<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 April 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 May 11, 2000, there were the following shares outstanding:
Class A Common Stock, $.01 par value 24,714,607
Class B Common Stock, $.01 par value 6,121,714
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
QUARTER ENDED APRIL 1, 2000
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Independent Auditors' Review Report 3
Consolidated Balance Sheets
as of April 1, 2000 (unaudited) and December 31, 1999 4
Consolidated Statements of Earnings (unaudited)
for the three months ended April 1, 2000 and April 3, 1999 5
Consolidated Statements of Comprehensive Income (unaudited)
for the three months ended April 1, 2000 and April 3, 1999 6
Consolidated Statements of Cash Flows (unaudited)
for the three months ended April 1, 2000 and April 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 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
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 April 1, 2000, and the related consolidated
statements of earnings, comprehensive income, and cash flows for the three-month
periods ended April 1, 2000 and April 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
April 21, 2000
3
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
APRIL 1, DECEMBER 31,
2000 1999
-------------- ---------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 134,858 $ 38,501
Investments and marketable securities 163,620 197,067
Accounts receivable, net 59,203 62,870
Inventories 47,182 42,379
Deferred income taxes 3,518 3,467
Prepaid expenses 1,692 1,614
-------------- ---------------
Total current assets 410,073 345,898
-------------- ---------------
Property and equipment at cost, less
accumulated depreciation and amortization 41,803 41,686
Other assets 6,182 7,059
-------------- ---------------
TOTAL ASSETS $ 458,058 $ 394,643
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,681 $ 23,798
Accrued liabilities 6,251 11,295
Short-term note payable 50,188 196
Current portion of obligation under capital lease with related party 200 264
Income taxes payable 10,750 7,541
-------------- ---------------
Total current liabilities 88,070 43,094
-------------- ---------------
Obligation under capital lease with related party, less current portion 466 571
Long-term liability 74 93
Deferred income taxes 2,125 1,473
Other 130 105
-------------- ---------------
TOTAL LIABILITIES 90,865 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, 25,301,091 and 24,877,501 shares issued
and outstanding in 2000 and 1999, respectively 253 249
Class B Common Stock, $.01 par value; 28,358,189 shares
authorized, 6,240,100 and 6,540,188 shares issued
and outstanding in 2000 and 1999, respectively 62 65
Additional paid-in capital 63,166 60,072
Retained earnings 304,632 289,404
Accumulated other comprehensive income (920) (483)
-------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 367,193 349,307
-------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 458,058 $ 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
-----------------------------
APRIL 1, APRIL 3,
2000 1999
-------------- -------------
<S> <C> <C>
Net sales $ 98,619 $ 89,822
Cost of sales 49,239 47,365
-------------- -------------
Gross profit 49,380 42,457
Operating expenses:
Selling and marketing 10,613 9,072
Research and development 5,748 5,662
General and administrative 7,734 7,847
Merger costs 1,009 1,869
-------------- -------------
Total operating expenses 25,104 24,450
-------------- -------------
Operating income 24,276 18,007
-------------- -------------
Other income (expense):
Investment income 3,215 2,284
Interest expense (18) (3)
Other, net (3,679) (38)
-------------- -------------
Total other income (482) 2,243
-------------- -------------
Income before income taxes 23,794 20,250
Income taxes 8,566 7,600
-------------- -------------
Net income $ 15,228 $ 12,650
============== =============
Basic earnings per share $ 0.48 $ 0.41
Diluted earnings per share $ 0.48 $ 0.41
Basic weighted average shares outstanding 31,462 30,958
Diluted weighted average and equivalent shares outstanding 31,956 31,137
</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
------------------------------
APRIL 1, APRIL 3,
2000 1999
------------ ------------
<S> <C> <C>
Net income $ 15,228 $ 12,650
Other comprehensive income (loss):
Foreign currency translation adjustment (437) (1,328)
------------ ------------
Comprehensive income $ 14,791 $ 11,322
============ ============
</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>
THREE MONTHS ENDED
---------------------------------
APRIL 1, APRIL 3,
2000 1999
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 15,228 $ 12,650
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,527 2,374
Appreciation in market value
of investments and marketable securities (1,553) (823)
Deferred income taxes 601 6
Changes in assets and liabilities:
Accounts receivable, net 3,667 (1,205)
Inventories (4,803) 4,858
Other assets 810 552
Accounts payable (3,117) (2,842)
Accrued expenses (5,044) (77)
Income taxes payable 3,209 4,176
Other operating activities (53) (256)
Investments and marketable securities 35,000 (6,370)
--------------- ----------------
Net cash provided by operating activities 46,472 13,043
--------------- ----------------
Cash flows from investing activities:
Purchases of property and equipment (2,577) (2,204)
--------------- ----------------
Net cash used in investing activities (2,577) (2,204)
--------------- ----------------
Cash flows from financing activities:
Proceeds from exercise of stock options 3,095 419
Net issuance (repayment) of notes payable 49,973 (18)
Payments for obligation under capital lease (169) (17)
--------------- ----------------
Net cash provided by financing activities 52,899 384
--------------- ----------------
Effect of exchange rate changes on cash (437) (1,328)
--------------- ----------------
Net increase in cash and cash equivalents 96,357 9,895
Cash and cash equivalents at beginning of period 38,501 11,391
--------------- ----------------
Cash and cash equivalents at end of period $ 134,858 $ 21,286
=============== ================
Supplemental disclosures of cash flow information:
Interest paid $ 18 $ 3
Income taxes paid 5,251 4,833
</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 April 1, 2000,
and the consolidated results of operations and cash flows for the three months
ended April 1, 2000, and April 3, 1999. The results of operations for such
interim periods are not necessarily indicative of the results for the full year.
