ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-2675536
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PAGE
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Item 1.
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Consolidated Financial Statements
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April 1,
2017 |
|
December 31,
2016 |
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(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
180
|
|
|
$
|
156
|
|
Accounts receivable, net of allowances for doubtful accounts of $4
|
550
|
|
|
625
|
|
||
Inventories, net
|
376
|
|
|
345
|
|
||
Income tax receivable
|
28
|
|
|
32
|
|
||
Prepaid expenses and other current assets
|
35
|
|
|
64
|
|
||
Total Current assets
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1,169
|
|
|
1,222
|
|
||
Property, plant and equipment, net
|
284
|
|
|
292
|
|
||
Goodwill
|
2,460
|
|
|
2,458
|
|
||
Other intangibles, net
|
430
|
|
|
480
|
|
||
Long-term deferred income taxes
|
121
|
|
|
113
|
|
||
Other long-term assets
|
67
|
|
|
67
|
|
||
Total Assets
|
$
|
4,531
|
|
|
$
|
4,632
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
365
|
|
|
$
|
413
|
|
Accrued liabilities
|
324
|
|
|
323
|
|
||
Deferred revenue
|
217
|
|
|
191
|
|
||
Income taxes payable
|
15
|
|
|
22
|
|
||
Total Current liabilities
|
921
|
|
|
949
|
|
||
Long-term debt
|
2,573
|
|
|
2,648
|
|
||
Long-term deferred income taxes
|
2
|
|
|
3
|
|
||
Long-term deferred revenue
|
128
|
|
|
124
|
|
||
Other long-term liabilities
|
112
|
|
|
116
|
|
||
Total Liabilities
|
3,736
|
|
|
3,840
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued
|
—
|
|
|
—
|
|
||
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
234
|
|
|
210
|
|
||
Treasury stock at cost, 19,397,578 and 19,267,269 shares at April 1, 2017 and December 31, 2016, respectively
|
(630
|
)
|
|
(614
|
)
|
||
Retained earnings
|
1,239
|
|
|
1,240
|
|
||
Accumulated other comprehensive loss
|
(49
|
)
|
|
(45
|
)
|
||
Total Stockholders’ Equity
|
795
|
|
|
792
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
4,531
|
|
|
$
|
4,632
|
|
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Three Months Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Net sales:
|
|
|
|
||||
Net sales of tangible products
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$
|
735
|
|
|
$
|
716
|
|
Revenue from services and software
|
130
|
|
|
133
|
|
||
Total Net sales
|
865
|
|
|
849
|
|
||
Cost of sales:
|
|
|
|
||||
Cost of sales of tangible products
|
379
|
|
|
375
|
|
||
Cost of services and software
|
85
|
|
|
84
|
|
||
Total Cost of sales
|
464
|
|
|
459
|
|
||
Gross profit
|
401
|
|
|
390
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
109
|
|
|
113
|
|
||
Research and development
|
96
|
|
|
93
|
|
||
General and administrative
|
75
|
|
|
74
|
|
||
Amortization of intangible assets
|
50
|
|
|
59
|
|
||
Acquisition and integration costs
|
27
|
|
|
36
|
|
||
Exit and restructuring costs
|
4
|
|
|
5
|
|
||
Total Operating expenses
|
361
|
|
|
380
|
|
||
Operating income
|
40
|
|
|
10
|
|
||
Other (expenses) income:
|
|
|
|
||||
Foreign exchange (loss) gain
|
(1
|
)
|
|
2
|
|
||
Interest expense, net
|
(41
|
)
|
|
(50
|
)
|
||
Other, net
|
—
|
|
|
(1
|
)
|
||
Total Other expenses
|
(42
|
)
|
|
(49
|
)
|
||
Loss before income taxes
|
(2
|
)
|
|
(39
|
)
|
||
Income tax benefit
|
(10
|
)
|
|
(13
|
)
|
||
Net income (loss)
|
$
|
8
|
|
|
$
|
(26
|
)
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Basic earnings (loss) per share
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$
|
0.16
|
|
|
$
|
(0.50
|
)
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Diluted earnings (loss) per share
|
$
|
0.16
|
|
|
$
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(0.50
|
)
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Basic weighted average shares outstanding
|
51,842,025
|
|
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51,299,632
|
|
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Diluted weighted average and equivalent shares outstanding
|
52,946,883
|
|
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51,299,632
|
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Three Months Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Net income (loss)
|
$
|
8
|
|
|
$
|
(26
|
)
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Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Unrealized loss on anticipated sales hedging transactions
|
(6
|
)
|
|
(15
|
)
|
||
Unrealized gain (loss) on forward interest rate swaps hedging transactions
|
2
|
|
|
(7
|
)
|
||
Foreign currency translation adjustment
|
—
|
|
|
4
|
|
||
Comprehensive income (loss)
|
$
|
4
|
|
|
$
|
(44
|
)
|
|
Three Months Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
8
|
|
|
$
|
(26
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
69
|
|
|
77
|
|
||
Amortization of debt issuance costs and discount
|
4
|
|
|
5
|
|
||
Share-based compensation
|
7
|
|
|
9
|
|
||
Deferred income taxes
|
(9
|
)
|
|
3
|
|
||
Unrealized gain on forward interest rate swaps
|
—
|
|
|
(1
|
)
|
||
Other, net
|
1
|
|
|
3
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
79
|
|
|
65
|
|
||
Inventories, net
|
(31
|
)
|
|
12
|
|
||
Other assets
|
17
|
|
|
—
|
|
||
Accounts payable
|
(49
|
)
|
|
20
|
|
||
Accrued liabilities
|
(3
|
)
|
|
(35
|
)
|
||
Deferred revenue
|
30
|
|
|
4
|
|
||
Income taxes
|
(2
|
)
|
|
(47
|
)
|
||
Other operating activities
|
(4
|
)
|
|
7
|
|
||
Net cash provided by operating activities
|
117
|
|
|
96
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(13
|
)
|
|
(19
|
)
|
||
Purchases of long-term investments
|
—
|
|
|
(1
|
)
|
||
Net cash used in investing activities
|
(13
|
)
|
|
(20
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payment of long-term debt
|
(80
|
)
|
|
(80
|
)
|
||
Proceeds from exercise of stock options and stock purchase plan purchases
|
4
|
|
|
3
|
|
||
Taxes paid related to net share settlement of equity awards
|
(2
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(78
|
)
|
|
(77
|
)
|
||
Effect of exchange rate changes on cash
|
(2
|
)
|
|
3
|
|
||
Net increase in cash and cash equivalents
|
24
|
|
|
2
|
|
||
Cash and cash equivalents at beginning of year
|
156
|
|
|
192
|
|
||
Cash and cash equivalents at end of year
|
$
|
180
|
|
|
$
|
194
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Income taxes paid
|
$
|
5
|
|
|
$
|
29
|
|
Interest paid
|
$
|
16
|
|
|
$
|
26
|
|
•
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At the end of each fiscal quarter, the Company estimates the income tax provision that will be provided for the fiscal year.
