ZEBRA TECHNOLOGIES CORP (Form: 10-Q, Received: 05/02/2013 12:55:27)

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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 March 30, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

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

incorporation or organization)

(I.R.S. Employer

Identification No.)

475 Half Day Road, Suite 500, Lincolnshire, IL 60069

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (847) 634-6700

Indicate by check mark whether the registrant: (1) 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 (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of April 26, 2013, there were 50,923,113 shares of Class A Common Stock, $.01 par value, outstanding.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

QUARTER ENDED MARCH 30, 2013

INDEX


		PAGE

PART I - FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets as of March 30, 2013 (unaudited) and December 31, 2012	3

	Consolidated Statements of Earnings (unaudited) for the three months ended March 30, 2013 and March 31, 2012	4

	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 30, 2013 and March 31, 2012	5

	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 30, 2013 and March 31, 2012	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 6.	Exhibits	32

SIGNATURES		33

PART I - FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)


	March 30, 2013			December 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	49,592		$	64,740
Investments and marketable securities		364,529			324,140
Accounts receivable, net		169,255			168,732
Inventories, net		116,417			123,357
Deferred income taxes		12,962			13,484
Prepaid expenses and other current assets		17,379			16,410

Total current assets		730,134			710,863

Property and equipment at cost, less accumulated depreciation and amortization		101,054			101,349
Long-term deferred income taxes		2,134			2,602
Goodwill		94,942			94,942
Other intangibles, net		37,288			39,151
Long-term investments and marketable securities		3,443			5,195
Other assets		14,602			13,646

Total assets	$	983,597		$	967,748

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,141		$	23,045
Accrued liabilities		43,932			57,234
Deferred revenue		13,445			13,326
Income taxes payable		2,374			1,609

Total current liabilities		79,892			95,214
Deferred rent		1,245			1,303
Other long-term liabilities		16,096			14,229

Total liabilities		97,233			110,746

Stockholders’ equity:
Preferred Stock		0			0
Class A Common Stock		722			722
Additional paid-in capital		140,736			139,523
Treasury stock		(638,596	)		(641,438	)
Retained earnings		1,392,062			1,368,520
Accumulated other comprehensive loss		(8,560	)		(10,325	)

Total stockholders’ equity		886,364			857,002

Total liabilities and stockholders’ equity	$	983,597		$	967,748

See accompanying notes to consolidated financial statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 30, 2013			March 31, 2012
Net sales:
Net sales of tangible products	$	225,121		$	232,476
Revenue from services and software		11,816			11,399

Total net sales		236,937			243,875


Cost of sales:
Cost of sales of tangible products		117,111			119,033
Cost of services and software		6,761			4,959

Total cost of sales		123,872			123,992


Gross profit		113,065			119,883


Operating expenses:
Selling and marketing		33,515			32,114
Research and development		21,858			20,416
General and administrative		25,276			24,320
Amortization of intangible assets		1,863			770
Acquisition costs		482			254
Exit and restructuring costs		1,895			0

Total operating expenses		84,889			77,874


Operating income		28,176			42,009


Other income (expense):
Investment income		677			592
Foreign exchange loss		(98	)		(342	)
Other, net		9			(364	)

Total other income (expense)		588			(114	)


Income before income taxes		28,764			41,895
Income taxes		5,222			11,731

Net income	$	23,542		$	30,164


Basic earnings per share	$	0.46		$	0.58
Diluted earnings per share	$	0.46		$	0.58

Basic weighted average shares outstanding		50,980			51,998
Diluted weighted average and equivalent shares outstanding		51,366			52,301

See accompanying notes to consolidated financial statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)


	Three Months Ended
	March 30, 2013			March 31, 2012
Net income	$	23,542		$	30,164
Other comprehensive income (loss):
Unrealized gains (losses) on hedging transactions, net of income taxes		1,743			(4,646	)
Unrealized holding gains (losses) on investments, net of income taxes		(72	)		570
Foreign currency translation adjustment		94			83

Comprehensive income	$	25,307		$	26,171

See accompanying notes to consolidated financial statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Three Months Ended
	March 30, 2013			March 31, 2012
Cash flows from operating activities:
Net income	$	23,542		$	30,164
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		7,372			5,959
Share-based compensation		2,146			3,800
Excess tax benefit from share-based compensation		(358	)		(66	)
Loss on sale of property and equipment		136			83
Deferred income taxes		990			(391	)
Changes in assets and liabilities:
Accounts receivable, net		(516	)		(1,862	)
Inventories, net		6,943			7,169
Other assets		(137	)		9,395
Accounts payable		(7,119	)		(3,378	)
Accrued liabilities		(12,787	)		(16,881	)
Deferred revenue		1,618			1,151
Income taxes		649			6,135
Other operating activities		1,685			(4,725	)

Net cash provided by operating activities		24,164			36,553


Cash flows from investing activities:
Purchases of property and equipment		(1,952	)		(7,654	)
Proceeds from the sale of business		0			13,790
Acquisition of intangible assets		(500	)		0
Acquisition of long-term equity investment		(604	)		0
Purchases of investments and marketable securities		(106,947	)		(132,390	)
Maturities of investments and marketable securities		3,144			81,189
Proceeds from sales of investments and marketable securities		65,094			21,748

Net cash used in investing activities		(41,765	)		(23,317	)


Cash flows from financing activities:
Purchase of treasury stock		(3,888	)		(9,775	)
Proceeds from exercise of stock options and stock purchase plan purchases		5,913			1,998
Excess tax benefit from share-based compensation		358			66

Net cash provided by (used in) financing activities		2,383			(7,711	)

Effect of exchange rate changes on cash		70			0


Net increase (decrease) in cash and cash equivalents		(15,148	)		5,525
Cash and cash equivalents at beginning of period		64,740			36,418

Cash and cash equivalents at end of period	$	49,592		$	41,943


Supplemental disclosures of cash flow information:
Income taxes paid, net	$	2,271		$	7,956

See accompanying notes to consolidated financial statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

Management prepared these unaudited interim consolidated financial statements for Zebra Technologies Corporation and subsidiaries (“Zebra”) according to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. These financial statements do not include all of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in Zebra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

The consolidated balance sheet as of December 31, 2012 included in this Form 10-Q is taken from the audited consolidated balance sheet in our Form 10-K. These interim financial statements include all adjustments (of a normal, recurring nature) necessary to present fairly Zebra’s consolidated financial position as of March 30, 2013, the consolidated statement of earnings for the three months ended March 30, 2013 and March 31, 2012, consolidated statement of comprehensive income for the three months ended March 30, 2013 and March 31, 2012, and the consolidated statement of cash flows for the three months ended March 30, 2013 and March 31, 2012. These results, however, are not necessarily indicative of results for the full year.

Note 2 – Fair Value Measurements

Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Zebra uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (i.e. U.S. Treasuries and money market funds).

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in the assessment of fair value. Included in our investment portfolio at March 30, 2013, is an auction rate security which is classified as available for sale and is reflected at fair value. Due to events in credit markets, however, the auction event for the instrument held by Zebra is failed. Therefore, the fair value of this security is estimated utilizing broker quotations, discounted cash flow analysis or other types of valuation adjustment methodologies at March 30, 2013. These analyses consider, among other items, the collateral underlying the security instruments, the creditworthiness of the counterparty, the timing of expected future cash flows, estimates of the next time the security is expected to have a successful auction, and Zebra’s intent and ability to hold such securities until credit markets improve. The security was also compared, when possible, to other securities with similar characteristics.

The decline in the market value of our auction rate security discussed above is considered temporary and has been recorded in accumulated other comprehensive income loss on Zebra’s balance sheet. Since Zebra has the intent and ability to hold this auction rate security until it is sold at auction, redeemed at carrying value or reaches maturity, we have classified it as a long-term investment on the balance sheet.

Financial assets and liabilities carried at fair value as of March 30, 2013, are classified below (in thousands):


	Level 1		Level 2		Level 3		Total
Assets:
U.S. government and agency securities	$	91,228	$	13,634	$	0	$	104,862
Obligations of government-sponsored enterprises (1)		0		11,046		0		11,046
State and municipal bonds		0		111,559		0		111,559
Corporate securities		0		137,881		2,588		140,469
Other investments		0		36		0		36

Investments subtotal		91,228		274,156		2,588		367,972
Forward contracts (2)		1,575		1,003		0		2,578
Money market investments related to the deferred compensation plan		3,917		0		0		3,917

Total assets at fair value	$	96,720	$	275,159	$	2,588	$	374,467


Liabilities:
Liabilities related to the deferred compensation plan	$	3,917	$	0	$	0	$	3,917

Total liabilities at fair value	$	3,917	$	0	$	0	$	3,917

Financial assets and liabilities carried at fair value as of December 31, 2012, are classified below (in thousands):


	Level 1		Level 2		Level 3		Total
Assets:
U.S. government and agency securities	$	83,532	$	13,455	$	0	$	96,987
Obligations of government-sponsored enterprises (1)		0		4,840		0		4,840
State and municipal bonds		0		96,516		0		96,516
Corporate securities		0		128,368		2,588		130,956
Other investments		0		36		0		36

Investments subtotal		83,532		243,215		2,588		329,335
Money market investments related to the deferred compensation plan		3,553		0		0		3,553

Total assets at fair value	$	87,085	$	243,215	$	2,588	$	332,888


Liabilities:
Forward contracts (2)	$	1,174	$	871	$	0	$	2,045
Liabilities related to the deferred compensation plan		3,553		0		0		3,553

Total liabilities at fair value	$	4,727	$	871	$	0	$	5,598

1)	Includes investments in notes issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Farm Credit Banks and the Federal Home Loan Bank.

2)	The fair value of forward contracts are calculated as follows:

Fair value of a collar or put option contract associated with forecasted sales hedges are calculated using bid and ask rates for similar contracts.

Fair value of regular forward contracts associated with forecasted sales hedges are calculated using the period-end exchange rate adjusted for current forward points.

Fair value of balance sheet hedges are calculated at the period end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period end. If this is the case, the fair value is calculated at the rate at which the hedge is being settled.

The following table presents Zebra’s activity for assets measured at fair value on a recurring basis using significant unobservable inputs, Level 3, for the following periods (in thousands):


	Three Months Ended
	March 30, 2013		March 31, 2012
Balance at beginning of the year	$	2,588	$	2,588
Transfers to Level 3		0		0
Total losses (realized or unrealized):
Included in earnings		0		0
Included in other comprehensive income (loss)		0		0
Purchases and settlements (net)		0		0

Balance at end of period	$	2,588	$	2,588

Total gains and (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets still held at end of period	$	0	$	0

The following is a summary of short-term and long-term investments (in thousands):


	As of March 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government and agency securities	$	104,784	$	80	$	(2	)	$	104,862
Obligations of government-sponsored enterprises		11,035		11		0			11,046
State and municipal bonds		111,383		199		(23	)		111,559
Corporate securities		140,302		643		(476	)		140,469
Other investments		36		0		0			36

Total investments	$	367,540	$	933	$	(501	)	$	367,972


	As of December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government and agency securities	$	96,913	$	77	$	(3	)	$	96,987
Obligations of government-sponsored enterprises		4,830		10		0			4,840
State and municipal bonds		96,383		161		(28	)		96,516
Corporate securities		130,634		790		(468	)		130,956
Other investments		36		0		0			36

Total investments	$	328,796	$	1,038	$	(499	)	$	329,335

The maturity dates of investments are as follows (in thousands):


	As of March 30, 2013
	Amortized Cost		Estimated Fair Value
Less than 1 year	$	168,127	$	168,361
1 to 5 years		195,556		196,168
6 to 10 years		3,857		3,443
Thereafter		0		0

Total	$	367,540	$	367,972

The carrying value for Zebra’s financial instruments classified as current assets (other than short-term investments) and current liabilities approximate fair value due to their short maturities.

Note 3 – Investments and Marketable Securities

Investments in marketable debt securities are classified based on intent and ability to sell investment securities. Zebra’s available-for-sale securities are used to fund further acquisitions and other operating needs and therefore may be sold prior to maturity. Investments in marketable debt securities for which Zebra intends to sell within the next year are classified as current and those that we intend to hold in excess of one-year are classified as non-current.

Changes in the market value of available-for-sale securities are reflected in the accumulated other comprehensive income caption of stockholders’ equity in the balance sheet, until we dispose of the securities. Once these securities are disposed of, either by sale or maturity, the accumulated changes in market value are transferred to investment income. On the statement of cash flows, changes in the balances of available-for-sale securities are shown as purchases, sales and maturities of investments and marketable securities under investing activities.

Changes in market value of trading securities would be recorded in investment income as they occur, and the related statement of cash flows would include changes in the balances of trading securities as operating cash flows.

Included in Zebra’s cash and investments and marketable securities are amounts held by foreign subsidiaries which are generally invested in U.S. dollar-denominated holdings. Zebra had foreign cash and investments of $195,895,000 as of March 30, 2013, and $173,483,000 as of December 31, 2012. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation upon repatriation, however, Zebra does not see a need to repatriate these funds.

