<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 1, 2000
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, 2000, there were the following shares outstanding:
<TABLE>
<S> <C>
Class A Common Stock, $.01 par value 24,309,061
Class B Common Stock, $.01 par value 6,096,042
</TABLE>
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
QUARTER ENDED JULY 1, 2000
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 1, 2000 (unaudited) and December 31, 1999 4
Consolidated Statements of Earnings (unaudited)
for the three and six months ended July 1, 2000 and July 3, 1999 5
Consolidated Statements of Comprehensive Income (unaudited)
for the three and six months ended July 1, 2000 and July 3, 1999 6
Consolidated Statements of Cash Flows (unaudited)
for the three and six months ended July 1, 2000 and July 3, 1999 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 12
PART II - OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</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 as of July 1, 2000, and the related consolidated
statements of earnings and comprehensive income for the three-month and
six-month periods ended July 1, 2000 and July 3, 1999, and cash flows for the
six-month periods ended July 1, 2000 and July 3, 1999. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our review 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 review, 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, 1999, 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
January 31, 2000, 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, 1999 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 17, 2000
3
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
JULY 1, DECEMBER 31,
2000 1999
---------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 41,189 $ 38,501
Investments and marketable securities 134,524 197,067
Accounts receivable, net 78,967 62,870
Inventories 55,514 42,379
Deferred income taxes 3,353 3,467
Prepaid expenses 3,338 1,614
---------------- --------------
Total current assets 316,885 345,898
---------------- --------------
Property and equipment at cost, less
accumulated depreciation and amortization 41,113 41,686
Long-term deferred income taxes 1,760 -
Excess of cost over fair value of net assets acquired 35,128 189
Other intangibles 30,947 -
Other assets 6,007 6,870
---------------- --------------
TOTAL ASSETS $ 431,840 $ 394,643
================ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,534 $ 23,798
Accrued liabilities 10,378 11,295
Short-term note payable 35,188 196
Current portion of obligation under capital lease with related party 181 264
Income taxes payable 7,473 7,541
---------------- --------------
Total current liabilities 85,754 43,094
---------------- --------------
Obligation under capital lease, less current portion 446 571
Long-term liability 74 93
Deferred income taxes - 1,473
Other 154 105
---------------- --------------
TOTAL LIABILITIES 86,428 45,336
---------------- --------------
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, 25,430,945 and 24,877,501 shares issued;
24,584,645 and 24,877,501 shares outstanding
in 2000 and 1999, respectively 254 249
Class B Common Stock, $.01 par value; 28,358,189 shares
authorized, 6,115,571 and 6,540,188 shares issued
and outstanding in 2000 and 1999, respectively 61 65
Additional paid-in capital 63,483 60,072
Treasury stock (846,300 shares) (37,836) -
Retained earnings 321,283 289,404
Accumulated other comprehensive income (1,833) (483)
---------------- --------------
TOTAL SHAREHOLDERS' EQUITY 345,412 349,307
---------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 431,840 $ 394,643
================ ==============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ----------------------------
JULY 1, JULY 3, JULY 1, JULY 3,
2000 1999 2000 1999
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 128,355 $ 97,321 $ 226,975 $ 187,143
Cost of sales 66,043 48,618 115,282 95,983
------------- ------------ ------------- -------------
Gross profit 62,312 48,703 111,693 91,160
Operating expenses:
Selling and marketing 12,469 9,684 23,082 18,756
Research and development 7,370 5,461 13,118 11,123
General and administrative 8,501 8,155 16,235 16,002
Amortization of intangible assets 1,344 75 1,411 152
Acquired in-process technology 5,953 - 5,953 -
Merger costs 1,732 1,291 2,741 3,160
------------- ------------ ------------- -------------
Total operating expenses 37,369 24,666 62,540 49,193
------------- ------------ ------------- -------------
Operating income 24,943 24,037 49,153 41,967
------------- ------------ ------------- -------------
