-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FXbx69J0uw7iIesEbp2En0v9WGoJdD7LfTGnp+0szw4GoWIrX+U0dLnfXwW57tqt SE+iz0lk18krR7dXMp9hXg== 0000877212-97-000004.txt : 19970616 0000877212-97-000004.hdr.sgml : 19970616 ACCESSION NUMBER: 0000877212-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970613 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZEBRA TECHNOLOGIES CORP/DE CENTRAL INDEX KEY: 0000877212 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 362675536 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19406 FILM NUMBER: 97623962 BUSINESS ADDRESS: STREET 1: 333 CORPORATE WOODS PKWY CITY: VERNON HILLS STATE: IL ZIP: 60061 BUSINESS PHONE: 7086346700 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 29, 1997 Commission File Number: O-19406 Zebra Technologies Corporation (Exact name of registrant as specified in its charter) Delaware 36-2675536 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 Corporate Woods Parkway, Vernon Hills, IL 60061 (Address of principal executive offices) (Zip Code) (847) 634-6700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and has been subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No As of April 28, 1997, there were the following shares outstanding: Class A Common Stock, $.01 par value: 16,984,973 Class B Common Stock, $.01 par value: 7,255,404 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES QUARTER ENDED MARCH 29, 1997 INDEX PAGE PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Independent Auditors' Review Report 2 Consolidated Balance Sheets as of March 29, 1997 (unaudited) and December 31, 1996 3 Consolidated Statements of Earnings (unaudited) for the three months ended March 29, 1997 and March 30, 1996 4 Consolidated Statements of Cash Flows (unaudited) for the three months ended March 29, 1997 and March 30, 1996 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 13
Item 1. Consolidated Financial Statements Independent Auditors' Review Report The Board of Directors Zebra Technologies Corporation: We have reviewed the consolidated balance sheet of Zebra Technologies Corporation and subsidiaries as of March 29, 1997, and the related consolidated statements of earnings and cash flows for the three-month periods ended March 29, 1997 and March 30, 1996. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim Financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Zebra Technologies Corporation and subsidiaries as of December 31, 1996, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 7, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1996, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Chicago, Illinois KPMG Peat Marwick LLP April 15, 1997 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 29, December 31, 1997 1996 (Unaudited) ASSETS Current assets: Cash and cash equivalents $8,371 $5,168 Investments and marketable securities 104,246 89,372 Accounts receivable, net of allowances of $973 and $960 28,176 31,631 Inventories: Finished goods 9,593 10,428 Work-in-process 759 325 Raw materials 10,082 10,750 Total inventories 20,434 21,503 Deferred Income Taxes Prepaid expenses 1,544 1,322 Total current assets 162,771 148,996 Machinery and equipment at cost, less accumulated depreciation and amortization 11,125 11,328 Other assets 2,647 2,812 Deferred tax asset - 147 Total assets $176,543 $163,283 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $9,149 $12,200 Due to related party - - Accrued liabilities 4,997 4,180 Short-term note payable 83 1 Current portion of obligation under capitalized lease with related party 63 62 Income taxes payable 7,276 3,750 Total current liabilities 21,568 20,193 Obligation under capitalized lease with related party,less current portion 99 115 Long-term liability 2,211 2,211 Deferred tax liability 1,431 - Other 301 308 Total liabilities 25,610 22,827 Stockholders' equity: Preferred stock, $.01 par value, 10,000,000 shares authorized, none outstanding Class A Common Stock, $.01 par value; 35,000,000 shares authorized, 16,924,973 shares issued and outstanding 169 169 Class B Common Stock, $.01 par value; 35,000,000 shares authorized, 7,315,404 shares issued and outstanding 73 73 Paid-in capital 30,386 30,386 Retained earnings 119,858 108,624 Unrealized holding gain/(loss) on investments - (6) Cumulative translation adjustment 447 1,210 Total stockholders' equity 150,933 140,456 Total liabilities and stockholders' equity $176,543 $163,283
