8-K

UNITED STATES	OMB APPROVAL
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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)     October 27, 2004
Zebra Technologies Corporation
(Exact name of registrant as specified in its charter)
Delaware		00-19406	36-2675536
(State or other jurisdiction of incorporation)		(Commission File Number)	(IRS Employer Identification No.)
	333 Corporate Woods Parkway, Vernon Hills, IL			60661
	(Address of principal executive offices)			(Zip Code)
Registrant’s telephone number, including area code(847) 634-6700
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On October 27, 2004, Zebra Technologies Corporation (the “Registrant”) issued a press release setting forth the Registrant’s third-quarter earnings.  A copy of the Registrant’s press release is attached hereto as Exhibit 99.1 and the information contained therein is incorporated herein by reference.  The information contained in this Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and it shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(a) None.

(b) None.

(c) Exhibits - The following Exhibit is being furnished herewith:

Exhibit Number	Description of Exhibits
99.1	Press Release of Registrant dated October 27 2004.

2

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 hereunto duly authorized.

	ZEBRA TECHNOLOGIES CORPORATION
	By:	/s/ Edward L. Kaplan
		Chairman of the Board and
		Chief Executive Officer
Dated: October 27, 2004

3

Exhibit Index

Exhibit Number	Description of Exhibits
99.1	Press Release of Registrant dated October 27, 2004.

4

EX-99.1

Exhibit 99.1

	Zebra Technologies Corporation
	333 Corporate Woods Parkway
	Vernon Hills, Illinois 60061.3109 U.S.A.
	Telephone +1.847.634.6700
	Facsimile +1.847.913.8766
	www.zebra.com

FOR IMMEDIATE RELEASE

Zebra Technologies Reports Net Income Up 36% on 27% Sales Growth to Record Levels

Vernon Hills, IL, October 27, 2004–Zebra Technologies Corporation (Nasdaq: ZBRA) today announced continued high growth in net sales, net income and earnings per share to record levels for the third quarter that ended October 2, 2004. Quarterly net income increased 36.2% to $31,319,000, or $0.43 per diluted share, from $22,999,000, or $0.32 per diluted share, for the same period a year ago. Third quarter net sales advanced 27.1% to $171,176,000 from $134,649,000. Per-share figures for 2003 were adjusted for a three-for-two stock split that was paid on August 25, 2004, in the form of a 50% stock dividend. Sales and earnings results exceeded previously announced forecasts and analyst consensus estimates. The company also announced a continuation of the positive outlook in its financial forecast for the fourth quarter of 2004.

“The business momentum that delivered record results for the first half of this year has carried into the second half,” stated Edward Kaplan, Zebra’s chairman and chief executive officer. “Consistent growth occurred across products, channels, and geographies. Our North American region grew 31% for the quarter, including large shipments of mobile printers to support enterprise mobility in retail and manufacturing. Zebra is winning more business around the world, on the strength of its brand, global reach, and the success of activities creating greater demand for specialty digital printing solutions.”

Mr. Kaplan added, “Zebra is ideally positioned for additional growth and stockholder value creation. We are extending our leadership position in attractive markets for barcoding and plastic card printing. In radio frequency identification, we are using our industry leadership, market coverage, and broad RFID product line to help companies meet approaching compliance labeling deadlines, as well as develop and implement RFID solutions in several industries seeking to benefit from using the technology. At the same time, we are also bringing Zebra’s financial and operational resources to bear on opportunities in digital photo printing and additional mobile solutions for an increasing array of vertical market applications.”

For the first nine months of 2004, net sales were a record $488,180,000, up 25.4% from $389,197,000 for the same period in 2003. Net income increased 31.8% to a record $88,682,000 from $67,301,000. On a per-share basis, split-adjusted diluted earnings were $1.22 versus $0.94 for the same period a year ago.

At October 2, 2004, Zebra had $523,040,000 in cash, investments and marketable securities, and no long-term debt. Inventories totaled $54,313,000 and accounts receivable were $95,300,000, both reflecting the higher level of business for the quarter.

Discussion and Analysis

Continuing the trends affecting the first half of 2004, all major product lines and geographic regions contributed to the company’s sales growth for the third quarter of 2004. The company’s North American region experienced an acceleration in sales growth to a record level and made the largest contribution to total sales growth. Outside North America, sales growth occurred in all geographic regions, including record sales in the company’s Latin American region. Higher average unit prices supplemented higher unit volumes. Gross profit margin of 50.9% increased 0.6 percentage points from the third quarter of 2003, primarily from higher capacity utilization related to the higher sales volume and, to a lesser extent, cost reductions and favorable foreign exchange rates. Third quarter operating expenses increased 23.4% over the same period a year ago, including $715,000 in exit costs related to the company’s previously announced consolidation of manufacturing and service operations. Third quarter operating expenses also reflect higher payroll and benefits from increased headcount to support sales and marketing activities and product

development, including those related to RFID products, as well as higher legal expenses related to litigation and increased work on intellectual property matters. Quarterly operating income increased 33.8% on margin expansion to 26.3% of net sales from 25.0% for the third quarter of 2003.