Other income (expense):
Investment income 3,316 2,922 6,531 5,207
Interest expense (15) (15) (33) (18)
Other, net (2,228) (186) (5,840) (148)
------------- ------------ ------------- -------------
Total other income 1,073 2,721 658 5,041
------------- ------------ ------------- -------------
Income before income taxes 26,016 26,758 49,811 47,008
Income taxes 9,366 9,636 17,932 17,236
------------- ------------ ------------- -------------
Net income $ 16,650 $ 17,122 $ 31,879 $ 29,772
============= ============ ============= =============
Basic earnings per share $ 0.54 $ 0.55 $ 1.02 $ 0.96
Diluted earnings per share $ 0.53 $ 0.55 $ 1.01 $ 0.95
Basic weighted average shares outstanding 30,976 31,043 31,133 31,018
Diluted weighted average and equivalent
shares outstanding 31,372 31,283 31,559 31,233
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- --------------------------
JULY 1, JULY 3, JULY 1, JULY 3,
2000 1999 2000 1999
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Net income $ 16,650 $ 17,122 $ 31,879 $ 29,772
Other comprehensive income (loss):
Foreign currency translation adjustment (912) (790) (1,350) (2,118)
-------------------------- --------------------------
Comprehensive income $ 15,738 $ 16,332 $ 30,529 $ 27,654
========================== ==========================
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------
JULY 1, JULY 3,
2000 1999
---------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 31,879 $ 29,772
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,522 4,892
Acquired in-process technology 5,953 --
Depreciation (appreciation) in market value
of investments and marketable securities 2,898 (1,807)
Deferred income taxes (3,119) 6
Changes in assets and liabilities, net of business acquired:
Accounts receivable, net (2,132) (7,412)
Inventories (5,841) 7,526
Other assets 1,040 (95)
Accounts payable 2,632 (2,967)
Accrued expenses (2,342) 1,326
Income taxes payable (68) 1,912
Other operating activities (2,119) (291)
Investments and marketable securities 60,195 (19,518)
-------------- -------------
Net cash provided by operating activities 95,498 13,344
-------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (3,247) (4,719)
Acquisition of Comtec Information Systems, net of cash acquired (88,477) --
-------------- -------------
Net cash used in investing activities (91,724) (4,719)
-------------- -------------
Cash flows from financing activities:
Purchase of treasury stock (37,836) --
Proceeds from exercise of stock options 3,412 3,128
Issuance (repayment) of notes payable 34,973 (18)
Issuance of (payments for) obligation under capital lease (285) 20
-------------- -------------
Net cash provided by financing activities 264 3,130
-------------- -------------
Effect of exchange rate changes on cash (1,350) (2,118)
-------------- -------------
Net increase in cash and cash equivalents 2,688 9,637
Cash and cash equivalents at beginning of period 38,501 18,379
-------------- -------------
Cash and cash equivalents at end of period $ 41,189 $ 28,016
============== =============
Supplemental disclosures of cash flow information:
Interest paid $ 33 $ 18
Income taxes paid 23,568 15,860
</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, 1999, 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 1, 2000, and the consolidated results of
operations for the three months and six months ended July 1, 2000, and cash
flows for the six months ended July 1, 2000, and July 3, 1999. The results of
operations for such interim periods are not necessarily indicative of the
results for the full year.
NOTE 2 - ACQUISITION OF COMTEC INFORMATION SYSTEMS, INC.
On April 3, 2000, the Company acquired Comtec Information Systems, Inc.
("Comtec"), acquiring all of the outstanding capital stock of Comtec for
approximately $88,477,000 in cash. Located in Warwick, Rhode Island, Comtec
had been a privately held company. Comtec designs, manufactures and supports
portable wireless thermal printing solutions. The acquisition was accounted
for under the purchase method. Accordingly, the purchase price has been
allocated to identifiable tangible assets and intangible assets acquired and
liabilities assumed based on their estimated fair values. Estimated amounts
allocated to acquired in-process technology were expensed at the time of the
acquisition. The excess of cost over net assets acquired is amortized on a
straight-line basis over the expected period to be benefited of 20 years. The
consolidated statements of operation reflect the results of operations of
Comtec since the effective date of the acquisition.
