetti, certify that:

1. I have reviewed this report on Form 10-Q of Zebra Technologies Corporation (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     August 7, 2018    By: /s/ Olivier Leonetti    

Olivier Leonetti

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Zebra Technologies Corporation (the “Company”) on Form 10-Q for the period that ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof, I, Anders Gustafsson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:    August 7, 2018    By: /s/ Anders Gustafsson    

Anders Gustafsson

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Zebra Technologies Corporation (the “Company”) on Form 10-Q for the period that ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof, I, Olivier Leonetti, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:    August 7, 2018    By: /s/ Olivier Leonetti    

Olivier Leonetti

Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 31, 2018
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Trading Symbol	ZBRA
Entity Registrant Name	ZEBRA TECHNOLOGIES CORP
Entity Central Index Key	0000877212
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		53,692,395

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 46	$ 62
Accounts receivable, net of allowances for doubtful accounts of $2 million and $3 million as of June 30, 2018 and December 31, 2017, respectively	502	479
Inventories, net	465	458
Income tax receivable	44	40
Prepaid expenses and other current assets	52	24
Total Current assets	1,109	1,063
Property, plant and equipment, net	254	264
Goodwill	2,462	2,465
Other intangibles, net	252	299
Long-term deferred income taxes	104	119
Other long-term assets	94	65
Total Assets	4,275	4,275
Current liabilities:
Current portion of long-term debt	85	51
Accounts payable	442	424
Accrued liabilities	238	296
Deferred revenue	198	186
Income taxes payable	51	43
Total Current liabilities	1,014	1,000
Long-term debt	1,914	2,176
Long-term deferred revenue	150	148
Other long-term liabilities	124	117
Total Liabilities	3,202	3,441
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued	0	0
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares	1	1
Additional paid-in capital	273	257
Treasury stock at cost, 18,459,879 and 18,915,762 shares at June 30, 2018 and December 31, 2017, respectively	(617)	(620)
Retained earnings	1,446	1,248
Accumulated other comprehensive loss	(30)	(52)
Total Stockholders’ Equity	1,073	834
Total Liabilities and Stockholders’ Equity	$ 4,275	$ 4,275

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 2	$ 3
Preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	72,151,857	72,151,857
Treasury stock, shares	18,459,879	18,915,762

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Net sales:
Total Net sales	$ 1,012	$ 896	$ 1,989	$ 1,761
Cost of sales:
Total Cost of sales	540	485	1,052	949
Gross profit	472	411	937	812
Operating expenses:
Selling and marketing	121	114	241	223
Research and development	109	99	210	195
General and administrative	93	68	164	143
Amortization of intangible assets	23	52	46	102
Acquisition and integration costs	0	19	2	46
Exit and restructuring costs	1	1	5	5
Total Operating expenses	347	353	668	714
Operating income	125	58	269	98
Other (expenses) income:
Foreign exchange (loss) gain	(4)	2	(4)	1
Interest expense, net	(23)	(40)	(34)	(81)
Other, net	2	(1)	2	(1)
Total Other expenses, net	(25)	(39)	(36)	(81)
Income before income tax expense	100	19	233	17
Income tax expense (benefit)	30	2	54	(8)
Net income	$ 70	$ 17	$ 179	$ 25
Basic earnings per share (USD per share)	$ 1.31	$ 0.33	$ 3.35	$ 0.49
Diluted earnings per share (USD per share)	$ 1.29	$ 0.32	$ 3.30	$ 0.48
Basic weighted average shares outstanding (in shares)	53,537,876	51,996,353	53,414,267	51,928,911
Diluted weighted average and equivalent shares outstanding (in shares)	54,255,707	53,128,657	54,134,110	53,037,956
Net sales of tangible products
Net sales:
Total Net sales	$ 889	$ 779	$ 1,728	$ 1,514
Cost of sales:
Total Cost of sales	450	408	873	787
Revenue from services and software
Net sales:
Total Net sales	123	117	261	247
Cost of sales:
Total Cost of sales	$ 90	$ 77	$ 179	$ 162

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 70	$ 17	$ 179	$ 25
Other comprehensive income (loss), net of tax:
Unrealized gain(loss) on anticipated sales hedging transactions	23	(8)	22	(14)
Unrealized gain on forward interest rate swaps hedging transactions	2	0	7	2
Foreign currency translation adjustment	(9)	0	(7)	0
Comprehensive income	$ 86	$ 9	$ 201	$ 13

XML

CONSOLDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Cash flows from operating activities:
Net income	$ 179	$ 25
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	86	141
Amortization of debt issuance costs and discounts	9	10
Share-based compensation	24	15
Deferred income taxes	3	(10)
Unrealized gain on forward interest rate swaps	(18)	(1)
Other, net	2	2
Changes in operating assets and liabilities:
Accounts receivable, net	(26)	104
Inventories, net	(11)	(68)
Other assets	(9)	15
Accounts payable	21	13
Accrued liabilities	(48)	(21)
Deferred revenue	22	20
Income taxes	24	(35)
Other operating activities	8	(7)
Net cash provided by operating activities	266	203
Cash flows from investing activities:
Purchases of property, plant and equipment	(33)	(22)
Proceeds from sale of long-term investments	2	0
Purchases of long-term investments	(2)	0
Net cash used in investing activities	(33)	(22)
Cash flows from financing activities:
Payment of debt issuance costs and discounts	(2)	0
Payments of long-term debt	(1,114)	(240)
Proceeds from issuance of long-term debt	879	0
Payments of debt extinguishment costs	(1)	0
Proceeds from exercise of stock options and stock purchase plan purchases	6	7
Taxes paid related to net share settlement of equity awards	(10)	(5)
Net cash used in financing activities	(242)	(238)
Effect of exchange rate changes on cash	(7)	(4)
Net decrease in cash and cash equivalents	(16)	(61)
Cash and cash equivalents at beginning of period	62	156
Cash and cash equivalents at end of period	46	95
Supplemental disclosures of cash flow information:
Income taxes paid	21	43
Interest paid	$ 52	$ 70

XML

Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

Zebra Technologies Corporation and its wholly-owned subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic identification and data capture solutions industry. We design, manufacture, and sell a broad range of products that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, and managed services, including cloud-based subscriptions. End-users of our products and services include those in retail and e-commerce, transportation and logistics, manufacturing, healthcare, hospitality, warehouse and distribution, energy and utilities, and education industries around the world. We provide our products and services globally through a direct sales force and an extensive network of channel partners.

Management prepared these condensed unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and notes. As permitted under Article 10 of Regulation S-X and the instructions of Form 10-Q, these condensed consolidated financial statements do not include all the information and notes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements, although management believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

The Company reclassified $41 million of costs from Accrued liabilities to Accounts payable on the Consolidated Balance Sheets for the period ended December 31, 2017 to conform to the current period presentation. A similar reclassification was made to the Consolidated Statements of Cash Flows resulting in a change to Accounts payable and Accrued liabilities within Net cash provided by operating activities for the period ended June 30, 2017.

In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to present fairly its Consolidated Balance Sheets as of June 30, 2018, the Consolidated Statements of Operations and Comprehensive Income for the three and six-months ended June 30, 2018 and July 1, 2017, and the Consolidated Statements of Cash Flows for the six-months ended June 30, 2018 and July 1, 2017. These results, however, are not necessarily indicative of the results expected for the full year ending December 31, 2018.

XML

Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Revenue Recognition. Revenue includes sales of hardware, supplies and services (including repair services and product maintenance service contracts, which typically occur over time, and professional services such as installation, integration and provisioning, which typically occur in the early stages of a project). The average life of repair and maintenance service contracts is approximately three years. The duration of professional service arrangements ranges from a day to several weeks or months. We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

The Company elects to exclude from the transaction price sales and other taxes assessed by a governmental authority and collected by the Company from a customer. The Company also considers shipping and handling activities as part of the fulfillment costs, not as a separate performance obligation.

Recently Adopted Accounting Pronouncements

On January 1, 2018, we adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”) applying the modified retrospective method to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“ASC 605”). The adoption of ASC 606 did not have a material effect on the Company’s consolidated financial statements or results of operations.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet related to the adoption of ASC

606 were as follows (in millions):

	As Reported December 31, 2017		Adjustment			As Adjusted January 1, 2018
Assets:
Inventories, net (1)	$	458	$	(3	)	$	455
Prepaid expenses and other current assets (2)	24		7			31
Long-term deferred income taxes (3)	119		(5		)	114
Other long-term assets (4)	65		12			77
Liabilities:
Deferred revenue (5)	186		(2		)	184
Long-term deferred revenue (6)	148		(6		)	142
Stockholders’ Equity:
Retained earnings	1,248		19			1,267

(1) Reflects an adjustment of $(3) million related to changes in revenue recognition patterns.

(2) Reflects an adjustment of $7 million related to changes in revenue recognition patterns.

(3) Reflects the income tax effect of $(5) million related to the adjustments made for the adoption of ASC 606.

(4) Reflects an adjustment of $12 million related to the capitalization of costs to obtain contracts (primarily comprised of sales commissions associated with longer term support service contracts).

(5) Reflects an adjustment of $(3) million related to reallocation of revenue between performance obligations and $1 million related to changes in the timing of revenue recognition.

(6) Reflects an adjustment of $(6) million related to reallocation of revenue between performance obligations.

Under the modified retrospective method of adoption, we are required to disclose the impact to the Consolidated Financial Statements had we continued to follow our accounting policies under the previous revenue recognition guidance. Had the Company applied the previous revenue recognition guidance, revenue would have been $3 million lower for the quarter ended June 30, 2018 and $2 million lower for the six-month period endedJune 30, 2018.

See Note 3, Revenues for further information.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” On January 1, 2018, the Company adopted this ASU. ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The adoption of this ASU did not have a material impact to the Company's consolidated financial statements or related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management has assessed the impact of adoption of the new standard and determined there are no material impacts to the Company's consolidated financial statements or disclosures resulting from the adoption of this ASU.

In February 2016, the FASB issued ASU 2016-02, “Leases (Subtopic 842).” This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the Consolidated Balance Sheets and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the Consolidated Balance Sheets. The recognition, measurement and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply.  While Management is currently assessing the impact of adoption on its consolidated financial statements, we have identified and collected data on our significant leases, made progress in assessing practical expedients and policy elections we will make upon adoption, as well as, selected an accounting system to support future accounting and disclosure requirements.  At this time, we do not have an estimate of the expected increase in assets and liabilities on the Company’s consolidated balance sheet upon adoption of this ASU in the first quarter of 2019.

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Revenues

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

As prescribed in ASC 606, the Company recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

Performance Obligations

We enter into contract arrangements that may include various combinations of tangible products and services, which generally are capable of being distinct and accounted for as separate performance obligations. For these types of contract arrangements, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue recorded in the reporting period. We use the accounting guidance on “capable of being distinct” and “distinct within the context of the contract” to help with the aforementioned evaluation.

For contract arrangements that include multiple performance obligations, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for the products and/or services underlying each performance obligation. When the standalone selling prices are not directly observable, we estimate the standalone selling prices primarily based on the expected cost-plus margin approach. For arrangements comprised strictly of the sale of product and performance of maintenance type services where the standalone selling price of the maintenance service is not discernible, we estimate the standalone selling price of the maintenance contract through the use of the residual approach. When the residual approach cannot be applied, regional pricing, marketing strategies and business practices are evaluated and analyzed to derive the estimated standalone selling price through the use of a cost-plus margin methodology.

The Company recognizes revenue when transfer of control has occurred for the goods or services sold. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services sold. The Company uses judgment in the evaluation of the following criteria: 1) the customer simultaneously receives and consumes the benefits provided by the transfer of goods or service; 2) the performance creates or enhances an asset that is under control of the customer; 3) the performance does not create an asset with an alternative use to the customer and the Company has an enforceable right to payment, in order to determine whether control transfers at a point in time or over time. For each performance obligation satisfied over time, the Company measures its progress toward completion to determine the timing of revenue recognition. Judgment is also used in the evaluation of the following transfer of control criteria: 1) the Company has a present right to payment for the asset; 2) the legal title to the asset has transferred to the customer; 3) the customer has physical possession of the asset; 4) the customer has the significant risks and rewards of ownership of the asset; 5) the customer has accepted the asset, in order to determine when revenue should be recognized in a point in time revenue recognition pattern. Assuming all other criteria for revenue recognition have been met, for products and services sold on a standalone basis, revenue is generally recognized upon shipment and by using an output method or time-based method respectively. In cases where a bundle of products and services are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

The Company’s remaining obligations that are greater than one year in duration relate primarily to repair and support services. The aggregated transaction price allocated to remaining performance obligations related to these types of service arrangements is $430 million as of June 30, 2018. We expect to recognize these performance obligations over the approximate three-year average contract term.

For some of our transactions, products are sold with a right of return, and we may also provide other rebates, price protection, or incentives, which are accounted for as variable consideration. The Company estimates the amount of variable consideration by using the expected value or the most likely amount method and reduces the revenue by those estimated amounts, only to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur. These estimates are reviewed and updated, as necessary, at the end of each reporting period.

Revenue recognized in the reporting period from performance obligations satisfied in previous periods was not material for the three and six-month periods ended June 30, 2018.

Disaggregation of Revenue

The following table presents our revenues disaggregated by product category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and six-months ended June 30, 2018 (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018						June 30, 2018
	Product Category						Product Category
Segment	Tangible Products		Services and Software		Total		Tangible Products		Services and Software		Total
AIT	$	322	$	29	$	351	$	635	$	68	$	703
EVM	567		94		661		1,093		193		1,286
Total	$	889	$	123	$	1,012	$	1,728	$	261	$	1,989

In addition, refer to Note 14, Segment Information for Net sales to customers by geographic region.