Fourth Quarter Outlook

Zebra also announced its financial forecast for the fourth quarter of 2004. Net sales are expected within a range of $170,000,000 and $174,000,000, or up 13% to 15%, with earnings growth of 16% to 23%, to between $0.41 and $0.44 per diluted share. This forecast implies full-year sales growth of approximately 23% to a record $660,000,000, and 29% growth in net income to approximately $120 million, or $1.65 per share.

Forward-looking Statement

This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company’s financial forecast for the fourth quarter of 2004 stated in the paragraph directly above. These statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in general industry and market conditions, of general domestic and international economic conditions, and other factors. Specifically, these factors include market acceptance of the company’s products and product lines and competitors’ product offerings, as well as the speed of adoption of the company’s printing technologies and competing technologies. When used in this release and documents referenced, the words “anticipate,” “believe,” “estimate,” “forecast” and “expect” and similar expressions, as they relate to the company or its management are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company’s future operations and results can be found in Zebra’s filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra’s Form 10-K for the year ended December 31, 2003.

Zebra Technologies Corporation delivers innovative and reliable on-demand printing solutions for business improvement and security applications in 90 countries around the world. More than 90 percent of Fortune 500 companies use Zebra-brand printers. A broad range of applications benefit from Zebra-brand thermal bar code, “smart” label, receipt, and card printers, resulting in enhanced security, increased productivity, improved quality, lower costs, and better customer service. The company has sold more than three million printers, including RFID printer/encoders and wireless mobile solutions, and also offers software, connectivity solutions, and printing supplies. Information about Zebra Technologies can be found at www.zebra.com.

Investors are invited to listen to a live Internet broadcast of Zebra’s conference call discussing the company’s financial results for the third quarter of 2004. The conference call will be held at 11:00 Eastern Time today. To listen to the call, visit the company’s Web site at www.zebra.com.

For Information, Contact:

Charles R. Whitchurch

Chief Financial Officer

Phone: 847.634.6700

Fax: 847.821.2545

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	October 2, 2004		December 31, 2003
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,269	$	14,266
Investments and marketable securities	512,771		433,582
Accounts receivable, net	95,300		81,867
Inventories	54,313		42,781
Deferred income taxes	5,481		4,507
Prepaid expenses	4,921		4,415
Total current assets	683,055		581,418
Property and equipment at cost, less accumulated depreciation and amortization	42,500		39,286
Goodwill	61,137		61,150
Other intangibles, net	7,164		9,031
Other assets	25,907		10,726
Total assets	$	819,763	$	701,611
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	22,033	$	16,238
Accrued liabilities	25,915		26,938
Current portion of obligation under capital lease	55		153
Income taxes payable	4,983		2,273
Total current liabilities	52,986		45,602
Obligation under capital lease, less current portion	131		452
Deferred income taxes	1,189		723
Deferred rent	566		518
Other long-term liabilities	3,553		2,401
Total liabilities	58,425		49,696
Stockholders’ equity:
Preferred stock	¾		¾
Class A Common Stock	717		711
Additional paid-in capital	81,691		61,929
Retained earnings	674,528		585,846
Accumulated other comprehensive income	4,402		3,429
Total stockholders’ equity	761,338		651,915
Total liabilities and stockholders’ equity	$	819,763	$	701,611

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	October 2, 2004			September 27, 2003			October 2, 2004			September 27, 2003
Net sales	$	171,176		$	134,649		$	488,180		$	389,197
Cost of sales	84,030			66,876			235,916			190,517
Gross profit	87,146			67,773			252,264			198,680
Operating expenses:
Selling and marketing	19,217			15,871			54,447			47,128
Research and development	9,596			7,898			27,725			23,037
General and administrative	11,865			9,937			37,139			30,437
Amortization of intangible assets	647			371			1,921			1,113
Exit costs	715			—			1,953			—
Merger costs	10			—			68			—
Total operating expenses	42,050			34,077			123,253			101,715
Operating income	45,096			33,696			129,011			96,965
Other income (expense):
Investment income (loss)	2,515			(982		)	7,678			4,474
Interest expense	(7		)	(64		)	(39		)	(116		)
Foreign exchange gains (losses)	737			(18		)	493			(248		)
Other, net	(381		)	(263		)	(1,232		)	(549		)
Total other income	2,864			(1,327		)	6,900			3,561
Income before income taxes	47,960			32,369			135,911			100,526
Income taxes	16,641			9,370			47,229			33,225
Net income	$	31,319		$	22,999		$	88,682		$	67,301
Basic earnings per share	$	0.44		$	0.32		$	1.24		$	0.95
Diluted earnings per share	$	0.43		$	0.32		$	1.22		$	0.94
Basic weighted average shares outstanding	71,696			70,880			71,489			70,536
Diluted weighted average and equivalent shares outstanding	72,673			71,785			72,485			71,331

