<PAGE>
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 3, 1999
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 9, 1999, there were the following shares outstanding:
Class A Common Stock, $.01 par value 24,083,721
Class B Common Stock, $.01 par value 7,179,074
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
QUARTER ENDED JULY 3, 1999
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Independent Auditors' Review Report 3
Consolidated Balance Sheets
as of July 3, 1999 (unaudited) and December 31, 1998 4
Consolidated Statements of Earnings (unaudited)
for the three months and six months ended July 3, 1999 and July 4, 1998 5
Consolidated Statements of Comprehensive Income (unaudited)
for the three months and six months ended July 3, 1999 and July 4, 1998 6
Consolidated Statements of Cash Flows (unaudited)
for the six months ended July 3, 1999 and July 4, 1998 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
2
<PAGE>
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 (the Company) as of July 3, 1999, and the
related consolidated statements of earnings and comprehensive income for the
three-month and six-month periods ended July 3, 1999 and July 4, 1998, and
the related statements of cash flows for the six-month periods ended July 3,
1999, and July 4, 1998. 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, 1998, and the related consolidated
statements of earnings, comprehensive income, shareholders' equity, and cash
flows for the year then ended (not presented herein); and in our report dated
February 24, 1999, 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, 1998 is fairly
stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/KPMG LLP
Chicago, Illinois
July 20, 1999
3
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
JULY 3, DECEMBER 31,
1999 1998
------------- --------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 28,016 $ 11,391
Investments and marketable securities 165,614 151,277
Accounts receivable, net 65,066 57,654
Inventories 32,158 39,684
Deferred income taxes 5,273 5,137
Prepaid expenses 1,403 1,328
-------------- -----------------
Total current assets 297,530 266,471
-------------- -----------------
Property and equipment at cost, less
accumulated depreciation and amortization 38,829 38,850
Other assets 4,624 4,681
-------------- -----------------
TOTAL ASSETS $ 340,983 $ 310,002
-------------- -----------------
-------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,598 $ 20,565
Accrued liabilities 12,824 11,498
Short-term note payable 185 183
Current portion of obligation under capital lease with related party 26 51
Income taxes payable 6,398 4,486
-------------- -----------------
Total current liabilities 37,031 36,783
-------------- -----------------
Obligation under capital lease with related party, less current portion 45 -
Long-term liability 16 36
Deferred income taxes 2,074 1,932
Other 151 367
-------------- -----------------
TOTAL LIABILITIES 39,317 39,118
-------------- -----------------
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, 23,852,236 and 22,323,094 shares issued
and outstanding in 1999 and 1998, respectively 239 223
Class B Common Stock, $.01 par value; 28,358,189 shares
authorized, 7,266,406 and 8,619,919 shares issued
and outstanding in 1999 and 1998, respectively 73 86
Additional paid-in capital 52,979 49,854
Retained earnings 249,544 219,772
Accumulated other comprehensive income (1,169) 949
-------------- -----------------
TOTAL SHAREHOLDERS' EQUITY 301,666 270,884
-------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 340,983 $ 310,002
-------------- -----------------
-------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JULY 3, JULY 4, JULY 3, JULY 4,
1999 1998 1999 1998
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 97,321 $ 87,040 $ 187,143 $ 167,838
Cost of sales 49,126 45,339 96,468 87,276
-------------- --------------- -------------- ---------------
Gross profit 48,195 41,701 90,675 80,562
Operating expenses:
Selling and marketing 9,783 8,964 19,741 17,413
Research and development 5,379 4,767 11,006 10,535
General and administrative 8,213 6,733 15,285 13,268
Merger costs 1,291 -- 3,160 --
-------------- --------------- -------------- ---------------
Total operating expenses 24,666 20,464 49,192 41,216
-------------- --------------- -------------- ---------------
Operating income 23,529 21,237 41,483 39,346
-------------- --------------- -------------- ---------------
Other income (expense):
Investment income 2,922 1,886 5,207 3,616
Interest expense (15) (406) (18) (408)
Other, net 322 (619) 336 282
-------------- --------------- -------------- ---------------
Total other income 3,229 861 5,525 3,490
-------------- --------------- -------------- ---------------
Income before income taxes 26,758 22,098 47,008 42,836
Income taxes 9,636 8,061 17,236 15,636
-------------- --------------- -------------- ---------------
Net income $ 17,122 $ 14,037 $ 29,772 $ 27,200
-------------- --------------- -------------- ---------------
-------------- --------------- -------------- ---------------