|
•
|
The forecasted annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of each quarter to compute the year-to-date tax applicable to ordinary income (loss). The term ordinary income (loss) refers to income (loss) from continuing operations, before income taxes, excluding significant, unusual, or infrequently occurring items.
|
•
|
The tax effects of significant, unusual, or infrequently occurring items are recognized as discrete items in the interim periods in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about valuation allowances established in prior years, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant, unusual, or infrequently occurring items.
|
|
April 1,
2017 |
|
December 31,
2016 |
||||
Raw material
|
$
|
160
|
|
|
$
|
172
|
|
Work in process
|
1
|
|
|
1
|
|
||
Finished goods
|
298
|
|
|
254
|
|
||
Inventories, gross
|
459
|
|
|
427
|
|
||
Inventory reserves
|
(83
|
)
|
|
(82
|
)
|
||
Inventories, net
|
$
|
376
|
|
|
$
|
345
|
|
|
Cumulative costs incurred through December 31, 2016
|
|
Costs incurred for the three months ended April 1, 2017
|
|
Cumulative costs incurred through April 1, 2017
|
||||||
Severance, related benefits and, other expenses
|
$
|
54
|
|
|
$
|
4
|
|
|
$
|
58
|
|
Obligations for future non-cancellable lease payments
|
11
|
|
|
—
|
|
|
11
|
|
|||
Total
|
$
|
65
|
|
|
$
|
4
|
|
|
$
|
69
|
|
|
Three Months Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Balance at the beginning of the period
|
$
|
10
|
|
|
$
|
15
|
|
Charged to earnings
|
4
|
|
|
5
|
|
||
Cash paid
|
(3
|
)
|
|
(7
|
)
|
||
Balance at the end of the period
|
$
|
11
|
|
|
$
|
13
|
|
|
April 1,
2017 |
|
December 31,
2016 |
||||
Accrued liabilities
|
$
|
8
|
|
|
$
|
7
|
|
Other long-term liabilities
|
3
|
|
|
3
|
|
||
Total liabilities related to exit and restructuring activities
|
$
|
11
|
|
|
$
|
10
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts (1)
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Money market investments related to the deferred compensation plan
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||
Total Assets at fair value
|
$
|
12
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Forward interest rate swap contracts (2)
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
24
|
|
Foreign exchange contracts (1)
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Liabilities related to the deferred compensation plan
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||
Total Liabilities at fair value
|
$
|
17
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts (1)
|
$
|
11
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
23
|
|
Money market investments related to the deferred compensation plan
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
Total Assets at fair value
|
$
|
22
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
34
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Forward interest rate swap contracts (2)
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
27
|
|
Liabilities related to the deferred compensation plan
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
Total Liabilities at fair value
|
$
|
11
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
Asset (Liability) Derivatives
|
||||||||
|
Balance Sheet Classification
|
|
Fair Value
|
||||||
|
|
|
April 1, 2017
|
|
December 31, 2016
|
||||
Derivative instruments designated as hedges:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
4
|
|
|
$
|
12
|
|
Foreign exchange contracts
|
Accrued liabilities
|
|
—
|
|
|
—
|
|
||
Forward interest rate swaps
|
Accrued liabilities
|
|
(1
|
)
|
|
(3
|
)
|
||
Forward interest rate swaps
|
Other long-term liabilities
|
|
(13
|
)
|
|
(13
|
)
|
||
Total derivative instruments designated as hedges
|
|
|
$
|
(10
|
)
|
|
$
|
(4
|
)
|
|
|
|
|
|
|
||||
Derivative instruments not designated as hedges:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
11
|
|
Foreign exchange contracts
|
Accrued liabilities
|
|
(5
|
)
|
|
—
|
|
||
Forward interest rate swaps
|
Accrued liabilities
|
|
(1
|
)
|
|
(1
|
)
|
||
Forward interest rate swaps
|
Other long-term liabilities
|
|
(9
|
)
|
|
(10
|
)
|
||
Total derivative instruments not designated as hedges
|
|
|
(15
|
)
|
|
—
|
|
||
Total Net Derivative Liability
|
|
|
$
|
(25
|
)
|
|
$
|
(4
|
)
|
|
Gain (Loss) Recognized in Income
|
|||||||
|
|
Three Months Ended
|
||||||
|
Statement of Operations Classification
|
April 1, 2017
|
|
April 2, 2016
|
||||
Derivative instruments not designated as hedges:
|
|
|
|
|
||||
Foreign exchange contracts
|
Foreign exchange (loss) gain
|
$
|
(5
|
)
|
|
$
|
(5
|
)
|
Forward interest rate swaps
|
Interest expense, net
|
1
|
|
|
1
|
|
||