See accompanying notes to consolidated financial statements. ZEBRA TECHNOLOGIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except for per share data) (Unaudited) Three Months Ended March 29, March 30, 1997 1996 Net sales $42,415 $38,352 Cost of sales 21,185 19,919 Gross profit 21,230 18,433 Operating expenses: Sales and marketing 4,473 4,640 Research and development 2,529 2,674 General and administrative 3,434 3,312 Acquired in-process technology - 1,114 Total operating expenses 10,436 11,740 Income from operations 10,794 6,693 Other income (expense) Investment income 1,082 859 Gain on securities 6,029 445 Other, net 11 (25) Total other income 7,122 1,279 Income before income taxes 17,916 7,972 Provision for income taxes 6,682 2,723 Net income $11,234 $5,249 Net income per share $0.46 $0.22 Average shares 24,240 24,189
See accompanying notes to consolidated financial statements. ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Ended March 29, March 30, 1997 1996 Cash flows from operating activities: Net income $11,234 $5,249 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 909 752 Appreciation in market value of investments & marketable securities 564 304 Decrease (increase) in accounts receivable 3,455 (437) Decrease (increase) in inventories 1,069 (86) Decrease in other assets 165 305 Decrease in accounts payable (3,051) (1,549) Increase (decrease) in accrued expenses 810 (611) Increase in income taxes payable 3,526 700 Increase in deferred income taxes 1,578 352 Net decrease in other operating activities (985) (666) Net purchases of investments and marketable securities (20,911) (4,288) Net cash provided by (used in) operating activities (1,637) 25 Cash flows from investing activities: Purchases of machinery and equipment (706) (1,294) Net sales (purchases) of investments and marketable securities 5,479 (890) Net cash provided by (used in) investing activities 4,773 (2,184) Cash flows from financing activities: Net proceeds from sale of stock - 345 Issuance of short-term notes payable 82 204 Payments for obligation under capital lease (15) (14) Net cash provided by financing activities 67 535 Net increase (decrease) in cash and cash equivalents 3,203 (1,624) Cash including cash equivalents at beginning of period 5,168 10,017 Cash including cash equivalents at end of period $8,371 $8,393 Supplemental disclosures of cash flow information: Interest paid $3 $4 Income taxes paid $1,100 $1,685
See accompanying notes to consolidated financial statements. ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The consolidated financial statements included herein have been prepared by Zebra Technologies Corporation and subsidiaries (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K filed with the Securities and Exchange Commission. The consolidated balance sheet as of December 31, 1996 presented herein has been derived from the audited consolidated balance sheet contained in the Annual Report on Form 10-K. In the opinion of the Company, the consolidated financial statements reflect all adjustments necessary to present fairly the consolidated financial position of Zebra Technologies Corporation and subsidiaries as of March 29, 1997 and December 31, 1996, and the consolidated results of their operations and their cash flows for the three months ended March 29, 1997 and March 30, 1996. The results of operations for such interim periods are not necessarily indicative of the results for the full year. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations First Quarter of 1997 versus First Quarter of 1996 Net sales for the first quarter of 1997 increased 10.6% to $42,415,000 versus sales of $38,352,000 for the first quarter of 1996. This sales increase is attributed to unit growth in all product categories rather than price increases, as the average unit price of printer products has decreased due to product mix changes. Printer sales increased by 15.1% and supplies sales by 7.9% over the first quarter of 1996, bringing printer sales to 71.9% and supplies sales to 23.7% of consolidated net sales, respectively. The remaining 4.4% of net sales consisted of service and software revenue. Approximately 45.4% of first quarter net sales were derived from international sources as compared to 43.7% during the first quarter of 1996. Gross profit increased to $21,230,000 for the first quarter of 1997, a 15.2% gain over gross profit of $18,433,000 for the first quarter of 1996. As a percentage of net sales, gross profit increased 2.0% from 48.1% to 50.1%. This increase is principally due to decreased material costs of high volume printer parts plus a favorable product mix within the Company's