We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all of our revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time.

Contract Balances

Progress on satisfying performance obligations under contracts with customers and the related billings and cash collections are recorded on the Consolidated Balance Sheets in Accounts receivable, net and Prepaid expenses and other current assets. The opening and closing contract assets balances were $7 million and $5 million, as of January 1, 2018 and June 30, 2018, respectively, and were recorded within Prepaid expenses and other current assets on the Consolidated Balance Sheets. These contract assets result from timing differences between the billing schedule and the products and services delivery schedules, as well as, the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Our policy is to test these contract asset balances for impairment in accordance with ASC 310 Receivables. No impairment losses have been recorded for the three and six-month periods ended June 30, 2018.

Deferred revenue on the Consolidated Balance Sheets, consist of payments and billings in advance of our performance. The combined short-term and long-term Deferred revenue balances were $348 million and $334 million at June 30, 2018 and December 31, 2017, respectively. During the three-month and six-month period ended June 30, 2018, the Company recognized $55 million and $120 million in revenue respectively, which was previously included in the beginning balance of deferred revenue.

Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts do not include a significant financing component.

Costs to obtain a contract

Our incremental direct costs of obtaining a contract, which consist of sales commissions and incremental fringe benefits, are deferred and amortized over the weighted-average contract term, consistent with the guidance in ASC 340 Other Assets and Deferred Costs. The incremental costs to obtain a contract, which were previously expensed as incurred under ASC 605, and the determination of the amortization period are derived at a portfolio level and the amortization is recognized on a straight-line basis. The adoption of ASC 606 required the capitalization of these costs which resulted in an adjustment to increase retained earnings. The Company recorded $12 million to Other long-term assets on the Consolidated Balance Sheets as of January 1, 2018. The Company recognized amortization expense related to commissions during the three-month and six-month period ended June 30, 2018 of $3 million and $5 million, respectively. The ending balance of the deferred commissions was $12 million as of June 30, 2018. The Company elected a practical expedient permitted by ASC 606, whereby the incremental costs of obtaining a contract are expensed as incurred if the amortization period of the assets would otherwise be one year or less.

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Inventories

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are stated at the lower of a moving-average cost (which approximates cost on a first-in, first-out basis) and net realizable value. Manufactured inventory cost includes materials, labor, and manufacturing overhead. Purchased inventory cost also includes internal purchasing overhead costs.

Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values. Inventory provisions are based on forecasted demand, experience with specific customers, the age and nature of the inventory, and the ability to redistribute inventory to other programs or to rework into consumable inventory.

The components of Inventories, net are as follows (in millions): 

	June 30, 2018		December 31, 2017
Raw material	$	131	$	116
Work in process	2		1
Finished goods	332		341
Total	$	465	$	458

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Costs Associated with Exit and Restructuring Activities

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Costs Associated with Exit and Restructuring Activities

Costs Associated with Exit and Restructuring Activities

In the first quarter of 2017, the Company’s executive leadership approved an initiative to continue the Company’s efforts to increase operational efficiency (the “Productivity Plan”). The Company expects the Productivity Plan to build upon the exit and restructuring initiatives specific to the acquisition of the Enterprise business (“Enterprise”) from Motorola Solutions, Inc. in October 2014, (the “Acquisition Plan”). The Company completed all initiatives under the Acquisition Plan as of December 31, 2017. Actions under the Productivity Plan include organizational design changes, process improvements and automation. Exit and restructuring costs are not included in the operating results of our segments as they are not deemed to impact the specific segment measures as reviewed by our Chief Operating Decision Maker and therefore are reported as a component of Corporate, eliminations. See Note 14, Segment Information.

Total exit and restructuring charges of $17 million life-to-date specific to the Productivity Plan have been recorded through June 30, 2018 and relate to severance and related benefits and other expenses. Exit and restructuring charges of $1 million and $5 million were recorded in the respective three and six-month periods ended June 30, 2018, respectively. Total remaining charges associated with this plan are expected to be less than $6 million with activities expected to be substantially complete by the end of fiscal 2018.

A roll forward of the exit and restructuring accruals is as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Balance at the beginning of the period	$	7		$	11		$	8		$	10
Charged to earnings, net	1			1			5			5
Cash paid	(4		)	(5		)	(9		)	(8		)
Balance at the end of the period	$	4		$	7		$	4		$	7

The $4 million accrual as of June 30, 2018 is reflected within the Consolidated Balance Sheet as $3 million within Accrued liabilities and $1 million within Other long-term liabilities. The long-term portion of the accrual relates to non-cancellable lease payments associated with exited facilities whose latest term expires May 2021.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy in accordance with ASC Topic 820, “Fair Value Measurements.” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries & money market funds).

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value.

Financial assets and liabilities carried at fair value as of June 30, 2018, are classified below (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts (1)	$	1	$	16	$	—	$	17
Forward interest rate swap contracts (2)	—		7		—		7
Money market investments related to the deferred compensation plan	17		—		—		17
Total Assets at fair value	$	18	$	23	$	—	$	41
Liabilities:
Liabilities related to the deferred compensation plan	17		—		—		17
Total Liabilities at fair value	$	17	$	—	$	—	$	17

Financial assets and liabilities carried at fair value as of December 31, 2017, are classified below (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Money market investments related to the deferred compensation plan	$	15	$	—	$	—	$	15
Total Assets at fair value	$	15	$	—	$	—	$	15
Liabilities:
Forward interest rate swap contracts (2)	$	—	$	18	$	—	$	18
Foreign exchange contracts (1)	2		9		—		11
Liabilities related to the deferred compensation plan	15		—		—		15
Total Liabilities at fair value	$	17	$	27	$	—	$	44

(1) The fair value of the derivative contracts is calculated as follows:

a. Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts.

b. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.

c. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, there were $1 million of transfers from Level 2 to Level 1 as of June 30, 2018 and $2 million as of December 31, 2017.

(2) The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms. See gross balance reporting in Note 7, Derivative Instruments.

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Derivative Instruments

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC 815, Derivatives and Hedging. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes.

In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions):

	Asset (Liability) Derivatives
		Fair Values as of
	Balance Sheet Classification	June 30, 2018			December 31, 2017
Derivative instruments designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	16		$	—
Foreign exchange contracts	Accrued liabilities	—			(9		)
Forward interest rate swaps	Accrued liabilities	(1		)	(2		)
Forward interest rate swaps	Other long-term liabilities	(1		)	(8		)
Total derivative instruments designated as hedges		$	14		$	(19	)
Derivative instruments not designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	1		$	—
Forward interest rate swaps	Other long-term assets	12			—
Foreign exchange contracts	Accrued liabilities	—			(2		)
Forward interest rate swaps	Accrued liabilities	(3		)	(1		)
Forward interest rate swaps	Other long-term liabilities	—			(7		)
Total derivative instruments not designated as hedges		$	10		$	(10	)
Total net derivative asset (liability)		$	24		$	(29	)

The following table presents the gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):

	Gain (Loss) Recognized in Income
		Three Months Ended					Six Months Ended
	Statements of Operations Classification	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Derivative instruments not designated as hedges:
Foreign exchange contracts	Foreign exchange gain (loss) gain	$	1	$	(11	)	$	1	$	(16	)
Forward interest rate swaps	Interest expense, net	5		—			18		1
Total gain (loss) recognized in income		$	6	$	(11	)	$	19	$	(15	)

Credit and Market Risk Management

Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s credit risk counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

Foreign Currency Exchange Risk Management

The Company conducts business on a multinational basis in a wide variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises from euro denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company realizes its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign exchange forward and option contracts.

The Company manages the exchange rate risk of anticipated euro denominated sales using put options, forward contracts, and participating forwards, all of which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Company’s Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized (losses) were $(1) million and $0 million for the quarter ending June 30, 2018, and July 1, 2017, respectively.  For the comparable six-month period endedJune 30, 2018, and July 1, 2017, realized (losses) or gains were $(6) million and $1 million, respectively. As of June 30, 2018, and December 31, 2017, the notional amounts of the Company’s foreign exchange cash flow hedges were €402 million and €389 million, respectively. The Company has reviewed cash flow hedges for effectiveness and determined they are highly effective.

The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to its Brazilian real, British pound, Canadian dollar, Czech koruna, Euro, Australian dollar, Swedish krona, Japanese yen, and Singapore dollars, Mexican Peso and Chinese Yuan denominated net assets. These forward contracts typically mature within one-month after execution. Monetary gains and losses on these forward contracts are recorded in income each quarter and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair value of these outstanding contracts are as follows (in millions):

	June 30, 2018		December 31, 2017
Notional balance of outstanding contracts:
British Pound/U.S. Dollar	£	16	£	13
Euro/U.S. Dollar	€	71	€	108
British Pound/Euro	£	5	£	5
Canadian Dollar/U.S. Dollar	$	7	$	12
Czech Koruna/U.S. Dollar	Kč	378	Kč	361
Brazilian Real/U.S. Dollar	R$	31	R$	34
Australian Dollar/U.S. Dollar	A$	50	A$	55
Swedish Krona/U.S. Dollar	kr	14	kr	13
Japanese Yen/U.S. Dollar	¥	144	¥	151
Singapore Dollar/U.S. Dollar	S$	6	S$	4
Mexican Peso/U.S. Dollar	Mex$	127	Mex$
Chinese Yuan/U.S. Dollar	¥	44	¥
Net fair value of asset (liability) of outstanding contracts	$	1	$	(2	)

Interest Rate Risk Management

The Company’s debt consists of borrowings under two term loans (“Term Loan A” and “Term Loan B”), the Revolving Credit Facility and the receivables financing facility which bear interest at variable rates plus an applicable margin. See Note 8, Long-Term Debt. As a result, the Company is exposed to market risk associated with the variable interest rate payments on both term loans.

The Company manages its exposure to changes in interest rates by utilizing interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions. The Company does not enter into derivative instruments for trading or speculative purposes.

In December 2017, the Company entered into an $800 million forward long-term interest rate swap agreement to lock into a fixed LIBOR interest rate base for debt facilities subject to monthly interest payments, including Term Loan A, the Revolving Credit Facility and receivables financing facility. Under the terms of the agreement, $800 million in variable-rate debt will be swapped for a fixed interest rate with net settlement terms due effective in December 2018. The changes in fair value of these swaps are not designated as hedges and are recognized immediately as Interest expense, net on the Consolidated Statements of Operations.

The Company previously had a floating-to-fixed interest rate swap, which was designated as a cash flow hedge. This swap was terminated and the hedge accounting treatment discontinued in 2014. The terminated swap has approximately $3 million remaining to be amortized through AOCI on the Consolidated Balance Sheets and subsequently reclassified into net earnings through June 2021. Approximately $2 million is expected to be amortized and expensed in 2018. There was less than $1 million expensed by the Company in the second quarter of 2018 and $1 million expensed for the six-month period endedJune 30, 2018.

The Company has three interest rate swaps previously entered into for the purpose of converting floating-to-fixed rate debt. The first swap was entered into with a syndicated group of commercial banks for the purpose of moving from floating-to-fixed rate debt. The second swap largely offsets the first swap, moving from fixed-to-floating rate debt. Both of these instruments are not designated as hedges with the changes in fair value recognized in Interest expense, net on the Consolidated Statements of Operations. The third swap entered into is an interest rate swap converting floating-to-fixed rate debt which was designated as a cash flow hedge and receives hedge accounting treatment. All three swaps have a termination date in June 2021.

The changes in fair value of the active swap designated as a cash flow hedge are recognized in AOCI on the Consolidated Balance Sheets, with any ineffectiveness immediately recognized in earnings.

The notional amount of the interest rate swaps effective in each year of the cash flow hedge relationships does not exceed the principal amount of Term Loan B, which is hedged. The Company has reviewed the interest rate swap hedges for effectiveness and determined they are 100% effective.

At June 30, 2018, the Company estimated that approximately $1 million in losses on the forward interest rate swap designated as a cash flow hedge will be reclassified from AOCI on the Consolidated Balance Sheets into earnings during the next four quarters.

The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. The following table presents the (liability) asset gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at June 30, 2018 (in millions):

	Gross Fair Value			Offsetting Counterparty Fair Value			Net Fair Value in the Consolidated Balance Sheets
Counterparty A	$	(3	)	$	(1	)	$	(2	)
Counterparty B	(1		)	—			(1		)
Counterparty C	(1		)	—			(1		)
Counterparty D	(2		)	(1		)	(1		)
Counterparty E	(1		)	—			(1		)
Counterparty F	15			—			15
Counterparty G	(2		)	—			(2		)
Total	$	5		$	(2	)	$	7

The interest rate swaps have future maturities consisting of the following notional amounts per year (in millions):

Year 2018	$	—
Year 2019	1,344
Year 2020	1,072
Year 2021	1,072
Year 2022	800
Notional balance of outstanding contracts	$	4,288

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Long-Term Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

The following table summarizes the carrying value of the Company’s long-term debt (in millions):

	June 30, 2018			December 31, 2017
Term Loan B	$	810		$	1,160
Term Loan A	653			679
Revolving Credit Facility	433			275
Receivables Financing Facility	118			135
Total debt	$	2,014		$	2,249
Less: Debt issuance costs	(6		)	(7		)
Less: Unamortized discounts	(9		)	(15		)
Less: Current portion of long-term debt	(85		)	(51		)
Total long-term debt	$	1,914		$	2,176

At June 30, 2018, the future maturities of debt, excluding debt discounts and issuance costs, are as follows (in millions):

2018	$	37
2019	144
2020	54
2021	1,779
2022	—
Thereafter	—
Total future maturities of long-term debt	$	2,014

The estimated fair value of the Company’s long-term debt approximated $2.0 billion at June 30, 2018 and $2.2 billion at December 31, 2017. These fair value amounts represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the long-term debt will continue to vary each period based on fluctuations in market interest rates, as well as changes to the Company’s credit ratings. This methodology resulted in a Level 2 classification in the fair value hierarchy.