Total (loss) gain recognized in income
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
April 1, 2017
|
|
December 31, 2016
|
||||
Notional balance of outstanding contracts:
|
|
|
|
||||
British Pound/U.S. dollar
|
£
|
11
|
|
|
£
|
3
|
|
Euro/U.S. dollar
|
€
|
138
|
|
|
€
|
148
|
|
British Pound/Euro
|
£
|
8
|
|
|
£
|
8
|
|
Canadian Dollar/U.S. dollar
|
$
|
4
|
|
|
$
|
13
|
|
Czech Koruna/U.S. dollar
|
Kč
|
192
|
|
|
Kč
|
147
|
|
Brazilian Real/U.S. dollar
|
R$
|
72
|
|
|
R$
|
56
|
|
Malaysian Ringgit/U.S. dollar
|
RM
|
2
|
|
|
RM
|
16
|
|
Australian Dollar/U.S. dollar
|
$
|
5
|
|
|
$
|
50
|
|
Swedish Krona/U.S. dollar
|
kr
|
22
|
|
|
kr
|
7
|
|
Japanese yen/U.S. dollar
|
¥
|
168
|
|
|
¥
|
48
|
|
Singapore dollar/U.S. dollar
|
S$
|
11
|
|
|
S$
|
15
|
|
Net fair value asset (liability) of outstanding contracts
|
$
|
(5
|
)
|
|
$
|
11
|
|
|
Gross Fair
Value
|
|
Counterparty
Offsetting
|
|
Net Fair
Value in the
Consolidated
Balance
Sheets
|
||||||
Counterparty A
|
$
|
11
|
|
|
$
|
6
|
|
|
$
|
5
|
|
Counterparty B
|
4
|
|
|
2
|
|
|
2
|
|
|||
Counterparty C
|
4
|
|
|
2
|
|
|
2
|
|
|||
Counterparty D
|
8
|
|
|
3
|
|
|
5
|
|
|||
Counterparty E
|
3
|
|
|
1
|
|
|
2
|
|
|||
Counterparty F
|
4
|
|
|
1
|
|
|
3
|
|
|||
Counterparty G
|
5
|
|
|
—
|
|
|
5
|
|
|||
Total
|
$
|
39
|
|
|
$
|
15
|
|
|
$
|
24
|
|
Year 2017
|
$
|
697
|
|
Year 2018
|
544
|
|
|
Year 2019
|
544
|
|
|
Year 2020
|
272
|
|
|
Year 2021
|
272
|
|
|
Notional balance of outstanding contracts
|
$
|
2,329
|
|
|
April 1,
2017 |
|
December 31, 2016
|
||||
Senior Notes
|
$
|
1,050
|
|
|
$
|
1,050
|
|
Term Loan
|
1,573
|
|
|
1,653
|
|
||
Less: Debt Issuance Costs
|
(20
|
)
|
|
(22
|
)
|
||
Less: Unamortized Discounts
|
(30
|
)
|
|
(33
|
)
|
||
Total outstanding debt
|
$
|
2,573
|
|
|
$
|
2,648
|
|
2017
|
$
|
—
|
|
|||
2018
|
—
|
|
||||
2019
|
—
|
|
||||
2020
|
—
|
|
||||
2021
|
1,573
|
|
||||
Thereafter
|
1,050
|
|
||||
Total maturities of long-term debt
|
$
|
2,623
|
|
|
Three Months Ended
|
||||||
|
April 1, 2017
|
|
April 2, 2016
|
||||
Balance at the beginning of the period
|
$
|
21
|
|
|
$
|
22
|
|
Warranty expense
|
6
|
|
|
7
|
|
||
Warranty payments
|
(7
|
)
|
|
(8
|
)
|
||
Balance at the end of the period
|
$
|
20
|
|
|
$
|
21
|
|
•
|
Unrealized (loss) gain on anticipated sales hedging transactions
relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 7,
Derivative Instruments
for more details.
|
•
|
Unrealized (loss) gain on forward interest rate swaps hedging transactions
refers to the hedging of the interest rate risk exposure associated with the variable rate commitment entered into for the Acquisition. See Note 7,
Derivative Instruments
for more details.
|
•
|
Foreign currency translation adjustment
relates to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. The Company is required to translate the subsidiary
|
|
|
Unrealized (loss) gain on sales hedging
|
|
Unrealized (loss)/ gain on forward interest rate swaps (1)
|
|
Currency translation adjustments
|
|
Total
|
||||||||
Balance at December 31, 2015
|
$
|
(1
|
)
|
|
$
|
(15
|
)
|
|
$
|
(32
|
)
|
|
$
|
(48
|
)
|
|
Other comprehensive (loss) income before reclassifications
|
|
(20
|
)
|
|
(9
|
)
|
|
4
|
|
|
(25
|
)
|
||||
Amounts reclassified from AOCI
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Tax benefit
|
|
4
|
|
|
3
|
|
|
—
|
|
|
7
|
|
||||
Other comprehensive (loss) income
|
|
(15
|
)
|
|
(7
|
)
|
|
4
|
|
|
(18
|
)
|
||||
Balance at April 2, 2016
|
$
|
(16
|
)
|
|
$
|
(22
|
)
|
|
$
|
(28
|
)
|
|
$
|
(66
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2016
|
$
|
6
|
|
|
$
|
(15
|
)
|
|
$
|
(36
|
)
|
|
$
|
(45
|
)
|
|
Other comprehensive (loss) income before reclassifications
|
|
(6
|
)
|
|
2
|
|
|
—
|
|
|
(4
|
)
|
||||
Amounts reclassified from AOCI
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Tax benefit (expense)
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Other comprehensive (loss) income
|
|
(6
|
)
|
|
2
|
|
|
—
|
|
|
(4
|
)
|
||||
Balance at April 1, 2017
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
(36
|
)
|
|
$
|
(49
|
)
|
|
Three Months Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Net sales:
|
|
|
|
||||
Legacy Zebra
|
$
|
322
|
|
|
$
|
314
|
|
Enterprise
|
544
|
|
|
538
|
|
||
Total segment
|
866
|
|
|
852
|
|
||
Corporate, eliminations (1)
|
(1
|
)
|
|
(3
|
)
|
||
Total
|
$
|
865
|
|
|
$
|
849
|
|
Operating income (loss):
|
|
|
|
||||
Legacy Zebra
|
$
|
67
|
|
|
$
|
71
|
|
Enterprise
|
55
|
|
|
42
|
|
||
Total segment
|
122
|
|
|
113
|
|
||
Corporate, eliminations (2)
|
(82
|
)
|
|
(103
|
)
|
||
Total
|
$
|
40
|
|
|
$
|
10
|
|
(1)
|
Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments related to the Acquisition.
