UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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): June 2, 2016
ZEBRA TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-19406 | 36-2675536 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 3 Overlook Point, Lincolnshire, Illinois | 60069 | |||
| (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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13c-4(c)) |
| Item 1.01. | Entry into a Material Definitive Agreement |
On June 2, 2016, Zebra Technologies Corporation (the “Company”) entered into a Refinancing Amendment (the “Amendment”), that amended the Credit Agreement, dated as of October 27, 2014 (the “Credit Agreement”), by and among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as revolving facility administrative agent, and Morgan Stanley Senior Funding, Inc., as term loan administrative agent and collateral agent. The Amendment, among other things, (1) reduced the interest rate (a) for Eurocurrency Loans that are term loans from 4.00% plus the London interbank offered rate (“LIBOR”) to 3.25% plus LIBOR and retained the LIBOR “floor” of 0.75% for Eurocurrency Loans that are term loans, and (b) for alternate base rate loans that are term loans from (x) 3.00% plus an alternate base rate (the “ABR”) determined by reference to the highest of (i) the federal funds effective rate plus 0.50%, (ii) the rate that The Wall Street Journal from time to time publishes as the “U.S. Prime Rate,” (iii) the London interbank offered rate for U.S. dollars (for a one-month interest period), which will at all times account for statutory reserves, plus 1.00% and (iv) 1.75%, to (y) 2.25% plus the ABR; (2) updated the dates for the quarterly repayment of principal equal to 0.25% of the initial principal amount refinanced with such repayment commencing on September 30, 2016; and (3) added a prepayment premium equal to 1% of the aggregate principal amount of term loans prepaid or repriced on or prior to December 2, 2016 in connection with any refinancing or repricing of term loans resulting in a lower effective all-in yield, subject to certain customary exceptions. The term loan maturity date of October 27, 2021 remains unchanged, and the other terms of the Credit Agreement remain substantially unchanged.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment. A copy of the Amendment will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2016.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits. The following Exhibit is being furnished herewith:
| Exhibit |
Description of Exhibits | |
| 99.1 | Registrant’s Press Release dated June 2, 2016 | |
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 | ||||||
| Date: June 3, 2016 | By: | /s/ Michael C. Smiley | ||||
| Michael C. Smiley | ||||||
| Chief Financial Officer | ||||||
EXHIBIT INDEX
| Exhibit |
Description of Exhibits | |
| 99.1 | Registrant’s Press Release dated June 2, 2016 | |
Exhibit 99.1
Zebra Technologies Announces Repricing of $2 Billion Term Loan
Lincolnshire, Ill., June 2, 2016—Zebra Technologies Corporation (NASDAQ: ZBRA), a global leader in providing solutions and services that give enterprises real-time visibility into their operations, announced that effective today it has successfully repriced its $1.96 billion term loan.
Under the amended term loan, the interest rate has been reduced by 75 basis points to LIBOR+ 3.25% (LIBOR floor of 0.75% is unchanged), from LIBOR+ 4.00%, which is expected to generate annualized interest expense net savings of approximately $14 million based on the current principal balance outstanding. As previously communicated, the company expects to continue to reduce the principal balance prior to the October 27, 2021 maturity date. The company will incur approximately $6 million of debt issuance and discount costs related to the repricing.
“In-line with our commitment to further improving the financial strength of Zebra, we’re announcing the successful repricing of our term loan, which provides meaningful interest expense savings. We continually explore opportunities to lower borrowing costs as we reduce the financial leverage within our capital structure. We appreciate our lenders’ continued support of Zebra,” said Michael Smiley, CFO of Zebra Technologies.
The company expects full year 2016 interest expense to be favorably impacted by approximately $5 million reflecting the benefit of a lower interest rate, partially offset by transaction fees and $2 million incremental and accelerated amortization of debt issuance and discount costs.
The company expects interest expense in the second quarter of 2016 to be negatively impacted by less than $2 million primarily due to accelerated amortization of a fraction of debt issuance and discount costs related to the original October 27, 2014 agreement. Transaction fees should roughly offset the benefit of a lower interest rate in the second quarter.
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 outlook. Actual results may differ from those expressed or implied in the company’s forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes 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 release.
These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra’s hardware and software products and competitors’ product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra’s ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions will also have an impact
on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. The success of integrating acquisitions, including the Enterprise business, could also affect profitability, reported results and the company’s competitive position in it industry. These and other factors could have an adverse effect on Zebra’s sales, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words “anticipate,” “believe,” “outlook,” 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, including the company’s most recent Form 10-K.
About Zebra Technologies
With the unparalleled visibility Zebra (NASDAQ: ZBRA) provides, enterprises become as smart and connected as the world we live in. Real-time information – gleaned from visionary solutions including hardware, software and services – give organizations the competitive edge they need to simplify operations, know more about their businesses and customers, and empower their mobile workers to succeed in today’s data-centric world. For more information, visit www.zebra.com. Follow us on LinkedIn, Twitter and Facebook.
Contacts
| Investors | Media | |
| Michael Steele, CFA, IRC | Therese Van Ryne | |
| Vice President, Investor Relations | Director, Global Public Relations | |
| + 1 847 793 6707 | + 1 847 370 2317 | |
| msteele@zebra.com | therese.vanryne@zebra.com |