Credit Facilities

On May 31, 2018, the Company entered into Amendment No.1. to the Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 replaced the existing Term Loan A with a new Term Loan A (“Amended Term Loan A”) of $670 million and increased the existing revolving credit facility from $500 million to $800 million (“Revolving Credit Facility”). In addition, as part of the Amendment No. 1, the Company entered into a partial early debt termination of $300 million and repricing of Term Loan B. Amendment No. 1 lowered the index rate spread for LIBOR loans from LIBOR + 200 bp to LIBOR + 175 bp.

In accounting for the impact of Amendment No. 1, the Company applied the provisions of ASC Subtopic 470-50, Modifications and Extinguishments (“ASC 470-50”), which resulted in the second quarter results including approximately $6 million in non-cash accelerated amortization of debt issuance costs and approximately $1 million of one-time pretax charges related to third party fees associated with the amendments, which are reflected as a component of Interest expense,net within the Company’s Consolidated Statements of Operations.

In addition, the issuance of Amended Term Loan A and the increase to the revolving credit facility resulted in $2 million of one-time third party fees for arranger, legal, and other services, which were capitalized and will be amortized over the term of the credit facilities.

As of June 30, 2018, the Term Loan A interest rate was 3.84%, and the Term Loan B interest rate was 4.06%. Borrowings under Term Loan A and B bear interest at a variable rate. Term Loan B borrowings are subject to a floor of 2.75%. Interest payments are payable monthly or quarterly on Term Loan A and quarterly on Term Loan B. The Company has entered into interest rate swaps to manage interest rate risk on Term Loan B. See Note 7, Derivative Instruments.

Amendement No. 1 also requires the Company to prepay certain amounts in the event of certain circumstances or transactions. The Company may make prepayments against the Term Loans, in whole or in part, without premium or penalty. The borrowings under Amendment No. 1 will mature on July 27, 2021.

The Revolving Credit Facility is available for working capital and other general corporate purposes including letters of credit. As of June 30, 2018, the Company had issued letters of credit totaling $5 million, which reduced funds available for other borrowings under the agreement to $795 million. The Revolving Credit Facility will mature and the related commitments will terminate on July 27, 2021.

Borrowings under the Revolving Credit Facility bear interest at a variable rate plus an applicable margin. As of June 30, 2018, the Revolving Credit Facility had an average interest rate of 3.91%. Interest payments are payable monthly or quarterly for the Revolving Credit Facility.

Receivables Financing Facility

On December 1, 2017, a wholly-owned, bankruptcy-remote, special-purpose entity (“SPE”) of the Company entered into the Receivables Purchase Agreement, which provides for a receivables financing facility of up to $180 million. The SPE utilizes the receivables financing facility in the normal course of business as part of its management of cash flows. Under its committed receivables financing facility, a subsidiary of the Company sells its domestically originated accounts receivables at fair value, on a revolving basis, to the SPE which was formed for the sole purpose of buying the receivables. The SPE, in turn, pledges a valid and perfected first-priority security interest in the pool of purchased receivables to a financial institution for borrowing purposes. The subsidiary retains an ownership interest in the pool of receivables that are sold to the SPE and services those receivables. Accordingly, the Company has determined that these transactions do not qualify for sale accounting under ASC 860, Transfers and Servicing of Financial Assets, and has, therefore, accounted for the transactions as secured borrowings.

At June 30, 2018, the Company’s Consolidated Balance Sheets included $419 million of receivables that were pledged and $118 million of associated liabilities. The receivables financing facility will mature on November 29, 2019.

Borrowings under the receivables financing facility bear interest at a variable rate plus an applicable margin. As of June 30, 2018, the receivables financing facility had an average interest rate of 2.94% and requires monthly interest payments.

Both the Revolving Credit Facility and receivables financing facility include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

Certain domestic subsidiaries of the Company (the “Guarantor Subsidiaries”) guarantee the Term Loan A, Term Loan B, and the Revolving Credit Facility on a senior basis. For the six-month period ended June 30, 2018, the non-Guarantor Subsidiaries would have (a) accounted for 47.8% of our total revenue and (b) held 84.0% or $3.6 billion of our total assets and approximately 80.1% or $2.6 billion of our total liabilities including trade payables but excluding intercompany liabilities.

On June 30, 2018, the Company was in compliance with all covenants.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Warranties

In general, the Company provides warranty coverage of 1 year on mobile computers, printers and batteries. Advanced data capture products are warrantied from 1 to 5 years, depending on the product. Thermal printheads are warrantied for 6 months and battery-based products, such as location tags, are covered by a 90-day warranty. The provision for warranty expense is adjusted quarterly based on historical warranty experience.

The following table is a summary of the Company’s accrued warranty obligation (in millions):

	Six Months Ended
	June 30, 2018			July 1, 2017
Balance at the beginning of the period	$	18		$	21
Warranty expense	16			13
Warranty payments	(16		)	(15		)
Balance at the end of the period	$	18		$	19

Contingencies

The Company is subject to a variety of investigations, claims, suits, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort, and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company’s view of these matters and its potential effects may change in the future. The Company establishes an accrued liability for loss contingencies related to legal matters when the loss is both probable and estimable. In addition, for some matters for which a loss is probable or reasonably possible, an estimate of the amount of loss or range of loss is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.

In connection with the acquisition of the Enterprise business from Motorola Solutions, Inc., the Company acquired Symbol Technologies, Inc., a subsidiary of Motorola Solutions (“Symbol”). A putative federal class action lawsuit, Waring v. Symbol Technologies, Inc., et al., was filed on August 16, 2005 against Symbol Technologies, Inc. and two of its former officers in the United States District Court for the Eastern District of New York by Robert Waring. After the filing of the Waring action, several additional purported class actions were filed against Symbol and the same former officers making substantially similar allegations (collectively, the New Class Actions”). The Waring action and the New Class Actions were consolidated for all purposes and on April 26, 2006, the Court appointed the Iron Workers Local # 580 Pension Fund as lead plaintiff and approved its retention of lead counsel on behalf of the putative class. On August 30, 2006, the lead plaintiff filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”), and named additional former officers and directors of Symbol as defendants. The lead plaintiff alleges that the defendants misrepresented the effectiveness of Symbol’s internal controls and forecasting processes, and that, as a result, all of the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the individual defendants violated Section 20(a) of the Exchange Act. The lead plaintiff alleges that it was damaged by the decline in the price of Symbol’s stock following certain purported corrective disclosures and seeks unspecified damages. The court has certified a class of investors that includes those that purchased Symbol common stock between March 12, 2004 and August 1, 2005. The parties completed fact and expert discovery. They also agreed to a schedule for the filing of dispositive motions, which the court so-ordered on February 12, 2018. However, by order entered on April 2, 2018, the court adjourned the deadlines for summary judgment briefing in light of the fact that the parties reached an agreement in principle to settle the matter at the mediation held on March 15, 2018. The settlement is subject to approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, and Zebra has reached agreements with certain of its insurers to fund the settlement. On April 30, 2018, the lead plaintiff commenced the process for obtaining the court’s approval of the settlement by filing a motion for preliminary approval of the class action settlement, and on May 22, 2018, the Court entered an order: (1) preliminarily approving the settlement with the hearing for final approval of the settlement terms set for October 30, 2018; (2) approving the notice provisions to be provided to the class; (3) appointing the settlementadministrator; and (4) setting forth the procedure and timing by which class members may elect to participate in, opt out of or object to the settlement.

Unclaimed Property Voluntary Disclosure Agreement (“VDA”) and Audits: The Company is currently under audit by several states related to its reporting of unclaimed property liabilities. Additionally, in December 2017, the Company entered into a VDA with the State of Delaware. The Company has engaged an outside consultant to facilitate the assessment of the estimated liability that may result from these activities. As of June 30, 2018, no significant contingency reserve has been recorded as it has not progressed sufficiently in its assessment to quantify and record a contingency reserve for any unreported unclaimed property liabilities is ongoing.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

On May 17, 2018, shareholders approved the Zebra Technologies 2018 Long-Term Incentive Plan (“2018 Plan”). The 2018 Plan superseded and replaced the 2015 Plan on the approval date, except that the 2015 Plan shall remain in effect with respect to outstanding awards under the 2015 Plan until such awards have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with their terms.

The 2018 plan provides for incentive compensation to the Company’s non-employee directors, officers and employees. The awards available under the 2018 Plan include Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock Awards (“RSAs”), Performance Share Awards (“PSAs”), Cash-settled Stock Appreciation Rights (“CSRs”), Restricted Stock Units (“RSUs”), and Performance Stock Units (“PSUs”). A total of 3,800,000 shares are authorized for delivery under the 2018 Plan.

A summary of the equity awards authorized and available for future grants under the 2018 Plan is as follows:

Available for future grants at December 31, 2017	—
Newly authorized shares	3,800,000
Granted	(925	)
Cancellation and forfeitures	—
Plan termination	—
Available for future grants at June 30, 2018	3,799,075

The Zebra Technologies Corporation Long-Term Incentive Plan (“2015 Plan”), provided for incentive compensation to the Company’s non-employee directors, officers and employees. The awards available under the 2015 Plan included SARs, RSAs, PSAs, Cash-settled Stock Appreciation Rights, RSUs, and PSUs. A total of 4 million shares were authorized for delivery under the 2015 Plan. Upon approval of the 2018 plan, there are no shares available for grant under the 2015 plan.

A summary of the equity awards authorized and available for future grants under the 2015 Plan is as follows:

Available for future grants at December 31, 2017	1,437,435
Newly authorized shares	—
Granted	(360,999	)
Cancellation and forfeitures	—
Plan termination	(1,076,436	)
Available for future grants at June 30, 2018	—

Pre-tax share-based compensation expense recognized in the Consolidated Statements of Operations was $28 million and $16 million for the six-month period ended June 30, 2018 and July 1, 2017, respectively. Tax related benefits of $5 million were also recognized for the each of the six-month periods ended June 30, 2018 and July 1, 2017, respectively. As of June 30, 2018, total unearned compensation costs related to the Company’s share-based compensation plans was $75 million, which will be amortized over the weighted average remaining service period of 2.13 years.

Stock Appreciation Rights (“SARs”)

A summary of the Company’s SARs outstanding under the 2015 Plan are as follows:

	Six Months Ended
	June 30, 2018
SARs	Shares		Weighted- Average Exercise  Price
Outstanding at beginning of year	1,817,991		$	65.73
Granted	87,310		149.57
Exercised	(384,528	)	58.18
Forfeited	(35,417	)	79.69
Expired	(438	)	108.20
Outstanding at end of period	1,484,918		$	72.28
Exercisable at end of period	797,045		$	58.20

The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Company’s stock price over its entire stock history. Grants in the table below include SARs that will be settled in the Class A common stock or cash.

The following table shows the weighted-average assumptions used for grants of SARs, as well as the fair value of the grants based on those assumptions:

	June 30, 2018	July 1, 2017
Expected dividend yield	0%	0%
Forfeiture rate	8.40%	9.37%
Volatility	35.93%	35.49%
Risk free interest rate	2.96%	1.77%
Range of interest rates	1.68% - 3.00%	0.71% - 2.41%
Expected weighted-average life (in years)	4.11	4.13
Fair value of SARs granted (in millions)	$13	$12
Weighted-average grant date fair value of SARs granted (per underlying share)	$47.59	$29.84

The following table summarizes information about SARs outstanding at June 30, 2018:

	Outstanding		Exercisable
Aggregate intrinsic value (in millions)	$	106	$	68
Weighted-average remaining contractual term (in years)	5.86		5.01

The intrinsic value for SARs exercised during the six-months ended June 30, 2018 and July 1, 2017 was $34 million and $8 million, respectively. The total fair value of SARs vested during the period of June 30, 2018 and July 1, 2017 was $7 million and $6 million, respectively.

The Company’s SARs are expensed straight-line over the vesting period of the related award, which is typically 4 years.

Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”)

The Company’s restricted stock grants consist of time-vested restricted stock awards (“RSAs”) and performance vested restricted stock awards (“PSAs”). The RSAs and PSAs hold voting rights and therefore are considered participating securities. The outstanding RSAs and PSAs are included as part of the Company’s Class A Common Stock outstanding. The RSAs and PSAs vest at each vesting date subject to restrictions such as continuous employment except in certain cases as set forth in each stock agreement. The Company’s restricted stock awards are expensed straight-line over the vesting period of the related award, which is typically 3 years. The RSAs granted beginning in 2018 will grade vest over the 3-year vesting period. Some awards, including those granted annually to non-employee directors as an equity retainer fee, were vested upon grant. PSAs targets are set based on certain Company-wide financial metrics. Compensation cost is calculated as the market date fair value on grant date multiplied by the number of shares granted.

The Company also issues stock awards to non-employee directors. Each director receives an equity grant of shares every year during the month of May. The number of shares granted to each director is determined by dividing the value of the annual grant by the price of a share of common stock. During the first six months of 2018, there were 7,980 shares granted to non-employee directors compared to 12,488 shares in the first six months of prior year. The shares vest immediately upon the grant date.

