Zebra Technologies International, LLC - Zebra Technologies Announces 32% Growth in Net Income on 25% Sales Growth to New Records for the 2004 Second Quarter

Zebra Technologies International, LLC

333 Corporate Woods Parkway

Vernon Hills IL 60061

United States of America

(847) 634-6700 tel

(800) 423-0442 tel

(847) 913-8766 fax


Email us: inquiry4@zebra.com		Visit us online: www.zebra.com


BOOTH(S): E-9435, E-9535

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Region Interest: Asia Pacific (Japan, Korea), Mexico/Central America/Carribean

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Zebra Technologies Announces 32% Growth in Net Income on 25% Sales Growth to New Records for the 2004 Second Quarter

July 28, 2004
VERNON HILLS, Ill., July 28 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced net income for the second quarter that ended July 3, 2004, increased 32.2% to a record $29,428,000, or $0.61 per diluted share, from $22,262,000, or $0.47 per diluted share, for the same period a year ago. This acceleration in quarterly earnings growth accompanied higher profitability and 25.4% growth in net sales to a record $162,830,000 from $129,863,000 for the same period in 2003. Per-share figures for 2003 were adjusted for a three-for-two stock split that was paid on August 21, 2003, in the form of a 50% stock dividend. Sales and earnings results exceeded previously announced forecasts and analyst estimates. The company also announced a continued positive outlook in its financial forecast for the third quarter of 2004. "All products, channels and geographies contributed to the strongest sales growth in four years," stated Edward Kaplan, Zebra's chairman and chief executive officer. "Sales growth for North America, our largest region, accelerated to 26% on the strength of higher adoption rates of mobile printing solutions in retail and other vertical market applications and shipments of card printer products for a broad range of personal identification solutions. We achieved greater success in creating demand for our products and delivering them through more effective and expanded global channels. Now with nine consecutive quarters of sales growth, we ended the first half of 2004 on a strong note and enter the second half of the year with a high order backlog and an outlook for further growth and success." Mr. Kaplan added, "The ongoing strength of our core bar code labeling solutions and card imaging business is matched with an equally strong commitment to advance our strategic position in radio frequency identification, vertical market applications, and international regions including China. These and other high-growth opportunities add to an even greater sense of optimism for long-term growth and stockholder value creation." For the first six months of 2004, net sales were a record $317,004,000, up 24.5% from $254,547,000 for the same period in 2003. Net income increased 29.5% to a record $57,362,000, or $1.19 per diluted share, from $44,302,000, or $0.93 per diluted share, for the same period a year ago. At July 3, 2004, Zebra had $498,944,000 in cash, investments and marketable securities, and no long-term debt. Inventories totaled $47,613,000 and accounts receivable were $95,333,000, both reflecting the higher level of business for the quarter. Discussion and Analysis All major product lines and geographic regions participated in the company's sales growth for the second quarter of 2004. The company's North American region experienced accelerating sales growth to a record level and made the largest contribution to total sales growth. Outside North America, strong growth in all regions delivered record international sales, with the largest portion of the international sales volume increase deriving from Zebra's European region. Higher average unit prices supplemented higher unit volumes. Gross profit margin of 51.9% increased 0.6 percentage points from the second quarter of 2003, primarily from higher capacity utilization related to the higher sales volume, product cost reductions, and, to a lesser extent, favorable foreign exchange rates. Second quarter operating expenses increased 18.2% over the same period a year ago, including $876,000 in exit costs related to the company's previously announced consolidation of manufacturing and service operations. Second quarter operating expenses also reflect higher payroll and benefits from increased headcount to support sales and marketing activities and product development, including those related to RFID products, as well as higher legal expenses related to litigation and increased work on intellectual property matters. Quarterly operating income increased 36.7% on margin expansion to 26.5% of net sales from 24.4% for the second quarter of 2003. Third Quarter Outlook Zebra also announced its financial forecast for the third quarter of 2004. Net sales are expected within a range of $162,000,000 and $168,000,000, or up 20% to 25%, with earnings growth of 23% to 33%, to between $0.59 and $0.64 per diluted share. Management noted that normally the third quarter is seasonally comparable with the second quarter. Forward-looking Statement This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company's financial forecast for the third quarter of 2004 stated in the paragraph directly above. These statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in general industry and market conditions, of general domestic and international economic conditions, and other factors. Specifically, these factors include market acceptance of the company's products and product lines and competitors' product offerings, as well as the speed of adoption of the company's printing technologies and competing technologies. When used in this release 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, 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, readers are referred to Zebra's Form 10-K for the year ended December 31, 2003. Zebra Technologies Corporation delivers innovative and reliable on-demand printing solutions for business improvement and security applications in 90 countries around the world. More than 90 percent of Fortune 500 companies use Zebra-brand printers. A broad range of applications benefit from Zebra-brand thermal bar code, "smart" label, receipt, and card printers, resulting in enhanced security, increased productivity, improved quality, lower costs, and better customer service. The company has sold more than three million printers, including RFID printer/encoders and wireless mobile solutions, and also offers software, connectivity solutions, and printing supplies. Information about Zebra Technologies can be found at http://www.zebra.com .