-----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, SOih18pNeRP0X1uRFNR1q9oVFdH1/9cFwFrf577TXQFBwIKk0Ew2GIC+TvOf8CYH bwFOuJ61zu6R4Ri8EYHJJA== 0001047469-98-031645.txt : 19980817 0001047469-98-031645.hdr.sgml : 19980817 ACCESSION NUMBER: 0001047469-98-031645 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980704 FILED AS OF DATE: 19980814 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: 366966580 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19406 FILM NUMBER: 98690110 BUSINESS ADDRESS: STREET 1: 333 CORPORATE WOODS PKWY CITY: VERNON HILLS STATE: IL ZIP: 60061 BUSINESS PHONE: 7086346700 10-Q 1 10-Q 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 July 4, 1998 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 (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 August 12, 1998, there were the following shares outstanding: Class A Common Stock, $.01 par value 19,429,874 Class B Common Stock, $.01 par value 4,890,609 1 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES QUARTER ENDED JULY 4, 1998 INDEX
PAGE PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Independent Auditors' Review Report 3 Consolidated Balance Sheets as of July 4, 1998 (unaudited) and December 31, 1997 4 Consolidated Statements of Earnings and Comprehensive Income (unaudited)for the three months and six months ended July 4, 1998 and June 28,1997 5 Consolidated Statements of Cash Flows (unaudited) for the six months ended July 4, 1998 and June 28,1997 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14
2 PART I - FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REVIEW REPORT The Board of Directors and Shareholders Zebra Technologies Corporation: We have reviewed the consolidated balance sheet of Zebra Technologies Corporation and subsidiaries as of July 4, 1998, the related consolidated statements of earnings and comprehensive income for the three-month and six-month periods ended July 4, 1998 and June 28, 1997, and the related consolidated statements of cash flows for the six-month periods ended July 4, 1998 and June 28, 1997. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews 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 reviews, 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, 1997, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 27, 1998, 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, 1997 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/KPMG Peat Marwick LLP Chicago, Illinois July 22, 1998 3 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
JULY 4, DECEMBER 31, 1998 1997 ---- ---- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 9,372 $ 7,155 Investments and marketable securities 135,170 121,698 Accounts receivable, net of allowance of $1,653 in 1998 and $1,788 in 1997 38,194 31,032 Inventories 19,853 22,443 Deferred income taxes 2,365 4,307 Prepaid expenses 773 843 -------- -------- Total current assets 205,727 187,478 -------- -------- Machinery and equipment at cost, less accumulated depreciation and amortization 16,581 12,753 Other assets 4,036 3,353 -------- -------- TOTAL ASSETS $226,344 $203,584 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,778 $ 11,141 Accrued liabilities 6,713 6,900 Short-term note payable 137 137 Current portion of obligation under capitalized lease with related party 66 65 Income taxes payable 4,073 4,329 -------- -------- Total current liabilities 23,767 22,572 -------- -------- Obligation under capitalized lease with related party, less current portion 17 51 Long-term liability - 212 Deferred income taxes 577 911 Other 260 287 -------- -------- TOTAL LIABILITIES 24,621 24,033 -------- -------- Shareholders' equity: Preferred stock, $.01 par value; 10,000,000 shares authorized, none outstanding - - Class A Common Stock, $.01 par value; 50,000,000 shares authorized, 19,429,574 and 19,413,933 shares issued and outstanding in 1998 and 1997, respectively 194 194 Class B Common Stock, $.01 par value; 28,358,189 shares authorized, 4,890,609 shares issued and outstanding in 1998 and 1997 49 49 Paid-in capital 30,282 29,984 Retained earnings 170,500 148,779 Accumulated other comprehensive income 698 545 -------- -------- TOTAL SHAREHOLDERS' EQUITY 201,723 179,551 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $226,344 $203,584 -------- -------- -------- --------
