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2010 Fourth Quarter Record Earnings

Zebra Technologies Announces Record Earnings per Share in 2010 Fourth Quarter
Investments in geographic expansion contribute to strong growth in international regions

Lincolnshire, IL, February 15, 2011─Zebra Technologies Corporation (NASDAQ: ZBRA) today announced fourth quarter net income of $28,217,000, or a recored $0.50 per diluted share, including $1,134,000 in exit, restructuring and integration costs that reduce diluted earnings by $0.01 per share. Quarterly net sales of $248,175,000 were up 11.5% from $222,522,000 for the same period of 2009. Net income for the fourth quarter of 2009 was $17,630,000, or $0.30 per diluted share, including $2,737,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.03 per share.

"Zebra's sixth quarter of sequential sales growth accompanied further improvements in gross margin to produce our second quarterly record in EPS" stated Anders Gustafsson, Zebra's chief executive officer. "Our success in the fourth quarter and throughout 2010 is a direct result of the leverage we have in our financial strength, global go-to-market channels, broad product line and other competitive advantages. During the year we extended our industry leadership with additional sales representation in high-growth regions, broader and stronger distribution, and introductions of new, innovative products that enable us to serve more of our customers' asset tagging needs. These and other accomplishments make us optimistic in our capacity to achieve further growth and create greater value for all of our shareholders." 

As of December 31, 2010, Zebra had $259,899,000 in cash and investments, and no long-term debt. Net inventories were
$113,742,000, and net accounts receivable were $154,146,000.

Discussion and Analysis

  • Net sales for the fourth quarter of 2010 compared with the 2009 fourth quarter benefited from improved business conditions in all geographic regions, with the highest growth rates occurring in Latin America and Asia Pacific. All major printer product categories and aftermarket parts contributed to the growth. Quarterly sales increased 14.4% on a constant-currency basis from a year ago. 
  • Gross margin of 49.8% versus 45.6% a year ago was principally driven by higher volumes, an improved product mix, product material savings and lower overhead and freight charges. These factors were partially offset by unfavorable movements in foreign exchange rates.  
  • Operating expenses increased 10.6% from the fourth quarter of 2009 substantially from increased selling and marketing and research and development expenses related to higher costs for compensation, business development, outside professional services, travel and entertainment, and project expenses. 
  • Fourth quarter operating expenses for 2010 include $1,082,000 in favorable litigation settlements related to escrow funds associated with prior acquisitions. 
  • The income tax rate of 29.9% for the fourth quarter of 2010 reflects an extension of Federal R&D tax credits. In addition, as Zebra's business continued to expand more rapidly in international regions that have lower tax rates, the company's consolidated global tax rate has declined. 

For the full year, net sales were $956,848,000, up 19.1% from $803,585,000. Net income for 2010 totaled $101,778,000,
or a record $1.77 per diluted share, compared with $47,104,000, or $0.79 per diluted share for 2009. Exit, restructuring and integration costs for 2010 totaled $4,197,000 and reduced diluted earnings by $0.05 per share. For 2009, exit, restructuring and integration costs of $12,191,000 lowered diluted earnings by $0.14 per share.

Stock Purchase Update
During the fourth quarter of 2010, Zebra repurchased 900,000 shares of Zebra Technologies Corporation Class A Common Stock. At December 31, 2010, 1,850,000 shares remained in the company's stock buyback authorization, and 55,711,325 shares of common stock were outstanding.

First Quarter Outlook

Zebra announced its financial forecast for the first quarter of 2011. Net sales are expected within a range of $224,000,000 to $235,000,000, reflecting the pending sale of the company's Navis operation and certain other assets. For the first quarter of 2010, Zebra's reported net sales were $226,431,000, including sales for Navis and the certain other assets in the range of $14,000,000 to $16,000,000. Adjusting for these sales, the company calculates that first quarter 2010 net sales were in the range of $210,431,000 and $212,431,000. Diluted earnings per share from continuing operations for the first quarter of 2011 are expected within a range of $0.41 to $0.47, including $0.02 per share in exit, restructuring and integration costs.

On January 31, 2011, Zebra announced a definitive agreement to sell its Navis operation and other related assets to Cargotec Corporation for approximately $190,000,000 in cash. The transaction is expected to be completed in the first quarter of 2011 and is subject to regulatory approvals, customary closing conditions and working capital adjustments. The Navis operation and certain other assets will be designated as discontinued operations beginning in the first quarter of 2011.

Conference Call Notification

Investors are invited to listen to a live Internet broadcast of Zebra's conference call discussing the company's financial results for the fourth quarter of 2010. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company's Web site at http://www.zebra.com.

Forward-looking Statement

This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company's financial forecast for the first quarter of 2011 stated in the paragraph above captioned "First Quarter Outlook." Actual results may differ from those expressed or implied in the company's forward-looking statements. These statements represent estimates only as of the date they were made. 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 release.

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 customer acceptance of Zebra's hardware and software products and competitors' product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit, capital markets volatility, may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships.

Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs. Risks to financial results also include the timing and successful completion of the Navis divestiture as well as the successful integration of the remaining portion of Zebra Enterprise Solutions into Zebra. Because of a large investment portfolio, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. These and other factors could have an adverse effect on Zebra's sales, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words "anticipate," "believe," "estimate," and "expect" and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company's future operations and results can be found in Zebra's filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra's Form 10-K for the year ended December 31, 2009.

About Zebra Technologies

Zebra Technologies Corporation (NASDAQ: ZBRA) gives customers visibility of critical assets, people and transactions through a broad range of printing and location technologies. Our barcode, card, kiosk and RFID printers as well as real-time location solutions have made us a recognized global leader in providing enabling solutions that identify, track, and manage critical assets, people and transactions for improved business efficiencies.

For more information about Zebra's solutions, visit http://www.zebra.com.

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