Note 4 – Accounts Receivable

The components of accounts receivable are as follows (in thousands):


	As of
	March 30, 2013			December 31, 2012
Accounts receivable, gross	$	170,050		$	169,401
Accounts receivable reserves		(795	)		(669	)

Accounts receivable, net	$	169,255		$	168,732

Note 5 – Inventories

The components of inventories are as follows (in thousands):


	As of
	March 30, 2013			December 31, 2012
Raw material	$	30,972		$	31,350
Work in process		718			921
Deferred costs of long-term contracts		631			604
Finished goods		97,915			104,137

Inventories, gross		130,236			137,012
Inventory reserves		(13,819	)		(13,655	)

Inventories, net	$	116,417		$	123,357

Note 6 – Goodwill and Other Intangible Assets

Intangible assets are as follows (in thousands):


	As of March 30, 2013
	Gross Amount		Accumulated Amortization			Net Amount
Current technology	$	18,978	$	(12,809	)	$	6,169
Patent and patent rights		29,569		(15,460	)		14,109
Customer relationships		20,493		(3,483	)		17,010

Other intangibles, net	$	69,040	$	(31,752	)	$	37,288


Amortization expense for the three months ended March 30, 2013			$	1,863


	As of December 31, 2012
	Gross Amount		Accumulated Amortization			Net Amount
Current technology	$	18,978	$	(12,391	)	$	6,587
Patent and patent rights		29,569		(14,618	)		14,951
Customer relationships		20,493		(2,880	)		17,613

Other intangibles, net	$	69,040	$	(29,889	)	$	39,151

Amortization expense for the three months ended March 31, 2012			$	770

Zebra has $94,942,000 of goodwill recorded as of March 31, 2013 and December 31, 2012. We test goodwill for impairment on an annual basis or more frequently if we believe indicators of impairment exist.

Factors considered that may trigger an impairment review consist of:

•

Significant underperformance relative to historical or projected future operating results,

•

Significant changes in the manner of use of the acquired assets or the strategy for the overall business,

•

Significant negative industry or economic trends,

•

Significant decline in Zebra’s stock price for a sustained period, and

•

Significant decline in market capitalization relative to net book value.

If Zebra believes that one or more of the above indicators of impairment have occurred, we perform an impairment test. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using three valuation methods: Income Approach – Discounted Cash Flow Analysis, Market Approach – Guideline Public Company Method, and Market Approach – Comparative Transactions Method. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill.

Note 7 – Costs Associated with Exit and Restructuring Activities

In December 2012, Zebra began a plan, “2012 restructuring plan”, to restructure its Location Solutions business management structure and announced a project to further optimize our manufacturing operations costs, which includes the consolidation and relocation of support functions. The costs below incurred for the year ended December 31, 2012 represent the costs related to the restructuring of Location Solutions business management structure. Costs incurred for 2013 and costs expected to be incurred relate to the following: restructuring of Zebra’s manufacturing operations, relocation of a significant portion of Zebra’s supply chain operations from the U.S. to China and consolidating activities domestically, restructuring of our sales operations and corporate restructuring.

As of March 30, 2013, we have incurred the following exit and restructuring costs related to the location solutions business management structure and manufacturing operations relocation and restructuring (in thousands):


Type of Cost	Cost incurred through December 31, 2012		Costs incurred for the three months ended March 30, 2013		Total costs incurred as of March 30, 2013		Additional costs expected to be incurred		Total costs expected to be incurred
Severance, stay bonuses, and other employee-related expenses	$	960	$	1,862	$	2,822	$	2,728	$	5,550
Professional services		0		12		12		298		310
Relocation and transition costs		0		21		21		459		480

Total	$	960	$	1,895	$	2,855	$	3,485	$	6,340

Liabilities and expenses below relate to the 2011 and 2012 exit and restructuring plans (in thousands):


	Three Months Ended
	March 30, 2013			March 31, 2012
Balance at beginning of period	$	967		$	1,048
Charged to earnings		1,895			0
Cash paid		(2,161	)		(337	)

Balance at the end of period	$	701		$	711

Liabilities related to exit and restructuring activities are included in the accrued liabilities line item on the balance sheet. All exit costs are included in operating expenses under the line item exit and restructuring costs.

Note 8 – Derivative Instruments

Portions of our operations are subject to fluctuations in currency values. We manage these risks using derivative financial instruments. We conduct business on a multinational basis in a wide variety of foreign currencies. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade. Our objective is to preserve the economic value of non-functional currency denominated cash flows. We attempt to hedge transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign exchange forward and option contracts with third parties.

Credit and market risk

Financial instruments, including derivatives, expose us to counter party credit risk for nonperformance and to market risk related to interest and currency exchange rates. We manage our exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties, and procedures to monitor concentrations of credit risk. Our counterparties in derivative transactions are commercial banks with significant experience using derivative instruments. We monitor the impact of market risk on the fair value and cash flows of our derivative and other financial instruments considering reasonably possible changes in interest rates and currency exchange rates and restrict the use of derivative financial instruments to hedging activities. We continually monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. The terms and conditions of our credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

Fair Value of Derivative Instruments

Zebra has determined that derivative instruments for hedges that have traded but have not settled are considered Level 1 in the fair value hierarchy, and hedges that have not traded are considered Level 2 in the fair value hierarchy. Derivative instruments are used to manage risk and are not used for trading or other speculative purposes, nor do we use leveraged derivative financial instruments. Our foreign currency exchange contracts are valued using broker quotations or market transactions, in either the listed or over-the-counter markets.

Hedging of Net Assets

We use forward contracts to manage exposure related to our pound and euro denominated net assets. Forward contracts typically mature within three months after execution of the contracts. We record gains and losses on these contracts and options in income each quarter along with the transaction gains and losses related to our net asset positions, which would ordinarily offset each other.

Summary financial information related to these activities included in our consolidated statement of earnings as other income (expense) is as follows (in thousands):


	Three Months Ended
	March 30, 2013			March 31, 2012
Change in gains (losses) from foreign exchange derivatives	$	1,581		$	(2,035	)
Gain (loss) on net foreign currency assets		(1,679	)		1,693

Foreign exchange loss	$	(98	)	$	(342	)


	As of
	March 30, 2013		December 31, 2012
Notional balance of outstanding contracts:
Pound/US dollar	£	3,631	£	3,810
Euro/US dollar	€	30,729	€	37,598
Net fair value of outstanding contracts	$	24	$	18

Hedging of Anticipated Sales

We can manage the exchange rate risk of anticipated euro-denominated sales using purchased options, forward contracts, and participating forwards. We designate these contracts as cash flow hedges which mature within twelve months after the execution of the contracts. Gains and losses on these contracts are deferred in other comprehensive income until the contracts are settled and the hedged sales are realized. The deferred gains or losses will then be reported as an increase or decrease to sales.

Summary financial information related to the cash flow hedges is as follows (in thousands):


	As of
	March 30, 2013		March 31, 2012
Unrealized gains (losses) on hedging transactions:
Gross	$	2,270	$	(6,538	)
Income tax expense (benefit)		527		(1,892	)

Net	$	1,743	$	(4,646	)

Summary financial information related to the cash flow hedges of future revenues follows (in thousands, except percentages):


	As of
	March 30, 2013			December 31, 2012
Notional balance of outstanding contracts versus the dollar	€	84,845		€	88,680
Hedge effectiveness		100	%		100	%


	Three Months Ended
	March 30, 2013			March 31, 2012
Net gains and (losses) included in revenue	$	(1,046	)	$	1,157

Forward contracts

We record our forward contracts at fair value on our consolidated balance sheet as either long-term other assets or long-term other liabilities, depending upon the fair value calculation as detailed in Note 2 of Zebra’s financial statements. The amounts recorded on our consolidated balance sheet are as follows (in thousands):


	As of
	March 30, 2013		December 31, 2012
Assets:
Prepaid expenses and other current assets	$	2,578	$	0

Total	$	2,578	$	0

Liabilities:
Accrued liabilities	$	0	$	2,045

Total	$	0	$	2,045

Note 9 – Warranty

In general, Zebra provides warranty coverage of one year on printers against defects in material and workmanship. Printheads are warranted for nine months and batteries are warranted for one year. Battery based products, such as location tags, are covered by a 30-day warranty. A provision for warranty expense is recorded at the time of sale and adjusted quarterly based on historical warranty experience.

The following table is a summary of Zebra’s accrued warranty obligation (in thousands):


	Three Months Ended
	March 30, 2013			March 31, 2012
Balance at the beginning of the year	$	4,252		$	4,613
Warranty expense		1,837			1,068
Warranty payments		(1,707	)		(1,792	)

Balance at the end of the period	$	4,382		$	3,889

Note 10 – Contingencies

We are subject to a variety of investigations, claims, suits and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort and breach of contract matters. We currently believe that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on our business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and management’s view of these matters and their potential effects may change in the future.

Note 11 – Stockholders’ Equity

Share count and par value data related to stockholders’ equity are as follows:


	As of
	March 30, 2013		December 31, 2012
Preferred Stock
Par value per share	$	0.01	$	0.01
Shares authorized		10,000,000		10,000,000
Shares outstanding		0		0
Common Stock - Class A
Par value per share	$	0.01	$	0.01
Shares authorized		150,000,000		150,000,000
Shares issued		72,151,857		72,151,857
Shares outstanding		51,017,867		50,908,267
Treasury stock
Shares held		21,133,990		21,243,590

During the three-month period ended March 30, 2013, Zebra purchased 87,254 shares of its common stock for $3,888,000 under a board authorized share repurchase plan, compared with purchases of 264,567 shares of common stock for $9,775,000 for the three-month period ended March 31, 2012.

A roll forward of Class A common shares outstanding is as follows:


	Three Months Ended
	March 30, 2013			March 31, 2012
Balance at the beginning of the year		50,908,267			52,095,166
Repurchases		(87,254	)		(264,567	)
Stock option and ESPP issuances		199,715			76,063
Restricted share issuances		3,698			3,635
Restricted share forfeitures		(708	)		(1,923	)
Shares withheld for tax obligations		(5,851	)		0

Balance at the end of the period		51,017,867			51,908,374

Note 12 – Earnings Per Share

Earnings per share were computed as follows (in thousands, except per share amounts):


	Three Months Ended
	March 30, 2013		March 31, 2012
Weighted average shares:
Weighted average common shares outstanding		50,980		51,998
Effect of dilutive securities outstanding		386		303

Diluted weighted average shares outstanding		51,366		52,301


Basic per share amounts:
Net income	$	23,542	$	30,164
Weighted average common shares outstanding		50,980		51,998
Per share amount	$	0.46	$	0.58

Diluted per share amounts:
Net income	$	23,542	$	30,164
Diluted weighted average shares outstanding		51,366		52,301
Per share amount	$	0.46	$	0.58

Potentially dilutive securities that were excluded from the earnings per share calculation consist of stock options and stock appreciation rights (SARs) with an exercise price greater than the average market closing price of the Class A common stock. These excluded options and SARs were as follows:


	Three Months Ended
	March 30, 2013		March 31, 2012
Potentially dilutive shares		601,000		1,386,000

Note 13 – Share-Based Compensation

Zebra has a share-based compensation plan and a stock purchase plan available for future grants. Zebra recognizes compensation costs using the straight-line method over the vesting period of up to 5 years.

The compensation expense and the related tax benefit for share-based payments were included in the Consolidated Statement of Earnings as follows (in thousands):


	Three Months Ended
	March 30, 2013		March 31, 2012
Cost of sales	$	184	$	235
Selling and marketing		465		361
Research and development		325		388
General and administrative		1,172		2,816

Total compensation	$	2,146	$	3,800

Income tax benefit	$	730	$	1,021

Cash flows resulting from the tax benefits from tax deductions in excess of the compensation cost recognized (excess tax benefits) are classified as financing cash flows in the statement of cash flows. The tax benefits classified as financing cash flows for the three months ended March 30, 2013 was $358,000 and for the three months ended March 31, 2012 was $66,000.

The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of Zebra stock prices over our entire stock history. Stock option grants in the table below include both stock options, all of which were non-qualified, and stock appreciation rights (SAR) that will be settled in Zebra stock. Restricted stock grants are valued at the market closing price on the date of the grant. The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value of the grants based on those assumptions:


	Three Months Ended
	March 30, 2013			March 31, 2012
Expected dividend yield		0	%		0	%
Forfeiture rate		10.21	%		11.50	%
Volatility		35.90	%		35.33	%
Risk free interest rate		0.94	%		2.01	%
Range of interest rates		0.07% - 1.95	%		0.01% - 3.18	%
Expected weighted-average life		5.48 years			5.42 years
Fair value of stock appreciation rights (SARs) granted	$	82,910		$	0
Weighted-average grant date fair value of SARs granted	$	15.08		$	0

Stock option activity was as follows:


	Three Months Ended March 30, 2013
Options	Shares			Weighted-Average Exercise Price
Outstanding at beginning of year		1,531,844		$	41.69
Granted		0			0.00
Exercised		(162,085	)		36.76
Forfeited		0			0.00
Expired		0			0.00

Outstanding at end of period		1,369,759		$	42.27

Exercisable at end of period		1,366,354		$	42.33

Intrinsic value of exercised options	$	1,203,000

The following table summarizes information about stock options outstanding at March 30, 2013:


	Outstanding		Exercisable
Aggregate intrinsic value	$	4,324,000	$	4,240,000
Weighted-average remaining contractual term		3.1 years		3.1 years

SAR activity was as follows:


	Three Months Ended March 30, 2013
SARs	Shares			Weighted-Average Exercise Price
Outstanding at beginning of year		1,535,804		$	31.66
Granted		5,498			44.95
Exercised		(69,878	)		26.18
Forfeited		(33,268	)		35.25

Outstanding at end of period		1,438,156		$	31.89

Exercisable at end of period		448,788		$	26.61

Intrinsic value of exercised SARs	$	1,240,000

The terms of the SARs are established under either the 2006 Incentive Compensation Plan or the 2011 Long-term Incentive Plan (the “Plans”) and the applicable SAR agreement. Once vested, a SAR entitles the holder to receive a payment equal to the difference between the per-share grant price of the SAR and the fair market value of a share of Zebra stock on the date the SAR is exercised, multiplied by the number of SARs exercised. Exercised SARs are settled in whole shares of Zebra stock, and any fraction of a share is settled in cash. The SARs granted typically vest annually in four equal amounts on each of the first four anniversaries of the grant date, with some SARs vesting over a period of five years. All SARs expire 10 years after the grant date.

