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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2024
OR
☐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)
Delaware36-2675536
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
3 Overlook Point, Lincolnshire, IL 60069
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (847) 634-6700
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Class A Common Stock, par value $.01 per shareZBRAThe NASDAQ Stock Market, LLC
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  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes   ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 Large accelerated filer☒Accelerated filer☐
 Non-accelerated filer☐Smaller reporting company☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) 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  ☒
As of October 22, 2024, there were 51,580,028 shares of Class A Common Stock, $.01 par value, outstanding.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
QUARTER ENDED SEPTEMBER 28, 2024
TABLE OF CONTENTS
 
  PAGE
Item 1.
Item 2.
Item 3.
Item 4.
Item 5.
Item 1.
Item 1A.
Item 2.
Item 6.
2
PART I - FINANCIAL INFORMATION
 
Item 1.Consolidated Financial Statements
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
September 28,
2024		December 31,
2023
 (Unaudited)
Assets
Current assets:
Cash and cash equivalents$676 $137 
Accounts receivable, net of allowances for doubtful accounts of $1 each as of September 28, 2024 and December 31, 2023
642 521 
Inventories, net639 804 
Income tax receivable67 63 
Prepaid expenses and other current assets109 147 
Total Current assets2,133 1,672 
Property, plant and equipment, net302 309 
Right-of-use lease assets173 169 
Goodwill3,895 3,895 
Other intangibles, net447 527 
Deferred income taxes501 438 
Other long-term assets239 296 
Total Assets$7,690 $7,306 
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt$89 $173 
Accounts payable533 456 
Accrued liabilities490 504 
Deferred revenue432 458 
Income taxes payable18 7 
Total Current liabilities1,562 1,598 
Long-term debt2,080 2,047 
Long-term lease liabilities162 152 
Deferred income taxes66 67 
Long-term deferred revenue304 312 
Other long-term liabilities95 94 
Total Liabilities4,269 4,270 
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued
— — 
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares
1 1 
Additional paid-in capital653 615 
Treasury stock at cost, 20,609,801 and 20,772,995 shares as of September 28, 2024 and December 31, 2023, respectively
(1,871)(1,858)
Retained earnings4,697 4,332 
Accumulated other comprehensive loss(59)(54)
Total Stockholders’ Equity3,421 3,036 
Total Liabilities and Stockholders’ Equity$7,690 $7,306 
See accompanying Notes to Consolidated Financial Statements.
3
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share data)
(Unaudited)
 