A summary of information relative to the Company’s restricted stock awards is as follows:

	Six Months Ended
	June 30, 2018
Restricted Stock Awards	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of year	628,642		$	77.70
Granted	199,025		149.41
Released	(144,957	)	109.21
Forfeited	(16,494	)	83.89
Outstanding at end of period	666,216		$	92.26

The fair value of each performance award granted includes assumptions around the Company’s performance goals. A summary of information relative to the Company’s performance awards is as follows:

	Six Months Ended
	June 30, 2018
Performance Share Awards	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of year	265,747		$	77.04
Granted	59,383		146.64
Released	(57,074	)	107.31
Forfeited	(6,518	)	80.17
Outstanding at end of period	261,538		$	86.24

Other Award Types

The Company also has cash-settled compensation awards including cash-settled Stock Appreciation Rights (“CSRs”), Restricted Stock Units (“RSUs”), and Performance Stock Units (“PSUs”) (the “Awards”) that are expensed over the vesting period of the related award, which is not more than 4 years. The RSUs granted beginning in 2018 will grade vest over the 3-year vesting period. Compensation cost is calculated as the market date fair value on grant date multiplied by the number of share-equivalents granted. The fair value is remeasured at the end of each reporting period. Cash settlement payments for these awards of $2.0 million and $1.0 million were made during the six-months ended June 30, 2018 and July 1, 2017, respectively. Share-equivalents issued under these programs totaled 17,253 and 45,781 during the six-months ended June 30, 2018 and July 1, 2017, respectively.

Non-qualified Stock Options

A summary of the Company’s options outstanding under the 2006 Plan is as follows:

	Six Months Ended
	June 30, 2018
Non-qualified Options	Shares		Weighted- Average Exercise Price
Outstanding at beginning of year	15,705		$	26.34
Exercised	(9,083	)	31.26
Expired	—		—
Outstanding at end of period	6,622		$	19.59
Exercisable at end of period	6,622		$	19.59

The following table summarizes information about non-qualified stock options outstanding at June 30, 2018:

	Outstanding		Exercisable
Aggregate intrinsic value (in millions)	$	1	$	1
Weighted-average remaining contractual term (in years)	0.42		0.42

The intrinsic value for non-qualified options exercised during the six-months ended June 30, 2018 and July 1, 2017 was $1 million and $5 million, respectively.

Cash received from the exercise of non-qualified options during the six-months ended June 30, 2018 was less than $1 million compared to $3 million in the prior year period. The related tax benefit realized was $1 million during both the six-months ended June 30, 2018 and July 1, 2017.

Employee Stock Purchase Plan

The Zebra Technologies Corporation 2011 Employee Stock Purchase Plan (“2011 Plan”), which became effective in fiscal 2011, permits eligible employees to purchase common stock at 95% of the fair market value at the date of purchase. Employees may make purchases by cash or payroll deductions up to certain limits. The aggregate number of shares that may be purchased under this plan is 1,500,000 shares. At June 30, 2018, 869,514 shares were available for future purchase.

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rates for the three-month and six-month periods ended June 30, 2018 were 30.0% and 23.2%, respectively. The variance from the 2018 federal statutory rate of 21% for the three months and six months ended June 30, 2018 was attributable to increases related to foreign earnings subject to U.S. taxation, the U.S. impact of the Enterprise acquisition, partially offset by lower tax rates in foreign jurisdictions, and the generation of tax credits in the current year. The Company’s effective tax rate was further increased by additional uncertain tax positions, adjustments to provisional items related to the Tax Cuts and Jobs Act enacted in December 2017 (“U.S. Tax Reform” or “the Act”), and partially decreased by share-based compensation benefits. The increase in uncertain tax positions is related to interpretive guidance issued during the second quarter of 2018 that impacted management’s judgment with respect to prior year tax positions.

In the prior year, the effective tax rates for the three-month and six-month periods ended July 1, 2017 were 10.5% and (47.1)%, respectively. The variance from the 2017 federal statutory rate of 35% for the three months and six months ended July 1, 2017 was attributable to lower tax rates in foreign jurisdictions, the generation of tax credits and benefits for share-based compensation, which were partially offset by the U.S. impact of the Enterprise acquisition and state deferred tax expense due to changes in our business operations. The Company’s effective tax rate for the six months ended July 1, 2017 was further reduced by benefits associated with an intercompany sale of intellectual property and a rate decrease in Singapore.

Pre-tax earnings outside the United States are primarily generated in the United Kingdom, Singapore, and Luxembourg, with statutory rates of 19%, 17%, and 27%, respectively. During 2017, the Company received approval from the Singapore Economic Development Board for a tax rate of 10% with the Company’s commitment to make increased investments in Singapore. The Singapore incentivized rate expires on December 31, 2018.

Quarterly, Management evaluates all jurisdictions based on historical pre-tax earnings and taxable income to determine the need for valuation allowances. Based on this analysis, a valuation allowance has been recorded for any jurisdictions where, in the Company’s judgment, tax benefits will not be realized.

Uncertain Tax Positions

The Company is currently undergoing U.S. Federal income tax audits for the years 2013 through 2015, as well as UK income tax years 2012 and 2014. The tax years 2004 through 2016 remain open to examination by multiple foreign and U.S. state taxing jurisdictions. The Company continues to believe its positions are supportable, however, the Company anticipates that $22 million of uncertain tax benefits may be disallowed within the next twelve months and has reflected this liability as current within the Company’s Consolidated Balance Sheets. During the second quarter of 2018, the Company recorded a $13 million charge related to increases in income tax uncertainties for prior year tax positions. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlement of uncertain tax positions may change and the actual tax benefits may differ significantly from the estimates.

Impact of U.S. Tax Reform

Enacted on December 22, 2017, the Act reduces the U.S. federal corporate tax rate from 35% to 21%, and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Based on current operations, we estimate that the Company is subject to the Global Intangible Low-Taxed Income and the Deduction for Foreign-Derived Intangible Income provisions of the Act. We estimate that the new limitations which defer U.S. interest deductions in excess of 30% of Adjusted Taxable Income are not applicable. Additionally, the Company is no longer able to deduct performance-based compensation for its covered employees which exceeds the limitation under Internal Revenue Code Section 162(m). These impacts are included in the calculation of our annual estimated effective tax rate.

Provisional amounts

At June 30, 2018, we continue to analyze the accounting for the tax effects of enactment of the Act. The Company remeasured U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the remeasurement of deferred taxes requires further analysis regarding the state tax impacts of the remeasurement, the impact of the Act on the taxation of executive compensation arrangements, changes to tax capitalization provisions and other aspects of the Act that may impact our tax balances.

The Company recorded a provisional amount of $36 million in the December 31, 2017 financial statements for the one-time transition tax. The Internal Revenue Service issued Notice 2018-26 on April 2, 2018, which required an additional $8 million of tax expense to be recorded in the quarter ended June 30, 2018, increasing the total provisional amount to $44 million. The Company utilized $10 million of deferred tax assets for income tax credits available to offset the one-time transition tax, and estimates its cash tax liability to be $34 million, that will be remitted over the next eight years in annual amounts ranging from $3 to $8 million.

We continue to evaluate the transition charge based on guidance issued. The transition tax is based in part on the amount of those earnings held in cash and other specified assets. This calculation may change when we finalize the calculation of post-1986 foreign earnings and profit previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets.

The Company earns a significant amount of its operating income outside of the U.S. The Company’s policy considers its U.S. investment in directly-owned foreign affiliates to be indefinitely reinvested. Under the Act, future unremitted foreign earnings will no longer be subject to tax when repatriated to its U.S. parent, but may be subject to withholding taxes of the payor affiliate country. Additionally, gains and losses on taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. tax.

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Earnings per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock method and in periods of income, reflects the additional shares that would be outstanding if dilutive stock options were exercised for common shares during the period.

Earnings per share (in millions, except share data):

	Three Months Ended				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Basic:
Net income	$	70	$	17	$	179	$	25
Weighted-average shares outstanding	53,537,876		51,996,353		53,414,267		51,928,911
Basic earnings per share	$	1.31	$	0.33	$	3.35	$	0.49
Diluted:
Net income	$	70	$	17	$	179	$	25
Weighted-average shares outstanding	53,537,876		51,996,353		53,414,267		51,928,911
Dilutive shares	717,831		1,132,304		719,843		1,109,045
Diluted weighted-average shares outstanding	54,255,707		53,128,657		54,134,110		53,037,956
Diluted earnings per share	$	1.29	$	0.32	$	3.30	$	0.48

Outstanding options to purchase common shares were anti-dilutive and excluded from the earnings per share calculations of 86,726 and 273,216 for the three-month periods ended June 30, 2018 and of July 1, 2017, respectively. Outstanding options to purchase common shares were anti-dilutive and excluded from the earnings per share calculations of 87,310 and 701,272 for the six-month periods ended June 30, 2018 and July 1, 2017, respectively. Anti-dilutive securities consist primarily of stock appreciation rights (“SARs”) with an exercise price greater than the average market closing price of the Class A common stock.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Stockholders’ equity includes certain items classified as Accumulated other comprehensive loss, including:

• Unrealized (loss) gain on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 7, Derivative Instruments for more details.

• Unrealized (loss) gain on forward interest rate swaps hedging transactions refers to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the Enterprise Acquisition. See Note 7, Derivative Instruments for more details.

• Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. The Company is required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of accumulated other comprehensive loss.

The components of Accumulated other comprehensive loss (“AOCI”) for the six months ended June 30, 2018 and July 1, 2017 are as follows (in millions):

	Unrealized (loss) gain on sales hedging			Unrealized (loss)/ gain on forward interest rate swaps			Currency translation adjustments			Total
Balance at December 31, 2016	$	6		$	(15	)	$	(36	)	$	(45	)
Other comprehensive (loss) income before reclassifications	(16		)	1			—			(15		)
Amounts reclassified from AOCI(1)	(1		)	1			—			—
Tax benefit	3			—			—			3
Other comprehensive (loss) income	(14		)	2			—			(12		)
Balance at July 1, 2017	$	(8	)	$	(13	)	$	(36	)	$	(57	)
Balance at December 31, 2017	$	(9	)	$	(9	)	$	(34	)	$	(52	)
Other comprehensive income (loss) before reclassifications	21			7			(7		)	21
Amounts reclassified from AOCI(1)	6			2			—			8
Tax (expense)	(5		)	(2		)	—			(7		)
Other comprehensive income (loss)	22			7			(7		)	22
Balance at June 30, 2018	$	13		$	(2	)	$	(41	)	$	(30	)

(1) See Note 7, Derivative Instruments regarding timing of reclassifications on forward interest rate swaps.

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Segment Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”). The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability. Adjusted operating income excludes purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, and exit and restructuring costs. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

Financial information by segment is presented as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales:
AIT	$	351		$	313		$	703		$	635
EVM	661			584			1,286			1,128
Total segment net sales	1,012			897			1,989			1,763
Corporate, eliminations (1)	—			(1		)	—			(2		)
Total net sales	$	1,012		$	896		$	1,989		$	1,761
Operating income:
AIT(3)	$	77		$	61		$	169		$	135
EVM(3)	73			70			153			118
Total segment operating income	150			131			322			253
Corporate, eliminations (2)	(25		)	(73		)	(53		)	(155		)
Total operating income	$	125		$	58		$	269		$	98

(1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments related to the Enterprise Acquisition.

(2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, and exit and restructuring costs.

(3) Effective January 1, 2018, the Company changed its methodology for allocating certain operating expenses across its two reportable segments to more accurately reflect where these operating costs are being incurred. The reallocations relate primarily to information technology, marketing and human resources expenses. Prior year segment operating results have been recast for comparability with the current year presentation. For the quarter ended July 1, 2017, $2 million of operating expenses were reclassified from EVM to AIT. For the six-month period ended July 1, 2017, $5 million of operating expenses were reclassified from AIT to EVM. For the full year ended December 31, 2017, $14 million of operating expenses were reclassified from AIT to EVM. There was no impact to the Consolidated Financial Statements as a result of these reclassifications.

Information regarding the Company’s operations by geographic area is contained in the following table. These amounts are reported in the geographic area of the destination of the final sale.

Net sales to customers by geographic region were as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Europe, Middle East and Africa	$	337	$	279	$	686	$	566
Latin America	57		57		113		110
Asia-Pacific	134		123		249		231
North America	484		437		941		854
Total Net sales	$	1,012	$	896	$	1,989	$	1,761

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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

During the second quarter of 2018, the Company began settlement discussions associated with a pending commercial lawsuit.  On July 27, 2018, the Company and plaintiff executed an agreement resolving the lawsuit in its entirety. As a result, the Company recorded a $13 million pretax charge in the second quarter of 2018, which is reflected as a component of General and administrative expenses within the Consolidated Statements of Operations. 

On July 5, 2018, Zebra entered into a definitive agreement under which Zebra will acquire all outstanding common stock of Xplore Technologies Corporation for $6.00 per share in cash. Under the terms of the agreement, Zebra plans to effect the acquisition via a tender offer. The aggregate consideration of the transaction, including assumed indebtedness, is expected to be less than or equal to $90 million. Zebra expects to fund the transaction with a combination of cash on hand along with fully committed financing available under its Revolving Credit Facility. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2018. The tender offer was filed on July 17, 2018. The acquired business will become part of the EVM segment.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Revenue Recognition

Revenue Recognition. Revenue includes sales of hardware, supplies and services (including repair services and product maintenance service contracts, which typically occur over time, and professional services such as installation, integration and provisioning, which typically occur in the early stages of a project). The average life of repair and maintenance service contracts is approximately three years. The duration of professional service arrangements ranges from a day to several weeks or months. We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

The Company elects to exclude from the transaction price sales and other taxes assessed by a governmental authority and collected by the Company from a customer. The Company also considers shipping and handling activities as part of the fulfillment costs, not as a separate performance obligation.