See accompanying notes to consolidated financial statements. 4 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT PER-SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED ---------------------- ----------------------- JULY 4, JUNE 28, JULY 4, JUNE 28, 1998 1997 1998 1997 ------- ------- -------- ------- Net sales $55,353 $47,844 $105,567 $88,853 Cost of sales 26,563 23,546 50,637 44,124 ------- ------- -------- ------- Gross profit 28,790 24,298 54,930 44,729 Operating expenses: Sales and marketing 5,634 5,070 10,937 8,945 Research and development 2,914 2,775 6,360 5,167 General and administrative 4,312 3,923 8,532 6,917 ------- ------- -------- ------- Total operating expenses 12,860 11,768 25,829 21,029 ------- ------- -------- ------- Income from operations 15,930 12,530 29,101 23,700 ------- ------- -------- ------- Other income (expense): Investment income 1,136 1,356 2,411 2,437 Gain on securities 1,544 665 2,866 1,235 Other, net (973) 215 (414) 5,686 ------- ------- -------- ------- Total other income 1,707 2,236 4,863 9,358 ------- ------- -------- ------- Income from continuing operations before taxes 17,637 14,766 33,964 33,058 Provision for income taxes 6,349 5,121 12,243 11,887 ------- ------- -------- ------- Income from continuing operations 11,288 9,645 21,721 21,171 ------- ------- -------- ------- Loss from discontinued operation (less applicable income tax benefit) -- (2,363) -- (2,655) ------- ------- -------- ------- Net income $11,288 $ 7,282 $ 21,721 $18,516 ------- ------- -------- ------- ------- ------- -------- ------- Other comprehensive income - foreign currency translation adjustments 15 363 152 (399) ------- ------- -------- ------- Comprehensive income $11,303 $ 7,645 $ 21,873 $18,117 ------- ------- -------- ------- ------- ------- -------- ------- Basic earnings per share from continuing operations $0.46 $0.40 $0.89 $0.87 Diluted earnings per share from continuing operations $0.46 $0.40 $0.89 $0.87 Basic earnings per share $0.46 $0.30 $0.89 $0.76 Diluted earnings per share $0.46 $0.30 $0.89 $0.76 Basic weighted-average shares outstanding 24,317 24,244 24,298 24,242 Diluted weighted-average and equivalent shares outstanding 24,431 24,293 24,412 24,281
See accompanying notes to consolidated financial statements. 5 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED ----------------------------- JULY 4, JUNE 28, 1998 1997 -------- --------- Cash flows from operating activities: Net income $ 21,721 $ 18,516 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,632 1,888 Depreciation in market value of investments & marketable securities 2,926 1,190 Discontinued operations - (3,371) Decrease (increase) in accounts receivable (7,162) 1,877 Decrease (increase) in inventories 2,590 (1,022) Decrease (increase) in other assets (683) 2,124 Increase in accounts payable 1,637 279 Increase (decrease) in accrued liabilities and other (214) 3,117 Decrease in income taxes payable (256) (810) Decrease (increase) in deferred taxes 1,608 (1,582) Net increase (decrease) in other operating activities 223 (1,462) Net purchases of investments and marketable securities (16,398) (18,025) -------- -------- Net cash provided by operating activities 8,624 2,718 -------- -------- Cash flows from investing activities: Purchases of machinery and equipment (6,460) (2,631) Net sales of investments and marketable securities - 6,044 -------- -------- Net cash provided by (used in) investing activities (6,460) 3,413 -------- -------- Cash flows from financing activities: Proceeds from exercise of stock options and stock purchase plan 298 179 Issuance of short-term notes payable - 136 Payment of long-term notes payable (212) - Payments for obligation under capital lease (33) (31) -------- -------- Net cash provided by financing activities 53 284 -------- -------- Net increase in cash and cash equivalents 2,217 6,415 Cash and cash equivalents at beginning of period 7,155 5,168 -------- -------- Cash and cash equivalents at end of period $ 9,372 $ 11,583 -------- -------- -------- -------- Supplemental disclosures of cash flow information: Interest paid $465 $6 Income taxes paid $9,037 $12,343
See accompanying notes to consolidated financial statements. 6 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, 1997, 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 July 4, 1998, the consolidated results of their operations for the three months and six months ended July 4, 1998, and June 28, 1997, and their cash flows for the six months ended July 4, 1998, and June 28, 1997. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," as of January 1, 1998. Required changes are reported in the Consolidated Statements of Earnings and Comprehensive Income. NOTE 2 - DISCONTINUED BUSINESS OPERATIONS As of June 28, 1997, the Company made the decision to discontinue the operations of its subsidiary, Zebra Technologies VTI ("VTI"). A one-time charge of $2,363,000, before income tax benefits, was recorded in the second quarter of 1997 and was related to the discontinuance of VTI and the Company's presence in the PC retail channel. The one-time charge includes a provision for expected product returns from present retail channel partners, provision for slow moving/obsolete product, and provisions for estimated contingent liabilities. The Company's financial statements for the three months and six months ended June 28, 1997, have been revised to reflect the discontinuance of VTI. NOTE 3 - TAX AUDITS AND RELATED LITIGATION As of April 4, 1998, the Company completed the IRS audits covering federal income tax returns from 1993 and 1994. Settlements with the IRS for both years amounted to $999,500 and were paid prior to the close of the quarter. As of July 4, 1998, the Company made a final settlement to the IRS for interest charges related to the audits covering 1993 and 1994. The interest payments for both years amounted to $403,700 and were paid in the quarter that ended July 4, 1998. These payments are reflected in such quarter's statement of earnings and comprehensive income as other expenses. 