Basic earnings per share $ 0.55 $ 0.45 $ 0.96 $ 0.87
Diluted earnings per share $ 0.55 $ 0.45 $ 0.95 $ 0.87
Basic weighted average shares outstanding 31,043 30,897 31,018 30,930
Diluted weighted average
and equivalent shares outstanding 31,283 31,151 31,233 31,208
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------- -------------------------------
JULY 3, JULY 4, JULY 3, JULY 4,
1999 1998 1999 1998
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Net income $ 17,122 $ 14,037 $ 29,772 $ 27,200
Other comprehensive income (loss):
Foreign currency translation adjustment (790) (481) (2,118) (19)
-------------- ---------------- -------------- ----------------
Comprehensive income $ 16,332 $ 13,556 $ 27,654 $ 27,181
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------
JULY 3, JULY 4,
1999 1998
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 29,772 $ 27,200
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 4,892 4,294
Appreciation in market value
of investments and marketable securities (1,807) (1,067)
Deferred income taxes 6 1,608
Gain on sale of subsidiary's assets - (404)
Changes in assets and liabilities:
Accounts receivable, net (7,412) (10,123)
Inventories 7,526 1,802
Other assets (95) (659)
Accounts payable (2,967) 4,032
Accrued liabilities 1,326 436
Income taxes payable 1,912 (104)
Other operating activities (291) 130
Net purchases of investments
and marketable securities (12,530) (2,454)
--------------- ----------------
Net cash provided by operating activities 20,332 24,691
--------------- ----------------
Cash flows from investing activities:
Purchases of property and equipment (4,719) (17,020)
Proceeds from sale of subsidiary - 2,660
Purchase of investments and marketable securities - (127)
--------------- ----------------
Net cash used in investing activities (4,719) (14,487)
--------------- ----------------
Cash flows from financing activities:
Proceeds from exercise of stock options 3,128 435
Common stock purchased in connection
with Eltron merger - (8,092)
Repayment of notes payable (18) (230)
Payments for obligation under capital lease 20 (33)
--------------- ----------------
Net cash provided by (used in) financing activities 3,130 (7,920)
--------------- ----------------
Effect of exchange rate changes on cash (2,118) (19)
--------------- ----------------
Net increase in cash and cash equivalents 16,625 2,265
Cash and cash equivalents at beginning of period 11,391 10,925
--------------- ----------------
Cash and cash equivalents at end of period $ 28,016 $ 13,190
--------------- ----------------
--------------- ----------------
Supplemental disclosures of cash flow information:
Interest paid $ 18 $ 408
Income taxes paid 15,860 11,838
Supplemental disclosures of noncash transactions:
Book value of net assets sold and obligations recorded in
connection with sale of subsidiary - 2,256
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
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, 1998, 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 interim consolidated financial statements
reflect all adjustments necessary to present fairly the consolidated
financial position of the Company as of July 3, 1999, the consolidated
results of operations for the three months and six months ended July 3, 1999,
and July 4, 1998, and cash flows for the six months ended July 3, 1999, and
July 4, 1998. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
On October 28, 1998, the Company merged with Eltron International, Inc.
(Eltron). Eltron manufactures and markets high-quality, low-cost direct
thermal and thermal transfer bar code printers, plastic card printers, secure
card printing systems, ribbons, self-adhesive labels, and related accessories
throughout the world. Financial results for the Company have been restated to
reflect the merger as a pooling-of-interests.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: SECOND QUARTER OF 1999 VERSUS SECOND QUARTER OF 1998, AND
YEAR-TO-DATE 1999 VERSUS YEAR-TO-DATE 1998
Net sales for the second quarter increased 11.8% to $97,321,000 from
$87,040,000. Hardware sales (printers and replacement parts) increased 12.6%,
driven by unit volume increases that were partially offset by lower average
unit prices on lower-priced printers. For the second quarter, hardware sales
accounted for 80.3% of net sales. Supplies sales increased 8.8% to comprise
17.5% of net sales. The remaining 2.2% of net sales consisted of service and
software revenue. For the year to-date, net sales increased 11.5% to
$187,143,000 from $167,838,000.
International sales for the 1999 second quarter were $38,725,000, compared
with $34,649,000 for an 11.8% increase. This growth matched the 11.8%
increase in sales recorded in the Company's sales to North American
customers. International sales comprised 39.8% of net sales in both the
second quarter of 1999 and the second quarter of 1998. For the first six
months of 1999, international sales increased 12.8% to $75,369,000 from
$66,789,000 for the same period in 1998.