Note: Share and per-share figures were adjusted for a three-for-two stock split that was paid in the form of a 50% stock dividend on August 25, 2004.

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months Ended
	October 2, 2004			September 27, 2003
Cash flows from operating activities:
Net income	$	88,682		$	67,301
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,030			8,619
Tax benefit from exercise of options	6,346			3,362
Deferred income taxes	(505		)	462
Changes in assets and liabilities:
Accounts receivable, net	(13,272		)	(10,549		)
Inventories	(11,472		)	(713		)
Other assets	(14,071		)	(8,357		)
Accounts payable	5,705			1,457
Accrued liabilities	(1,028		)	1,529
Income taxes payable	2,697			4,921
Other operating activities	542			(2,027		)
Net cash provided by operating activities	72,654			66,005
Cash flows from investing activities:
Purchases of property and equipment	(10,298		)	(6,293		)
Purchases of investments and marketable securities	(1,072,540		)	(927,794		)
Sales of investments and marketable securities	993,351			855,214
Net cash used in investing activities	(89,487		)	(78,873		)
Cash flows from financing activities:
Proceeds from exercise of stock options and stock purchase plan purchases	13,660			13,891
Payments for obligation under capital lease	(419		)	(198		)
Other financing activities	(238		)	(142		)
Net cash provided by financing activities	13,003			13,551
Effect of exchange rate changes on cash	(167		)	782
Net increase (decrease) in cash and cash equivalents	(3,997		)	1,465
Cash and cash equivalents at beginning of period	14,266			18,418
Cash and cash equivalents at end of period	$	10,269		$	19,883
Supplemental disclosures of cash flow information:
Interest paid	$	39		$	116
Income taxes paid	39,515			29,226
Supplemental disclosures of non-cash transactions:
Conversion of Class B Common Stock to Class A Common Stock	—			88

ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

Sales by Product Category
	Three Months Ended
	October 2, 2004			September 27, 2003		Percent Change		Percent of Total Sales
Hardware	$	135,383		$	102,764	31.7		79.1
Supplies	29,007			24,436		18.7		16.9
Service and software	5,431			6,068		(10.5	)	3.2
Shipping and handling	1,286			966		33.1		0.8
Cash flow from hedging activities	69			415		(83.4	)	0.0
Total sales	$	171,176		$	134,649	27.1		100.0
Sales by Geographic Region
	Three Months Ended
	October 2, 2004			September 27, 2003		Percent Change		Percent of Total Sales
Europe, Middle East and Africa	$	48,553		$	40,759	19.1		28.4
Latin America	9,631			7,573		27.2		5.6
Asia-Pacific	13,578			10,558		28.6		7.9
Total international	71,762			58,890		21.9		41.9
North America	99,414			75,759		31.2		58.1
Total sales	$	171,176		$	134,649	27.1		100.0
Sales by Product Category
	Nine Months Ended
	October 2, 2004			September 27, 2003		Percent Change		Percent of Total Sales
Hardware	$	381,027		$	295,882	28.8		78.1
Supplies	85,953			71,781		19.7		17.6
Service and software	18,255			18,190		0.4		3.7
Shipping and handling	3,506			2,929		19.7		0.7
Cash flow from hedging activities	(561		)	415		(235.2	)	(0.1	)
Total sales	$	488,180		$	389,197	25.4		100.0
Sales by Geographic Region
	Nine Months Ended
	October 2, 2004			September 27, 2003		Percent Change		Percent of Total Sales
Europe, Middle East and Africa	$	154,161		$	122,650	25.7		31.6
Latin America	27,522			21,428		28.4		5.6
Asia-Pacific	37,767			29,689		27.2		7.7
Total international	219,450			173,767		26.3		44.9
North America	268,730			215,430		24.7		55.1
Total sales	$	488,180		$	389,197	25.4		100.0