7 Completion of the State of Illinois income tax audit covering the same tax years was settled during the first quarter of 1998. A settlement of $190,400 was paid in April 1998 for the tax years of 1993 and 1994. The Illinois Department of Revenue has recently challenged the Company on the tax status and treatment of the Company's intangible entities. Although the Company and its attorneys believe that the Company has a strong position, the Company was required to make a deposit of $2,665,400 while the matter is pending. This deposit was made early in the second quarter of 1998. NOTE 4 - MERGER WITH ELTRON On July 9, 1998, the Company announced that it has signed a definitive agreement to acquire 100% of the outstanding shares of Eltron International, Inc. ("Eltron"). Eltron manufactures and markets high-quality, low-cost bar code label and plastic card printers, secure card printing systems, ribbons, self-adhesive labels, and related accessories throughout the world. Eltron is headquartered in Simi Valley, California. The transaction is subject to shareholder approval, customary closing conditions, and certain regulatory approvals, including the applicable Hart-Scott-Rodino review. The transaction will be structured as a pooling-of-interest tax-free merger in which each of Eltron's common shares will be exchanged for .90 shares of Zebra Class B Common Stock. On a pro-forma basis, the combined company would have generated sales in excess of $325 million in the 12 months ended July 4, 1998, and would have more than $145 million in cash and investments. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF CONTINUING OPERATIONS; SECOND QUARTER OF 1998 VERSUS SECOND QUARTER OF 1997 AND YEAR-TO-DATE 1998 VERSUS YEAR-TO-DATE 1997 Net sales for the second quarter increased 15.7% to $55,353,000 from $47,844,000. The sales increase is attributable to unit growth in hardware (printers and replacement parts). The average unit price for printers declined slightly, since volume in lower-priced models has grown faster than increases in higher-priced models. For the second quarter, hardware sales increased 21.3% from the second quarter of 1997 to 79.3% of net sales, and supplies sales decreased 4.0% from the second quarter of 1997 to 18.4% of net sales. The remaining 2.2% of net sales consisted of service and software revenue. For the year to-date, net sales increased 18.8% to $105,567,000 from $88,853,000. Year-to-date hardware sales increased 24.7% to 78.2% of net sales, and supplies sales declined 1.7% to 19.3% of net sales. The remaining 2.6% of year-to-date net sales consisted of service and software revenue. International sales accounted for 43.0% of second quarter sales in 1998, compared with 47.4% of net sales for the second quarter of 1997. On a year-to-date basis, international sales accounted for 43.7% of sales in 1998 and 47.2% of sales in 1997. The decrease in the percentage of international sales, on both a quarterly and year-to-date basis, is principally due to declines in the Company's sales to the Asia-Pacific region. Gross profit increased to $28,790,000 for the second quarter, an increase of 18.5% from the gross profit of $24,298,000. As a percentage of net sales, gross profit increased 1.2 percentage points to 52.0% from 50.8%. The increase in gross profit margin was due to a decrease in printer component costs, productivity improvements in printer manufacturing, and a favorable product mix. On a year-to-date basis, gross profit increased to $54,930,000, up 22.8% from $44,729,000 for the same period a year ago. Year-to-date gross profit also increased as a percentage of net sales, to 52.0% from 50.3%. Sales and marketing expenses of $5,634,000 were up 11.1% for the second quarter from $5,070,000. Increases occurred in expenses for payroll and benefits related to higher staffing levels in the United States and Europe, for new regional offices in the United States, for trade shows, and for travel and entertainment. These cost increases were partially offset by expenditure declines in advertising and miscellaneous expenses. As a percentage of net sales, second quarter sales and marketing expenses decreased to 10.2% from 10.6%. Year-to-date sales and marketing expenses of $10,937,000 were up 22.3% from $8,945,000, increasing as a percentage of net sales to 10.4% from 10.1%. Research and development expenses for the second quarter increased 5.0% to $2,914,000 from $2,775,000. As a percentage of sales, quarterly research and development expenses decreased to 5.3% from 5.8%. Higher personnel-related expenses resulting from higher staffing levels and expenditures on outside services were largely offset by lower development costs and computer-related expenses. Year-to-date research and development expenses increased 23.1% to $6,360,000, or 6.0% of net sales, in 1998 from $5,167,000, or 5.8% of net sales in 1997. 