The following table summarizes information about SARs outstanding at March 30, 2013:


	Outstanding		Exercisable
Aggregate intrinsic value	$	17,139,000	$	7,714,000
Weighted-average remaining contractual term		7.6 years		6.9 years

Restricted stock award activity granted under the Plans, are as follows:


	Three Months Ended March 30, 2013
Restricted Stock Awards	Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		444,362		$	35.43
Granted		3,459			45.45
Released		(16,093	)		34.34
Forfeited		(708	)		37.83

Outstanding at end of period		431,020		$	35.54

The terms of Zebra’s time vested restricted stock grants are defined in the Plans noted above. Time vested restricted stock grants consist of restricted stock awards (RSA’s) and performance share awards (PSA’s). Zebra’s restricted stock awards are expensed over the vesting period of the related award, typically three to five years. Compensation cost is calculated as the market date fair value on the grant date multiplied by the number of shares granted.

Performance share award activity granted under the Plans, are as follows:


	Three Months Ended March 30, 2013
Performance Share Awards	Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		265,829		$	33.55
Granted		1,669			44.95
Released		(848	)		41.57
Forfeited		0			0.00

Outstanding at end of period		266,650		$	33.60


	As of March 30, 2013
Awards granted under Zebra’s equity based compensation plans:
Unearned compensation costs related to awards granted	$	14,556,000
Period expected to be recognized over		2.1 years

The fair value of the purchase rights of all Zebra employees issued under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. Expected lives of three months to one year have been used along with these assumptions.


	Three Months Ended
	March 30, 2013			March 31, 2012
Fair market value	$	39.31		$	35.78
Option price	$	37.34		$	33.99
Expected dividend yield		0	%		0	%
Expected volatility		17	%		20	%
Risk free interest rate		0.05	%		0.02	%

Note 14 – Income Taxes

Zebra has identified, evaluated, and measured the amount of income tax benefits to be recognized for all of our income tax positions. Included in deferred tax assets are amounts related to federal and state net operating losses that resulted from our acquisition of WhereNet Corp in 2007. We intend to utilize these net operating loss carryforwards to offset future income taxes.

Zebra earns a significant amount of our operating income outside of the U.S., which is deemed to be permanently reinvested in foreign jurisdictions. Zebra does not intend to repatriate funds, however, should Zebra require more capital in the U.S. than is generated by our operations locally, Zebra could elect to repatriate funds held in foreign jurisdictions or raise capital in the U.S. through debt or equity issuances. Repatriation would result in higher effective tax rates. Borrowing in the U.S. would result in increased interest expense.

An audit of U.S. federal tax returns for years 2008 through 2010 was completed in 2012. The tax years 2009 through 2011 remain open to examination by multiple state taxing jurisdictions. Tax authorities in the United Kingdom have completed income tax audits for tax years through 2011.

Zebra’s continuing practice is to recognize interest and/or penalties related to income tax matters as part of income tax expense. For the three months ended March 30, 2013 and March 31, 2012, we did not accrue any interest or penalties into income tax expense.


	Three Months Ended
	March 30, 2013			March 31, 2012
Effective tax rate		18.2	%		28.0	%

The 2013 effective rate reflects higher profits in lower rate international jurisdictions, a rate decrease related to the 2012 second quarter implementation of a new structure for Zebra’s international subsidiaries, and reinstatement of the US R&D tax credit during the quarter retroactive to January 2012 which resulted in a one-time credit of approximately $400,000 or a reduction to the effective tax rate of 1.3%.

Note 15 – Other Comprehensive Income

Stockholders’ equity includes certain items classified as accumulated other comprehensive income (AOCI), including:

•

Unrealized gains (losses) on hedging transactions relate to derivative instruments used to hedge the currency exchange rates for forecasted euro sales. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transaction occurs. See Note 8 for more details.

•

Unrealized gains (losses) on investments are deferred from income statement recognition until the gains or losses are realized.

•

Foreign currency translation adjustment relates to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive income.

The components of other comprehensive income are as follows (in thousands):


	As of December 31, 2012			Gain (Loss) recognized in OCI			Gain (Loss) reclassified from AOCI to income			Subtotal			As of March 30, 2013
Unrealized gains (losses) on hedging transactions:
Gross	$	(2,581	)	$	3,292		$	(1,022	) (1)	$	2,270		$	(311	)
Income tax (benefit)		(599	)		782			(255	)		527			(72	)

Net		(1,982	)		2,510			(767	)		1,743			(239	)

Unrealized gains (losses) on investments:
Gross		540			(287	)		179	(2)		(108	)		432
Income tax (benefit)		162			(94	)		58			(36	)		126

Net		378			(193	)		121			(72	)		306

Foreign currency translation adjustments		(8,721	)		94			0	(3)		94			(8,627	)

Total accumulated other comprehensive loss	$	(10,325	)	$	2,411		$	(646	)	$	1,765		$	(8,560	)


	As of December 31, 2011			Gain (Loss) recognized in OCI			Gain (Loss) reclassified from AOCI to income			Subtotal			As of March 30, 2012
Unrealized gains (losses) on hedging transactions:
Gross	$	7,355		$	(7,695	)	$	1,157	(1)	$	(6,538	)	$	817
Income tax (benefit)		2,096			(2,181	)		289			(1,892	)		204

Net		5,259			(5,514	)		868			(4,646	)		613

Unrealized gains (losses) on investments:
Gross		(797	)		884			(16	) (2)		868			71
Income tax (benefit)		(288	)		299			(1	)		298			10

Net		(509	)		585			(15	)		570			61

Foreign currency translation adjustments		(8,963	)		83			0	(3)		83			(8,880	)

Total accumulated other comprehensive loss	$	(4,213	)	$	(4,846	)	$	853		$	(3,993	)	$	(8,206	)

(1)	Transfer of unrealized gains and (losses) from AOCI to income on hedging transactions are included in net sales of tangible products.

(2)	Transfer of unrealized gains and (losses) from AOCI to income on investments are included in investment income.

(3)	Transfer of foreign currency translation gains and (losses) from AOCI to income, are included in foreign exchange.

Note 16 – New Accounting Pronouncements

In July 2012, the FASB issued update 2012-03, ASC 350, Intangibles Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment . This updated guidance provides entities with the option to make qualitative assessments about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it should perform a quantitative impairment test. This standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this standard did not have any effect upon our consolidated financial statements.

In February 2013, the FASB issued update 2013-02, ASC 220, Comprehensive Income: Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This updated guidance sets requirements for presentation for significant items reclassified to net income in their entirety during the period and for items not reclassified to net income in their entirety during period. This standard is effective for annual and interim periods beginning after December 15, 2012. The adoption of this standard includes additional disclosures in the notes to the consolidated financial statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations: First Quarter of 2013 versus First Quarter of 2012

Consolidated Results of Operations

(Amounts in thousands, except percentages):


	Three Months Ended
	March 30, 2013		March 31, 2012			Percent Change			Percent of Net Sales - 2013		Percent of Net Sales - 2012
Net Sales
Net sales of tangible products	$	225,121	$	232,476			(3.2	)		95.0		95.3
Revenue from services & software		11,816		11,399			3.7			5.0		4.7

Total net sales		236,937		243,875			(2.8	)		100.0		100.0
Cost of Sales
Cost of sales of tangible products		117,111		119,033			(1.6	)		49.4		48.8
Cost of services & software		6,761		4,959			36.3			2.9		2.0

Total cost of sales		123,872		123,992			(0.1	)		52.3		50.8

Gross profit		113,065		119,883			(5.7	)		47.7		49.2
Operating expenses		84,889		77,874			9.0			35.8		31.9

Operating income		28,176		42,009			(32.9	)		11.9		17.3
Other income (expense)		588		(114	)		N/M			0.2		0.0

Income before income taxes		28,764		41,895			(31.3	)		12.1		17.3
Income taxes		5,222		11,731			(55.5	)		2.2		4.9

Net income	$	23,542	$	30,164			(22.0	)		9.9		12.4

Diluted earnings per share	$	0.46	$	0.58			(20.7	)

Consolidated Results of Operations – First quarter

Sales

Net sales for the first quarter of 2013, compared with the corresponding 2012 quarter, declined 2.8% primarily due to a struggling European economy. Zebra experienced reduced sales to its significant customers in the first quarter of 2013 versus the first quarter of 2012. The decrease in sales was attributable to 8.0% decline in hardware sales offset by a 14.3% growth in supplies including labels, card printer supplies and aftermarket parts. Printer unit volume increased 0.7% from the first quarter of 2012 primarily due to volume increases in desktop, kiosk, and card printers.

Sales by product category were as follows (amounts in thousands, except percentages):


	Three Months Ended
Product Category	March 30, 2013		March 31, 2012		Percent Change			Percent of Net Sales - 2013		Percent of Net Sales - 2012
Hardware	$	166,692	$	181,196		(8.0	)		70.3		74.3
Supplies		57,123		49,962		14.3			24.1		20.5
Service and software		11,816		11,399		3.7			5.0		4.7

Subtotal products		235,631		242,557		(2.9	)		99.4		99.5
Shipping and handling		1,306		1,318		(0.9	)		0.6		0.5

Total net sales	$	236,937	$	243,875		(2.8	)		100.0		100.0

Sales declines in Europe, Middle East and Africa (EMEA) and Asia Pacific were primarily from challenged business environments which were slightly offset by increased sales in North America and Latin America. Sales increased in Latin America in part from expanded geographic coverage, with notable increases in desktop, kiosk, and mobile printers. Sales in North America increased due to increased sales in supplies, desktop and kiosk printers.

Sales to customers by geographic region were as follows (in thousands, except percentages):


	Three Months Ended
Geographic Region	March 30, 2013		March 31, 2012		Percent Change			Percent of Net Sales - 2013		Percent of Net Sales - 2012
Europe, Middle East and Africa	$	77,673	$	86,121		(9.8	)		32.8		35.3
Latin America		23,131		22,287		3.8			9.8		9.1
Asia-Pacific		32,909		33,148		(0.7	)		13.9		13.6

Total International		133,713		141,556		(5.5	)		56.5		58.0
North America		103,224		102,319		0.9			43.5		42.0

Total net sales	$	236,937	$	243,875		(2.8	)		100.0		100.0

Gross Profit

Gross profit of 47.7%, versus 49.2% in 2012, reflects lower sales across EMEA and Asia Pacific regions in addition to changes in product mix.

Printer unit volumes and average selling price information is summarized below:


	Three Months Ended
	March 30, 2013		March 31, 2012		Percent Change
Total printers shipped		299,633		297,669		0.7
Average selling price of printers shipped	$	469	$	503		(6.7	)

For the first quarter of 2013, unit volumes increased compared to the first quarter of 2012, with notable volume increases in desktop and card printers. The decrease in average selling price is a result of a change in product mix toward lower priced products in the 2013 quarter compared to the 2012 quarter. However, within product category, pricing remains stable.

Operating Expenses

Operating expenses for the quarter increased 9.0% due mainly to greater costs in all operating expense categories. Several expense types accounted for these increases, including compensation costs, outside professional services, project expenses, and travel and entertainment. These increases are principally related to activities supporting Zebra’s geographic expansion and market development activities. Amortization increases relate to intangible asset increases as a result of acquisitions in the second half of 2012. Acquisition costs relate to investigated and completed acquisitions. Exit and restructuring costs in 2013 relate to the relocation and consolidation of our supply chain operations to APAC, sales operations restructuring and corporate restructuring.

Operating expenses are summarized below (in thousands, except percentages):


	Three Months Ended
Operating Expenses	March 30, 2013		March 31, 2012		Percent Change		Percent of Net Sales 2013		Percent of Net Sales 2012
Selling and marketing	$	33,515	$	32,114		4.4		14.1		13.2
Research and development		21,858		20,416		7.1		9.2		8.4
General and administrative		25,276		24,320		3.9		10.7		10.0
Amortization of intangible assets		1,863		770		141.9		0.8		0.3
Acquisition costs		482		254		89.8		0.2		0.1
Exit and restructuring		1,895		0		N/M		0.8		0.0

Total operating expenses	$	84,889	$	77,874		9.0		35.8		31.9

Operating Income

The operating income decreased for the first quarter of 2013 versus 2012 as a result of decreased sales and higher operating expenses.

Other Income (Expense)

Investment income increased slightly from higher cash and investment amounts in 2013 compared with 2012 as a result of increased cash provided by operating activities.

Zebra’s non-operating income and expense items are summarized in the following table (in thousands):


	Three Months Ended
	March 30, 2013			March 31, 2012
Investment income	$	677		$	592
Foreign exchange loss		(98	)		(342	)
Other, net		9			(364	)

Total other income (expense)	$	588		$	(114	)

Income Taxes

The effective income tax rate for the first quarter of 2013 was 18.2% compared with 28.0% for the first quarter of 2012. The 2013 effective rate reflects higher profits in lower rate international jurisdictions and reinstatement of the US R&D tax credit during the quarter retroactive to January 2012 which resulted in a one-time credit of approximately $400,000 or a reduction to the effective tax rate of 1.3%.

Liquidity and Capital Resources

(Amounts in thousands, except percentages):


	Three Months Ended
Rate of Return Analysis:	March 30, 2013			March 31, 2012
Average cash and marketable securities balances	$	405,820		$	344,470
Annualized rate of return		0.7	%		0.7	%

Average cash and marketable securities balances for the first three months of 2013 increased compared to 2012 as a result of increased cash and marketable securities in 2013 versus comparable levels in 2012.