Revenues

As prescribed in ASC 606, the Company recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

Performance Obligations

We enter into contract arrangements that may include various combinations of tangible products and services, which generally are capable of being distinct and accounted for as separate performance obligations. For these types of contract arrangements, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue recorded in the reporting period. We use the accounting guidance on “capable of being distinct” and “distinct within the context of the contract” to help with the aforementioned evaluation.

For contract arrangements that include multiple performance obligations, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for the products and/or services underlying each performance obligation. When the standalone selling prices are not directly observable, we estimate the standalone selling prices primarily based on the expected cost-plus margin approach. For arrangements comprised strictly of the sale of product and performance of maintenance type services where the standalone selling price of the maintenance service is not discernible, we estimate the standalone selling price of the maintenance contract through the use of the residual approach. When the residual approach cannot be applied, regional pricing, marketing strategies and business practices are evaluated and analyzed to derive the estimated standalone selling price through the use of a cost-plus margin methodology.

The Company recognizes revenue when transfer of control has occurred for the goods or services sold. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services sold. The Company uses judgment in the evaluation of the following criteria: 1) the customer simultaneously receives and consumes the benefits provided by the transfer of goods or service; 2) the performance creates or enhances an asset that is under control of the customer; 3) the performance does not create an asset with an alternative use to the customer and the Company has an enforceable right to payment, in order to determine whether control transfers at a point in time or over time. For each performance obligation satisfied over time, the Company measures its progress toward completion to determine the timing of revenue recognition. Judgment is also used in the evaluation of the following transfer of control criteria: 1) the Company has a present right to payment for the asset; 2) the legal title to the asset has transferred to the customer; 3) the customer has physical possession of the asset; 4) the customer has the significant risks and rewards of ownership of the asset; 5) the customer has accepted the asset, in order to determine when revenue should be recognized in a point in time revenue recognition pattern. Assuming all other criteria for revenue recognition have been met, for products and services sold on a standalone basis, revenue is generally recognized upon shipment and by using an output method or time-based method respectively. In cases where a bundle of products and services are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

We recognize revenue arising from performance obligations outlined in contracts with our customers that are satisfied at a point in time and over time. Substantially all of our revenue for tangible products is recognized at a point in time, whereby revenue for services and software is predominantly recognized over time.

For some of our transactions, products are sold with a right of return, and we may also provide other rebates, price protection, or incentives, which are accounted for as variable consideration. The Company estimates the amount of variable consideration by using the expected value or the most likely amount method and reduces the revenue by those estimated amounts, only to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur. These estimates are reviewed and updated, as necessary, at the end of each reporting period.

Revenue recognized in the reporting period from performance obligations satisfied in previous periods was not material for the three and six-month periods ended June 30, 2018.

Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts do not include a significant financing component.

Costs to obtain a contract

Our incremental direct costs of obtaining a contract, which consist of sales commissions and incremental fringe benefits, are deferred and amortized over the weighted-average contract term, consistent with the guidance in ASC 340 Other Assets and Deferred Costs. The incremental costs to obtain a contract, which were previously expensed as incurred under ASC 605, and the determination of the amortization period are derived at a portfolio level and the amortization is recognized on a straight-line basis. The adoption of ASC 606 required the capitalization of these costs which resulted in an adjustment to increase retained earnings.

Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Adopted Accounting Pronouncements

On January 1, 2018, we adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”) applying the modified retrospective method to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“ASC 605”). The adoption of ASC 606 did not have a material effect on the Company’s consolidated financial statements or results of operations.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet related to the adoption of ASC

606 were as follows (in millions):

	As Reported December 31, 2017		Adjustment			As Adjusted January 1, 2018
Assets:
Inventories, net (1)	$	458	$	(3	)	$	455
Prepaid expenses and other current assets (2)	24		7			31
Long-term deferred income taxes (3)	119		(5		)	114
Other long-term assets (4)	65		12			77
Liabilities:
Deferred revenue (5)	186		(2		)	184
Long-term deferred revenue (6)	148		(6		)	142
Stockholders’ Equity:
Retained earnings	1,248		19			1,267

(1) Reflects an adjustment of $(3) million related to changes in revenue recognition patterns.

(2) Reflects an adjustment of $7 million related to changes in revenue recognition patterns.

(3) Reflects the income tax effect of $(5) million related to the adjustments made for the adoption of ASC 606.

(4) Reflects an adjustment of $12 million related to the capitalization of costs to obtain contracts (primarily comprised of sales commissions associated with longer term support service contracts).

(5) Reflects an adjustment of $(3) million related to reallocation of revenue between performance obligations and $1 million related to changes in the timing of revenue recognition.

(6) Reflects an adjustment of $(6) million related to reallocation of revenue between performance obligations.

Under the modified retrospective method of adoption, we are required to disclose the impact to the Consolidated Financial Statements had we continued to follow our accounting policies under the previous revenue recognition guidance. Had the Company applied the previous revenue recognition guidance, revenue would have been $3 million lower for the quarter ended June 30, 2018 and $2 million lower for the six-month period endedJune 30, 2018.

See Note 3, Revenues for further information.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” On January 1, 2018, the Company adopted this ASU. ASU 2016-01 amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The adoption of this ASU did not have a material impact to the Company's consolidated financial statements or related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. There are two transition methods available under the new standard dependent upon the type of financial instrument, either cumulative effect or prospective. The standard will be effective for the Company in the first quarter of 2020. Earlier adoption is permitted only for annual periods after December 15, 2018. Management has assessed the impact of adoption of the new standard and determined there are no material impacts to the Company's consolidated financial statements or disclosures resulting from the adoption of this ASU.

In February 2016, the FASB issued ASU 2016-02, “Leases (Subtopic 842).” This ASU increases the transparency and comparability of organizations by recognizing lease assets and liabilities on the Consolidated Balance Sheets and disclosing key quantitative and qualitative information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the Consolidated Balance Sheets. The recognition, measurement and cash flows arising from a lease by a lessee have not significantly changed. This standard will be effective for the Company in the first quarter of 2019, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply.  While Management is currently assessing the impact of adoption on its consolidated financial statements, we have identified and collected data on our significant leases, made progress in assessing practical expedients and policy elections we will make upon adoption, as well as, selected an accounting system to support future accounting and disclosure requirements.  At this time, we do not have an estimate of the expected increase in assets and liabilities on the Company’s consolidated balance sheet upon adoption of this ASU in the first quarter of 2019.

Fair Value Measurements

Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy in accordance with ASC Topic 820, “Fair Value Measurements.” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries & money market funds).

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. In addition, the Company considers counterparty credit risk in the assessment of fair value.

Derivative Instruments

Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC 815, Derivatives and Hedging. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes.

In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value.

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Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

The Cumulative Effect of Changes to the Balance Sheet Related to the Adoption of ASC 606

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet related to the adoption of ASC

606 were as follows (in millions):

	As Reported December 31, 2017		Adjustment			As Adjusted January 1, 2018
Assets:
Inventories, net (1)	$	458	$	(3	)	$	455
Prepaid expenses and other current assets (2)	24		7			31
Long-term deferred income taxes (3)	119		(5		)	114
Other long-term assets (4)	65		12			77
Liabilities:
Deferred revenue (5)	186		(2		)	184
Long-term deferred revenue (6)	148		(6		)	142
Stockholders’ Equity:
Retained earnings	1,248		19			1,267

(1) Reflects an adjustment of $(3) million related to changes in revenue recognition patterns.

(2) Reflects an adjustment of $7 million related to changes in revenue recognition patterns.

(3) Reflects the income tax effect of $(5) million related to the adjustments made for the adoption of ASC 606.

(4) Reflects an adjustment of $12 million related to the capitalization of costs to obtain contracts (primarily comprised of sales commissions associated with longer term support service contracts).

(5) Reflects an adjustment of $(3) million related to reallocation of revenue between performance obligations and $1 million related to changes in the timing of revenue recognition.

(6) Reflects an adjustment of $(6) million related to reallocation of revenue between performance obligations.

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Revenues (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue By Geographic Location, Product Category And Customer-type

The following table presents our revenues disaggregated by product category for each of our segments, Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”), for the three and six-months ended June 30, 2018 (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018						June 30, 2018
	Product Category						Product Category
Segment	Tangible Products		Services and Software		Total		Tangible Products		Services and Software		Total
AIT	$	322	$	29	$	351	$	635	$	68	$	703
EVM	567		94		661		1,093		193		1,286
Total	$	889	$	123	$	1,012	$	1,728	$	261	$	1,989

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Inventories (Tables)

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Components of Inventories, Net

The components of Inventories, net are as follows (in millions): 

	June 30, 2018		December 31, 2017
Raw material	$	131	$	116
Work in process	2		1
Finished goods	332		341
Total	$	465	$	458

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Costs Associated with Exit and Restructuring Activities (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Rollforward of Exit and Restructuring Accruals

A roll forward of the exit and restructuring accruals is as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Balance at the beginning of the period	$	7		$	11		$	8		$	10
Charged to earnings, net	1			1			5			5
Cash paid	(4		)	(5		)	(9		)	(8		)
Balance at the end of the period	$	4		$	7		$	4		$	7

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Carried at Fair Value

Financial assets and liabilities carried at fair value as of June 30, 2018, are classified below (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange contracts (1)	$	1	$	16	$	—	$	17
Forward interest rate swap contracts (2)	—		7		—		7
Money market investments related to the deferred compensation plan	17		—		—		17
Total Assets at fair value	$	18	$	23	$	—	$	41
Liabilities:
Liabilities related to the deferred compensation plan	17		—		—		17
Total Liabilities at fair value	$	17	$	—	$	—	$	17

Financial assets and liabilities carried at fair value as of December 31, 2017, are classified below (in millions):

	Level 1		Level 2		Level 3		Total
Assets:
Money market investments related to the deferred compensation plan	$	15	$	—	$	—	$	15
Total Assets at fair value	$	15	$	—	$	—	$	15
Liabilities:
Forward interest rate swap contracts (2)	$	—	$	18	$	—	$	18
Foreign exchange contracts (1)	2		9		—		11
Liabilities related to the deferred compensation plan	15		—		—		15
Total Liabilities at fair value	$	17	$	27	$	—	$	44

(1) The fair value of the derivative contracts is calculated as follows:

a. Fair value of a put option contract associated with forecasted sales hedges is calculated using bid and ask rates for similar contracts.

b. Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.

c. Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1). As a result, there were $1 million of transfers from Level 2 to Level 1 as of June 30, 2018 and $2 million as of December 31, 2017.

(2) The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms. See gross balance reporting in Note 7, Derivative Instruments.

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Assets and Liabilities

The following table presents the fair value of its derivative instruments (in millions):

	Asset (Liability) Derivatives
		Fair Values as of
	Balance Sheet Classification	June 30, 2018			December 31, 2017
Derivative instruments designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	16		$	—
Foreign exchange contracts	Accrued liabilities	—			(9		)
Forward interest rate swaps	Accrued liabilities	(1		)	(2		)
Forward interest rate swaps	Other long-term liabilities	(1		)	(8		)
Total derivative instruments designated as hedges		$	14		$	(19	)
Derivative instruments not designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	1		$	—
Forward interest rate swaps	Other long-term assets	12			—
Foreign exchange contracts	Accrued liabilities	—			(2		)
Forward interest rate swaps	Accrued liabilities	(3		)	(1		)
Forward interest rate swaps	Other long-term liabilities	—			(7		)
Total derivative instruments not designated as hedges		$	10		$	(10	)
Total net derivative asset (liability)		$	24		$	(29	)

Derivative Instruments, Gains (Losses) from Changes in Fair Values

The following table presents the gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):

	Gain (Loss) Recognized in Income
		Three Months Ended					Six Months Ended
	Statements of Operations Classification	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Derivative instruments not designated as hedges:
Foreign exchange contracts	Foreign exchange gain (loss) gain	$	1	$	(11	)	$	1	$	(16	)
Forward interest rate swaps	Interest expense, net	5		—			18		1
Total gain (loss) recognized in income		$	6	$	(11	)	$	19	$	(15	)

Schedule of Notional Values and Net Fair Value of Forward Contracts

The notional values and the net fair value of these outstanding contracts are as follows (in millions):

	June 30, 2018		December 31, 2017
Notional balance of outstanding contracts:
British Pound/U.S. Dollar	£	16	£	13
Euro/U.S. Dollar	€	71	€	108
British Pound/Euro	£	5	£	5
Canadian Dollar/U.S. Dollar	$	7	$	12
Czech Koruna/U.S. Dollar	Kč	378	Kč	361
Brazilian Real/U.S. Dollar	R$	31	R$	34
Australian Dollar/U.S. Dollar	A$	50	A$	55
Swedish Krona/U.S. Dollar	kr	14	kr	13
Japanese Yen/U.S. Dollar	¥	144	¥	151
Singapore Dollar/U.S. Dollar	S$	6	S$	4
Mexican Peso/U.S. Dollar	Mex$	127	Mex$
Chinese Yuan/U.S. Dollar	¥	44	¥
Net fair value of asset (liability) of outstanding contracts	$	1	$	(2	)

Schedule of Gross and Net Amount Offset

The following table presents the (liability) asset gross fair values and related offsetting counterparty fair values as well as the net fair value amounts at June 30, 2018 (in millions):