|
(2)
|
Amounts included in Corporate, eliminations consist of purchase accounting adjustments not reported in segments; amortization expense, acquisition and integration expenses, and exit and restructuring costs.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|||||||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
865
|
|
|
$
|
849
|
|
|
$
|
16
|
|
|
1.9
|
%
|
Gross profit
|
401
|
|
|
390
|
|
|
11
|
|
|
2.8
|
%
|
|||
Operating expenses
|
361
|
|
|
380
|
|
|
(19
|
)
|
|
(5.0
|
)%
|
|||
Operating income
|
$
|
40
|
|
|
$
|
10
|
|
|
30
|
|
|
300.0
|
%
|
|
Gross margin
|
46.4
|
%
|
|
45.9
|
%
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
$ Change
|
|
% Change
|
|||||||
Europe, Middle East and Africa
|
$
|
287
|
|
|
$
|
274
|
|
|
$
|
13
|
|
|
4.7
|
%
|
Latin America
|
53
|
|
|
46
|
|
|
7
|
|
|
15.2
|
%
|
|||
Asia-Pacific
|
108
|
|
|
114
|
|
|
(6
|
)
|
|
(5.3
|
)%
|
|||
Total International
|
448
|
|
|
434
|
|
|
14
|
|
|
3.2
|
%
|
|||
North America
|
417
|
|
|
415
|
|
|
2
|
|
|
0.5
|
%
|
|||
Total net sales
|
$
|
865
|
|
|
$
|
849
|
|
|
$
|
16
|
|
|
1.9
|
%
|
|
Three Months Ended
|
|||||||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
$ Change
|
|
% Change
|
|||||||
Selling and marketing
|
$
|
109
|
|
|
$
|
113
|
|
|
$
|
(4
|
)
|
|
(3.5
|
)%
|
Research and development
|
96
|
|
|
93
|
|
|
3
|
|
|
3.2
|
%
|
|||
General and administrative
|
75
|
|
|
74
|
|
|
1
|
|
|
1.4
|
%
|
|||
Amortization of intangible assets
|
50
|
|
|
59
|
|
|
(9
|
)
|
|
(15.3
|
)%
|
|||
Acquisition and integration costs
|
27
|
|
|
36
|
|
|
(9
|
)
|
|
(25.0
|
)%
|
|||
Exit and restructuring costs
|
4
|
|
|
5
|
|
|
(1
|
)
|
|
(20.0
|
)%
|
|||
Total operating expenses
|
$
|
361
|
|
|
$
|
380
|
|
|
$
|
(19
|
)
|
|
(5.0
|
)%
|
|
Three Months Ended
|
|||||||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
322
|
|
|
$
|
314
|
|
|
$
|
8
|
|
|
2.5
|
%
|
Gross profit
|
162
|
|
|
165
|
|
|
(3
|
)
|
|
(1.8
|
)%
|
|||
Operating expenses
|
95
|
|
|
94
|
|
|
1
|
|
|
1.1
|
%
|
|||
Operating income
|
$
|
67
|
|
|
$
|
71
|
|
|
(4
|
)
|
|
(5.6
|
)%
|
|
Gross margin
|
50.3
|
%
|
|
52.5
|
%
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
544
|
|
|
$
|
538
|
|
|
$
|
6
|
|
|
1.1
|
%
|
Gross profit
|
240
|
|
|
228
|
|
|
12
|
|
|
5.3
|
%
|
|||
Operating expenses
|
185
|
|
|
186
|
|
|
(1
|
)
|
|
(0.5
|
)%
|
|||
Operating income
|
$
|
55
|
|
|
$
|
42
|
|
|
13
|
|
|
31.0
|
%
|
|
Gross margin
|
44.1
|
%
|
|
42.4
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
$ Change
|
|
% Change
|
|||||||
Operating activities
|
$
|
117
|
|
|
$
|
96
|
|
|
$
|
21
|
|
|
21.9
|
%
|
Investing activities
|
(13
|
)
|
|
(20
|
)
|
|
7
|
|
|
(35.0
|
)%
|
|||
Financing activities
|
(78
|
)
|
|
(77
|
)
|
|
(1
|
)
|
|
1.3
|
%
|
|||
Effect of exchange rates on cash
|
(2
|
)
|
|
3
|
|
|
(5
|
)
|
|
(166.7
|
)%
|
|||
Net increase in cash and cash equivalents
|
$
|
24
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
1,100.0
|
%
|
•
|
The improvement in cash flow from operations was driven by net income of
$8 million
in the current period compared to net loss of
$26 million
in the prior year period. This included significant non-cash drivers of a lower deferred income tax benefit of
$12 million
. Additionally, the Company had improved working capital of
$11 million
during 2017. Working capital improvements consisted primarily of lower income taxes paid, lower accrued liabilities and increased deferred revenue.
|
•
|
The decline in net cash used in investing activities is driven by lower capital expenditures.
|
•
|
Net cash used in financing activities during
2017
consisted primarily of early debt principal repayments of
$80 million
under the Term Loan which is flat to the prior year comparable period.