 Three Months EndedNine Months Ended
 September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net sales:
Tangible products$1,019 $729 $2,931 $2,885 
Services and software236 227 716 690 
Total Net sales1,255 956 3,647 3,575 
Cost of sales:
Tangible products526 419 1,539 1,559 
Services and software116 110 343 341 
Total Cost of sales642 529 1,882 1,900 
Gross profit613 427 1,765 1,675 
Operating expenses:
Selling and marketing151 138 449 445 
Research and development141 127 425 403 
General and administrative96 88 274 256 
Amortization of intangible assets29 26 80 78 
Acquisition and integration costs1 2 3 4 
Exit and restructuring costs4 58 17 82 
Total Operating expenses422 439 1,248 1,268 
Operating income (loss)191 (12)517 407 
Other (loss) income, net:
Foreign exchange (loss) gain(9)6 (6)2 
Interest expense, net(31)(16)(71)(69)
Other expense, net(2)(2)(13)(8)
Total Other expense, net(42)(12)(90)(75)
Income (loss) before income tax 149 (24)427 332 
Income tax expense (benefit)12 (9)62 53 
Net income (loss)$137 $(15)$365 $279 
Basic earnings (loss) per share$2.65 $(0.28)$7.09 $5.44 
Diluted earnings (loss) per share$2.64 $(0.28)$7.04 $5.40 
See accompanying Notes to Consolidated Financial Statements.
4
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 Three Months EndedNine Months Ended
 September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net income (loss)$137 $(15)$365 $279 
Other comprehensive income (loss), net of tax:
Changes in unrealized (losses) gains on sales hedging(16)23 (6)24 
Foreign currency translation adjustment9 (7)1 (2)
Comprehensive income$130 $1 $360 $301 
See accompanying Notes to Consolidated Financial Statements.
5
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except share data)
(Unaudited)
Class A Common Stock SharesClass A Common Stock ValueAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive LossTotal
Balance at December 31, 202351,378,862 $1 $615 $(1,858)$4,332 $(54)$3,036 
Issuances of treasury shares related to share-based compensation plans, net of forfeitures21,312 — (3)— — — (3)
Shares withheld to fund withholding tax obligations related to share-based compensation plans(206)— — — — — — 
Share-based compensation— — 17 — — — 17 
Net income— — — — 115 — 115 
Changes in unrealized gains and losses on sales hedging (net of income taxes)— — — — — 9 9 
Foreign currency translation adjustment— — — — — (5)(5)
Balance at March 30, 202451,399,968 $1 $629 $(1,858)$4,447 $(50)$3,169 
Issuances of treasury shares related to share-based compensation plans, net of forfeitures170,023 — (27)3 — — (24)
Share-based compensation— — 31 — — — 31 
Net income— — — — 113 — 113 
Changes in unrealized gains and losses on sales hedging (net of income taxes)— — — — — 1 1 
Foreign currency translation adjustment— — — — — (3)(3)
Balance at June 29, 202451,569,991 $1 $633 $(1,855)$4,560 $(52)$3,287 
Issuances of treasury shares related to share-based compensation plans, net of forfeitures22,369 — — — — — — 
Share-based compensation— — 20 — — — 20 
Repurchase of common stock(50,304)— — (16)— — (16)
Net income— — — — 137 — 137 
Changes in unrealized gains and losses on sales hedging (net of income taxes)— — — — — (16)(16)
Foreign currency translation adjustment— — — — — 9 9 
Balance at September 28, 202451,542,056 $1 $653 $(1,871)$4,697 $(59)$3,421 
=

6
Class A Common Stock SharesClass A Common Stock ValueAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive LossTotal
Balance at December 31, 202251,451,500 $1 $561 $(1,799)$4,036 $(66)$2,733 
Issuances of treasury shares related to share-based compensation plans, net of forfeitures29,784 — 5 — — — 5 
Shares withheld to fund withholding tax obligations related to share-based compensation plans(504)— — — — — — 
Share-based compensation— — 18 — — — 18 
Repurchase of common stock(55,811)— — (15)— — (15)
Net income— — — — 150 — 150 
Changes in unrealized gains and losses on sales hedging (net of income taxes)— — — — — (3)(3)
Foreign currency translation adjustment— — — — — 3 3 
Balance at April 1, 202351,424,969 $1 $584 $(1,814)$4,186 $(66)$2,891 
Issuances of treasury shares related to share-based compensation plans, net of forfeitures75,271 — (6)1 — — (5)
Shares withheld to fund withholding tax obligations related to share-based compensation plans(28,795)— — (9)— — (9)
Share-based compensation— — 2 — — — 2 
Repurchase of common stock(138,508)— — (37)— — (37)
Net income— — — — 144 — 144 
Changes in unrealized gains and losses on sales hedging (net of income taxes)— — — — — 4 4 
Foreign currency translation adjustment— — — — — 2 2 
Balance at July 1, 202351,332,937 $1 $580 $(1,859)$4,330 $(60)$2,992 
Issuances of treasury shares related to share-based compensation plans, net of forfeitures26,506 — — 1 — — 1 
Shares withheld to fund withholding tax obligations related to share-based compensation plans(159)— — — — — — 
Share-based compensation— — 19 — — — 19 
Net loss— — — — (15)— (15)
Changes in unrealized gains and losses on sales hedging (net of income taxes)— — — — — 23 23 
Foreign currency translation adjustment— — — — — (7)(7)
Balance at September 30, 202351,359,284 $1 $599 $(1,858)$4,315 $(44)$3,013 