As of March 30, 2013, Zebra had $417,564,000 in cash and investments and marketable securities, compared with $394,075,000 at December 31, 2012. Factors affecting cash and investment balances during the first three months of 2013 include the following (changes below include the impact of foreign currency):

•

Inventories decreased $6,943,000 due to decreases in raw materials and finished goods.

•

Accounts payable decreased $7,119,000 due to the timing of payments at period end.

•

Accrued liabilities decreased $12,787,000 due to the timing of annual bonus payments and regular payroll.

•

Purchases of treasury shares totaled $3,888,000.

•

Stock option exercises and purchases under the stock purchase plan contributed $5,913,000.

Management believes that existing capital resources and funds generated from operations are sufficient to finance anticipated capital requirements.

Critical Accounting Policies and Estimates

Management prepared the consolidated financial statements of Zebra under accounting principles generally accepted in the United States of America. These principles require the use of estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we used are reasonable, based upon the information available.

Our estimates and assumptions affect the reported amounts in our financial statements. The following accounting policies comprise those that we believe are the most critical in understanding and evaluating Zebra’s reported financial results.

Revenue Recognition

Product revenue is recognized once four criteria are met: (1) we have persuasive evidence that an arrangement exists; (2) delivery has occurred and title has passed to the customer, which generally happens at the point of shipment provided that no significant obligations remain; (3) the price is fixed and determinable; and (4) collectability is reasonably assured. Other items that affect our revenue recognition include:

Customer Returns

Customers have the right to return products that do not function properly within a limited time after delivery. We monitor and track product returns and record a provision for the estimated future returns based on historical experience and any notification received of pending returns. Returns have historically been within expectations and the provisions established, but Zebra cannot guarantee that it will continue to experience return rates consistent with historical patterns. Historically, our product returns have not been significant. However, if a significant issue should arise, it could have a material impact on our financial statements.

Growth Rebates

Some of our channel program partners are offered incentive rebates based on the attainment of specific growth targets related to products they purchase from us over a quarter or year. These rebates are recorded as a reduction to revenue. Each quarter, we estimate the amount of outstanding rebates and establish a reserve for them based on shipment history. Historically, actual rebates have been in line with our estimates.

Pass Through Rebate Program

Some of our distributors are offered monthly rebates based on distribution of products to our program partners. These rebates are recorded as a reduction to revenue. Each month we estimate the amount of rebate earned and establish a reserve for them based on recent trends of actual activity. The actual distributor rebates paid have historically been in line with our estimates.

Price Protection

Some of our customers are offered price protection by Zebra as an incentive to carry inventory of our product. These price protection plans provide that if we lower prices, we will credit them for the price decrease on inventory they hold. We estimate future payments under price protection programs quarterly and establish a reserve, which is charged against revenue. Our customers typically carry limited amounts of inventory, and Zebra infrequently lowers prices on current products. As a result, the amounts paid under these plans have been minimal.

Software Revenue

We sell three types of software and record revenue as follows:

•

Our printers contain embedded firmware, which is part of the hardware purchase. We consider the sale of this firmware to be incidental to the sale of the printer and do not attribute any revenue to it.

•

We sell a limited amount of prepackaged, or off-the-shelf, software for the creation of bar code labels using our printers. There is no customization required to use this software, and we have no post-shipment obligations on the software. Revenue is recognized at the time this prepackaged software is shipped.

•

We sometimes provide custom software as part of a printer installation project. We bill custom software development services separate from the related hardware. Revenue related to custom software is recognized once the custom software development services have been completed and accepted by the customer.

•

We recognize license revenue when (1) a signed contract is obtained; (2) delivery of the product has occurred; (3) the license fee is fixed or determinable; and (4) collection is probable.

Maintenance and Support Agreements

We enter into post-contract maintenance and support agreements. Revenues are recognized ratably over the service period and the cost of providing these services is expensed as incurred.

Shipping and Handling

We charge our customers for shipping and handling services based upon our internal price list for these items. The amounts billed to customers are recorded as revenue when the product ships. Any costs incurred related to these services are included in cost of sales.

Zebra enters into sales transactions that include more than one product type. This bundle of products might include printers, current or future supplies, and services. When this type of transaction occurs, we allocate the purchase price to each product type based on the fair value of the individual products determined by vendor specific objective evidence. The revenue for each individual product is then recognized when the recognition criteria for that product is fully met.

Investments and Marketable Securities

Investments and marketable securities at March 30, 2013, consisted of the following:


U.S. government and agency securities	28.5	%
Obligations of government-sponsored enterprises (1)	3.0	%
State and municipal bonds	30.3	%
Corporate securities	38.2	%

(1)	Includes investments in notes issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Farm Credit Banks and the Federal Home Loan Bank.

Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those debt securities that Zebra has the ability and intent to hold until maturity. Securities not included in trading or held-to-maturity are classified as available-for-sale.

Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of discounts or premiums. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity until realized.

Zebra’s investments in marketable debt securities are classified as available-for-sale except for securities held in Zebra’s deferred compensation plan, which are considered to be trading securities. Investments in marketable debt securities are classified based on intent and ability to sell investment securities. Zebra’s available-for-sale securities are used to fund further acquisitions and other operating needs and therefore can be sold prior to maturity. Investments in marketable debt securities for which Zebra intends to sell within the next year are classified as current and those that we intend to hold in excess of one-year are classified as non-current.

Accounts Receivable

We have standardized credit granting and review policies and procedures for all customer accounts, including:

•

Credit reviews of all new customer accounts,

•

Ongoing credit evaluations of current customers,

•

Credit limits and payment terms based on available credit information,

•

Adjustments to credit limits based upon payment history and the customer’s current credit worthiness,

•

An active collection effort by regional credit functions, reporting directly to the corporate financial officers, and

•

Limited credit insurance on the majority of our international receivables.

We reserve for estimated credit losses based upon historical experience and specific customer collection issues. Over the last three years, accounts receivable reserves varied from 0.4% to 1.2% of total accounts receivable. Accounts receivable reserves as of March 30, 2013, were $795,000, or 0.5% of the balance due. Accounts receivable reserves as of December 31, 2012, were $669,000, or 0.4% of the balance due. We believe our reserve level is appropriate considering the quality of the portfolio as of March 30, 2013. While credit losses have historically been within expectations and the provisions established, we cannot guarantee that our credit loss experience will continue to be consistent with historical experience.

Inventories

We value our inventories at the lower of the actual cost to purchase or manufacture using the first-in, first-out (FIFO) method, or the current estimated market value. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on forecasts of product demand and production requirements for the subsequent twelve months.

Over the last three years, our reserves for excess and obsolete inventories have ranged from 8.0% to 11.9% of gross inventory. As of March 30, 2013, inventory reserves were $13,819,000, or 10.6% of gross inventory compared to inventory reserves of $13,655,000, or 10.0% of gross inventory as of December 31, 2012. We believe our reserve level is appropriate considering the quantities and quality of the inventories as of March 30, 2013.

Valuation of Goodwill

Goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include:

•

Significant adverse change in legal factors or in the business climate,

•

Adverse action or assessment by a regulator,

•

Unanticipated competition,

•

Loss of key personnel,

•

More-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of,

•

Testing for recoverability of a significant asset group within a reporting unit,

•

Allocation of a portion of goodwill to a business to be disposed of.

If Zebra believes that one or more of the above indicators of impairment have occurred, we perform an impairment test. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using three valuation methods: Income Approach – Discounted Cash Flow Analysis, Market Approach – Guideline Public Company Method, and Market Approach – Comparative Transactions Method. The approach defined below is based upon our last impairment test conducted in June 2012 as of the end of May 2012. Zebra performed an interim impairment test in October 2012 for its smaller reporting unit as of the end of September 2012. The October 2012 test only utilized the income approach as discussed below.

Under the “Income Approach – Discounted Cash Flow Analysis” the key assumptions consider sales, cost of sales and operating expenses projected through the year 2021. These assumptions were determined by management utilizing our internal operating plan and assuming growth rates for revenues and operating expenses, and margin assumptions. The fourth key assumption under this approach is the discount rate which is determined by looking at current risk-free rates of capital, current market interest rates and the evaluation of risk premium relevant to the business segment. If our assumptions relative to growth rates were to change or were incorrect, our fair value calculation may change which could result in impairment.

Under the “Market Approach – Guideline Company Method” we identified 20 publicly traded companies, including Zebra, which we believe have significant relevant similarities. For these 20 companies we calculated the mean ratio of invested capital to revenues and invested capital to EBITDA. Similar to the Income approach discussed above, sales, cost of sales, operating expenses and their respective growth rates were the key assumptions utilized. The market prices of Zebra and other guideline company shares are key assumptions. If these market prices increase, the estimated market value would increase. If the market prices decrease, the estimated market value would decrease.

Under the “Market Approach – Comparative Transactions Method” we looked at 19 market based transactions for companies that have similarities to our business segment, including similarities to one or more of the business lines, markets, growth prospects, margins and size. We calculated mean revenue and EBITDA multiples for the selected transactions. These multiples were applied to forecasted Zebra results for that segment to estimate market value. The key assumptions and impact to changes to those assumptions would be similar to those assumptions under the “Income Approach – Discounted Cash Flow Analysis” and the “Market Approach – Guideline Company Method”.

The results of these three methods are weighted based upon managements’ determination with more weight attached to the Income approach because it considers anticipated future financial performance. The Market approaches are based upon historical and current economic conditions which might not reflect the long term prospects or opportunities for our business segment being evaluated.

If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill.

There have not been any significant changes to our impairment testing methodology other than updating the assumptions to reflect the current market environment. As discussed above, key assumptions used in the first step of the goodwill

impairment test were determined by management utilizing the internal operating plan. The key assumptions utilized include forecasted growth rates for revenues and operating expenses as well as a discount rate which is determined by looking at current risk-free rates of capital, current market interest rates and the evaluation of a risk premium relevant to the business segment. Zebra will monitor future results and will perform a test if indicators trigger an impairment review.

We test the impairment of goodwill each year as of the end of May or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Zebra has two reporting units required for its annual goodwill impairment test. We completed our annual assessment during June 2012 and determined that our goodwill was not impaired as of the end of May 2012. As part of Zebra’s annual impairment test in the second quarter of 2012, Management determined that the larger of the two reporting units’ fair value exceeded its carrying value by a significant amount. The second smaller reporting unit’s amount by which the fair value exceeded the carrying value ranged from approximately 8% under the Income Approach to 31% under the Market Approach.

Due to the deterioration in the smaller reporting unit’s operating results during the third quarter of 2012, failing to meet our forecasted revenues and operating expenses, and a decline in expected growth rates, our fair value calculation for the smaller reporting unit changed and we determined our goodwill associated with the smaller reporting unit was impaired. The above impairment indicators led us to conclude an interim goodwill test was necessary. Zebra performed the first step of the impairment test which failed. As a result, Zebra also performed a second step analysis and recorded a goodwill impairment charge of $9,114,000 as of September 29, 2012. After this impairment charge, there is no remaining goodwill in the smaller reporting unit.

Valuation of Long-Lived and Other Intangible Assets

We evaluate the impairment of identifiable intangibles and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered that may trigger an impairment review consist of:

•

Significant underperformance relative to expected historical or projected future operating results,

•

Significant changes in the manner of use of the acquired assets or the strategy for the overall business,

•

Significant negative industry or economic trends,

•

Significant decline in Zebra’s stock price for a sustained period, and

•

Significant decline in market capitalization relative to net book value.

If Zebra believes that one or more of the above indicators of impairment have occurred and the undiscounted cash flow test has failed in the case of amortizable assets, we measure impairment based on projected discounted cash flows using a discount rate that incorporates the risk inherent in the cash flows.

Net intangible assets, long-lived assets and goodwill amounted to $233,284,000 as of March 30, 2013.

Income Taxes

Zebra has identified, evaluated, and measured the amount of income tax benefits to be recognized for all of our income tax positions. Included in deferred tax assets are amounts related to federal and state net operating losses that resulted from our acquisition of WhereNet Corp. Zebra’s intention is to utilize these net operating loss carryforwards to offset future income taxes.

Zebra’s continuing practice is to recognize interest and/or penalties related to income tax matters as part of income tax expense. For the three month ended March 30, 2013 and March 31, 2012, we did not accrue any interest or penalties into income tax expense.

Zebra’s estimates of taxes for interim periods are based upon the annual effective tax rate for the full-year, adjusted for any discrete items that relate to an interim period. The estimated annual effective tax rate is determined using projections of full-year taxable income by each Zebra legal entity with the appropriate statutory tax rate for that subsidiary applied. The effective rate may change during the year, typically due to the change in our estimated taxable income by jurisdiction as each year progresses.


	Three Months Ended
	March 30, 2013			March 31, 2012
Effective tax rate		18.2	%		28.0	%

Significant Customer

Our net sales to significant customers as a percentage of total net sales were as follows:


	Three Months Ended
	March 30, 2013			March 31, 2012
Customer A		16.6	%		21.5	%
Customer B		12.0	%		11.0	%
Customer C		11.9	%		9.7	%

No other customer accounted for 10% or more of total net sales during these periods. The customers disclosed above are distributors (i.e. not end users) of Zebra’s products.

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 expressed or implied in such forward looking statements. These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include:

•

Market acceptance of Zebra’s printer and software products and competitors’ product 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 and other regions in which we do business,

•

Our ability to control manufacturing and operating costs,

•

The availability of credit and the volatility of capital markets, which may affect our suppliers and customers,

•

Success of acquisitions and their integration,

•

Interest rate and financial market conditions because of our large investment portfolio,

•

The effect of natural disaster on our business,

•

Foreign exchange rates due to the large percentage of our international sales and operations, and

•

The outcome of litigation in which Zebra is involved, particularly litigation or claims related to infringement of third-party intellectual property rights.