|
Senior Notes
|
$
|
1,050
|
|
Term Loan
|
1,573
|
|
|
Less: Debt Issuance Costs
|
(20
|
)
|
|
Less: Unamortized Discounts
|
(30
|
)
|
|
Total Long-Term Debt
|
$
|
2,573
|
|
|
Three Months Ended
|
||||||||||||||||
|
April 1, 2017
|
|
April 2, 2016
|
||||||||||||||
|
Zebra
|
|
Enterprise
|
|
Total
|
|
Zebra
|
|
Enterprise
|
|
Total
|
||||||
Customer A
|
6.6
|
%
|
|
13.3
|
%
|
|
19.9
|
%
|
|
6.0
|
%
|
|
13.6
|
%
|
|
19.6
|
%
|
Customer B
|
5.2
|
%
|
|
8.2
|
%
|
|
13.4
|
%
|
|
4.5
|
%
|
|
8.2
|
%
|
|
12.7
|
%
|
Customer C
|
6.6
|
%
|
|
6.3
|
%
|
|
12.9
|
%
|
|
5.8
|
%
|
|
6.6
|
%
|
|
12.4
|
%
|
•
|
Market acceptance of Zebra’s products and solution offerings and competitors’ offerings and the potential effects of technological changes,
|
•
|
The effect of global market conditions, including North America, Latin America, Asia-Pacific, Europe, Middle East, and Africa regions in which we do business,
|
•
|
Our ability to control manufacturing and operating costs,
|
•
|
Risks related to the manufacturing of Zebra’s products and conducting business operations in countries outside the U.S., including the risk of depending on key suppliers who are also in countries outside the U.S.,
|
•
|
Zebra’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions,
|
•
|
The availability of credit and the volatility of capital markets, which may affect our suppliers, customers and ourselves,
|
•
|
Success of integrating acquisitions, including the Enterprise business we acquired in October 2014 from Motorola Solutions, Inc.,
|
•
|
Interest rate and financial market conditions,
|
•
|
Access to cash and cash equivalents held outside the United States,
|
•
|
The effect of natural disasters on our business,
|
•
|
The impact of changes in governmental policies, laws or regulations in countries where we conduct business, including the U.S.,
|
•
|
The impact of foreign exchange rates due to the large percentage of our sales and operations being in countries outside the U.S.,
|
•
|
The outcome of litigation in which Zebra may be involved, particularly litigation or claims related to infringement of third-party intellectual property rights, and
|
•
|
The outcome of any future tax matters or tax law changes.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 6.
|
Exhibits
|
10.1
|
Form of 2017 time-vested stock appreciation rights agreement for employees other than CEO.
|
10.2
|
Form of 2017 time-vested stock appreciation rights agreement for CEO.
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification
|
|
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification
|
|
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
The following financial information from Zebra Technologies Corporation Quarterly Report on Form 10-Q, for the quarter ended April 1, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) the consolidated balance sheets; (ii) the consolidated statements of operations; (iii) the consolidated statements of comprehensive (loss) income; (iv) the consolidated statements of cash flows; and (v) notes to consolidated financial statements.
|
|
|
|
ZEBRA TECHNOLOGIES CORPORATION
|
||
|
|
|
|
Date: May 9, 2017
|
By:
|
|
/s/ Anders Gustafsson
|
|
|
|
Anders Gustafsson
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: May 9, 2017
|
By:
|
|
/s/ Olivier Leonetti
|
|
|
|
Olivier Leonetti
|
|
|
|
Chief Financial Officer
|
1.
|
Grant of Stock Appreciation Right
.
|
(a)
|
Grant
.
Subject to the provisions of this SAR Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date a stock appreciation right (the “
SAR
”) covering
%%TOTAL_SHARES_GRANTED,’999,999,999’%-%
shares
(the “
SAR Shares
”) of the Company’s Class A Common Stock, $0.01 par value per share (the “Stock”), at a price of
%%OPTION_PRICE,’$999,999,999.99’%-
per share (the “
SAR Price
”). The SAR is not issued in tandem with an Option.
This SAR Agreement shall be null and void unless the Participant accepts this SAR Agreement by either (i) electronically accepting this SAR Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this SAR Agreement in the space provided below and returning it to the Company, in each case not later than June 30, 2017.
|
(b)
|
Term of the SAR
.
Unless the SAR terminates earlier pursuant to other provisions of the SAR Agreement, the SAR shall expire at 5:00 p.m., Central Time, on the seventh (7
th
) anniversary of the Grant Date (the “
Expiration Date
”).
|
(c)
|
Nontransferability
.
The SAR shall be nontransferable, except by will or the laws of descent and distribution, or as otherwise permitted under the Plan.
|
2.
|
Vesting of the SAR
.
|
(a)
|
General Vesting Rule
.
Prior to the Expiration Date, the SAR shall become and be exercisable as follows:
|
(b)
|
Additional Vesting Rules
.
Notwithstanding Section 2(a), the SAR shall be subject to the following additional vesting rules in the following circumstances:
|
a.
|
Death or Disability
.
In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to the Participant’s death or Disability, any unvested portion of the SAR as of the effective date of the Participant’s termination of employment shall immediately become fully vested and exercisable as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment and, together with any unexercised vested portion of the SAR, shall remain exercisable until the earlier of:
|
(A)
|
5:00 p.m., Central Time, on the Expiration Date; or
|
(B)
|
5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to the Participant’s death or Disability.
|
b.
|
Retirement
.
In the event the Participant’s employment with the Company and/or any Subsidiary is terminated due to Retirement, any unexercised vested portion of the SAR as of the effective date of the Participant’s termination of employment shall remain exercisable until the earlier of:
|
i.
|
5:00 p.m., Central Time, on the Expiration Date; or
|
ii.
|
5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to Retirement.
|
c.
|
Termination for Cause
.
In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for Cause, any unexercised SAR, whether vested or not, shall expire immediately, be forfeited, and be considered null and void. For purposes of this SAR Agreement, “
Cause
” has the meaning set forth in the employment agreement, if any, between the Company and/or any Subsidiary and the Participant or, if the Participant is not a party to such an agreement, “
Cause
” has the meaning, as determined by the Company in its sole discretion, set forth in the Plan.
|
d.
|
Other Termination of Employment
.