NOTE 2 - SUBSEQUENT EVENT
On April 3, 2000, the Company completed the acquisition of Comtec Information
Systems, Inc. ("Comtec"), acquiring all of the outstanding capital stock of
Comtec for approximately $90,000,000 in cash. Located in Warwick, Rhode Island,
Comtec was formerly a privately held company. The Company believes Comtec is an
industry leader in the design, manufacture and support of portable wireless
thermal printing solutions.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: FIRST QUARTER OF 2000 VERSUS FIRST QUARTER OF 1999
Net sales for the first quarter increased 9.8% to $98,619,000 from $89,822,000.
Hardware sales (printers and replacement parts) increased 10.3% on unit volume
increases. For the first quarter, hardware sales accounted for 79.8% of net
sales. Supplies sales increased 9.8% to comprise 18.3% of net sales. The
remaining 1.9% of net sales consisted of service and software revenue.
International sales of $44,049,000 accounted for 44.7% of 2000 first quarter
sales, compared with 40.8% of net sales for the first quarter of 1999. The
increase in the percentage of international sales is due to 20.2% sales growth
in international markets, compared with 2.6% sales growth in North America. The
Company recorded growth in all of the Company's international geographic
territories, particularly in Europe and Latin America. Management views
international markets as holding significant growth opportunities for the
Company. To support this growth, the Company expanded its international presence
with the opening of new sales offices in Seoul, South Korea, and Hong Kong
during the first quarter of 2000. In North America, robust sales growth of
instant-issuance plastic card printers and a favorable trend in supplies sales
was offset by weakness in bar code label printer sales.
Gross profit for the first quarter of 2000 was $49,380,000, up 16.3% from the
gross profit of $42,457,000. As a percentage of net sales, gross profit
increased to 50.1% from 47.3%. The increase in gross profit margin was
principally the result of product cost reductions enabled by the October 1998
merger with Eltron International combined with unit volume increases, which
increased capacity utilization of the Company's manufacturing operations.
Selling and marketing expenses increased 17.0% to $10,613,000 from $9,072,000
for the first quarter of 1999. The growth in selling and marketing expenses was
primarily due to increased payroll and business development expenses to support
new sales initiatives, programs to expand distribution channels and to improve
service. Management indicated that these initiatives are important elements for
driving sales growth. As a percentage of net sales, first quarter selling and
marketing expenses increased to 10.8% from 10.1%.
Research and development expenses for the first quarter increased 1.5% to
$5,748,000 from $5,662,000. Increases in fees for outside professional services,
building expenses related to new engineering facilities in Vernon Hills, and
payroll were substantially offset by reductions in project expenses and
non-payroll expenditures. As a percentage of net sales, quarterly research and
development expenses decreased to 5.8% from 6.3%.
General and administrative expenses for the first quarter declined by 1.4% to
$7,734,000 from $7,847,000. Lower bad debt expense was partially offset by
increased non-payroll expenses. As a percentage of net sales, quarterly general
and administrative expenses decreased to 7.8% from 8.7%.
During the first quarter of 2000, Zebra recorded $1,009,000 in merger costs,
which are related to integration of the operations of Eltron International,
Inc., with which the Company merged in October 1998. For the first quarter of
1999, merger costs totaled $1,869,000. These costs, which could not be provided
for at the time of the merger, 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 for
the Eltron integration through the second quarter of 2000.
Operating income for the first quarter increased 34.8% to $24,276,000, or 24.6%
of net sales, from $18,007,000, or 20.0% of net sales. Excluding the merger
costs described above, operating income increased 27.2% to $25,285,000, or 25.6%
of net sales from $19,876,000, or 22.1% of net sales.