9 General and administrative expenses for the second quarter increased by 9.9% to $4,312,000 from $3,923,000. As a percentage of net sales, quarterly general and administrative expenses declined to 7.8% from 8.2%. Increases in payroll and benefits from higher staffing levels and increased depreciation were partially offset by declines in computer-related expenditures and expenses for outside services. For the first half of the year, general and administrative expenses increased 23.3% to $8,532,000, or 8.1% of net sales, from $6,917,000, or 7.8% of net sales. Income from operations for the second quarter increased by $3,400,000, or 27.1%, to $15,930,000, or 28.8% of net sales, from to $12,530,000, or 26.2% of net sales. For the year to-date, income from operations increased by $5,401,000, or 22.8%, to $29,101,000, or 27.6% of net sales, from $23,700,000, or 26.7% of net sales. Investment income and gain on securities for the second quarter of 1998 increased 32.6% to $2,680,000 from $2,021,000 for the same period in 1997. Higher gains on securities transactions more than offset a $220,000 decline in investment income. Year-to-date investment income and gain on securities increased by $1,605,000, or 43.7%, to $5,277,000 from $3,672,000 for the first half of 1997. Other expense of $973,000 for the 1998 second quarter included $403,700 for a one-time interest charge for a tax deficiency arising from a recently completed U.S. Internal Revenue Service tax audit of 1993 and 1994. See Note 3 to the Consolidated Financial Statements included elsewhere herein. For the year to-date in 1997, other expense includes a one-time pre-tax investment gain of $5,458,000, which was recognized in the first quarter of 1997. Income from continuing operations before taxes for the second quarter of 1998 was $17,637,000, compared with $14,766,000 for the same period in 1997, an increase of $2,871,000, or 19.4%. On a year-to-date basis, income from continuing operations before taxes increased 2.7% to $33,964,000 from $33,058,000 for the previous year. Excluding the previously discussed one-time investment gain recognized in the first quarter of 1997, year-to-date income from continuing operations before taxes increased 23.1%. The effective income tax rate for the second quarter of 1998 was 36.0%, resulting in income from continuing operations and net income of $11,288,000, or $0.46 per share (basic and diluted). For the second quarter of 1997, the effective income tax rate was 34.7%, income from continuing operations was $9,645,000, or $0.40 per share (basic and diluted), and net income was $7,282,000, or $0.30 per share (basic and diluted). As a percentage of net sales, quarterly income from continuing operations was 20.4% in 1998 and 20.2% in 1997. For the year to-date, the effective income tax rate was 36.0% for 1998, resulting in income from continuing operations and net income of $21,721,000, or $0.89 per share (basic and diluted). For 1997, the effective income tax rate was 36.0%, income from continuing operations was $21,171,000, or $0.87 per share (basic and diluted), and net income was $18,516,000, or $0.76 per share (basic and diluted). As a percentage of net sales, year-to-date income from continuing operations was 20.6% in 1998 and 23.8% in 1997. 10 LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of liquidity continues to be cash generated from operations. Cash and cash equivalents and investments and marketable securities totaled $144,542,000 at July 4, 1998, compared with $128,853,000 at December 31, 1997. Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements. YEAR 2000 CONSIDERATIONS To meet changing business needs, the Company initiated a conversion in 1995 to the Baan system, an enterprise-wide business management and resource planning system. This system is Year 2000 compliant and its implementation was completed in the second quarter of 1998 for Vernon Hills and will be completed by year-end 1998 for the Company's United Kingdom location. The Company's payroll system, which is not covered by the Baan system, will also be replaced by the end of 1998. The payroll system will integrate payroll with the Company's human resources software and will be Year 2000 compliant. To date, expenditures on the Baan project have totaled $8,164,000, of which $6,340,000 has been capitalized. At completion, total expenditures are estimated to be $8,800,000, of which $7,100,000 is estimated to be capitalized. The Company does not believe that its non-information technology