When used in this document and documents referenced, the words “anticipate,” “believe,” “estimate,” “will” and “expect” and similar expressions as they relate to Zebra or its management are intended to identify such forward-looking statements. We encourage readers of this report to review Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, for a further discussion of issues that could affect Zebra’s future results. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in Zebra’s market risk during the quarter ended March 30, 2013. For additional information on market risk, refer to the “Quantitative and Qualitative Disclosures About Market Risk” section of our Form 10-K for the year ended December 31, 2012.

In the normal course of business, portions of Zebra’s operations are subject to fluctuations in currency values. We manage these risks using derivative financial instruments. See Note 8 to the Consolidated Financial Statements included in this report for further discussion of derivative instruments.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this Form 10-Q. The evaluation was conducted under the supervision of our Disclosure Committee, and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in this report on Form 10-Q was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by us in our reports that we file or furnish under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter covered by this report, there have been no changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Zebra have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

See Note 10 to the Consolidated Financial Statements included in this report.

Item 1A.

Risk Factors

In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, and the factors identified under “Safe Harbor” at the end of Item 2 of Part I of this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, cash flows or results of operations. The risks described in our Annual Report on Form 10-K are not the only risks facing Zebra. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, cash flows and/or results of operations.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Treasury Shares

During the first quarter of 2013, Zebra purchased 87,254 shares of Zebra’s Class A Common Stock at a weighted average share price of $44.56 per share, as follows:

ISSUER PURCHASES OF EQUITY SECURITIES


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced programs		Maximum number of shares that may yet be purchased under the program
January 2013 (January 1 – January 26)		0	$	0.00		0		2,022,336
February 2013 (January 27 – February 23)		0	$	0.00		0		2,022,336
March 2013 (February 24 – March 30)		87,254	$	44.56		87,254		1,935,082

(1)	On November 4, 2011, Zebra’s Board authorized the purchase of up to an additional 3,000,000 shares under our stock repurchase program. This authorization does not have an expiration date.

(2)	During the first quarter, Zebra acquired 5,851 shares of Zebra Class A Common Stock through the withholding of shares necessary to satisfy tax withholding obligations upon the vesting of restricted stock awards. These shares were acquired at an average price of $42.69 per share.

Item 6.

Exhibits


10.1		Form of 2013 time-vested stock appreciation rights agreement for employees other than CEO. +

10.2		Form of 2013 time-vested restricted stock agreement for employees other than CEO. +

10.3		Form of 2013 performance-based restricted stock agreement for employees other than CEO. +

10.4		Form of 2013 time-vested stock appreciation rights agreement for CEO. +

10.5		Form of 2013 time-vested restricted stock agreement for CEO. +

10.6		Form of 2013 performance-based restricted stock agreement for CEO. +

10.7		Amendment to the lease between the Company and BLDG Vernon LLC and Bacael Vernon LLC for the Company’s facility in Vernon Hills, Illinois, dated as of November 26, 2012.

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 March 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the consolidated balance sheets; (ii) the consolidated statements of earnings; (iii) the consolidated statements of comprehensive income; (iv) the consolidated statements of cash Flows; and (v) notes to consolidated financial statements.

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 2, 2013	By:	/s/ Anders Gustafsson
		Anders Gustafsson
		Chief Executive Officer

Date: May 2, 2013	By:	/s/ Michael C. Smiley
		Michael C. Smiley
		Chief Financial Officer

Exhibit 10.1

S TOCK A PPRECIATION R IGHTS A GREEMENT

This STOCK APPRECIATION RIGHTS AGREEMENT (this “SAR Agreement”), dated as of
%%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION , a Delaware corporation (the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (the “Participant”), relating to a stock appreciation right granted under the 2011 Zebra Technologies Corporation Long-Term Incentive Plan (the “Plan”). Capitalized terms used in this SAR Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

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 not later than the 40th day following the Grant Date.

(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 tenth (10 ^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:


Vesting Date Anniversary	Percentage of SAR Exercisable
Prior to the first anniversary of the Grant Date		0	%
On or after the first anniversary of the Grant Date		25	%
On or after the second anniversary of the Grant Date, an additional		25	%
On or after the third anniversary of the Grant Date, an additional		25	%
On or after the fourth anniversary of the Grant Date, an additional		25	%

provided, however, except as otherwise provided for under this SAR Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the applicable vesting dates.

(b)

Additional Vesting Rules . Notwithstanding Section 2(a) hereof, the SAR shall be subject to the following additional vesting rules in the following circumstances:

(i)

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, along 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.

In the event of the Participant’s death, the Participant’s beneficiary or estate may exercise the vested SAR.

(ii)

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:

(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 Retirement.

For purposes of this SAR Agreement, “Retirement” means the Participant’s voluntary termination of employment with the Company and/or any Subsidiary after attaining either:

•

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).

(iii)

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.

(iv)

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 hereof, 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.

3.	Exercise of SAR .

(a) Notice of Exercise . Prior to the Expiration Date, the vested portion of the SAR may be exercised, in whole or in part, by delivering written notice to the Company in accordance with Section 7(j) hereof and in such form as the Company may require from time to time. Such notice of exercise shall specify the number of SAR Shares to be exercised.

(b) Payment . As of the date of exercise of the SAR, the Company shall settle the exercised portion of the SAR as provided in Section 6.6 of the Plan. The amount of the payment for each SAR Share exercised shall equal (i) the Fair Market Value of a share of Stock on the date of exercise, less (ii) the SAR Price for each such exercised SAR Share. The exercised SAR shall be settled in whole shares of Stock, and cash for the value of a fractional share of Stock.

(c) Payment of Taxes . If the Company is obligated to withhold an amount on account of any tax imposed as a result of the exercise of the SAR, the Participant shall be required to pay such amount to the Company, as provided in Section 9,10 of the Plan. Alternatively, subject to Company approval, the Participant may elect to withhold a portion of the SAR exercise payment equal to the minimum statutory tax that would be imposed on the exercise, as provided under Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the SAR and its exercise.

(d) Death Prior to Exercise . In the event of the Participant’s death prior to the exercise of any vested portion of the SAR, the Participant’s beneficiary or estate may exercise the vested SAR.

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 payment of such SAR portion would not be deductible under Code Section 162(m). The Participant may not sell or otherwise dispose of any portion of the SAR in violation of any applicable law. The Company may postpone issuing and delivering any Stock in payment for the exercise of such 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 or state 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 local tax withholding obligations.

5.	Change in Control . Subject to Section 9.8 of the Plan:

(a) Notwithstanding any provision in this Agreement, in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan in connection with which (i) holders of Shares receive consideration consisting solely of shares of common stock that are registered under Section 12 of the Exchange Act (and disregarding the payment of cash in lieu of fractional shares) and (ii) this SAR Agreement is assumed or provision is made for the continuation of this SAR Agreement, then subject to Section 4.3 of the Plan, this SAR Agreement shall continue in accordance with its terms, and there shall be substituted for each SAR Share then subject to this SAR Agreement, the number and class of shares into which each outstanding Share shall be converted pursuant to such Change in Control. In the event of any such substitution, the SAR Price shall be appropriately adjusted by the Board or Committee (whose determination shall be final, binding and conclusive), such adjustments to be made without an increase in the aggregate SAR Price. In the event the Participant’s employment with the Company and/or any Subsidiary is terminated by the Participant for Good Reason or by Zebra or any Subsidiary without Cause on or after the date of such Change in Control and on or prior to the one-year anniversary date of such Change in Control, then 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 and, along with any unexercised vested portion of the SAR, shall remain exercisable until the earlier of (1) the Expiration Date or (2) one (1) year after the effective date of the Participant’s termination of employment. For purposes of this SAR Agreement, “Good Reason” 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, “Good Reason” has the meaning set forth in the Plan.

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this grant shall be surrendered to the Company by the Participant, and this grant shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of SAR Shares then subject to this SAR, multiplied by the excess, if any, of the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control, over the SAR Price.

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.

The Company and its Subsidiaries devote significant financial, human and other resources to the development of their products, customer base and the general goodwill associated with their business, and the Company and its Subsidiaries diligently maintain the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this SAR Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b)

Non-Solicitation and Non-Compete . Notwithstanding any provision of this SAR Agreement, if at any time 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, 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;

the SAR shall terminate automatically on the date the Participant engages in such activity and the Participant shall pay the Company, within five business days of receipt by the Participant of a written demand therefor, an amount in cash determined by multiplying the number of Shares as to which the SAR was exercised within the one-year period described above by the difference between (i) the Fair Market Value of a Share on the date of such exercise and (ii) the SAR Price per SAR (without reduction for any Shares withheld by the Company pursuant to Section 3(c)).

(c)

Remedies for Violation.

(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) hereof) 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) hereof, 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) hereof, 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) hereof 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 into Stock and such 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)

Beneficiary Designation . The Participant may, from time to time, in accordance with procedures set forth by the Committee, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this SAR Agreement is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Committee during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate or exercised by the Participant’s estate.

(e)

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.

(f)

No Vested Right in Future Awards . The Participant acknowledges and agrees (by 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.

(g)

Use of Personal Data . By 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.

(h)

Severability . In the event that any provision of this SAR Agreement (including, without limitations, the provisions of Section 6 hereof) are held to be unenforceable under applicable law to any extent, such provision(s) shall, to that extent, be excluded from this SAR Agreement and the balance of the SAR Agreement shall be interpreted as if such provision(s) were so excluded to that extent and shall be enforceable in accordance with its terms.

(i)

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.

(j)

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.

(k)

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.

(l)

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.

(m)

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.

(n)

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.

(o)

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.

(p)

Headings . The headings contained in this SAR Agreement are for reference purposes only and shall not affect the meaning or interpretation of this SAR Agreement.

IN WITNESS WHEREOF , the Company has caused this SAR Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has hereunto set his or her hand, all as of the day and year first above written.


ZEBRA TECHNOLOGIES CORPORATION

By:
Name: Anders Gustafsson
Title: Chief Executive Officer

Exhibit 10.2

R ESTRICTED S TOCK A GREEMENT

This RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of
%%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION , a Delaware corporation (the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (the “Participant”), relating to restricted stock granted under the Zebra Technologies Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used in this Stock Agreement without definition shall have the meanings ascribed to such terms in the Plan.

1. Grant of Restricted Stock .

(a) Grant . Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date %%TOTAL_SHARES_GRANTED,’999,999,999’%-% shares of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by E*TRADE or (ii) executing this Stock Agreement in the space provided below and returning it to the Company not later than the 40th day following the Grant Date.

(b) Nontransferability . Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Period of Restriction set forth under Section 2 of this Stock Agreement.

2. Vesting of Restricted Stock .

(a) Period of Restriction .

(i) The Restricted Stock shall be forfeitable and non-transferable during the Period of Restriction. The “Period of Restriction” with respect to the Restricted Stock shall begin on the Grant Date and end at 5:00 p.m., Central Time, on the three year anniversary of %%VEST_BASE_DATE,’MM/DD/YYYY’%-%.

(ii) Except as otherwise provided for under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the Period of Restriction.

(b) Additional Vesting Rules . Notwithstanding Section 2(a) hereof, the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

(i) Death or Disability . In the event the Participant’s employment with the Company and its Subsidiaries is terminated due to death or Disability, any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment and the remainder of the Period of Restriction shall lapse.

(ii) Good Reason or Termination by the Company or any Subsidiary other than for Cause . In the event the Participant’s employment with the Company and its Subsidiaries is terminated by reason of the Participant’s resignation for Good Reason, or by the Company and/or any Subsidiary other than for Cause, the number of shares of Restricted Stock that shall be vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s

termination of employment shall equal the product of the total number of shares of Restricted Stock granted as of the Grant Date under Section 1(a) multiplied by a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1096. For purposes of this Stock Agreement, “Good Reason” and “Cause” have the meanings 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, “Good Reason” has the meaning set forth in the Plan and “Cause” has the meaning, as determined by the Company in its sole discretion, set forth in the Plan.

(iii) Other Termination of Employment . In the event the Participant’s employment with the Company and its Subsidiaries is terminated for any reason other than as provided in Section 2(b)(i) or (ii), any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall immediately be forfeited to the Company.

3. Rights While Holding Restricted Stock .

(a) Custody and Availability of Shares. The Company shall hold the shares of Restricted Stock subject to this Agreement in uncertificated, book-entry form registered in the Participant’s name until the Restricted Stock shall have vested, in whole or in part, pursuant to Section 2. Subject to Section 4, if and to the extent shares of Restricted Stock become vested, the Company shall remove or cause the removal of the restrictions on transfer of such shares arising from this Stock Agreement. Such unrestricted shares shall be made available to the Participant in uncertificated, book-entry form registered in the Participant’s name.

(b) Rights as a Stockholder. During the period that shares of Restricted Stock remain unvested, the Participant shall have all of the rights of a stockholder of the Company with respect to the Restricted Stock including, but not limited to, the right to receive dividends paid on the shares of Restricted Stock and the full right to vote such shares.

(c) Section 83(b) Election . The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(d) Compliance with Federal and State Law . The Company may postpone issuing and delivering any Restricted Stock for so long as the Company reasonably determines to be necessary to satisfy the following:

its completing or amending any securities registration or qualification of the Restricted Stock or it or the Participant satisfying any exemption from registration under any federal or state law, rule, or regulation;

the Participant complying with any federal, state, or local tax withholding obligations; and

its deferring payment of any amount that it reasonably determines would not be deductible under Code Section 162(m) until the earlier of:

(A) the earliest date on which the Company reasonably determines that the deductibility of the payment will not be limited; or

(B) the year following the Participant’s termination of employment.