The following summary presents information concerning the purchase price
allocation for the Comtec acquisition:
<TABLE>
<CAPTION>
Amount
(in thousands)
<S> <C>
Net tangible assets $ 15,236
Acquired in-process technology 5,953
Intangible assets 31,786
Goodwill 35,502
--------------
Purchase price $ 88,477
==============
</TABLE>
The following unaudited proforma summary presents Zebra's results of
operations as if the Comtec acquisition had occurred at the beginning of each
period. This summary is provided for information purposes only. It does not
necessarily reflect the actual results that would have occurred had the
acquisition been made as of their respective dates, or of results that may
occur.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------------
JULY 1, JULY 3,
2000 1999
----------------- --------------
(in thousands ,except per share data)
<S> <C> <C>
Net sales $ 249,513 $ 211,244
Net income 31,633 29,565
Diluted net income per share $ 1.00 $ 0.95
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: SECOND QUARTER OF 2000 VERSUS SECOND QUARTER OF 1999,
AND YEAR-TO-DATE 2000 VERSUS YEAR-TO-DATE 1999
Net sales for the second quarter of 2000, which include sales by Comtec,
increased 31.9% to $128,355,000 from $97,321,000. Hardware sales (printers and
replacement parts) increased 30.9%, sales of supplies advanced 20.8%, and
service and software revenue increased 154.1%. As a percentage of net sales,
hardware sales accounted for 79.7%, compared with 80.3% for the second quarter
of 1999. Compared with the second quarter of 1999, supplies sales amounted to
16.0% of net sales versus 17.5%, and service and software revenue accounted
for 4.3% of net sales versus 2.2%. The decline in percentage of sales derived
from supplies and increasing percentage of service and software revenue were
principally due to the effect of Comtec's results on the Company's sales mix.
For the year to-date, net sales increased 21.3% to $226,975,000 from
187,143,000.
International sales totaled $48,046,000, or 37.4% of second quarter sales,
compared with $38,725,000, or 39.8% of net sales for the second quarter of
1999, for a 24.1% increase. The decline in the percentage of international
sales was principally due to the lower proportion of international sales from
Comtec. For the second quarter of 2000, net sales in North America increased
37.1%. The Company recorded growth in all of its international geographic
territories, particularly in Europe and Asia Pacific. Management believes that
international markets continue to hold significant growth opportunities for
the Company. For the first six months of 2000, international sales increased
22.2% to $92,094,000, or 40.6% of net sales, from $75,369,000, or 40.3% of net
sales.
Gross profit for the second quarter of 2000 increased 27.9% to $62,312,000
from $48,703,000. As a percentage of net sales, gross profit decreased to
48.5% from 50.0%. Foreign currency translation on products sold into Europe,
the Company's largest international region, and generally lower gross margin
percentages on Comtec products lowered gross profit margin. Higher production
volume and lower component costs on the Company's established business
partially offset the negative impacts of foreign currency translation and
product mix. For the year to-date, gross profit for 2000 totaled $111,693,000,
or 49.2% of net sales, compared with $91,160,000, or 48.7% of net sales, for
overall growth of 22.5%.
Selling and marketing expenses for the second quarter of 2000 increased 28.8%
to $12,469,000 from $9,684,000 for the second quarter of 1999. The growth in
selling and marketing expenses was primarily due to increased payroll and
business development expenses related to the Comtec acquisition, as well as
additional personnel in the Company's established business units. The Company
has undertaken these investments in sales and marketing human resources to
generate higher levels of sales. As a percentage of net sales, second quarter
selling and marketing expenses decreased to 9.7% from 10.0%. For the first six
months of 2000, selling and marketing expenses increased 23.1% to $23,082,000
from $18,756,000 for the corresponding period in 1999. As a percentage of net
sales for the year to-date, selling and marketing expenses were 10.2% in 2000,
compared with 10.0% in 1999.