In the event the Participant’s employment with the Company and/or any Subsidiary is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii) or Section 5, the unexercised vested portion of the SAR as of the effective date of the Participant’s termination of employment shall remain exercisable until the earliest of:
|
a.
|
5:00 p.m., Central Time, on the Expiration Date; or
|
b.
|
5:00 p.m., Central Time, on the date that is ninety (90) days after the effective date of the Participant’s involuntary (as to the Participant) termination of employment for reasons other than death, Disability, Retirement, or Cause; or
|
c.
|
5:00 p.m., Central Time, on the date that is thirty (30) days after the effective date of the Participant’s voluntary termination of employment for reasons other than Retirement.
|
4.
|
Compliance with Federal and State Law
.
The Company reserves the right to delay the Participant’s exercise of any portion of the SAR if (a) the Company’s issuance of Stock upon such exercise would violate any applicable federal or state securities laws or any other applicable laws or regulations, or (b) the Company reasonably determines that such payment (or any portion of such payment) would not be deductible under Code Section 162(m). The Participant may not sell or otherwise dispose of any portion of the SAR or any Stock in violation of any applicable law. The Company may postpone issuing and delivering any Stock in payment for the exercise of any portion of the SAR for so long as the Company reasonably determines to be necessary to satisfy the following:
|
(i)
|
its completing or amending any securities registration or qualification of the Stock or it or the Participant satisfying any exemption from registration under any federal, state or other law, rule or regulation;
|
(ii)
|
its receiving proof it considers satisfactory that a person seeking to exercise the SAR after the Participant’s death is entitled to do so; and
|
(iii)
|
the Participant complying with any federal, state or other tax withholding obligations.
|
5.
|
Change in Control
.
Subject to Section 9.8 of the Plan:
|
6.
|
Confidentiality, Non-Solicitation and Non-Compete
.
The Participant agrees to, understands, and acknowledges the following:
|
(a)
|
Confidential Information
.
The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this SAR Agreement, “
Confidential Information
” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation:
|
(i)
|
information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;
|
(ii)
|
inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;
|
(iii)
|
the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of, but not limited, to computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;
|
(iv)
|
the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and
|
(v)
|
other confidential and proprietary information or documents relating to the Company’s or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.
|
(b)
|
Breach or Violation of Section 6(a) ; Non-Solicitation and Non-Compete
.
Notwithstanding any provision of this SAR Agreement, if at any time (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of exercise of all or any portion of the SAR, the Participant directly or indirectly:
|
(i)
|
breaches or violates Section 6(a) of this SAR Agreement; or
|
(ii)
|
employs, recruits or solicits for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or
|
(iii)
|
accepts employment or engages in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or
|
(iv)
|
solicits or encourages any customer or vendor (or potential customer or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a “
potential customer
” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest;
|
(i)
|
Injunctive Action
.
The Participant acknowledges that if he or she violates the terms of this Section 6, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this SAR Agreement (including any provision of Section 6(a) or (b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this SAR Agreement, and the Company and/or Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 6 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Section 6(a) or (b), the Company will have the right to cancel this SAR Agreement.
|
(ii)
|
Attorneys’ Fees; Set-off Right
.
In addition to the rights available to the Company and its Subsidiaries under Section 6(c)(i), if the Participant violates the terms of this Section 6 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 6. By accepting this SAR grant, the Participant hereby consents to a deduction from any amounts the Company or any Subsidiary owes to the Participant from time to time (including amounts owed to the Participant as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to the Participant by the Company or any Subsidiary), unless such amount is subject to Section 409A of the Code, to the extent of any amounts that the Participant owes the Company under this Section 6. In addition to any injunctive relief sought under Section 6(c)(i) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 6(c)(ii), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.
|
(d)
|
Enforceability of Restrictive Covenants
.
The scope and duration of the restrictive covenants contained in this SAR Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.
|
(e)
|
Written Acknowledgement by the Participant
.
The Committee, in its sole discretion, may require the Participant, as a condition to the exercise of this SAR, to acknowledge in writing that he or she has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.
|
7.
|
Miscellaneous Provisions
.
|
(a)
|
No Service or Employment Rights
.
No provision of this SAR Agreement or of the SAR granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.
|
(b)
|
Stockholder Rights
.
Until the SAR shall have been duly exercised and Stock has been officially recorded as issued on the Company’s official stockholder records, no person or entity shall be entitled to vote, receive dividends or be deemed for any purpose the holder of such Stock, and adjustments for dividends or otherwise shall be made only if the record date thereof is subsequent to the date such shares are recorded and after the date of exercise and without duplication of any adjustment.
|
(c)
|
Plan Document Governs
.
The SAR is granted pursuant to the Plan, and the SAR and this SAR Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this SAR Agreement by reference or are expressly cited. Any inconsistency between the SAR Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.
|
(d)
|
Administration
.
This SAR Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this SAR Agreement, all of which shall be binding upon the Participant.
|
(e)
|
No Vested Right in Future Awards
.
The Participant acknowledges and agrees (by accepting or executing this SAR Agreement) that the granting of the SAR under this SAR Agreement is made on a fully discretionary basis by the Company and that this SAR Agreement does not lead to a vested right to further SAR or other awards in the future.
|
(f)
|
Use of Personal Data
.
By accepting or executing this SAR Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position, and details of all past Awards and current Awards outstanding under the Plan (“
Data
”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company or its Subsidiaries may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.
|
(g)
|
Severability
.
If a provision of this SAR Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this SAR Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this SAR Agreement.
|
(h)
|
Waiver; Cumulative Rights
.
The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.
|
(i)
|
Notices
.
Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.
|
(j)
|
Counterparts
.
This SAR Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.
|
(k)
|
Successors and Assigns
.
This SAR Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.
|
(l)
|
Governing Law
.
This SAR Agreement and the SAR granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.
|
(m)
|
Entire Agreement
.