4. Payment of Taxes . If the Company is obligated to withhold an amount on account of any tax imposed as a result of the issuance or vesting of the Restricted Stock, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the Restricted Stock and its vesting.

5. Change in Control . Subject to Section 9.8 of the Plan:

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to
Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which
Section 5(a) above does not apply, this grant shall be surrendered to the Company by the Participant, and this grant shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of Shares of unvested Restricted Stock as of the effective date of the Change in Control, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

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 Stock 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,

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;

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;

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 which the Company reasonably regards as being confidential.

The Company and its Subsidiaries devotes significant financial, human and other resources to the development of its products, its customer base and the general goodwill associated with its business, and the Company and its Subsidiaries diligently maintains the secrecy and confidentiality of their Confidential Information. Each and every component of the Confidential Information is sufficiently secret to derive economic value from its not being generally known to other persons. While employed by the Company and/or Subsidiary and thereafter, the Participant will hold in the strictest confidence and not use in any manner which is detrimental to the Company or its Subsidiaries or disclose to any individual or entity any Confidential Information, except as may be required by the Company or its Subsidiaries in connection with the Participant’s employment.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(b) Non-Solicitation and Non-Compete . Notwithstanding any provision of this Stock Agreement, if at any time prior to the date that is one year after the date of vesting of all or any portion of the Restricted Stock, the Participant, directly or indirectly:

breaches or violates Section 6(a) of this Stock Agreement; or

employs, recruits or solicits for employment any person who is (or was within six (6) months prior to the Participant’s employment termination date) an employee of the Company and/or any Subsidiary; or

accepts employment or engages in a competing business which 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

the unvested Restricted Stock shall be forfeited automatically on the date the Participant engages in such activity and then the Participant shall pay the Company, within five business days of receipt by the Participant of a written demand therefore, an amount in cash determined by multiplying the number of Shares of Restricted Stock subject to this Stock Agreement which vested within the one-year period described above by the Fair Market Value of a Share, determined as of the date of vesting.

Injunctive Action . 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 Stock Agreement (including any provision of Section 6(a) or (b) hereof) 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 Stock Agreement, and the Company and/or a 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) hereof, the Company will have the right to cancel this Stock Agreement.

Forfeiture of Restricted Stock. In addition to the rights available to the Company and its Subsidiaries under Section 6(c)(i) hereof, if the Participant violates the terms of this Section 6 at any time, the Participant, without any further action by the Company or the Participant, shall forfeit, as of the first day of any such violation, all right, title and interest to unvested Restricted Stock and the Company further 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 Restricted Stock 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 to the Company under this Section 6. In addition to

any injunctive relief sought under Section 6(c)(i) hereof 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 Stock Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

(e) Written Acknowledgement by Participant . The Committee, in its sole discretion, may require the Participant, as a condition to lapsing any restriction on the Restricted Stock, to acknowledge in writing that the Participant 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 Stock Agreement or of the Restricted Stock 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) Plan Document Governs . The Restricted Stock is granted pursuant to the Plan, and the Restricted Stock and this Stock 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 Stock Agreement by reference or are expressly cited. Any inconsistency between the Stock Agreement and the Plan shall be resolved in favor of the Plan. Participant hereby acknowledges receipt of a copy of the Plan.

(c) Beneficiary Designation . The Participant may, from time to time, in accordance with procedures set forth by the Committee, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Stock Agreement is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Committee during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate or exercised by the Participant’s estate.

(d) Administration . This Stock 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 Stock Agreement, all of which shall be binding upon the Participant.

(e) No Vested Right In Future Awards . Participant acknowledges and agrees (by executing this Stock Agreement) that the granting of Restricted Stock under this Stock Agreement is made on a fully discretionary basis by the Company and that this Stock Agreement does not lead to a vested right to further restricted stock or other awards in the future.

(f) Use Of Personal Data . By executing this Stock Agreement, 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 . In the event that any provision of this Stock Agreement (including, without limitations, the provisions of Section 6 hereof) are held to be unenforceable under applicable law to any extent, such provision(s) shall, to that extent, be excluded from this Stock Agreement and the balance of the Stock Agreement shall be interpreted as if such provision(s) were so excluded to that extent and shall be enforceable in accordance with its terms.

(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 Stock 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 Stock 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 Stock Agreement and the Restricted Stock 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 Stock Agreement, together with the Plan, constitute 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 Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(o) Headings . The headings contained in this Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement.

IN WITNESS WHEREOF , the Company has caused this Stock Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has hereunto set his or her hand, all as of the day and year first above written.


ZEBRA TECHNOLOGIES CORPORATION

By:
Name: Anders Gustafsson
Title: Chief Executive Officer

Exhibit 10.3

R ESTRICTED S TOCK A GREEMENT

This RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of %%OPTION_DATE,’MM/DDYYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION , a Delaware corporation (the “Company”), and %%FIRST_NAME%-% %%LAST_NAME%-% (the “Participant”), relating to restricted stock granted under the Zebra Technologies Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used in this Stock Agreement without definition shall have the meanings ascribed to such terms in the Plan.

1. Grant of Restricted Stock .

Grant. Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date %%TOTAL_SHARES_GRANTED,’999,999,999’%-% shares (the “Target Shares”) of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by E*TRADE or (ii) executing this Stock Agreement in the space provided below and returning it to the Company not later than the 40th day following the Grant Date.

Nontransferability . Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Period of Restriction set forth under Section 2 of this Stock Agreement.

2. Vesting of Restricted Stock .

Period of Restriction and Performance Goal .

(i)

The Restricted Stock shall be forfeitable and non-transferable during the Period of Restriction. The “Period of Restriction” with respect to the Restricted Stock shall begin on the Grant Date and shall end at 5:00 p.m., Central Time, on the three year anniversary of %%VEST_BASE_DATE,’MM/DD/YYYY’%-% in accordance with Exhibit A .

(ii)

Except as otherwise provided for under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the Period of Restriction.

Additional Vesting Rules . Notwithstanding Section 2(a) hereof, the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

(i)

Death or Disability . In the event the Participant’s employment with the Company and its Subsidiaries is terminated prior to December 31, 2015 due to death or Disability, a number of Shares equal to the Target Shares shall become fully vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment and the remainder of the Period of Restriction shall lapse. In the event the Participant’s employment with the Company and its Subsidiaries is terminated on or after December 31, 2015 and on or prior to 5:00 p.m., Central Time, on the three year anniversary of %%VEST_BASE_DATE,’MM/DD/YYYY’%-% due to death or Disability, the Period of Restriction shall lapse as of 5:00 p.m., Central Time, on the three year anniversary of %%VEST_BASE_DATE,’MM/DD/YYYY’%-% in accordance with Exhibit A .

(ii)

Termination for Good Reason or by the Company or any Subsidiary other than for Cause . In the event the Participant’s employment with the Company and its Subsidiaries is terminated by reason of the Participant’s resignation for Good Reason or by the Company and/or any Subsidiary other than for Cause, the Period of Restriction shall lapse as of 5:00 p.m., Central Time, on the three year anniversary of %%VEST_BASE_DATE,’MM/DD/YYYY’%-% in accordance with Exhibit A . For purposes of this Stock Agreement, “Good Reason” and “Cause” have the meanings 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, “Good Reason” has the meaning set forth in the Plan and “Cause” has the meaning, as determined by the Company in its sole discretion, set forth in the Plan.

(iii)

Other Termination of Employment . In the event the Participant’s employment with the Company and its Subsidiaries is terminated for any reason other than as provided in Section 2(b)(i) or (ii) hereof, all Shares of Restricted Stock shall immediately be forfeited to the Company.

3. Rights While Holding Restricted Stock .

a. Custody and Availability of Shares. The Company shall hold the shares of Restricted Stock subject to this Agreement in uncertificated, book-entry form registered in the Participant’s name until the Restricted Stock shall have vested, in whole or in part, pursuant to Section 2. Subject to Section 4, if and to the extent shares of Restricted Stock become vested, the Company shall remove or cause the removal of the restrictions on transfer of such shares arising from this Stock Agreement. Such unrestricted shares shall be made available to the Participant in uncertificated, book-entry form registered in the Participant’s name.

b. Rights as a Stockholder . During the period that shares of Restricted Stock remain unvested, the Participant shall have all of the rights of a stockholder of the Company with respect to the Restricted Stock including, but not limited to, the right to receive dividends paid on the shares of Restricted Stock and the full right to vote such shares.

c. Section 83(b) Election . The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

d. Compliance with Federal and State Law . The Company may postpone issuing and delivering any Restricted Stock 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 Restricted Stock or it or the Participant satisfying any exemption from registration under any federal or state law, rule or regulation; and

(ii) the Participant complying with any federal, state or local tax withholding obligations.

4. Payment of Taxes . If the Company is obligated to withhold an amount on account of any tax imposed as a result of the issuance of the Restricted Stock, the Participant shall be required to pay such amount to the Company, as provided under Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the Restricted Stock and its vesting.

5. Change in Control . Subject to Section 9.8 of the Plan:

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this grant shall be surrendered to the Company by the Participant, and this grant shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of Target Shares, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6. Confidentiality, Non-Solicitation and Non-Compete . 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 Stock 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 which the Company reasonably regards as being confidential.

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

b. Non-Solicitation and Non-Compete . Notwithstanding any provision of this Stock Agreement, if at any time prior to the date that is one year after the date of vesting of all or any portion of the Restricted Stock, the Participant directly or indirectly:

(i) breaches or violates Section 6(a) of this Stock Agreement; or

(ii) employs, recruits or solicits for employment any person who is (or was within 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 which 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, vendor or potential customer or vendor of the Company with whom the Participant had contact while employed by the Company 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 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;

the unvested Restricted Stock shall be forfeited automatically on the date the Participant engages in such activity and the Participant shall pay the Company, within five business days of receipt by the Participant of a written demand therefor, an amount in cash determined by multiplying the number of Shares of Restricted Stock subject to this Stock Agreement which vested within the one-year period described above by the Fair Market Value of a Share, determined as of the date of vesting

c. Remedies for Violation .

(i) Injunctive Action . 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 Stock Agreement (including any provision of Section 6(a) or (b) hereof) 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 Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or a Subsidiary’s rights under this Section 6 or any other remedies of the Company or Subsidiary, if the Participant breaches any of the provisions of Section 6(a) or (b) hereof, the Company will have the right to cancel this Stock Agreement.

(ii) Attorneys’ Fees; Set-off Right . In addition to the rights available to the Company and its Subsidiaries under Section 6(c)(i) hereof, 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 Restricted Stock 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 to the Company under this Section 6. In addition to any injunctive relief sought under Section 6(c)(i) hereof 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 Stock Agreement are reasonable and necessary to protect a legitimate, protectable interest of the Company and its Subsidiaries.

e. Written Acknowledgement by Participant . The Committee, in its sole discretion, may require the Participant, as a condition to lapsing any restriction on the Restricted Stock, to acknowledge in writing that the Participant 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 Stock Agreement or of the Restricted Stock 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. Plan Document Governs . The Restricted Stock is granted pursuant to the Plan, and the Restricted Stock and this Stock 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 Stock Agreement by reference or are expressly cited. Any inconsistency between the Stock Agreement and the Plan shall be resolved in favor of the Plan. Participant hereby acknowledges receipt of a copy of the Plan.

c. Beneficiary Designation . The Participant may, from time to time, in accordance with procedures set forth by the Committee, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Stock Agreement is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Committee during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate or exercised by the Participant’s estate.

d. Administration . This Stock 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 Stock Agreement, all of which shall be binding upon the Participant.

e. No Vested Right In Future Awards . Participant acknowledges and agrees (by executing this Stock Agreement) that the granting of Restricted Stock under this Stock Agreement is made on a fully discretionary basis by the Company and that this Stock Agreement does not lead to a vested right to further restricted stock or other awards in the future.

f. Use Of Personal Data . By executing this Stock Agreement, 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 one or more provisions of this Stock Agreement (including, without limitations, the provisions of Section 6 hereof) are held to be unenforceable under applicable law to any extent, such provision(s) shall, to that extent, be excluded from this Stock Agreement and the balance of the Stock Agreement shall be interpreted as if such provision(s) were so excluded to that extent and shall be enforceable in accordance with its terms.

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 Stock Agreement may be signed in two 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 Stock 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 Stock Agreement and the Restricted Stock 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 Stock Agreement, together with the Plan, constitute 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 Stock 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 Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement. This Stock Agreement is intended to be a stock right excluded from the requirements of Code Section 409A. The terms of this Stock 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

Exhibit A

Total Net Sales Performance Goal (Step 1).


	Below Threshold	Threshold	Target	Maximum
Compounded Annual Growth Rate of Total Net Sales	< 5.00%	5.00%	7.50%	10.00%
Vested Percentage of Restricted Stock	0%	50.00%	100.00%	150.00%

Compounded Annual Growth Rate of Total Net Sales (“CAGR”) equals (A) the quotient obtained by dividing 2015 total net sales of the Company by 2012 total net sales of the Company, (B) raised to the one-third power, minus (C) one. CAGR shall be rounded to the nearest one-hundredth of one percent. For a CAGR between 5.00% and 10.00%, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent.

Annual Net Sales Performance Goal: The Participant is eligible for banking of a specified number of shares on an annual basis based upon an implied annual growth rate. Unless the Committee or the Board otherwise determines in its sole discretion, the implied annual growth target will be the same as the three-year CAGR target of 7.5%. If, as of December 31 of each calendar year commencing December 31, 2013, the implied annual target is achieved, 1/3 of the number of Target Shares (rounded to the nearest whole Share) shall be banked for further calculations in steps 1 and 2. If the implied annual target for such year is not achieved, then no Shares shall be banked for such year. No interpolation or pro-ration is applied to the number of Shares if the implied annual target is not achieved and, if the implied annual target is exceeded, no additional Target Shares in respect of such year shall be banked. The sum of the banked shares in respect of each calendar year, if any, shall be the “Minimum Initial Vested Shares”.