Research and development expenses for the second quarter of 2000 increased
35.0% to $7,370,000 from $5,461,000. Increases in personnel-related expenses
from higher staffing levels, primarily related to the Comtec acquisition, fees
for outside professional services, and project expenses were largely
responsible for the overall increase. As a percentage of net sales, quarterly
research and development expenses increased to 5.7% from 5.6%. For the first
six months of 2000, research and development expenses increased 17.9% to
$13,118,000 from $11,123,000. On a year-to-date basis, research and
development expenses represented 5.8% of net sales in 2000 and 5.9% in 1999.
General and administrative expenses for the second quarter of 2000 increased
by 4.2% to $8,501,000 from $8,155,000. Higher non-payroll expenses and
payments for outside professional service were partially offset by lower
payroll-related expense and overhead allocations. As a percentage of net
sales, quarterly general and administrative expenses decreased to 6.6% from
8.4%. For the first six months of 2000, general and administrative expenses
increased 1.5% to $16,235,000, or 7.2% of net sales, from $16,002,000, or 8.6%
of net sales.
Amortization of intangible assets totaled $1,344,000 for the second quarter of
2000, compared with $75,000 for the same period in 1999. The increase in
amortization of intangible assets was related to the Comtec acquisition. For
the first six months of 2000, amortization of intangible assets totaled
$1,411,000, compared with $152,000 for the corresponding period in 1999.
9
<PAGE>
In April 2000, the Company acquired printer and wireless technology as part of
its acquisition of Comtec. A portion of the purchase price was attributed to
acquired in-process technology, as the development work associated with the
projects had not yet reached technical feasibility and was believed to have no
alternative future use. The Company assessed the fair value of the acquired
in-process technology using an income approach. During the second quarter of
2000, the company recorded a $5,953,000 charge to write-off this acquired
in-process technology.
During the second quarter of 2000, the Company recorded $1,732,000 in merger
integration costs related to the integration of both Comtec and Eltron
International, Inc., which the Company acquired in October 1998. For the
second quarter of 1999, merger costs totaled $1,291,000. These costs, which
could not be provided for at the time of the transactions, consisted
principally of information technology expenditures to integrate Eltron
operations into the Company's enterprise-wide resource planning (ERP) system.
The Company expects to incur merger costs principally related to the Comtec
acquisition through the second quarter of 2001. For the year to-date in 2000,
merger costs totaled $2,741,000, compared with 3,160,000 for the year to-date
in 1999.
Operating income for the second quarter of 2000 increased 3.8% to $24,943,000,
or 19.4% of net sales, from $24,037,000, or 24.7% of net sales. Excluding the
merger-related costs and the charge for acquired in-process technology
described above, operating income increased 28.8% to $32,628,000, or 25.4% of
net sales from $25,328,000, or 26.0% of net sales. For the first six months of
2000, operating income totaled $49,153,000, or 21.7% of net sales, which was
up 17.1% from $41,967,000 for the same period in 1999. Excluding the
merger-related costs and the charge for acquired in-process technology,
year-to-date operating income increased 36.1% to $71,234,000, or 31.4% of net
sales, from $52,353,000, or 28.0% of net sales.
Investment income for the second quarter of 2000 increased 13.5% to $3,316,000
from $2,922,000. The increase was primarily due to higher returns on lower
invested balances in marketable securities. For the year to-date, investment
income totaled $6,531,000 in 2000, up 25.4% from $5,207,000 in 1999.