Gross profit for the second quarter of 1999 increased 15.6% to $48,195,000
from $41,701,000. As a percentage of net sales, gross profit increased to
49.5% from 47.9%. The increase in gross profit margin was due to lower raw
material costs, the higher sales volume in the quarter, and an improved
product mix toward sales of higher-margin products, partially offset by lower
average selling prices, notably on lower-priced products. For the first six
months of 1999, gross profit increased 12.6% to $90,675,000, or 48.5% of net
sales, from $80,562,000, or 48.0% of net sales, in the same period of 1998.
Selling and marketing expenses for the second quarter increased 9.1% to
$9,783,000 from $8,964,000. The increase resulted primarily from increased
staffing levels and business development expenses for such items as co-op and
advertising expenses. As a percentage of net sales, second quarter selling
and marketing expenses decreased to 10.1% from 10.3%. For the year to-date,
selling and marketing expenses increased 13.4% to $19,741,000 from
$17,413,000, and represented 10.5% of net sales compared with 10.4% of net
sales.
Research and development expenses for the second quarter increased 12.8% to
$5,379,000 from $4,767,000. This increase was due to higher personnel-related
expenses from increased staffing levels and higher overhead building
allocation expenses. As a percentage of net sales, quarterly research and
development expenses were unchanged at 5.5% between the second quarter of
1999 and the second quarter of 1998. For the year to-date, research and
development expenses increased 4.5% to $11,006,000 from $10,535,000, and
represented 5.9% of net sales compared with 6.3% of net sales.
General and administrative expenses for the second quarter increased by 22.0%
to $8,213,000 from $6,733,000. Increases from higher payroll expenses
resulting from higher staffing levels and expenses for building operations
resulting from the addition of new properties were partially offset by
declines in expenditures for outside services. As a percentage of net sales,
quarterly general and administrative expenses increased to 8.4% from 7.7%.
For the year to-date, general and administrative expenses increased 15.2% to
$15,285,000 from $13,268,000, and represented 8.2% of net sales compared with
7.9% of net sales.
During the second quarter of 1999, Zebra recorded $1,291,000 in merger costs,
which related to the integration of Eltron operations. These costs, which
could not be provided for at the time of the merger, include expenditures on
consulting fees, as well as personnel-related expenses for relocation,
severance, and recruitment. The Company expects to incur additional merger
costs in future quarters of 1999, the amounts of which are not currently
estimable. For the year to-date, merger costs totaled $3,160,000.
Operating income for the second quarter increased 10.8% to $23,529,000, or
24.2% of net sales, from $21,237,000, or 24.4% of net sales. Excluding the
$1,291,000 in merger costs, operating income increased 16.9% to $24,820,000,
or 25.5% of net sales. For the year to-date, operating income was
$41,483,000, or 22.2% of net sales, up 5.4% from $39,346,000, or 23.4% of net
sales. Excluding $3,160,000 in merger costs, 1999 year-to-date operating
income increased 13.5% to $44,643,000, or 23.9% of net sales.
9
<PAGE>
Investment income for the second quarter increased 55.0% to $2,922,000 from
$1,886,000 for the same period in 1998. The increase was principally due to
higher average balances invested in marketable securities. Other income was
also favorably affected by a reduction in interest expense on capital leases,
which declined to $15,000 from $406,000, and by the absence of certain
one-time expenses recorded in the second quarter of 1998. For the year
to-date, investment income increased 44.0% to $5,207,000 from $3,616,000, and
total other income increased 58.3% to $5,525,000 from $3,490,000.
Income before income taxes for the second quarter of 1999 was $26,758,000, up
21.1% from $22,098,000 for the same period in 1998. For the year to-date,
income before income taxes increased 9.7% to $47,008,000 from $42,836,000.
The effective income tax rate for the second quarter of 1999 was 36.0%,
compared with 36.5% for the same period in 1998. Net income was $17,122,000,
or $0.55 per share (basic and diluted), compared with $14,037,000, or $0.45
per share (basic and diluted). Excluding the $1,291,000 in merger costs, net
income for the second quarter of 1999 was $17,956,000, or $0.57 per diluted
share. For the year to-date, the Company's effective income tax rate was
36.7%, compared with 36.5%. Net income was $29,772,000, or $0.95 per diluted
share, compared with $27,200,000, or $0.87 per diluted share. Excluding the
$3,160,000 in merger costs in 1999, year-to-date net income was $31,773,000,
or $1.02 per diluted share.