As of December 31, 2015, the greater of either (1) the Minimum Initial Vested Shares or (2) the number of Shares determined under this step 1 pursuant to the first paragraph in this Exhibit A shall be the initial number of Shares of Restricted Stock, if any, that vest and shall be rounded to the nearest whole Share (the “Initial Vested Shares”). The Vested Percentage of Restricted Stock, as so determined, shall be multiplied by the number of Target Shares to determine the number of Shares under this step 1.

Unless the Committee or the Board otherwise determines in its sole discretion, for purposes of calculating the CAGR and ROIC (as defined below and including the determination of Annual Fiscal ROIC and NOPAT), (A) net sales and ROIC of the Company derived from acquisitions shall be included and (B) divestitures of subsidiaries or businesses of the Company shall not affect the determination of total net sales or ROIC of the Company.

Return on Invested Capital Modifier (Step 2) . If the number of Initial Vested Shares exceeds zero, then the number of “Vested Shares” shall equal the product of the Initial Vested Shares multiplied by the Modifier set forth in the following table (rounded to the nearest whole share):


ROIC	< 13.00%	13.00% to 17.99%	18.00% to 21.99%	22.00% or greater
Modifier	0.6	0.8	1.0	1.2

ROIC equals the average of the Annual Fiscal ROIC for 2013, 2014, and 2015. Annual Fiscal ROIC is defined as net operating profit after tax (“NOPAT”) for the fiscal period divided by Invested Capital where (1) NOPAT equals Operating Income of the Company for the fiscal period multiplied by (1-budgeted tax rate for the fiscal period ) and (2) Invested Capital equals total assets, less cash and cash equivalents, current and long-term investments and marketable securities, and non-interest-bearing current liabilities, and which is calculated as the average Invested Capital reflected on five balance sheet dates (the ending balance for the prior fiscal year and the ending balance for all four fiscal quarters). “Operating Income” means the consolidated operating income of the Company for the fiscal year, adjusted to remove non-recurring charges and for acquisitions as described in this subsection.

Unless the Committee or the Board otherwise determines in its sole discretion, non-recurring charges specifically include such expense items as (i) one-time charges, non-operating charges or expenses incurred that are not under the control of operations management, as ratified by the Committee or the Board; (ii) restructuring expenses; (iii) exit expenses; (iv) integration expenses; (v) Board of Directors project activities (e.g., director searches); or (vi) gains or losses on the sale of assets; (vii) acquired in-process technology or (viii) impairment charges. This list is not exhaustive and is meant to represent examples of the kind of expenses typically excluded from the calculations of income from operations. Unless the Committee or the Board otherwise determines in its sole discretion, an acquisition shall be included beginning with the first quarter beginning at least six months after the acquisition closes.

Changes in accounting principles shall be consistently applied.

Exhibit 10.4

S TOCK A PPRECIATION R IGHTS A GREEMENT

This STOCK APPRECIATION RIGHTS AGREEMENT (this “SAR Agreement”), dated as of %%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION , a Delaware corporation (the “Company”), and Anders Gustafsson (the “Participant”), relating to a stock appreciation right granted under the Zebra Technologies Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used in this SAR Agreement without definitions shall have the meanings ascribed to such terms in the Plan.

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 not later than the 40th day following the Grant Date.

(b)

(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:


Vesting Date Anniversary	Percentage of SAR Exercisable
Prior to the first anniversary of the Grant Date		0	%
On or after the first anniversary of the Grant Date		25	%
On or after the second anniversary of the Grant Date, an additional		25	%
On or after the third anniversary of the Grant Date, an additional		25	%
On or after the fourth anniversary of the Grant Date, an additional		25	%

provided, however, except as otherwise provided for under this SAR Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the applicable vesting dates.

(b)

Additional Vesting Rules . Notwithstanding Section 2(a) hereof, the SAR shall be subject to the following additional vesting rules in the following circumstances:

(i)

Death, Disability, Good Reason or Termination by the Company or any Subsidiary other than for Cause . Notwithstanding the Employment Agreement between the Company and the Participant effective as of September 4, 2007, as amended (the “Employment Agreement”), and unless otherwise determined by the Board of Directors of the Company or the Compensation Committee of the Board of Directors, in the event the Participant’s employment with the Company is terminated due to the Participant’s death or Disability, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, the number of SAR Shares that shall be vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment shall equal the number obtained by (A) multiplying the total number of SAR Shares granted as of the Grant Date under Section 1(a) by a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the date of the Participant’s termination of employment, and the denominator of which is 1461 and (B) subtracting from such product the number, if any, of SAR Shares that vested prior to the date of the Participant’s termination of employment in accordance with Section 2(a). 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; or

(C)

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.

For purposes of this SAR Agreement, “Good Reason” and “Cause” have the meanings assigned to them in the Participant’s Employment Agreement. In the event of the Participant’s death, the Participant’s beneficiary or estate may exercise the vested SAR.

(ii)

Retirement . In the event the Participant’s employment with the Company 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:

(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 Retirement.

For purposes of this SAR Agreement, “Retirement” means the Participant’s voluntary termination of employment with the Company after attaining either:

•

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).

(iii)

Termination for Cause . In the event the Participant’s employment with the Company is terminated for Cause, any unexercised SAR, whether vested or not, shall expire immediately, be forfeited, and be considered null and void.

(iv)

Other Termination of Employment . In the event the Participant’s employment with the Company is terminated for any reason other than as provided in Section 2(b)(i), (ii) or (iii) hereof, 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 thirty (30) days after the effective date of the Participant’s termination of employment.

3.	Exercise of SAR .

(c) Payment of Taxes . If the Company is obligated to withhold an amount on account of any tax imposed as a result of the exercise of the SAR, the Participant shall be required to pay such amount to the Company, as provided in Section 9.10 of the Plan. Alternatively, subject to Company approval, the Participant may elect to withhold a portion of the SAR exercise payment equal to the minimum statutory tax that would be imposed on the exercise, as provided under Section 9.10 of the Plan. The Participant acknowledges and agrees that the Participant is responsible for the tax consequences associated with the grant of the SAR and its exercise.

(i)

(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 local 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)

(i)

(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)

(iv)

(v)

(b)

(i)

breaches or violates Section 6(a) of this SAR Agreement; or

(ii)

(iii)

(iv)

(c)

Remedies for Violation.

(i)

(ii)

(d)

(e)

7.	Miscellaneous Provisions .

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

(k)

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.

(l)

(m)

(n)

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.

(o)

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.

(p)

Headings . The headings contained in this SAR Agreement are for reference purposes only and shall not affect the meaning or interpretation of this SAR Agreement.


ZEBRA TECHNOLOGIES CORPORATION
By:

Name:		Terrance Collins
Title:		Senior Vice President, Human Resources

Exhibit 10.5

R ESTRICTED S TOCK A GREEMENT

This RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of
%%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION , a Delaware corporation (the “Company”), and Anders Gustafsson (the “Participant”), relating to restricted stock granted under the Zebra Technologies Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used in this Stock Agreement without definition shall have the meanings ascribed to such terms in the Plan.

1. Grant of Restricted Stock .

(a) Grant . Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date %%TOTAL_SHARES_GRANTED,’999,999,999’%-% shares of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this Stock Agreement in the space provided below and returning it to the Company not later than the 40th day following the Grant Date.

2. Vesting of Restricted Stock .

(a) Period of Restriction .

(i)

The Restricted Stock shall be forfeitable and non-transferable during the Period of Restriction. The “Period of Restriction” with respect to the Restricted Stock shall begin on the Grant Date and end at 5:00 p.m., Central Time, on the three year anniversary of %%VEST_BASE_DATE,’MM/DD/YYYY’%-%.

(ii)

Except as otherwise provided for under this Stock Agreement, that the Participant must remain employed by the Company or any Subsidiary continuously through the Period of Restriction.

(b) Additional Vesting Rules . Notwithstanding Section 2(a) hereof, the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

(i) Death, Disability, Good Reason or Termination by the Company other than for Cause . Notwithstanding the Employment Agreement between the Company and the Participant effective as of September 4, 2007, as amended (the “Employment Agreement”), and unless otherwise determined by the Board of Directors of the Company or the Compensation Committee of the Board of Directors, in the event the Participant’s employment with the Company is terminated due to death or Disability, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, the number of shares of Restricted Stock that shall be vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment shall equal the product of the total number of shares of Restricted Stock granted as of the Grant Date under Section 1(a) multiplied by a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1096. For purposes of this Stock Agreement, “Good Reason” and “Cause” have the meanings assigned to them in the Participant’s Employment Agreement.

(ii) Other Termination of Employment . In the event the Participant’s employment with the Company is terminated for any reason other than as provided in Section 2(b)(i), any unvested Restricted Stock as of the effective date of the Participant’s termination of employment shall immediately be forfeited to the Company.

3. Rights While Holding Restricted Stock .

(c) Section 83(b) Election . The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(ii) the Participant complying with any federal, state, or local tax withholding obligations; and

(iii) its deferring payment of any amount that it reasonably determines would not be deductible under Code Section 162(m) until the earlier of:

(A)

the earliest date on which the Company reasonably determines that the deductibility of the payment will not be limited; or

(B)

the year following the Participant’s termination of employment.

5. Change in Control . Subject to Section 9.8 of the Plan:

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which Section 5(a) above does not apply, this grant shall be surrendered to the Company by the Participant, and this grant shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of Shares of unvested Restricted Stock as of the effective date of the Change in Control, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6. Confidentiality, Non-Solicitation and Non-Compete . The Participant agrees to, understands and acknowledges the following:

(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;

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(i) breaches or violates Section 6(a) of this Stock Agreement; or

(iv) solicits or encourages any customer, 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;

the unvested Restricted Stock shall be forfeited automatically on the date the Participant engages in such activity and then the Participant shall pay the Company, within five business days of receipt by the Participant of a written demand therefor, an amount in cash determined by multiplying the number of Shares of Restricted Stock subject to this Stock Agreement which vested within the one-year period described above by the Fair Market Value of a Share, determined as of the date of vesting.

(i) Injunctive Action . 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 Stock Agreement (including any provision of Section 6(a) or (b) hereof) 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 Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or a 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) hereof, the Company will have the right to cancel this Stock Agreement.

(ii) Forfeiture of Restricted Stock. In addition to the rights available to the Company and its Subsidiaries under Section 6(c)(i) hereof, if the Participant violates the terms of this Section 6 at any time, the Participant, without any further action by the Company or the Participant, shall forfeit, as of the first day of any such violation, all right, title and interest to unvested Restricted Stock and the Company further 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 Restricted Stock 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 to the Company under this Section 6. In addition to any injunctive relief sought under Section 6(c)(i) hereof 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.

7.	Miscellaneous Provisions .

(j) Counterparts . This Stock 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.

(n) Amendment . Any amendment to this Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

(o) Headings . The headings contained in this Stock Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Stock Agreement.

ZEBRA TECHNOLOGIES CORPORATION

By:

Name: Terrance Collins

Title: Senior Vice President, Human Resources

Exhibit 10.6

R ESTRICTED S TOCK A GREEMENT

This RESTRICTED STOCK AGREEMENT (this “Stock Agreement”), dated as of
%%OPTION_DATE,’MM/DD/YYYY’%-% (the “Grant Date”), is between ZEBRA TECHNOLOGIES CORPORATION , a Delaware corporation (the “Company”), and Anders Gustafsson (the “Participant”), relating to restricted stock granted under the Zebra Technologies Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used in this Stock Agreement without definition shall have the meanings ascribed to such terms in the Plan.

1. Grant of Restricted Stock .

Grant . Subject to the provisions of this Stock Agreement and pursuant to the provisions of the Plan, the Company hereby grants to the Participant as of the Grant Date %%OPTION_DATE,’MM/DD/YYYY’%-% shares (the “Target Shares”) of the Company’s Class A Common Stock, $.01 par value per share (the “Restricted Stock”). This Stock Agreement shall be null and void unless the Participant accepts this Stock Agreement by either (i) electronically accepting this Stock Agreement through the Company’s electronic delivery and acceptance process operated by e*Trade or (ii) executing this Stock Agreement in the space provided below and returning it to the Company not later than the 40th day following the Grant Date.

Nontransferability . Except as otherwise permitted under the Plan or this Stock Agreement, the Restricted Stock granted hereunder shall be non-transferable by the Participant during the Period of Restriction set forth under Section 2 of this Stock Agreement.

2. Vesting of Restricted Stock .

Period of Restriction and Performance Goal .

(i)

(ii)

Except as otherwise provided for under this Stock Agreement, the Participant must remain employed by the Company or any Subsidiary continuously through the Period of Restriction.

Additional Vesting Rules . Notwithstanding Section 2(a) hereof, the Restricted Stock shall be subject to the following additional vesting rules in the following circumstances:

(i)

Directors of the Company or the Compensation Committee of the Board of Directors, in the event the Participant’s employment with the Company and its Subsidiaries is terminated due to death or Disability, or by reason of the Participant’s resignation for Good Reason, or by the Company other than for Cause, the number of shares of Restricted Stock that shall be vested as of 5:00 p.m., Central Time, on the effective date of the Participant’s termination of employment shall equal the product of the number of Target Shares granted as of the Grant Date under Section 1(a) multiplied by a fraction, the numerator of which is the number of days from but excluding the Grant Date and to and including the effective date of the Participant’s termination of employment, and the denominator of which is 1096. For purposes of this Stock Agreement, “Good Reason” and “Cause” have the meanings assigned to them in the Participant’s Employment Agreement.