Investment income increased 40.7% to $3,215,000 from $2,284,000. The increase
was primarily due to higher average balances invested in marketable securities.
Other expense for the first quarter of 2000 included $3,417,000 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
9
<PAGE>
Company's U.K. subsidiary. For the first quarter of 1999, the Company recorded a
gain from foreign currency transactions of $139,000.
Income before income taxes for the first quarter of 2000 was $23,794,000,
compared with $20,250,000 for the same period in 1999, for an increase of 17.5%.
The effective income tax rate for the first quarter of 2000 was 36.0%, compared
with 37.5% for the same period in 1999. The provision for income taxes for the
first quarter of 1999 included a one-time tax accrual. Net income was
$15,228,000, or $0.48 per share (basic and diluted), compared with $12,650,000,
or $0.41 per share (basic and diluted). Excluding the $1,009,000 and $1,869,000
in merger costs, net income for the first quarter was $15,875,000, or $0.50 per
diluted share, in 2000 and $13,818,000, or $0.44 per share, 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 $298,478,000 at April 1, 2000, compared with $235,568,000 at December
31, 1999.
As of April 1, 2000, the Company had a $50,000,000 short-term loan outstanding,
the proceeds of which were used to fund the acquisition of Comtec Information
Systems, 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 (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 customer accounted for 10% or more of total sales during the first quarter of
2000. Sales to United Parcel Service (UPS), one of the Company's designated key
accounts, accounted for 10.0% of the Company's net sales for the first quarter
of 1999.
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 Zebra's Form 10-K
for the year ended December 31, 1999, for further discussions of issues that
could affect Zebra's future results.
10
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the first quarter of 2000, the Company modified its investment strategy.
The Company's investment portfolio at December 31, 1999, consisted of U.S.
government securities, state and municipal bonds, partnership interests, and
equity securities, which were held indirectly in diversified funds actively
managed by investment professionals. During the second quarter Zebra began
re-deploying its cash reserves into a traditional corporate cash management
program, which consists of an actively managed diversified portfolio of U.S.
government securities, state and municipal bonds, and corporate bonds. This
program is also administered by outside professional investment managers.
Management expects this move to reduce volatility of returns on invested funds
and increase liquidity. 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.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 Amendment to the lease between the Registrant and
Unique Building Corporation for the Registrant's
facility in Vernon Hills, Illinois, dated as of
July 1, 1999
15.1 Acknowledgment of Independent Certified Public
Accountants Regarding Independent Auditors' Review
Report
27.1 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.
12
<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: May 12, 2000 By: /s/Edward L. Kaplan
---------------------------
Edward L. Kaplan
Chief Executive Officer
Date: May 12, 2000 By: /s/Charles R. Whitchurch
------------------------
Charles R. Whitchurch
Chief Financial Officer
13
<PAGE>
Exhibit 10.1
AMENDMENT TO INDUSTRIAL BUILDING LEASE
THIS AMENDMENT TO INDUSTRIAL BUILDING LEASE is dated as of July 1,
1999, by and between ZEBRA TECHNOLOGIES CORPORATION, as Lessee, and UNIQUE
BUILDING CORPORATION, as Lessor, for the Property commonly known as 333
Corporate Woods Parkway, Vernon Hills, Illinois (the "Property").
WHEREAS, on May 15, 1989, Lessor and Lessee executed an Industrial
Building Lease (the "Lease") for the Property for a term commencing September 1,
1989, and expiring August 31, 1999;
WHEREAS, on July 1, 1991, April 1, 1993, December 1, 1994, October 1,
1995, June 1, 1996, and June 2, 1996, Lessor and Lessee entered into several
amendments to the Lease (collectively the "Amendments") whereby additional
premises were added to the Property and leased by Lessee for the term and at the
rent set forth in the Amendments;
WHEREAS, Lessee desires to lease additional premises at the Property
and Lessor desires to lease said premises to Lessee on the terms and conditions
set forth herein;
WHEREAS, Lessee and Lessor desire to summarize all the Premises leased
at the Property by Lessee;
WHEREAS, Lessee and Lessor desire to amend the Lease and Amendments so
that there is a common expiration date of June 30, 2014;
WHEREAS, Lessor and Lessee desire to amend the Base Rent paid by Lessee
for the Premises under the Lease and Amendments.
NOW, THEREFORE, in consideration of Ten and No/l00 Dollars, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, Lessor and Lessee hereby agree as follows:
1. Lessee hereby leases from Lessor the newly constructed premises
commonly known as the Cless Technology Center, consisting of improvements of
approximately 57,508 square feet and a 167-car parking area (hereinafter the
"Cless Technology Center Premises").