printer products and a lower percentage of supplies sales. Sales and marketing expenses of $4,473,000 were down 3.6% for the first quarter of 1997 compared to $4,640,000 in the first quarter of 1996. As a percentage of net sales, first quarter sales and marketing expenses decreased to 10.5% from 12.1% for the same period last year. The decrease in expense was the result of improvements in bad debt expense, customer accommodation, advertising, and travel. The reductions were offset in part by increased staffing,co-op advertising, public relations, and trade show expenses. Research and development expenses for the first quarter of 1997 decreased by 5.4% to $2,529,000 (6.0% of net sales) as compared to $2,674,000 (7.0% of net sales) in the first quarter of 1996. Decreases resulted from reductions in usage of temporary help and outside services, offset in part by increased expenses related to new product prototypes. General and administrative expenses for the first quarter of 1997 increased by 3.7% to $3,434,000 (8.1% of net sales) as compared to $3,312,000 (8.6% of net sales) in the first quarter of 1996. The dollar increase was the result of increases in staffing, outside services, building, and depreciation. These expenses were offset in part by reductions in recruiting and mainframe computer costs. Both periods include the amortization of intangible assets and goodwill for the acquisitions of Vertical Technologies Inc. in July 1995 and Fenestra Computer Services in February 1996. Income from operations for the first quarter of 1997 increased by $4,101,000 or 61.3% to $10,794,000 (25.4% of net sales) compared to $6,693,000 (17.5% of net sales) for the first quarter of 1996. This increase was due to higher gross profits and decreased operating expenses, as previously indicated, and to the non-recurring write-off of acquired in-process technology of $1,114,000 in the first quarter of 1996 as a result of the Company's acquisition of Fenestra Computer Services. Investment income for the first quarter of 1997 increased by $5,808,000 or 445.7% to $7,111,000 versus $1,303,000 for the first quarter of last year. This amount includes a one time gain of $5,458,000 from the sale of 350,000 shares of Norand Corporation common stock which was purchased in October of 1995 when management briefly considered Norand a possible acquisition candidate. Income before income taxes was $17,916,000 in the first quarter of 1997 compared to $7,972,000 in the same quarter of last year, an increase of $9,944,000 or 124.7%. Income taxes were provided at a rate of 37.3% in the first quarter of 1997 resulting in net income of $11,234,000, or 26.5% of net sales, and net income per share of $0.46 on 24,240,000 average outstanding shares. In the first quarter of 1996, the provision for taxes was 34.2% resulting in net income of $5,249,000, or 13.7% of net sales, and net income per share of $0.22 on 24,189,000 average outstanding shares. The Peak Technologies Group, Inc., a customer of the Company which accounted for 21% of the Company's net sales for the year ended December 31, 1996, has agreed to be acquired by Moore Corporation. This transaction has not yet been completed. The Company believes it has an excellent long term relationship with Peak Technologies Group, Inc. However, the effect which such transaction will have on the Company's relationship with this customer - -- positive or negative -- is currently unknown. Liquidity and Capital Resources The Company's principal source of liquidity continues to be cash generated from operations. At March 31, 1997, the Company had $112,617,000 in cash and marketable securities versus $94,540,000 at the end of 1996. Effective February 16, 1996 the Company purchased the assets of Fenestra Computer Services, a UK partnership, in exchange for $1,398,000 in cash and Zebra Class A common stock. The transaction has been accounted for under the purchase method of accounting. Assets and liabilities, including software and hardware technology, and trade names have been recorded at their respective fair market values with $1,114,000 assigned to acquired in-process technology based on an independent third-party appraisal. The entire amount of the acquired in-process technology was expensed in the first quarter of 1996. Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements. The Company has no commitments or agreements with respect to acquisitions or other significant capital expenditures. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" ("EPS"). Implementation of SFAS No. 128 is required for the periods ending after December 15, 1997. The standard establishes new methods for computing and presenting EPS and replaces the presentation of primary and fully-diluted EPS with basic and diluted EPS. The new methods under this standard are not expected to have a significant impact on the Company's EPS amounts. 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 reflected in such forward looking statements. These factors include the acceptance of the Company's printer and software products by the market, and product offerings made by its competitors. Profits will be affected by the Company's ability to control manufacturing and operating costs. Due to the Company's large investment portfolio, interest rate conditions will also have an impact on results, as will foreign exchange rates due to the large percentage of the Company's sales in international markets. When used in this document and documents referenced, the words "anticipate", "believe", "estimate", and "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward looking statements. Readers of this release are referred to prior filings with the Securities and Exchange Commission, and Zebra's prospectus of December 7, 1995 for further discussions of factors that could affect Zebra's future results. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 15. Acknowledgment of Independent Certified Public Accountants Regarding Independent Accountants Review Report 27. Financial Data Schedule (b) Reports. No reports on Form 8-K have been filed by the Registrant for the quarterly period covered by this report. Exhibit 15 Acknowledgment of Independent Certified Public Accountants Regarding Independent Auditors' Review Report Zebra Technologies Corporation 333 Corporate Woods Parkway Vernon Hills, Illinois 60061-3109 Ladies and Gentlemen: With respect to the registration statements (No. 33-44706 and No. 33-72774) on Form S-8, we acknowledge our awareness of the use therein of our report dated April 15, 1997 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. Very truly yours, KPMG Peat Marwick LLP Chicago, Illinois May 9, 1997 Exhibit 27 The schedule contains summary financial information extracted from Zebra Technologies Corporation and subsidiaries consolidated balance sheets for March 29, 1997 and consolidated statements of earnings for the three months ended March 29, 1997 and is qualified in its entirety by reference to such financial statements. ZEBRA TECHNOLOGIES CORPORATION Appendix A to Item 601(c) of Regulation S-K Commercial and Industrial Companies Article 5 of Regulation S-X Item Number Item Description Amount 5-02(1) cash and cash items 8,371 5-02(2) marketable securities 104,246 5-02(3)(a)(1) notes and accounts receivable-trade 29,149 5-02(4) allowances for doubtful accounts (973) 5-02(6) inventory 20,434 5-02(9) total current assets 162,771 5-02(13) property, plant and equipment 22,830 5-02(14) accumulated depreciation (11,705) 5-02(18) total assets 176,543 5-02(21) total current liabilities 21,568 5-02(22) bonds, mortgages and similar debt 0 5-02(28) preferred stock-mandatory redemption 0 5-02(29) preferred stock-no mandatory redemption 0 5-02(30) common stock 242 5-02(31) other stockholder's equity 150,691 5-02(32) total liabilities and stockholder's equity 176,544 5-03(b)1(a) net sales of tangible products 41,651 5-03(b)1 total revenues 42,415 5-03(b)2(a) cost of tangible goods sold 20,903 5-03(b)2 total costs and expenses applicable to sales and revenues 21,185 5-03(b)3 other costs and expenses 10,509 5-03(b)5 provision for doubtful accounts and notes 23 5-03(b)(8) interest and amortization of debt discount 2,858 5-03(b)(10) income before income taxes 17,916 5-03(b)11 income tax expense 6,682 5-03(b)(14) income/loss 11,234 5-03(b)(15) discontinued operations 0 5-03(b)(17) extraordinary items 0 5-03(b)(18) cumulative effect- changes in accounting principles 0 5-03(b)(19) net income or loss 11,234 5-03(b)(20) earnings per share-primary 0.46 5-03(b)(20) earnings per share-fully diluted 0.46
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ZEBRA TECHNOLOGIES CORPORATION Date: May 9, 1997 By: /s/Edward L. Kaplan Edward L. Kaplan Chief Executive Officer Date: May 9, 1997 By: /s/Charles R. Whitchurch Charles R. Whitchurch Chief Financial Officer EX-27 2
5 3-MOS DEC-31-1997 MAR-29-1997 8371 104246 29149 (973) 20434 162771 22830 (11705) 176543 21568 0 0 0 242 150691 176544 41651 42415 20903 21185 10509 23 2858 17916 6682 11234 0 0 0 11234 0.46 0.46
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