(ii)

Other Termination of Employment . In the event the Participant’s employment with the Company is terminated for any reason other than as provided in Section 2(b)(i), all Shares of Restricted Stock shall immediately be forfeited to the Company.

3. Rights While Holding Restricted Stock .

c. Section 83(b) Election . The Participant is not permitted to make a Section 83(b) election with respect to the Restricted Stock.

(ii) the Participant complying with any federal, state or local tax withholding obligations.

5. Change in Control . Subject to Section 9.8 of the Plan:

(b) Notwithstanding any provision in this Agreement to the contrary, in the event of a Change in Control pursuant to
Section 2.5(a) or (b) of the Plan, or in the event of a Change in Control pursuant to Section 2.5(c) or (d) of the Plan as to which
Section 5(a) above does not apply, this grant shall be surrendered to the Company by the Participant, and this grant shall immediately be canceled by the Company, and the Participant shall receive, within 10 days following the effective date of the Change in Control, a cash payment from the Company in an amount equal to the number of Target Shares, multiplied by the greater of (i) the highest per Share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (ii) the Fair Market Value of a Share on the effective date of the Change in Control.

6. Confidentiality, Non-Solicitation and Non-Compete . Participant agrees to, understands and acknowledges the following:

(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;

All Company Materials are and will be the sole property of the Company and/or Subsidiary. The Participant agrees that during and after his or her employment by the Company and/or Subsidiary, the Participant will not remove any Company Materials from the business premises of the Company or a Subsidiary or deliver any Company Materials to any person or entity outside the Company or a Subsidiary, except as the Participant is required to do so in connection with performing the duties of his or her employment. The Participant further agrees that, immediately upon the termination of his or her employment for any reason, or during the Participant’s employment if so requested by the Company, the Participant will return all Company Materials and other physical property, and any reproduction thereof, excepting only the Participant’s copy of this Agreement. For purposes of this Stock Agreement, “Company Materials” means documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company and/or any Subsidiary, whether such documents have been prepared by the Participant or by others.

(i) breaches or violates Section 6(a) of this Stock Agreement; or

c. Remedies for Violation .

(i) Injunctive Action . 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 Stock Agreement (including any provision of Section 6(a) or (b) hereof) 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 Stock Agreement, and the Company and/or a Subsidiary will not be obligated to post bond or other security in seeking such relief. Without limiting the Company’s or a 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) hereof, the Company will have the right to cancel this Stock Agreement.

7. Miscellaneous Provisions .

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.

j. Counterparts . This Stock Agreement may be signed in two counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

n. Amendment . Any amendment to this Stock Agreement shall be in writing and signed by an executive officer of the Company or the Director of Compensation and Benefits.

ZEBRA TECHNOLOGIES CORPORATION

By:

Name: Terrance Collins

Title: Senior Vice President, Human Resources

Exhibit A

Total Net Sales Performance Goal (Step 1).


	Below Threshold			Threshold			Target			Maximum
Compounded Annual Growth Rate of Total Net Sales		< 5.00	%		5.00	%		7.50	%		10.00	%
Vested Percentage of Restricted Stock		0	%		50.00	%		100.00	%		150.00	%

Compounded Annual Growth Rate of Total Net Sales (“CAGR”) equals (A) the quotient obtained by dividing 2014 total net sales of the Company by 2011 total net sales of the Company, (B) raised to the one-third power, minus (C) one. CAGR shall be rounded to the nearest one-hundredth of one percent. For a CAGR between 5.00% and 10.00%, the Vested Percentage of Restricted Stock shall be interpolated on a straight line basis and rounded to the nearest one-hundredth of one percent.

Annual Net Sales Performance Goal: The Participant is eligible for banking of a specified number of shares on an annual basis based upon an implied annual growth rate. Unless the Committee or the Board otherwise determines in its sole discretion, the implied annual growth target will be the same as the three-year CAGR target of 7.5%. If, as of December 31 of each calendar year commencing December 31, 2012, the implied annual target is achieved, 1/3 of the number of Target Shares (rounded to the nearest whole Share) shall be banked for further calculations in steps 1 and 2. If the implied annual target for such year is not achieved, then no Shares shall be banked for such year. No interpolation or pro-ration is applied to the number of Shares if the implied annual target is not achieved and, if the implied annual target is exceeded, no additional Target Shares in respect of such year shall be banked. The sum of the banked shares in respect of each calendar year, if any, shall be the “Minimum Initial Vested Shares”.

As of December 31, 2014, the greater of either (1) the Minimum Initial Vested Shares or (2) the number of Shares determined under this step 1 pursuant to the first paragraph in this Exhibit A shall be the initial number of Shares of Restricted Stock, if any, that vest and shall be rounded to the nearest whole Share (the “Initial Vested Shares”). The Vested Percentage of Restricted Stock, as so determined, shall be multiplied by the number of Target Shares to determine the number of Shares under this step 1.

Unless the Committee or the Board otherwise determines in its sole discretion, for purposes of calculating the CAGR (A) net sales of the Company derived from acquisitions shall be included and (B) divestitures of subsidiaries or businesses of the Company shall not affect the 2011 total net sales of the Company.


ROIC	< 13.00%	13.00% to < 18.00%	18.00% to < 22.00	Equal to or greater than 22.00%
Modifier	0.6	0.8	1.0	1.2

ROIC equals the average of the Annual Fiscal ROIC for 2012, 2013, and 2014. Annual Fiscal ROIC is defined as net operating profit after tax (“NOPAT”) for the fiscal period divided by Invested Capital where (1) NOPAT equals Operating Income of the Company for the fiscal period multiplied by (1-budgeted tax rate for the fiscal period ) and (2) Invested Capital equals total assets, less cash and cash equivalents, current and long-term investments and marketable securities, and non-interest-bearing current liabilities, and which is calculated as the average Invested Capital reflected on five balance sheet dates (the ending balance for the prior fiscal year and the ending balance for all four fiscal quarters. “Operating Income” means the consolidated operating income of the Company for the fiscal year, adjusted to remove non-recurring charges and for acquisitions as described in this subsection.

Unless the Committee or the Board otherwise determines in its sole discretion, non-recurring charges specifically include such expense items as (i) one-time charges, non-operating charges or expenses incurred that are not under the control of operations management, as ratified by the Committee or the Board; (ii) restructuring expenses; (iii) exit expenses; (iv) integration expenses; (v) Board of Directors project activities (e.g.: director searches); or (vi) gains or losses on the sale of assets; (vii) acquired in-process technology or (viii) impairment charges. This list is not exhaustive and is meant to represent examples of the kind of expenses typically excluded from the calculations of income from operations. Unless the Committee or the Board otherwise determines in its sole discretion, an acquisition shall be included beginning with the first quarter beginning at least six months after the acquisition closes.

Changes in accounting principles shall be consistently applied.

Exhibit 10.7

AMENDMENT TO LEASE

This Amendment to Lease (“Amendment”) made as of this 26th day of November, 2012 between BLDG Vernon LLC and Bacael Vernon, LLC, with offices located at c/o BLDG Management Co., Inc., 417 Fifth Avenue, Suite 400, New York, New York 10016 (collectively, hereinafter referred to as “Landlord”), and Zebra Technologies Corporation (hereinafter referred to as ‘Tenant”).

STATEMENT OF FACTS

Landlord and Tenant are presently parties to a lease dated as of the 15th day of May, 1989 (hereinafter, as subsequently amended by the Amendment to Industrial Building Lease dated September 1, 1991, the Amendment to Industrial Building Lease dated April 1, 1993, the Amendment to Industrial Building Lease dated December 1, 1994, the Amendment to Industrial Building Lease dated October 1, 1995, the Amendment to Industrial Building Lease dated June 1, 1996, the Amendment to Industrial Building Lease dated June 2, 1996, and the Amendment to Industrial Building Lease dated July 1, 1999, referred to as the “Lease”), whereby Landlord leases to Tenant and Tenant hires from Landlord certain premises (“demised premises”) in a building known and numbered as 333 Corporate Woods Parkway, Vernon Hills, Illinois upon all of the terms, covenants, conditions, and provisions more particularly contained in the Lease. Landlord and Tenant now desire to amend the Lease, and to otherwise modify the Lease, as hereinafter provided.

NOW, THEREFORE, for Ten ($10.00) Dollars and other good and valuable consideration, the receipt and adequacy of which is hereby mutually acknowledged, Landlord and Tenant hereby agree to the following:

1. Unless the text hereof shall indicate otherwise, the terms commencing with an initial capital letter used herein shall have the meanings ascribed to them in the Lease.

2. The term shall be extended for the period beginning July 1, 2014 and ending June 30, 2015, inclusive, unless sooner terminated pursuant to terms and provisions of the Lease, or pursuant to law.

3. Notwithstanding any provision in the Lease to the contrary, the rental clause of the Lease shall be amended to provide the annual and monthly Base Rent payable by Tenant shall be the following amounts during the following periods:


Period	Annual Base Rent		Monthly Base Rent
7/1/14-6/30/15	$	2,532,746.28	$	211,062.19

4. Notwithstanding any other provision in the Lease to contrary, Tenant at its sole expense shall maintain at all times during the term:

(a) a policy of commercial general liability and property damage insurance, covering Tenant’s indemnity obligations under this Lease against claims for personal injury, death and/or property damage occurring in or about the premises, the Building and/or the Real Property, including products liability and completed operations, shall be a combined single limit with respect to each occurrence in an amount of not less than One Million Dollars ($1,000,000.00) it being agreed and understood that such limit of coverage may be provided by Tenant’s commercial general liability and property damage policy in conjunction with an umbrella liability or excess liability policy;

(b) insurance against loss or damage by fire and such other risks and hazards (including, during the period of construction of any Tenant’s Property and Alterations, casualty insurance in the so-called “Builder’s Risk Completed Value Non-Reporting Form”, burglary, theft and breakage of glass within the premises) as are insurable under the available standard forms of “all risk” insurance policies, to Tenant’s property and Alterations, for the full replacement cost value thereof (including an “agreed amount” endorsement); and

(c) Worker’s compensation insurance, in such amounts as shall be required, from time to time during the Lease term, by the legal requirements of any applicable Legal Authority.

The comprehensive liability policy shall have as an additional insured, until Landlord advises otherwise, BLDG Vernon LLC, Bacael Vernon, LLC, BLDG Management Co., Inc., Lloyd Goldman, Dorian Goldman and Katja Goldman.

5. Tenant represents and warrants that it has dealt with no broker and/or finder in connection with this Amendment other than Jones Lang LaSalle Midwest LLC (“Broker”) and that no broker, other than Broker, negotiated or procured this Amendment or is entitled to any commission in connection herewith. Tenant shall indemnify and hold Landlord harmless from and against any loss, damage, liability, cost or expense, including, without limitation, reasonable attorney’s fees and disbursements, by reason of a breach of or any inaccuracy in the foregoing representations and warranties by Tenant. The provisions of this Paragraph shall survive the expiration or termination of this Amendment.

6. Tenant represents and warrants that it has not assigned or encumbered the Lease nor sublet the Premises; that Landlord is not in default in the fulfillment or performance of any of the terms, covenants, conditions or provisions on Landlord’s part to be fulfilled or performed; and Tenant has no present defense, counterclaim or right of offset against Landlord. By entering into this Amendment, Landlord does not and shall not be deemed to consent to any matter as to which Landlord’s consent is required under the terms of this Lease.

7. Except as otherwise provided herein, all the terms, covenants, conditions and provisions of the Lease shall remain and continue unmodified, in full force and effect and binding upon the parties hereto, their heirs, administrators, executors and their permitted assigns.

8. This Amendment may not be modified or cancelled orally, nor any of its provisions waived, except by an agreement in writing signed by the party against whom any enforcement of any modification, cancellation or waiver is sought.

9. This Amendment shall inure to the benefit of and bind the parties hereto, their heirs, distributees, executors, administrators, successors and, except as otherwise provided in the Lease, their assigns.

10. Tenant shall pay all Fixed Rent and additional rent to the management company from time to time designated by Landlord. Landlord hereby designates BLDG Management Co., Inc., and Tenant shall make all payments to Landlord’s designee unless and until Landlord notifies Tenant of any change in accordance with the Lease.

11. The person executing this Amendment on behalf of Tenant represents and warrants that Tenant is duly formed under the laws of the State of Delaware and is qualified and authorized to do business in the State of Illinois, that Tenant has the full power and authority to enter into this Amendment and that he or she is duly authorized to execute this Amendment on behalf of Tenant.

IN WITNESS WHEREOF, Landlord and Tenant have respectively signed this Amendment as of the day and year first written above.


LANDLORD:
BLDG Vernon LLC and Bacael Vernon, LLC

BY:
		Lloyd Goldman, President of the Managing Member

TENANT: Zebra Technologies Corporation

BY:
		Name: Michael C. Smiley
		Title: CFO

Exhibit 31.1

CERTIFICATION

I, Anders Gustafsson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Zebra Technologies Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 31.2

CERTIFICATION

I, Michael C. Smiley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Zebra Technologies Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Zebra Technologies Corporation (Zebra) on Form 10-Q for the period that ended March 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anders Gustafsson, Chief Executive Officer of Zebra, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Zebra.

A signed original of this written statement required by Section 906, or another document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Zebra and will be retained by Zebra and furnished to the Securities and Exchange Commission or its staff upon request.


Date: May 2, 2013	By:	/s/Anders Gustafsson
		Anders Gustafsson
		Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Zebra Technologies Corporation (Zebra) on Form 10-Q for the period that ended March 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael C. Smiley, Chief Financial Officer of Zebra, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Zebra.


Date: May 2, 2013	By:	/s/ Michael C. Smiley
		Michael C. Smiley
		Chief Financial Officer

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