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 $193,630,000 at July 3, 1999, compared with $162,668,000
at December 31, 1998.
Management believes that existing capital resources and funds generated from
operations are sufficient to finance anticipated capital requirements.
YEAR 2000 CONSIDERATIONS
INTERNAL SYSTEMS. Management believes that substantially all of the Company's
critical internal computer systems and technical infrastructure is presently
Year 2000 (Y2K) compliant and that those systems not presently compliant will
be brought into compliance in sufficient time to avoid adverse business
consequences as the result of the Year 2000. Among the systems not compliant
as of July 3, 1999, is the Company's manufacturing control software used in
its label conversion and warehouse facility in Preston, England. This system
is scheduled for a Y2K compliance upgrade by the end of the third quarter of
1999. A variety of sub-systems were also non-compliant as of July 3, 1999.
These systems typically require the installation of a software upgrade or
patch and do not, in management's opinion, present a serious obstacle to
achieving Y2K compliance by year-end.
PRODUCTS. The Company has reviewed its entire product line for Y2K compliance
issues and has identified those products that will be affected. In general,
Y2K issues do not affect the Company's printer products because they contain
no internal clock or timing mechanism. The Company's current software
products are all Y2K compliant, although in some cases previous versions of
the Company's software products were not Y2K compliant. In addition, the
Company's PC-470 printer controller contains a real-time clock that must be
reset to function properly after January 1, 2000. In all cases where products
are not Y2K compliant, customers have been notified via letter or postings on
the Company's web site about any corrective action that is needed, including,
where appropriate, a requirement to upgrade certain software products.
SUPPLIERS. The Company surveyed each of its significant suppliers to
determine their ability to provide necessary products and services that are
critical to business continuation through Y2K. To date, 126 suppliers deemed
critical to the business have been surveyed and 119 have confirmed that they
would be Y2K compliant, and that there would be no impact on their ability to
supply the Company due to Y2K problems. The Company is pursuing responses
from the remaining seven suppliers.
Despite these assurances of compliance, the Company does not warrant the
performance of its suppliers. The failure by one or more significant
suppliers to achieve compliance could have a material adverse effect on the
Company. The Company has not undertaken to quantify the effect of such
possible non-compliance or to determine the likely worst-case scenario or to
develop contingency plans to deal with such a scenario.
10
<PAGE>
Management estimates that it will have incurred approximately $400,000 of
costs to ensure Y2K compliance by December 31, 1999. This includes
approximately $200,000 of direct expenditures to upgrade its systems and
products and approximately $200,000 of management and internal technical
support to upgrade systems and ensure the status of compliance within the
Company's supplier base. This estimate does not include the cost of new
systems or system upgrades that were made for reasons other than Y2K
compliance but included Y2K compliance as part of the upgrade package.
Specifically excluded from the cost of Y2K compliance is the cost of the
Company's recent conversion to the Baan ERP system and the cost of its new
payroll/human resources system, both of which were made for reasons other
than Y2K compliance.
SIGNIFICANT CUSTOMER
No single customer comprised 10.0% or more of the Company's sales for the
second quarter of 1999 or the year to-date. Sales to one of the Company's
designated key accounts, United Parcel Service (UPS), however, accounted for
11.3% of total sales for the second quarter of 1998 and 11.9% for the first
six months of 1998.
11
<PAGE>
SAFE HARBOR
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 market acceptance of the Company's
printer and software products and competitors' product offerings. They also
include the success and speed of the Company's integration with Eltron, as
well as the effect of market conditions in the various regions of the world
in which the Company conducts business on the Company's financial results.
Profits will be affected by the Company's ability to control manufacturing
and operating costs. Because of the Company's large investment portfolio,
interest rate and financial market conditions will also have an impact on
results. Foreign exchange rates will have an effect on financial results 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 Form 10-K for the year
ended December 31, 1998, and the joint proxy statement/prospectus dated
September 21, 1998, particularly the "Risk Factors" section, for further
discussions of issues that could affect Zebra's future results.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk during the
second quarter ended July 3, 1999. For additional information on market risk,
refer to the "Quantitative and Qualitative Disclosures About Market Risk"
section of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Stockholders on May 18, 1999.