	Gross Fair Value			Offsetting Counterparty Fair Value			Net Fair Value in the Consolidated Balance Sheets
Counterparty A	$	(3	)	$	(1	)	$	(2	)
Counterparty B	(1		)	—			(1		)
Counterparty C	(1		)	—			(1		)
Counterparty D	(2		)	(1		)	(1		)
Counterparty E	(1		)	—			(1		)
Counterparty F	15			—			15
Counterparty G	(2		)	—			(2		)
Total	$	5		$	(2	)	$	7

Schedule of Interest Rate Swaps Notional Amounts by Year

The interest rate swaps have future maturities consisting of the following notional amounts per year (in millions):

Year 2018	$	—
Year 2019	1,344
Year 2020	1,072
Year 2021	1,072
Year 2022	800
Notional balance of outstanding contracts	$	4,288

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Summary of Carrying Value of Long-term Debt

The following table summarizes the carrying value of the Company’s long-term debt (in millions):

	June 30, 2018			December 31, 2017
Term Loan B	$	810		$	1,160
Term Loan A	653			679
Revolving Credit Facility	433			275
Receivables Financing Facility	118			135
Total debt	$	2,014		$	2,249
Less: Debt issuance costs	(6		)	(7		)
Less: Unamortized discounts	(9		)	(15		)
Less: Current portion of long-term debt	(85		)	(51		)
Total long-term debt	$	1,914		$	2,176

Schedule of Future Maturities of Long-term Debt

At June 30, 2018, the future maturities of debt, excluding debt discounts and issuance costs, are as follows (in millions):

2018	$	37
2019	144
2020	54
2021	1,779
2022	—
Thereafter	—
Total future maturities of long-term debt	$	2,014

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Commitments and Contigencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Summary of Accrued Warranty Obligation

The following table is a summary of the Company’s accrued warranty obligation (in millions):

	Six Months Ended
	June 30, 2018			July 1, 2017
Balance at the beginning of the period	$	18		$	21
Warranty expense	16			13
Warranty payments	(16		)	(15		)
Balance at the end of the period	$	18		$	19

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Equity Awards Authorized and Available for Future Grant

A summary of the equity awards authorized and available for future grants under the 2018 Plan is as follows:

Available for future grants at December 31, 2017	—
Newly authorized shares	3,800,000
Granted	(925	)
Cancellation and forfeitures	—
Plan termination	—
Available for future grants at June 30, 2018	3,799,075

A summary of the equity awards authorized and available for future grants under the 2015 Plan is as follows:

Available for future grants at December 31, 2017	1,437,435
Newly authorized shares	—
Granted	(360,999	)
Cancellation and forfeitures	—
Plan termination	(1,076,436	)
Available for future grants at June 30, 2018	—

Summary of SARs Outstanding

A summary of the Company’s SARs outstanding under the 2015 Plan are as follows:

	Six Months Ended
	June 30, 2018
SARs	Shares		Weighted- Average Exercise  Price
Outstanding at beginning of year	1,817,991		$	65.73
Granted	87,310		149.57
Exercised	(384,528	)	58.18
Forfeited	(35,417	)	79.69
Expired	(438	)	108.20
Outstanding at end of period	1,484,918		$	72.28
Exercisable at end of period	797,045		$	58.20

Weighted-Average Assumptions Used for Grants of Stock Options and SARs

The following table shows the weighted-average assumptions used for grants of SARs, as well as the fair value of the grants based on those assumptions:

	June 30, 2018	July 1, 2017
Expected dividend yield	0%	0%
Forfeiture rate	8.40%	9.37%
Volatility	35.93%	35.49%
Risk free interest rate	2.96%	1.77%
Range of interest rates	1.68% - 3.00%	0.71% - 2.41%
Expected weighted-average life (in years)	4.11	4.13
Fair value of SARs granted (in millions)	$13	$12
Weighted-average grant date fair value of SARs granted (per underlying share)	$47.59	$29.84

Schedule of Outstanding and Exercisable Options

The following table summarizes information about non-qualified stock options outstanding at June 30, 2018:

	Outstanding		Exercisable
Aggregate intrinsic value (in millions)	$	1	$	1
Weighted-average remaining contractual term (in years)	0.42		0.42

The following table summarizes information about SARs outstanding at June 30, 2018:

	Outstanding		Exercisable
Aggregate intrinsic value (in millions)	$	106	$	68
Weighted-average remaining contractual term (in years)	5.86		5.01

Summary of Restricted Stock Award Activity

A summary of information relative to the Company’s restricted stock awards is as follows:

	Six Months Ended
	June 30, 2018
Restricted Stock Awards	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of year	628,642		$	77.70
Granted	199,025		149.41
Released	(144,957	)	109.21
Forfeited	(16,494	)	83.89
Outstanding at end of period	666,216		$	92.26

Summary of Performance Share Award Activity

The fair value of each performance award granted includes assumptions around the Company’s performance goals. A summary of information relative to the Company’s performance awards is as follows:

	Six Months Ended
	June 30, 2018
Performance Share Awards	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of year	265,747		$	77.04
Granted	59,383		146.64
Released	(57,074	)	107.31
Forfeited	(6,518	)	80.17
Outstanding at end of period	261,538		$	86.24

Schedule of Share-based Compensation, Stock Options, Activity

A summary of the Company’s options outstanding under the 2006 Plan is as follows:

	Six Months Ended
	June 30, 2018
Non-qualified Options	Shares		Weighted- Average Exercise Price
Outstanding at beginning of year	15,705		$	26.34
Exercised	(9,083	)	31.26
Expired	—		—
Outstanding at end of period	6,622		$	19.59
Exercisable at end of period	6,622		$	19.59

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Computation of Earnings per Share

Earnings per share (in millions, except share data):

	Three Months Ended				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Basic:
Net income	$	70	$	17	$	179	$	25
Weighted-average shares outstanding	53,537,876		51,996,353		53,414,267		51,928,911
Basic earnings per share	$	1.31	$	0.33	$	3.35	$	0.49
Diluted:
Net income	$	70	$	17	$	179	$	25
Weighted-average shares outstanding	53,537,876		51,996,353		53,414,267		51,928,911
Dilutive shares	717,831		1,132,304		719,843		1,109,045
Diluted weighted-average shares outstanding	54,255,707		53,128,657		54,134,110		53,037,956
Diluted earnings per share	$	1.29	$	0.32	$	3.30	$	0.48

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Components of Accumulated Other Comprehensive Loss (AOCI)

The components of Accumulated other comprehensive loss (“AOCI”) for the six months ended June 30, 2018 and July 1, 2017 are as follows (in millions):

	Unrealized (loss) gain on sales hedging			Unrealized (loss)/ gain on forward interest rate swaps			Currency translation adjustments			Total
Balance at December 31, 2016	$	6		$	(15	)	$	(36	)	$	(45	)
Other comprehensive (loss) income before reclassifications	(16		)	1			—			(15		)
Amounts reclassified from AOCI(1)	(1		)	1			—			—
Tax benefit	3			—			—			3
Other comprehensive (loss) income	(14		)	2			—			(12		)
Balance at July 1, 2017	$	(8	)	$	(13	)	$	(36	)	$	(57	)
Balance at December 31, 2017	$	(9	)	$	(9	)	$	(34	)	$	(52	)
Other comprehensive income (loss) before reclassifications	21			7			(7		)	21
Amounts reclassified from AOCI(1)	6			2			—			8
Tax (expense)	(5		)	(2		)	—			(7		)
Other comprehensive income (loss)	22			7			(7		)	22
Balance at June 30, 2018	$	13		$	(2	)	$	(41	)	$	(30	)

(1) See Note 7, Derivative Instruments regarding timing of reclassifications on forward interest rate swaps.

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Financial Information by Segments

Financial information by segment is presented as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales:
AIT	$	351		$	313		$	703		$	635
EVM	661			584			1,286			1,128
Total segment net sales	1,012			897			1,989			1,763
Corporate, eliminations (1)	—			(1		)	—			(2		)
Total net sales	$	1,012		$	896		$	1,989		$	1,761
Operating income:
AIT(3)	$	77		$	61		$	169		$	135
EVM(3)	73			70			153			118
Total segment operating income	150			131			322			253
Corporate, eliminations (2)	(25		)	(73		)	(53		)	(155		)
Total operating income	$	125		$	58		$	269		$	98

(1) Amounts included in Corporate, eliminations consist of purchase accounting adjustments related to the Enterprise Acquisition.

(2) Amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, and exit and restructuring costs.

(3) Effective January 1, 2018, the Company changed its methodology for allocating certain operating expenses across its two reportable segments to more accurately reflect where these operating costs are being incurred. The reallocations relate primarily to information technology, marketing and human resources expenses. Prior year segment operating results have been recast for comparability with the current year presentation. For the quarter ended July 1, 2017, $2 million of operating expenses were reclassified from EVM to AIT. For the six-month period ended July 1, 2017, $5 million of operating expenses were reclassified from AIT to EVM. For the full year ended December 31, 2017, $14 million of operating expenses were reclassified from AIT to EVM. There was no impact to the Consolidated Financial Statements as a result of these reclassifications.

Net Sales to Customers by Geographic Region

Net sales to customers by geographic region were as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Europe, Middle East and Africa	$	337	$	279	$	686	$	566
Latin America	57		57		113		110
Asia-Pacific	134		123		249		231
North America	484		437		941		854
Total Net sales	$	1,012	$	896	$	1,989	$	1,761

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Description of Business and Basis of Presentation (Details) - Scenario, Adjustment $ in Thousands	Dec. 31, 2017 USD ($)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Reclass from accrued liabilities	$ 41,000
Reclass to accounts payable	$ 41

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Significant Accounting Policies (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Jan. 01, 2018	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 31, 2017
Assets:
Inventory, net	$ 455	$ 465		$ 465		$ 458
Prepaid expenses and other current assets	31	52		52		24
Long-term deferred income taxes	114	104		104		119
Other long-term assets	77	94		94		65
Liabilities:
Deferred revenue	184
Long-term deferred revenue	142
Stockholders’ Equity:
Retained earnings	1,267	1,446		1,446		1,248
Increase in liability related to changes in revenue recognition	1
Impact on revenue before new revenue recognition guidance		1,012	$ 896	1,989	$ 1,761
Calculated under Revenue Guidance in Effect before Topic 606
Assets:
Inventory, net						458
Prepaid expenses and other current assets						24
Long-term deferred income taxes						119
Other long-term assets						65
Liabilities:
Deferred revenue						186
Long-term deferred revenue						148
Stockholders’ Equity:
Retained earnings						$ 1,248
ASU 2014-09 | Calculated under Revenue Guidance in Effect before Topic 606
Stockholders’ Equity:
Impact on revenue before new revenue recognition guidance		$ (3)		$ (2)
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
Assets:
Inventory, net	(3)
Prepaid expenses and other current assets	7
Long-term deferred income taxes	(5)
Other long-term assets	12
Liabilities:
Deferred revenue	(2)
Long-term deferred revenue	(6)
Stockholders’ Equity:
Retained earnings	19
Adjustment related to reallocation of revenue between performance obligations	$ (3)

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Revenues - Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Jan. 01, 2018
Capitalized Contract Cost [Line Items]
Remaining performance obligation	$ 430,000,000	$ 430,000,000
Remaining performance obligation, expected recognition period	3 years	3 years
Impairment losses		$ 0
Increase driven by payments received or due in advance of satisfying performance obligations		348,000,000	$ 334,000,000
Revenue recognized that was included in contract liability	$ 55,000,000	120,000,000
Other long-term assets	94,000,000	94,000,000	$ 65,000,000	$ 77,000,000
Sales Commissions
Capitalized Contract Cost [Line Items]
Commissions amortization	3,000,000	5,000,000
Deferred commissions	12,000,000	12,000,000
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
Capitalized Contract Cost [Line Items]
Other long-term assets				12,000,000
Prepaid expenses and other current assets
Capitalized Contract Cost [Line Items]
Contract assets recorded in prepaids and other current assets	$ 5,000,000	$ 5,000,000		$ 7,000,000

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Revenues - Disaggregation of Revenue By Product Category And Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Disaggregation of Revenue [Line Items]
Total Net sales	$ 1,012	$ 896	$ 1,989	$ 1,761
Net sales of tangible products
Disaggregation of Revenue [Line Items]
Total Net sales	889	779	1,728	1,514
Revenue from services and software
Disaggregation of Revenue [Line Items]
Total Net sales	123	$ 117	261	$ 247
AIT
Disaggregation of Revenue [Line Items]
Total Net sales	351		703
AIT | Net sales of tangible products
Disaggregation of Revenue [Line Items]
Total Net sales	322		635
AIT | Revenue from services and software
Disaggregation of Revenue [Line Items]
Total Net sales	29		68
EVM
Disaggregation of Revenue [Line Items]
Total Net sales	661		1,286
EVM | Net sales of tangible products
Disaggregation of Revenue [Line Items]
Total Net sales	567		1,093
EVM | Revenue from services and software
Disaggregation of Revenue [Line Items]
Total Net sales	$ 94		$ 193

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Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw material	$ 131		$ 116
Work in process	2		1
Finished goods	332		341
Total	$ 465	$ 455	$ 458

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Costs Associated with Exit and Restructuring Activities - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Restructuring Cost and Reserve [Line Items]
Exit and restructuring costs	$ 1	$ 1	$ 5	$ 5
Productivity Plan
Restructuring Cost and Reserve [Line Items]
Exit and restructuring costs	1		5
Restructuring and related cost, expected cost remaining (less than)	6		6
Severance, related benefits and, other expenses | Productivity Plan
Restructuring Cost and Reserve [Line Items]
Exit and restructuring charges, incurred life to date	$ 17		$ 17