This SAR Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.
|
(n)
|
Amendment
.
Any amendment to this SAR Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.
|
(o)
|
Headings and Construction
.
The headings contained in this SAR Agreement are for reference purposes only and shall not affect the meaning or interpretation of this SAR Agreement. This SAR Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this SAR Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.
|
ZEBRA TECHNOLOGIES CORPORATION
|
|
By:
|
|
Name: Anders Gustafsson
|
|
Title: Chief Executive Officer
|
|
1.
|
Grant of Stock Appreciation Right
.
|
(a)
|
Grant
.
Subject to the provisions of this SAR Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date a stock appreciation right (the “
SAR
”) covering
_______
shares
(the “
SAR Shares
”) of the Company’s Class A Common Stock, $0.01 par value per share (the “
Stock
”), at a price of
$_____ per
share (the “
SAR Price
”). The SAR is not issued in tandem with an Option.
This SAR Agreement shall be null and void unless the Participant accepts this SAR Agreement by either (i) electronically accepting this SAR Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this SAR Agreement in the space provided below and returning it to the Company, in each case not later than June 30, 2017.
|
(b)
|
Term of the SAR
.
Unless the SAR terminates earlier pursuant to other provisions of the SAR Agreement, the SAR shall expire at 5:00 p.m., Central Time, on the seventh (7
th
) anniversary of the Grant Date (the “
Expiration Date
”).
|
(c)
|
Nontransferability
.
The SAR shall be nontransferable, except by will or the laws of descent and distribution, or as otherwise permitted under the Plan.
|
2.
|
Vesting of the SAR
.
|
(a)
|
General Vesting Rule
.
Prior to the Expiration Date, the SAR shall become and be exercisable as follows:
|
(b)
|
Additional Vesting Rules
.
Notwithstanding Section 2(a), the SAR shall be subject to the following additional vesting rules in the following circumstances:
|
ii.
|
5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to the Participant’s death or Disability; or
|
iii.
|
5:00 p.m., Central Time, on the date that is ninety (90) days after the effective date of the Participant’s termination of employment by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause.
|
i.
|
5:00 p.m., Central Time, on the Expiration Date; or
|
ii.
|
5:00 p.m., Central Time, on the date that is one (1) year after the effective date of the Participant’s termination of employment due to Retirement.
|
•
|
age fifty-five (55) with ten (10) or more complete years of service with the Company and/or any Subsidiary; or
|
•
|
age sixty-five (65).
|
a.
|
5:00 p.m., Central Time, on the Expiration Date; or
|
b.
|
5:00 p.m., Central Time, on the date that is thirty (30) days after the effective date of the Participant’s termination of employment.
|
4.
|
Compliance with Federal and State Law
.
The Company reserves the right to delay the Participant’s exercise of any portion of the SAR if (a) the Company’s issuance of Stock upon such exercise would violate any applicable federal or state securities laws or any other applicable laws or regulations, or (b) the Company reasonably determines that such payment (or any portion of such payment would not be deductible under Code Section 162(m). The Participant may not sell or otherwise dispose of any portion of the SAR or any Stock in violation of any applicable law. The Company may postpone issuing and delivering any Stock in payment for the exercise of any portion of the SAR for so long as the Company reasonably determines to be necessary to satisfy the following:
|
5.
|
Change in Control
.
Subject to Section 9.8 of the Plan:
|
6.
|
Confidentiality, Non-Solicitation and Non-Compete
.
The Participant agrees to, understands, and acknowledges the following:
|
(a)
|
Confidential Information
.
The Participant will be furnished, use or otherwise have access to certain Confidential Information of the Company and/or a Subsidiary. For purposes of this SAR Agreement, “
Confidential Information
” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company and/or a Subsidiary that is confidential and proprietary to the Company and/or a Subsidiary, including without limitation:
|
(i)
|
information relating to the Company’s or Subsidiary’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information;
|
(ii)
|
inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company and/or a Subsidiary;
|
(iii)
|
the Company’s or Subsidiary’s proprietary programs, processes or software, consisting of, but not limited, to computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development;
|
(iv)
|
the subject matter of the Company’s or Subsidiary’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and
|
(v)
|
other confidential and proprietary information or documents relating to the Company’s or Subsidiary’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents that the Company and/or a Subsidiary reasonably regards as being confidential.
|
(b)
|
Breach or Violation of Section 6(a) ; Non-Solicitation and Non-Compete
.
Notwithstanding any provision of this SAR Agreement, if at any time (1) during the Participant’s employment with the Company or any Subsidiary or (2) during the one-year period commencing on the effective date of the Participant’s termination of employment or (3) prior to the date that is one year after the date of exercise of all or any portion of the SAR, the Participant directly or indirectly:
|
(i)
|
breaches or violates Section 6(a) of this SAR Agreement; or
|
(ii)
|
employs, recruits or solicits for employment any person who is (or was within the six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or
|
(iii)
|
accepts employment or engages in a competing business that may require contact, solicitation, interference or diverting of any of the Company’s or any Subsidiary’s customers, or that may result in the disclosure, divulging, or other use of Confidential Information or Company Materials acquired during the Participant’s employment with the Company or any Subsidiary; or
|
(iv)
|
solicits or encourages any customer or vendor (or potential customer or vendor of the Company or any Subsidiary with whom the Participant had contact while employed by the Company or any Subsidiary) to terminate or otherwise alter his, her or its relationship with the Company or any Subsidiary. The Participant understands that any person or entity that the Participant contacted during the twelve (12) months prior to the date of the Participant’s termination of employment for the purpose of soliciting sales from such person or entity shall be regarded as a “
potential customer
” of the Company to whom the Company or a Subsidiary has a protectable proprietary interest;
|
(i)
|
Injunctive Action
.