2. The term for the Cless Technology Center Premises will
commence July 1, 1999, and expire June 30, 2014. Base Rent for the Cless
Technology Center Premises will be as follows:
(i) July 1, 1999, through June 30, 2004: $58,376.00 per month;
(ii) July 1, 2004, through June 30, 2009: $67,132.00 per month;
(iii) July 1, 2009, through June 30, 2014: $77,202.00 per month.
3. The parties acknowledge and agree that the Base Rent for the
entire Premises less the Cless Technology Center Premises is currently as
follows:
(i) As of the date hereof and for the period through August 31,
1999: $111,997.00 per month;
(ii) For the period of September 1, 1999, through March 31, 2003:
$115,355.00 per month;
(iii) For the period of April 1, 2003, through March 31, 2008:
$127,570.00 per month.
The parties further agree that the Lease is hereby further amended to
provide that the Base Rent for the entire Premises less the Cless Technology
Center Premises for the remainder of the term subsequent to March 31, 2008,
shall be as follows:
<PAGE>
(i) For the period of April 1, 2008, through June 30,
2009: $132,354.00 per month;
(ii) For the period of July 1, 2009, through June 30,
2014: $152,207.00 per month.
4. Lessor and Lessee agree that all premises and parking areas
leased at the Property by Lessee pursuant to the Lease, the
Amendments and this Amendment to Industrial Building Lease are
described as follows:
The real estate, including parking areas and all improvements
thereon containing approximately 225,133 square feet (including the
Cless Technology Center Premises) located at 333 Corporate Woods
Parkway, Vernon Hills, Illinois, and legally described as follows:
Lots 113 through 132 in the Corporate Woods, being a
Subdivision of portions of Section 9, 10, 15 and 16, Township
43 North, Range 11, East of the Third Principal Meridian
according to the Plat thereof recorded August 5, 1986 as
Document 2468419 and recorded October 22, 1986 as Document
2496355 and amended by Letter of Amendments recorded as
Document 2561505 and 2585702, in Lake County, Illinois
(collectively, the "Premises").
5. The Lease as heretofore amended is hereby further amended to
provide that the term of the Lease for the entire Premises (to the extent not
already provided) is extended to June 30, 2014.
6. The parties agree that, as heretofore amended, the Lease is
hereby further amended to provide that the Base Rent for the entire Premises
shall be as follows:
(i) For the period of July 1, 1999, through August 31,
1999: $170,373.00 per month;
(ii) For the period of September 1, 1999, through March
31, 2003: $173,731.00 per month;
(iii) For the period of April 1, 2003, through June 30,
2004: $185,946.00 per month;
(iv) For the period of July 1, 2004, through March 31,
2008: $194,702.00 per month;
(v) For the period of April 1, 2008, through June 30,
2009: $199,486.00 per month;
(vi) For the period of July 1, 2009, through June 30,
2014: $229,409.00 per month.
7. The effective date of this Amendment is July 1, 1999.
8. Except as they may have been modified by anything set forth in
this Amendment, all of the terms and provisions of the Lease and Amendments are
hereby ratified and confirmed by the parties hereto as being in full force and
effect.
9. In the event of a conflict between the terms and conditions of
the Lease and Amendments and this Amendment to Lease, the provisions of this
Amendment to Lease shall prevail.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
this 1st day of July, 1999.
LESSEE: LESSOR:
ZEBRA TECHNOLOGIES CORPORATION UNIQUE BUILDING CORPORATION
By: /s/ Edward L. Kaplan By: /s/ Edward L. Kaplan
----------------------------------- --------------------------------
Title: Chief Executive Officer Title: President
-------------------------------- -----------------------------
<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 April 21, 2000, related to our review of interim financial
information as of April 1, 2000.
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
May 8, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> APR-01-2000
<CASH> 134,858
<SECURITIES> 163,620
<RECEIVABLES> 60,835
<ALLOWANCES> (1,632)
<INVENTORY> 47,182
<CURRENT-ASSETS> 410,073
<PP&E> 78,192
<DEPRECIATION> (36,389)
<TOTAL-ASSETS> 458,058
<CURRENT-LIABILITIES> 88,070
<BONDS> 0
0
0
<COMMON> 315
<OTHER-SE> 366,878
<TOTAL-LIABILITY-AND-EQUITY> 458,058
<SALES> 97,274
<TOTAL-REVENUES> 98,619
<CGS> 48,456
<TOTAL-COSTS> 49,239
<OTHER-EXPENSES> 25,051
<LOSS-PROVISION> 53
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 23,794
<INCOME-TAX> 8,566
<INCOME-CONTINUING> 15,228
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,228
<EPS-BASIC> 0.48
<EPS-DILUTED> 0.48
</TABLE>