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Costs Associated with Exit and Restructuring Activities - Rollforward of Exit and Restructuring Accruals (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Restructuring Reserve [Roll Forward]
Balance at the beginning of the period	$ 7	$ 11	$ 8	$ 10
Charged to earnings, net	1	1	5	5
Cash paid	(4)	(5)	(9)	(8)
Balance at the end of the period	4	$ 7	4	$ 7
Accrued liabilities
Restructuring Reserve [Roll Forward]
Balance at the end of the period	3		3
Other long-term liabilities
Restructuring Reserve [Roll Forward]
Balance at the end of the period	$ 1		$ 1

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Fair Value Measurements (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	$ 41	$ 15
Total Liabilities at fair value	17	44
Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	17
Total Liabilities at fair value		11
Forward interest rate swap contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	7	18
Money market investments related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	17	15
Liabilities related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	17	15
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	18	15
Total Liabilities at fair value	17	17
Level 1 | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	1
Total Liabilities at fair value		2
Fair value, assets, level 2 to level 1 transfers, amount	1	2
Level 1 | Forward interest rate swap contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	0	0
Level 1 | Money market investments related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	17	15
Level 1 | Liabilities related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	17	15
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	23	0
Total Liabilities at fair value	0	27
Level 2 | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	16
Total Liabilities at fair value		9
Level 2 | Forward interest rate swap contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	7	18
Level 2 | Money market investments related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	0	0
Level 2 | Liabilities related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	0	0
Total Liabilities at fair value	0	0
Level 3 | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	0
Total Liabilities at fair value		0
Level 3 | Forward interest rate swap contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	0	0
Level 3 | Money market investments related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at fair value	0	0
Level 3 | Liabilities related to the deferred compensation plan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Liabilities at fair value	$ 0	$ 0

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Derivative Instruments - Schedule of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Derivative [Line Items]
Total net derivative asset (liability)	$ 24	$ (29)
Derivative instruments designated as hedges
Derivative [Line Items]
Total net derivative asset (liability)	14	(19)
Derivative instruments not designated as hedges
Derivative [Line Items]
Total net derivative asset (liability)	10	(10)
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments designated as hedges
Derivative [Line Items]
Derivative asset, fair value	16	0
Prepaid expenses and other current assets | Foreign exchange contracts | Derivative instruments not designated as hedges
Derivative [Line Items]
Derivative asset, fair value	1	0
Accrued liabilities | Foreign exchange contracts | Derivative instruments designated as hedges
Derivative [Line Items]
Derivative liability, fair value	0	(9)
Accrued liabilities | Foreign exchange contracts | Derivative instruments not designated as hedges
Derivative [Line Items]
Derivative liability, fair value	0	(2)
Accrued liabilities | Forward interest rate swaps | Derivative instruments designated as hedges
Derivative [Line Items]
Derivative liability, fair value	(1)	(2)
Accrued liabilities | Forward interest rate swaps | Derivative instruments not designated as hedges
Derivative [Line Items]
Derivative liability, fair value	(3)	(1)
Other long-term assets | Forward interest rate swaps | Derivative instruments not designated as hedges
Derivative [Line Items]
Derivative asset, fair value	12	0
Other long-term liabilities | Forward interest rate swaps | Derivative instruments designated as hedges
Derivative [Line Items]
Derivative liability, fair value	(1)	(8)
Other long-term liabilities | Forward interest rate swaps | Derivative instruments not designated as hedges
Derivative [Line Items]
Derivative liability, fair value	$ 0	$ (7)

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Derivative Instruments - Gain (Loss) Recognized In Income (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Total gain (loss) recognized in income	$ (1,000,000)	$ 0	$ (6,000,000)	$ 1,000,000
Derivative instruments not designated as hedges
Derivative Instruments, Gain (Loss) [Line Items]
Total gain (loss) recognized in income	6,000,000	(11,000,000)	19,000,000	(15,000,000)
Derivative instruments not designated as hedges | Foreign exchange contracts | Foreign exchange gain (loss) gain
Derivative Instruments, Gain (Loss) [Line Items]
Total gain (loss) recognized in income	1,000,000	(11,000,000)	1,000,000	(16,000,000)
Derivative instruments not designated as hedges | Forward interest rate swaps | Interest expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Total gain (loss) recognized in income	$ 5,000,000	$ 0	$ 18,000,000	$ 1,000,000

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Derivative Instruments - Additional Information (Details) € in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) swap	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($) swap	Jul. 01, 2017 USD ($)	Jun. 30, 2018 EUR (€) swap	Dec. 31, 2017 USD ($)	Dec. 31, 2017 EUR (€)
Change in unrealized gain (loss) on anticipated sales hedging:
Realized (losses) or gains	$ (1,000,000)	$ 0	$ (6,000,000)	$ 1,000,000
Foreign currency cash flow hedge derivative | €					€ 402		€ 389
To be amortized through Accumulated other comprehensive loss			3,000,000
Losses on the forward interest rate swaps designated in a hedging relationship expected to be reclassified from accumulated other comprehensive loss into earnings during the next 12 months	1,000,000		1,000,000
Interest expense (less than in second quarter 2018)	$ 1,000,000		$ 1,000,000
Number of interest rate swaps | swap	3		3		3
Percentage of hedge effectiveness	100.00%		100.00%		100.00%
Derivative instruments designated as hedges
Change in unrealized gain (loss) on anticipated sales hedging:
Maturity period			12 months
Derivative instruments designated as hedges | Forward interest rate swaps
Change in unrealized gain (loss) on anticipated sales hedging:
Derivative forward long-term interest rate swap						$ 800,000,000
Derivative instruments not designated as hedges
Change in unrealized gain (loss) on anticipated sales hedging:
Realized (losses) or gains	$ 6,000,000	(11,000,000)	$ 19,000,000	(15,000,000)
Derivative instruments not designated as hedges | Foreign Exchange Forward
Change in unrealized gain (loss) on anticipated sales hedging:
Maturity period			1 month
Derivative instruments not designated as hedges | Forward interest rate swaps | Interest expense
Change in unrealized gain (loss) on anticipated sales hedging:
Realized (losses) or gains	5,000,000	$ 0	$ 18,000,000	$ 1,000,000
Losses on the forward interest rate swaps designated in a hedging relationship expected to be reclassified from accumulated other comprehensive loss into earnings during the next 12 months	$ 2,000,000		$ 2,000,000

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Derivative Instruments - Notional Values and Net Fair Value of Outstanding Contracts (Details) € in Millions, ¥ in Millions, ¥ in Millions, £ in Millions, kr in Millions, R$ in Millions, Kč in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions	Jun. 30, 2018 CZK (Kč)	Jun. 30, 2018 SEK (kr)	Jun. 30, 2018 USD ($)	Jun. 30, 2018 CAD ($)	Jun. 30, 2018 AUD ($)	Jun. 30, 2018 JPY (¥)	Jun. 30, 2018 GBP (£)	Jun. 30, 2018 MXN ($)	Jun. 30, 2018 CNY (¥)	Jun. 30, 2018 EUR (€)	Jun. 30, 2018 BRL (R$)	Jun. 30, 2018 SGD ($)	Dec. 31, 2017 CZK (Kč)	Dec. 31, 2017 SEK (kr)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 CAD ($)	Dec. 31, 2017 AUD ($)	Dec. 31, 2017 JPY (¥)	Dec. 31, 2017 GBP (£)	Dec. 31, 2017 MXN ($)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2017 EUR (€)	Dec. 31, 2017 BRL (R$)	Dec. 31, 2017 SGD ($)
Derivative [Line Items]
Net fair value of asset (liability) of outstanding contracts | $			$ 1												$ (2)
Foreign Exchange Forward | U.S. dollar
Derivative [Line Items]
Notional balance of outstanding contracts	Kč 378	kr 14		$ 7	$ 50	¥ 144	£ 16	$ 127	¥ 44	€ 71	R$ 31	$ 6	Kč 361	kr 13		$ 12	$ 55	¥ 151	£ 13	$ 0	¥ 0	€ 108	R$ 34	$ 4
Foreign Exchange Forward | Euro
Derivative [Line Items]
Notional balance of outstanding contracts | £							£ 5												£ 5

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Derivative Instruments - Schedule of Gross and Net Amount Offset (Details) - Foreign exchange contracts $ in Millions	Jun. 30, 2018 USD ($)
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	$ (5)
Offsetting Counterparty Fair Value	2
Net Fair Value in the Consolidated Balance Sheets	(7)
Counterparty A
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(3)
Offsetting Counterparty Fair Value	(1)
Net Fair Value in the Consolidated Balance Sheets	(2)
Counterparty B
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(1)
Offsetting Counterparty Fair Value	0
Net Fair Value in the Consolidated Balance Sheets	(1)
Counterparty C
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(1)
Offsetting Counterparty Fair Value	0
Net Fair Value in the Consolidated Balance Sheets	(1)
Counterparty D
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(2)
Offsetting Counterparty Fair Value	(1)
Net Fair Value in the Consolidated Balance Sheets	(1)
Counterparty E
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(1)
Offsetting Counterparty Fair Value	0
Net Fair Value in the Consolidated Balance Sheets	(1)
Counterparty F
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(15)
Offsetting Counterparty Fair Value	0
Net Fair Value in the Consolidated Balance Sheets	(15)
Counterparty G
Change in unrealized gain (loss) on anticipated sales hedging:
Gross Fair Value	(2)
Offsetting Counterparty Fair Value	0
Net Fair Value in the Consolidated Balance Sheets	$ (2)

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Derivative Instruments - Interest Rate Swaps Future Maturities (Details) $ in Millions	Jun. 30, 2018 USD ($)
Derivative [Line Items]
Notional balance of outstanding contracts	$ 4,288
Year 2018
Derivative [Line Items]
Notional balance of outstanding contracts	0
Year 2019
Derivative [Line Items]
Notional balance of outstanding contracts	1,344
Year 2020
Derivative [Line Items]
Notional balance of outstanding contracts	1,072
Year 2021
Derivative [Line Items]
Notional balance of outstanding contracts	1,072
Year 2022
Derivative [Line Items]
Notional balance of outstanding contracts	$ 800

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Long-Term Debt - Summary of Carrying Value of Debt (Details) - USD ($) $ in Millions	Jun. 30, 2018	May 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Total debt	$ 2,014		$ 2,249
Less: debt issuance costs	(6)		(7)
Less: unamortized discounts	(9)		(15)
Less: Current portion of long-term debt	(85)		(51)
Total long-term debt	1,914		2,176
Revolving Credit Facility
Debt Instrument [Line Items]
Total debt	433		275
Term Loan | Term Loan B
Debt Instrument [Line Items]
Total debt	810		1,160
Term Loan | Term Loan A
Debt Instrument [Line Items]
Total debt	653	$ 670	679
Secured Debt | Receivables Financing Facility
Debt Instrument [Line Items]
Total debt	$ 118		$ 135

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Long-Term Debt - Future Maturities of Long-Term Debt (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2018	$ 37
2019	144
2020	54
2021	1,779
2022	0
Thereafter	0
Total future maturities of long-term debt	$ 2,014	$ 2,249

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Long-Term Debt - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
Long-term debt, fair value	$ 2,000	$ 2,200
Debt Instrument [Line Items]
Assets	4,275	4,275
Liabilities	$ 3,202	$ 3,441
Sales Revenue, Net | Non-Guarantor Subsidiaries
Debt Instrument [Line Items]
Concentration risk, percentage	47.80%
Assets, Total | Non-Guarantor Subsidiaries
Debt Instrument [Line Items]
Concentration risk, percentage	84.00%
Assets	$ 3,600
Liabilities, Total | Non-Guarantor Subsidiaries
Debt Instrument [Line Items]
Concentration risk, percentage	80.10%
Liabilities	$ 2,600

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Long-Term Debt - Credit Facilities (Details) - USD ($)			3 Months Ended
	May 31, 2018	May 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Line of Credit Facility [Line Items]
Long-term debt			$ 2,014,000,000	$ 2,249,000,000
Accelerated amortization of debt issuance costs			6,000,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Long-term debt			433,000,000	275,000,000
Letters of credit			$ 5,000,000
Average interest rate			3.91%
Revolving Credit Facility | Amended and Restated Credit Agreement
Line of Credit Facility [Line Items]
Revolving credit facility maximum borrowing capacity	$ 800,000,000	$ 500,000,000
Line of Credit Facility, Remaining Borrowing Capacity			$ 795,000,000
Term Loan | Term Loan A
Line of Credit Facility [Line Items]
Long-term debt	670,000,000		653,000,000	679,000,000
Debt issuance costs			$ 2,000,000
Percentage bearing variable interest, percentage rate			3.84%
Term Loan | Term Loan B
Line of Credit Facility [Line Items]
Long-term debt			$ 810,000,000	$ 1,160,000,000
Early extinguishment of debt	$ 300,000,000
Debt issuance costs			$ 1,000,000
Percentage bearing variable interest, percentage rate			4.06%
Term Loan | Term Loan B | Floor
Line of Credit Facility [Line Items]
Percentage bearing variable interest, percentage rate			2.75%
LIBOR | Amended and Restated Credit Agreement
Line of Credit Facility [Line Items]
Rate spread	1.75%	2.00%

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Long-Term Debt - Receivable Financing Facility (Details) - USD ($)	Jun. 30, 2018	Dec. 01, 2017
Line of Credit Facility [Line Items]
Accounts receivable pledged	$ 419,000,000
Secured Debt | Receivables Financing Facility
Line of Credit Facility [Line Items]
Receivable financing facility, up to		$ 180,000,000
Pledged associated liabilities	$ 118,000,000
Average interest rate	2.94%

