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): May 31, 2018
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On May 31, 2018, Zebra Technologies Corporation (the “Company”) completed a debt restructuring by entering into an amendment (the “Amendment”) to the amended and restated Credit Agreement (the “Amended and Restated Credit Agreement”) by and among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as revolving facility administrative agent, tranche A term loan administrative agent and collateral agent, and Morgan Stanley Senior Funding, Inc., as tranche B term loan administrative agent. As part of the Amendment, Zebra Diamond Holdings Limited (“Zebra Diamond Holdings”), which is a wholly-owned subsidiary of the Company, became a borrower under the Amended and Restated Credit Agreement. This restructuring allows the Company to simplify its international capital structure and aligns the Company’s borrowing with its operational entity structure.
The Amendment, among other things, reduces the interest rate margins on the revolving credit facility (the “Revolving Credit Facility”), the term loan A facility (the “Term Loan A Facility”) and the term loan B facility (the “Term Loan B Facility”), moves the Term Loan A Facility to Zebra Diamond Holdings as the primary borrower, and increases the available funds under the Revolving Credit Facility from a maximum of $500 million to a maximum of $800 million. On the Revolving Credit Facility and the Term Loan A Facility, the Company added a new interest rate of LIBOR +1.625% applicable at a 2.5x leverage ratio, to be available in the fourth quarter 2018. The interest rate on the Term Loan B Facility will decrease from LIBOR + 2.00% to LIBOR + 1.75%. The Company will prepay $300 million of the Term Loan B Facility by drawing down $300 million on the Revolving Credit Facility. The maturity and other relevant terms of the Amended and Restated Credit Agreement remain 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 which will be filed with the Company’s 10-Q for the second quarter 2018.
Item 8.01 Other Items.
The Company issued a press release on May 31, 2018 announcing this debt restructuring. A copy of the press release is filed as Exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. The following Exhibit is being furnished herewith: |
| Exhibit Number |
Description | |
| 99.1 | Press release dated May 31, 2018. | |
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: May 31, 2018 | By: | /s/ Jim L. Kaput | ||||
| Name: | Jim L. Kaput | |||||
| Title: | SVP, General Counsel and Corporate Secretary | |||||
Exhibit 99.1
Zebra Technologies Announces Debt Restructuring Actions
Lincolnshire, Ill., May 31, 2018 — Zebra Technologies Corporation (NASDAQ: ZBRA), the market leader in rugged mobile computers, barcode scanners and barcode printers enhanced with software and services to enable real-time enterprise visibility, announced that today it has completed additional actions to restructure its debt, which reduce interest costs while maximizing financial flexibility.
The company amended its Term Loan B facility maturing Oct. 2021. The facility size has been decreased to $825 million, from $1.125 billion, and the interest rate has been reduced by 25 basis points to LIBOR + 1.75%, from LIBOR + 2.00%.
The company also amended its senior secured credit facility maturing July 2021, currently priced at LIBOR + 1.75%. This facility includes its $670 million Term Loan A, and an $800 million revolving credit facility (increased today from $500 million), on which $537 million is currently drawn. Under the terms of the amended agreement, the interest rate spread over LIBOR will be reduced by an additional 12.5 basis points upon certification of attainment of a certain debt leverage threshold, which is expected to result in the lower rate spread pricing before the end of 2018.
These restructuring actions are expected to result in annualized interest expense savings of approximately $4-5 million. In the second quarter of 2018, the company expects to incur approximately $3 million of transaction fees and $5-6 million of accelerated amortization of debt issuance and discount costs.
These actions follow the previously announced comprehensive restructuring of the company’s debt during the second half of 2017, which drove more than $45 million of annualized interest savings.
Forward-Looking Statements
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 and plans regarding debt restructuring and reduction. 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 each 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 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 “plan,” “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. In particular, please refer to the company’s latest filings of its Forms 10-K and 10-Q.
About Zebra
With the unparalleled operational 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 – gives 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 or sign up for our news alerts. 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 | |
| Phone: + 1 847 793 6707 | Phone: + 1 847 370 2317 | |
| msteele@zebra.com | therese.vanryne@zebra.com | |