The Participant acknowledges that if he or she violates the terms of this Section 6, the injury that would be suffered by the Company and/or a Subsidiary as a result of a breach of the provisions of this SAR Agreement (including any provision of Section 6(a) or (b)) would be irreparable and that an award of monetary damages to the Company and/or a Subsidiary for such a breach would be an inadequate remedy. Consequently, the Company and/or a Subsidiary will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this SAR Agreement, and the Company and/or Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or Subsidiary’s rights under this Section 6 or any other remedies of the Company or a Subsidiary, if the Participant breaches any of the provisions of Section 6(a) or (b), the Company will have the right to cancel this SAR Agreement.
|
(ii)
|
Attorneys’ Fees; Set-off Right
.
In addition to the rights available to the Company and its Subsidiaries under Section 6(c)(i), if the Participant violates the terms of this Section 6 at any time, the Company shall be entitled to reimbursement from the Participant of any fees and expenses (including attorneys’ fees) incurred by or on behalf of the Company or any Subsidiary in enforcing the Company’s or a Subsidiary’s rights under this Section 6. By accepting this SAR grant, the Participant hereby consents to a deduction from any amounts the Company or any Subsidiary owes to the Participant from time to time (including amounts owed to the Participant as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to the Participant by the Company or any Subsidiary), unless such amount is subject to Section 409A of the Code, to the extent of any amounts that the Participant owes the Company under this Section 6. In addition to any injunctive relief sought under Section 6(c)(i) and whether or not the Company or any Subsidiary elects to make any set-off in whole or in part, if the Company or any Subsidiary does not recover by means of set-off the full amount the Participant owes to the Company or any Subsidiary, calculated as set forth in this Section 6(c)(ii), the Participant agrees to immediately pay the unpaid balance to the Company or any Subsidiary.
|
(d)
|
Enforceability of Restrictive Covenants
.
The scope and duration of the restrictive covenants contained in this SAR Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.
|
(e)
|
Written Acknowledgement by the Participant
.
The Committee, in its sole discretion, may require the Participant, as a condition to the exercise of this SAR, to acknowledge in writing that he or she has not engaged, and is not in the process of engaging, in any of the activities described in this Section 6.
|
7.
|
Miscellaneous Provisions
.
|
(a)
|
No Service or Employment Rights
.
No provision of this SAR Agreement or of the SAR granted hereunder shall give the Participant any right to continue in the service or employ of the Company or any Subsidiary, create any inference as to the length of employment or service of the Participant, affect the right of the Company or any Subsidiary to terminate the employment or service of the Participant, with or without Cause, or give the Participant any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any Subsidiary.
|
(b)
|
Stockholder Rights
.
Until the SAR shall have been duly exercised and Stock has been officially recorded as issued on the Company’s official stockholder records, no person or entity shall be entitled to vote, receive dividends or be deemed for any purpose the holder of such Stock, and adjustments for dividends or otherwise shall be made only if the record date thereof is subsequent to the date such shares are recorded and after the date of exercise and without duplication of any adjustment.
|
(c)
|
Plan Document Governs
.
The SAR is granted pursuant to the Plan, and the SAR and this SAR Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this SAR Agreement by reference or are expressly cited. Any inconsistency between the SAR Agreement and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan.
|
(d)
|
Administration
.
This SAR Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this SAR Agreement, all of which shall be binding upon the Participant.
|
(e)
|
No Vested Right in Future Awards
.
The Participant acknowledges and agrees (by accepting or executing this SAR Agreement) that the granting of the SAR under this SAR Agreement is made on a fully discretionary basis by the Company and that this SAR Agreement does not lead to a vested right to further SAR or other awards in the future.
|
(f)
|
Use of Personal Data
.
By accepting or executing this SAR Agreement, the Participant acknowledges and agrees to the collection, use, processing and transfer of certain personal data, including his or her name, salary, nationality, job title, position, and details of all past Awards and current Awards outstanding under the Plan (“
Data
”), for the purpose of managing and administering the Plan. The Participant is not obliged to consent to such collection, use, processing and transfer of personal data, but a refusal to provide such consent may affect his or her ability to participate in the Plan. The Company or its Subsidiaries may transfer Data among themselves or to third parties as necessary for the purpose of implementation, administration and management of the Plan. These various recipients of Data may be located elsewhere throughout the world. The Participant authorizes these various recipients of Data to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Plan. The Participant may, at any time, review Data with respect to the Participant and require any necessary amendments to such Data. The Participant may withdraw his or her consent to use Data herein by notifying the Company in writing; however, the Participant understands that by withdrawing his or her consent to use Data, the Participant may affect his or her ability to participate in the Plan.
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(g)
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Severability
.
If a provision of this SAR Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not), and that shall not affect the validity or enforceability in that jurisdiction of any other provision of this SAR Agreement; or the validity or enforceability in other jurisdictions of that or any other provision of this SAR Agreement.
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(h)
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Waiver; Cumulative Rights
.
The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.
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(i)
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Notices
.
Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to the Corporate Secretary of the Company, at its then corporate headquarters, and the Participant at the Participant’s address (including any electronic mail address) as shown on the Company’s records, or to such other address as the Participant, by notice to the Company, may designate in writing from time to time. The Participant hereby consents to electronic delivery of any notices that may be made hereunder.
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(j)
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Counterparts
.
This SAR Agreement may be signed in counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.
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(k)
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Successors and Assigns
.
This SAR Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon the Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.
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(l)
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Governing Law
.
This SAR Agreement and the SAR granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to provisions thereof regarding conflict of laws.
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(m)
|
Entire Agreement
.
This SAR Agreement, together with the Plan, constitutes the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.
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(n)
|
Amendment
.
Any amendment to this SAR Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.
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(o)
|
Headings and Construction
.
The headings contained in this SAR Agreement are for reference purposes only and shall not affect the meaning or interpretation of this SAR Agreement. This SAR Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this SAR Agreement shall be administered and construed in a manner consistent with the intent that it be a stock right excluded from the requirements of Code Section 409A.
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ZEBRA TECHNOLOGIES CORPORATION
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By:
_____________________________________
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Name: Michael Terzich
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Title: Senior Vice President, Chief Administrative Officer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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