Other expenses for the second quarter of 2000 included $1,939,000 in losses
from foreign currency transactions on the value of euro-denominated cash
deposits and receivables from customers and pound sterling-denominated
receivables from the Company's U.K. subsidiary. For the second quarter of
1999, the Company recorded a loss from foreign currency transactions of
$474,000. The Company has implemented certain currency hedging strategies to
minimize the effects of foreign currency transactions for the second half of
2000. For the first six months of 2000, other expense totaled $5,840,000,
compared with $148,000 for the same period in 1999.
Income before income taxes for the second quarter of 2000 was $26,016,000,
compared with $26,758,000 for the same period in 1999, for a decrease of 2.8%.
For the year to-date, income before income taxes amounted to $49,811,000, up
6.0% from $47,008,000 for the first six months of 1999.
The effective income tax rate for the second quarter of 2000 was unchanged at
36.0% from the second quarter of 1999. Net income was $16,650,000, or $0.53
per diluted share, compared with $17,122,000, or $0.55 per share (basic and
diluted). Excluding merger costs and the charge for acquired in-process
technology, net income for the second quarter of 2000 was $21,568,000, or
$0.69 per diluted share, compared with $17,956,000, or $0.57 per share, for
the second quarter in 1999.
For the year to-date, the effective income tax rate for 2000 was 36.0%,
compared with 36.7% for the first six months of 1999. Net income was
$31,879,000, up 7.1% from $29,772,000. On a per-share basis, diluted earnings
were $1.01 for the first six months of 2000, compared with $0.95 for the same
period in 1999. Excluding merger costs and the charge for acquired in-process
technology, net income for the first six months of 2000 was $37,443,000, or
$1.19 per diluted share, up 17.8% from $31,773,000, or $1.02 per diluted
share, for the corresponding period in 1999.
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 $175,713,000 at July 1, 2000, compared with $235,568,000 at
December 31, 1999.
As of July 1, 2000, the Company had a $35,188,000 short-term loan outstanding,
the proceeds of which were used to fund the Comtec acquisition, which was
completed on April 3, 2000. The interest rate on this loan, which is in the
form of a reverse repurchase agreement, was calculated at 10 basis points over
the 90-day London Interbank Offer Rate
10
<PAGE>
(LIBOR) and was fixed for 90 days from the time of funding on March 31, 2000,
at 6.38%. Management expects to repay the loan from the liquidation of a
corresponding amount of securities from the Company's investment portfolio.
Management believes that existing capital resources and funds generated from
operations are sufficient to finance anticipated capital requirements.
SIGNIFICANT CUSTOMER
No single customer comprised 10.0% or more of the Company's sales for the
second quarter of 2000 or the year to-date.
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 Comtec, as well as the
effect of market conditions in the North America and other geographic regions
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 the Company's
Form 10-K for the year ended December 31, 1999, for further discussions of
issues that could affect the Company's future results.
11
<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 1, 2000. 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, 1999.
12
<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 16, 2000.
(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 81,710,244 335,025
Edward Kaplan 81,712,254 333,015
Christopher Knowles 81,854,585 190,684
David Riley 81,848,911 196,358
Donald Skinner 81,707,734 337,535
Michael Smith 81,856,920 188,349
</TABLE>
2. 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, 2000.
<TABLE>
<CAPTION>
Authority Broker
For Against Withheld Abstentions Non-votes
--- ------- -------- ----------- ---------
<S> <C> <C> <C> <C>
81,975,268 20,352 -- 49,649 --
</TABLE>
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
(a) Exhibits.
15.1 Acknowledgment of Independent Certified Public Accountants Regarding
Independent Auditors' Review Report
27.1 Financial Data Schedule
(b) Reports.
The Registrant filed one Form 8-K report dated April 18, 2000, and one Form 8-K/A
report dated June 15, 2000. Both reports are related to the Comtec acquisition.
</TABLE>
14
<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, 2000 By: /s/ Edward L. Kaplan
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Edward L. Kaplan
Chief Executive Officer
Date: August 10, 2000 By: /s/ Charles R. Whitchurch
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Charles R. Whitchurch
Chief Financial Officer
15