systems will be materially affected by the Year 2000 issues. The Company is in the process of analyzing its significant suppliers to determine if they are Year 2000 compliant. There can be no guarantee that such customers or suppliers will achieve compliance on a timely basis. The failure by one or more significant suppliers to achieve compliance could have a material adverse effect on the Company. The Company has not yet undertaken to quantify the effects of such possible non-compliance, to determine the likely worst-case scenario or to develop contingency plans to deal with such scenario. The Company's printers have no internal clock or dating mechanism and will not be affected by the change in dates. The Company's PC-470 printer controller has a self-contained real-time clock and currently is not Year 2000 compliant. The Company intends to post instructions on its Web site (www.zebra.com) on how to reset the PC-470's clock so that it will function properly after January 1, 2000. Current versions of the Company's labeling and other software are either Year 2000 compliant or depend on the internal clock of the computer on which it is running for proper dating. The Company's LABEL software depends on the BIOS of the system on which it is running or on the external data source being Year 2000 compliant. SIGNIFICANT CUSTOMER Sales to The Peak Technologies Group, Inc. ("Peak") accounted for 16.5% of the Company's total net sales for the second quarters of 1998 and 1997. For the year to-date, sales to Peak represented 16.8% of net sales in 1998 and 14.9% of net sales in 1997. Moore Corporation acquired Peak in June 1997. Management recognizes that since Moore Corporation is a major provider of labels, the acquisition could have an adverse effect Zebra's on label sales to Peak. 11 SUBSEQUENT EVENT On July 9, 1998, the Company announced that it had entered into a definitive merger agreement with Eltron International, Inc., whereby each share of Eltron common stock will be exchanged for .90 shares of Zebra Class B Common Stock. Eltron manufactures and markets high-quality, low-cost bar code label and plastic card printers, secure card printing systems, ribbons, self-adhesive labels, and related accessories throughout the world. Eltron is headquartered in Simi Valley, California. The pending transaction is structured as a pooling-of-interests tax-free merger and is expected to close by early October. The transaction is subject to shareholder approval, customary closing conditions, and certain regulatory approvals, including the applicable Hart-Scott-Rodino review. SAFE HARBOR Forward-looking statements contained in this filing are subject to the safe harbor created by the Private Securities 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 market acceptance of the Company's printer and software products and competitors' product offerings. 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 international sales. 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 document are referred to prior filings with the Securities and Exchange Commission, including Zebra's prospectus of September 4, 1997, for further discussions of factors that could affect Zebra's future results. 12 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 15.1 Acknowledgment of Independent Certified Public Accountants Regarding Independent Auditors' Review Report 27.1 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. 13 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 12, 1998 By: /s/ Edward L. Kaplan ------------------------ Edward L. Kaplan Chief Executive Officer Date: August 12, 1998 By: /s/ Charles R. Whitchurch -------------------------- Charles R. Whitchurch Chief Financial Officer 14 EX-15.1 2 EXHIBIT 15.1 Exhibit 15.1 ACKNOWLEDGMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REGARDING INDEPENDENT AUDITORS' REVIEW REPORT Zebra Technologies Corporation 333 Corporate Woods Parkway Vernon Hills, Illinois 60061-3109 Ladies and Gentlemen: With respect to the registration statements (No. 33-44706, No. 33-72774, and No. 333-59733) on Form S-8 and the registration statement on Form S-4 of Zebra Technologies Corporation, we acknowledge our awareness of the incorporation by reference therein of our report dated July 22, 1998, related to our review of interim financial information as of July 4, 1998. 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, /s/KPMG Peat Marwick LLP Chicago, Illinois July 29, 1998 15 EX-27.1 3 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JULY 4, 1998 AND CONSOLIDATED STATEMENTS OF EARNINGS FOR THE SIX MONTHS ENDED JULY 4, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA. 6-MOS DEC-31-1998 JAN-01-1998 JUL-04-1998 9,372 135,170 39,847 (1,653) 19,853 205,727 33,792 (17,211) 226,344 23,767 0 0 0 243 201,480 226,344 103,862 105,567 50,012 50,637 25,683 146 465 33,964 12,243 21,721 0 0 0 21,721 0.89 0.89
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