(b) The Company's shareholders voted on the following proposals:
1. To elect six directors to the Company's Board of Directors.
<TABLE>
<CAPTION>
AUTHORITY
DIRECTORS FOR WITHHELD
--------- --- ---------
<S> <C> <C>
Gerhard Cless 69,748,226 435,158
Edward Kaplan 69,748,226 435,158
Christopher Knowles 69,748,126 435,258
David Riley 69,740,201 443,183
Donald Skinner 69,740,221 443,163
Michael Smith 69,740,201 443,183
</TABLE>
2. To increase the number of authorized shares of Class A Common
Stock available for issuance under Zebra's 1997 Stock Option
Plan from 2,000,000 shares to 4,250,000 shares.
<TABLE>
<CAPTION>
AUTHORITY BROKER
FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES
--- ------ --------- ----------- ---------
<S> <C> <C> <C> <C>
61,396,659 3,242,315 152,760 -- 5,391,648
</TABLE>
3. To ratify the selection by the Board of Directors of KPMG LLP
as the independent auditors of the Company's financial
statements for the year ending December 31, 1999.
<TABLE>
<CAPTION>
AUTHORITY BROKER
FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES
--- ------ --------- ----------- ---------
<S> <C> <C> <C> <C>
70,106,031 49,594 27,759 -- --
</TABLE>
14
<PAGE>
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
27.2 Restated 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.
15
<PAGE>
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 10, 1999 By: /s/ EDWARD L. KAPLAN
--------------------------
Edward L. Kaplan
Chief Executive Officer
Date: August 10, 1999 By: /s/ CHARLES R. WHITCHURCH
--------------------------
Charles R. Whitchurch
Chief Financial Officer
16
<PAGE>
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, No.
333-59733, and No. 333-63009) on Form S-8 of Zebra Technologies Corporation,
we acknowledge our awareness of the incorporation by reference therein of our
report dated July 20, 1999, related to our review of interim financial
information as of July 3, 1999.
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 LLP
Chicago, Illinois
August 5, 1999
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ZEBRA
TECHNOLOGIES CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF JULY 3,
1999, AND CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED JULY 3,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUL-03-1999
<CASH> 28,016
<SECURITIES> 165,614
<RECEIVABLES> 68,374
<ALLOWANCES> (3,308)
<INVENTORY> 32,158
<CURRENT-ASSETS> 297,530
<PP&E> 68,671
<DEPRECIATION> (29,842)
<TOTAL-ASSETS> 340,983
<CURRENT-LIABILITIES> 37,031
<BONDS> 0
0
0
<COMMON> 312
<OTHER-SE> 301,354
<TOTAL-LIABILITY-AND-EQUITY> 340,983
<SALES> 184,439
<TOTAL-REVENUES> 187,143
<CGS> 95,344
<TOTAL-COSTS> 96,468
<OTHER-EXPENSES> 48,258
<LOSS-PROVISION> 934
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 47,008
<INCOME-TAX> 17,236
<INCOME-CONTINUING> 29,772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,772
<EPS-BASIC> 0.96
<EPS-DILUTED> 0.95
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FIN INFO EXTRACTED FROM ZEBRA TECH CORP AND
SUBSIDIARIES CNSLDTD BALANCE SHEET AS OF 7-4-98, AND CNSLDTD STMT OF EARNINGS
FOR THE 6 MOS ENDED 7-4-98, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FIN STMTS. THE RESTATED FIGURES HEREIN REFLECT THE COMPANY'S MERGER WITH
ELTRON INTL INC., WHICH WAS ACCOUNTED FOR ON A POOLING OF INTERESTS BASIS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUL-04-1998
<CASH> 13,190
<SECURITIES> 132,043
<RECEIVABLES> 63,217
<ALLOWANCES> (2,029)
<INVENTORY> 41,400
<CURRENT-ASSETS> 253,856
<PP&E> 59,271
<DEPRECIATION> (23,644)
<TOTAL-ASSETS> 294,588
<CURRENT-LIABILITIES> 37,552
<BONDS> 0
0
0
<COMMON> 316
<OTHER-SE> 255,558
<TOTAL-LIABILITY-AND-EQUITY> 294,588
<SALES> 165,736
<TOTAL-REVENUES> 167,838
<CGS> 86,651
<TOTAL-COSTS> 87,276
<OTHER-EXPENSES> 41,247
<LOSS-PROVISION> (31)
<INTEREST-EXPENSE> 408
<INCOME-PRETAX> 42,836
<INCOME-TAX> 15,636
<INCOME-CONTINUING> 27,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,200
<EPS-BASIC> 0.87
<EPS-DILUTED> 0.87
</TABLE>