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Commitments and Contigencies - Additional Information (Details) - officer	6 Months Ended
	Jun. 30, 2018	Aug. 16, 2005
Product Warranty Liability [Line Items]
Number of former officers being sued		2
Mobile Computers
Product Warranty Liability [Line Items]
Product warranty period	1 year
Printers
Product Warranty Liability [Line Items]
Product warranty period	1 year
Batteries
Product Warranty Liability [Line Items]
Product warranty period	1 year
Thermal Printheads
Product Warranty Liability [Line Items]
Product warranty period	6 months
Battery-Based Products
Product Warranty Liability [Line Items]
Product warranty period	90 days
Minimum | Advanced Data Capture Products
Product Warranty Liability [Line Items]
Product warranty period	1 year
Maximum | Advanced Data Capture Products
Product Warranty Liability [Line Items]
Product warranty period	5 years

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Commitments and Contigencies - Summary of Accrued Warranty Obligation (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 18	$ 21
Warranty expense	16	13
Warranty payments	(16)	(15)
Balance at the end of the period	$ 18	$ 19

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Share-Based Compensation - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Dec. 31, 2011	May 17, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense	$ 28.0	$ 16.0
Tax related benefits recognized	5.0
Total unearned compensation costs related to performance share awards	$ 75.0
Total unearned compensation costs amortization period	2 years 1 month 18 days
SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of exercised options	$ 34.0	8.0
Options, vested in period, fair value	$ 7.0	6.0
Vesting period	4 years
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Other Award Types
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Settlement payments for awards	$ 2.0	$ 1.0
Share-equivalents issued (in shares)	(17,253)	(45,781)
Non-qualified Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tax related benefits recognized	$ 1.0	$ 1.0
Intrinsic value of exercised options	1.0	5.0
Cash received from exercise of stock options (less than in 2018)	$ 1.0	$ 3.0
Maximum | Other Award Types
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
2018 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized				3,800,000
Share-equivalents issued (in shares)	(925)
Number of shares available for grant (in shares)	3,799,075				0
2018 Plan | RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
2015 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	4,000,000
Share-equivalents issued (in shares)	(360,999)
Number of shares available for grant (in shares)	0				1,437,435
2015 Plan | SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	87,310
2011 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized			1,500,000.0
Purchase price per share equal to lesser of fair market value percentage			95.00%
Number of shares available for grant (in shares)	869,514
Nonemployee directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	7,980	12,488

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Share-Based Compensation - Summary of Equity Awards Authorized and Available for Future Grant (Details)	6 Months Ended
	Jun. 30, 2018 shares
2018 Plan
Available for future grants
Available for future grants at beginning of period (in shares)	0
Newly authorized shares (in shares)	3,800,000
Granted (in shares)	(925)
Cancellation and forfeitures (in shares)	0
Plan termination (in shares)	0
Available for future grants at end of period (in shares)	3,799,075
2015 Plan
Available for future grants
Available for future grants at beginning of period (in shares)	1,437,435
Newly authorized shares (in shares)	0
Granted (in shares)	(360,999)
Cancellation and forfeitures (in shares)	0
Plan termination (in shares)	(1,076,436)
Available for future grants at end of period (in shares)	0

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Share-Based Compensation - Summary of SARs Outstanding (Detail)	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Stock Awards
Outstanding at beginning of period (in shares) | shares	15,705
Exercised (in shares) | shares	(9,083)
Expired (in shares) | shares	0
Outstanding at end of period (in shares) | shares	6,622
Exercisable at end of period (in shares) | shares	6,622
Weighted- Average Exercise Price
Outstanding at beginning of period (usd per share) | $ / shares	$ 26.34
Exercised (usd per share) | $ / shares	31.26
Expired (usd per share) | $ / shares	0.00
Outstanding at end of period (usd per share) | $ / shares	19.59
Exercisable at end of period (usd per share) | $ / shares	$ 19.59
SARs | 2015 Plan
Stock Awards
Outstanding at beginning of period (in shares) | shares	1,817,991
Granted (in shares) | shares	87,310
Exercised (in shares) | shares	(384,528)
Forfeited (in shares) | shares	(35,417)
Expired (in shares) | shares	(438)
Outstanding at end of period (in shares) | shares	1,484,918
Exercisable at end of period (in shares) | shares	797,045
Weighted- Average Exercise Price
Outstanding at beginning of period (usd per share) | $ / shares	$ 65.73
Granted (usd per share) | $ / shares	149.57
Exercised (usd per share) | $ / shares	58.18
Forfeited (usd per share) | $ / shares	79.69
Expired (usd per share) | $ / shares	108.20
Outstanding at end of period (usd per share) | $ / shares	72.28
Exercisable at end of period (usd per share) | $ / shares	$ 58.20

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Share-Based Compensation - Weighted-Average Assumptions Used for Grants of Stock Options and SARs (Detail) - SARs - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Forfeiture rate	8.40%	9.37%
Volatility	35.93%	35.49%
Risk free interest rate	2.96%	1.77%
Risk free interest rate, minimum	1.68%	0.71%
Risk free interest rate, maximum	3.00%	2.41%
Expected weighted-average life	4 years 1 month 10 days	4 years 1 month 17 days
Fair value of SARs granted	$ 13	$ 12
Weighted-average grant date fair value of SARs granted (per underlying share) (USD per share)	$ 47.59	$ 29.84

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Share-Based Compensation - Summary of Outstanding and Exercisable Options and SARs (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value - outstanding	$ 106
Weighted-average remaining contractual term - outstanding	5 years 10 months 10 days
Aggregate intrinsic value - exercisable	$ 68
Weighted-average remaining contractual term - exercisable	5 years 5 days
Non-qualified Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value - outstanding	$ 1
Weighted-average remaining contractual term - outstanding	5 months 2 days
Aggregate intrinsic value - exercisable	$ 1
Weighted-average remaining contractual term - exercisable	5 months 2 days

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Share-Based Compensation - Summary of Restricted Stock Award Activity (Detail) - Restricted Stock Awards	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Restricted Stock Awards and Units
Outstanding at beginning of period (in shares) | shares	628,642
Granted (in shares) | shares	199,025
Released (in shares) | shares	(144,957)
Forfeited (in shares) | shares	(16,494)
Outstanding at end of period (in shares) | shares	666,216
Weighted-Average Grant Date Fair Value
Outstanding at beginning of year (USD per share) | $ / shares	$ 77.70
Granted (USD per share) | $ / shares	149.41
Released (USD per share) | $ / shares	109.21
Forfeited (USD per share) | $ / shares	83.89
Outstanding at end of year (USD per share) | $ / shares	$ 92.26

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Share-Based Compensation - Summary of Performance Share Award Activity (Detail) - Performance Shares	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Performance Stock Awards
Outstanding at beginning of period (in shares) | shares	265,747
Granted (in shares) | shares	59,383
Released (in shares) | shares	(57,074)
Forfeited (in shares) | shares	(6,518)
Outstanding at end of period (in shares) | shares	261,538
Weighted-Average Grant Date Fair Value
Outstanding at beginning of year (USD per share) | $ / shares	$ 77.04
Granted (USD per share) | $ / shares	146.64
Released (USD per share) | $ / shares	107.31
Forfeited (USD per share) | $ / shares	80.17
Outstanding at end of year (USD per share) | $ / shares	$ 86.24

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Share-Based Compensation - Summary of Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Shares
Outstanding at beginning of period (in shares) | shares	15,705
Exercised (in shares) | shares	(9,083)
Expired (in shares) | shares	0
Outstanding at end of period (in shares) | shares	6,622
Exercisable at end of period (in shares) | shares	6,622
Weighted- Average Exercise Price
Outstanding at beginning of period (usd per share) | $ / shares	$ 26.34
Exercised (usd per share) | $ / shares	31.26
Expired (usd per share) | $ / shares	0.00
Outstanding at end of period (usd per share) | $ / shares	19.59
Exercisable at end of period (usd per share) | $ / shares	$ 19.59

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective tax rate	30.00%	10.50%	23.20%	(47.10%)
Income Tax Contingency [Line Items]
Uncertain tax benefits that may be paid within the next twelve months	$ 22		$ 22
Charge related to income tax uncertainties for prior year tax positions	$ 13
Deferred taxes, projected effective rate at which expected to reverse	21.00%		21.00%
Settlement payments offset liability increase			$ 44		$ 36
Increase in liability for uncertain tax benefits related to prior years	$ 8
Amount of accrued interest and penalties					$ 34
United Kingdom
Income Tax Contingency [Line Items]
Statutory tax rate			19.00%
Singapore
Income Tax Contingency [Line Items]
Statutory tax rate			17.00%
Luxembourg
Income Tax Contingency [Line Items]
Statutory tax rate			27.00%
Singapore Economic Development Board
Income Tax Contingency [Line Items]
Statutory tax rate					10.00%
Foreign Tax Authority
Income Tax Contingency [Line Items]
Tax credits					$ 10
Minimum
Income Tax Contingency [Line Items]
Payments to be remitted over next eight years	3		$ 3
Maximum
Income Tax Contingency [Line Items]
Payments to be remitted over next eight years	$ 8		$ 8

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Earnings per Share - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Basic:
Net income	$ 70	$ 17	$ 179	$ 25
Weighted-average shares outstanding (in shares)	53,537,876	51,996,353	53,414,267	51,928,911
Basic earnings per share (USD per share)	$ 1.31	$ 0.33	$ 3.35	$ 0.49
Diluted:
Net income	$ 70	$ 17	$ 179	$ 25
Weighted-average shares outstanding (in shares)	53,537,876	51,996,353	53,414,267	51,928,911
Dilutive shares (in shares)	717,831	1,132,304	719,843	1,109,045
Diluted weighted-average shares outstanding (in shares)	54,255,707	53,128,657	54,134,110	53,037,956
Diluted earnings per share (USD per share)	$ 1.29	$ 0.32	$ 3.30	$ 0.48

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Earnings per Share - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Earnings Per Share [Abstract]
Potentially dilutive shares	86,726	273,216	87,310	701,272

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
AOCI Attributable to Parent, Net of Tax
Beginning balance	$ 834
Other comprehensive income (loss) before reclassifications	21	$ (15)
Amounts reclassified from AOCI	8	0
Tax benefit	(7)	3
Other comprehensive income (loss)	22	(12)
Ending balance	1,073
Unrealized (loss) gain on sales hedging
AOCI Attributable to Parent, Net of Tax
Beginning balance	(9)	6
Other comprehensive income (loss) before reclassifications	21	(16)
Amounts reclassified from AOCI	6	(1)
Tax benefit	(5)	3
Other comprehensive income (loss)	22	(14)
Ending balance	13	(8)
Unrealized (loss)/ gain on forward interest rate swaps
AOCI Attributable to Parent, Net of Tax
Beginning balance	(9)	(15)
Other comprehensive income (loss) before reclassifications	7	1
Amounts reclassified from AOCI	2	1
Tax benefit	(2)	0
Other comprehensive income (loss)	7	2
Ending balance	(2)	(13)
Currency translation adjustments
AOCI Attributable to Parent, Net of Tax
Beginning balance	(34)	(36)
Other comprehensive income (loss) before reclassifications	(7)	0
Amounts reclassified from AOCI	0	0
Tax benefit	0	0
Other comprehensive income (loss)	(7)	0
Ending balance	(41)	(36)
Total
AOCI Attributable to Parent, Net of Tax
Beginning balance	(52)	(45)
Ending balance	$ (30)	$ (57)

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Segment Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2018 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Information - Segment Information by Reportable Segments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total Net sales	$ 1,012	$ 896	$ 1,989	$ 1,761
Total operating income	125	58	269	98
Operating expenses reclassified	347	353	668	714
AIT
Segment Reporting Information [Line Items]
Total Net sales	351		703
Operating Segments
Segment Reporting Information [Line Items]
Total Net sales	1,012	897	1,989	1,763
Total operating income	150	131	322	253
Operating Segments | AIT
Segment Reporting Information [Line Items]
Total Net sales	351	313	703	635
Total operating income	77	61	169	135
Operating expenses reclassified	2		(5)		$ (14)
Operating Segments | EVM
Segment Reporting Information [Line Items]
Total Net sales	661	584	1,286	1,128
Total operating income	73	70	153	118
Operating expenses reclassified	2		5		$ (14)
Corporate, eliminations
Segment Reporting Information [Line Items]
Total Net sales	0	(1)	0	(2)
Total operating income	$ (25)	$ (73)	$ (53)	$ (155)

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Segment Information - Net Sales to Customers by Geographic Region (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Segment Reporting Information [Line Items]
Total Net sales	$ 1,012	$ 896	$ 1,989	$ 1,761
Europe, Middle East and Africa
Segment Reporting Information [Line Items]
Total Net sales	337	279	686	566
Latin America
Segment Reporting Information [Line Items]
Total Net sales	57	57	113	110
Asia-Pacific
Segment Reporting Information [Line Items]
Total Net sales	134	123	249	231
North America
Segment Reporting Information [Line Items]
Total Net sales	$ 484	$ 437	$ 941	$ 854

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Subsequent Events (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Millions	Jul. 05, 2018	Jul. 03, 2018
Xplore Technologies Corporation
Subsequent Event [Line Items]
Acquisition, share price (in usd per share)	$ 6.00
Aggregate consideration of the transaction	$ 90
General and Administrative Expense
Subsequent Event [Line Items]
Litigation settlement with plaintiff		$ 13