See accompanying Notes to Consolidated Financial Statements.
7
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 28,
2024		September 30,
2023
Cash flows from operating activities:
Net income$365 $279 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization130 132 
Share-based compensation68 39 
Deferred income taxes(62)(35)
Unrealized gain on forward interest rate swaps(31)(34)
Other, net12 3 
Changes in operating assets and liabilities:
Accounts receivable, net(120)228 
Inventories, net161 7 
Other assets5 (25)
Accounts payable79 (402)
Accrued liabilities68 (79)
Deferred revenue(34)(12)
Income taxes25 (134)
Settlement liability(45)(135)
Cash receipts on forward interest rate swaps86 20 
Other operating activities— 3 
Net cash provided by (used in) operating activities707 (145)
Cash flows from investing activities:
Purchases of property, plant and equipment(41)(48)
Proceeds from sale of short-term investments2 — 
Purchases of long-term investments(3)(1)
Net cash used in investing activities(42)(49)
Cash flows from financing activities:
Payment of debt issuance costs, extinguishment costs and discounts(9)— 
Payments of debt(694)(221)
Proceeds from issuance of debt651 469 
Payments for repurchases of common stock(16)(52)
Net payments related to share-based compensation plans(27)(8)
Change in unremitted cash collections from servicing factored receivables(35)(48)
Other financing activities3 — 
Net cash (used in) provided by financing activities(127)140 
Effect of exchange rate changes on cash and cash equivalents, including restricted cash— (2)
Net increase (decrease) in cash and cash equivalents, including restricted cash538 (56)
Cash and cash equivalents, including restricted cash, at beginning of period138 117 
Cash and cash equivalents, including restricted cash, at end of period$676 $61 
Less restricted cash, included in Prepaid expenses and other current assets— — 
Cash and cash equivalents at end of period$676 $61 
Supplemental disclosures of cash flow information:
Income taxes paid$90 $227 
Interest paid inclusive of forward interest rate swaps$3 $80 
Certain prior period amounts included in Net cash provided by (used in) operating activities have been reclassified to conform with the current period presentation.
See accompanying Notes to Consolidated Financial Statements.

8
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Description of Business and Basis of Presentation

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic identification and data capture solutions industry. We design, manufacture, and sell a broad range of products and solutions, including cloud-based software subscriptions, that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, managed and professional services. End-users of our products, solutions and services include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries. We provide our products, solutions and services globally through a direct sales force and an extensive network of channel partners.

Management prepared these unaudited interim consolidated financial statements according to the rules and regulations of the Securities and Exchange Commission for interim financial information and notes. As permitted under Article 10 of Regulation S-X and the instructions of Form 10-Q, these consolidated financial statements do not include all the information and notes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements, although management believes that the disclosures made are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

In the opinion of the Company, these interim financial statements include all adjustments (of a normal, recurring nature) necessary to fairly present its Consolidated Balance Sheet as of September 28, 2024, the Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three and nine months ended September 28, 2024 and September 30, 2023, and the Consolidated Statement of Cash Flows for the nine months ended September 28, 2024 and September 30, 2023. These results, however, are not necessarily indicative of the results expected for the full fiscal year ending December 31, 2024.

Note 2 Significant Accounting Policies

For a discussion of our significant accounting policies, see Note 2, Significant Accounting Policies within Part II, Item 8. “Financial Statements and Supplementary Data” in the Annual Report on Form 10-K for the year ended December 31, 2023. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2023.

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Note 3 Revenues

The Company recognizes revenue to depict the transfer of goods, solutions or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods, solutions or services.

Revenues for tangible products are generally recognized upon shipment, whereas revenues for services and solution offerings are generally recognized over time by using an output or time-based method, assuming all other criteria for revenue recognition have been met. Revenues for software are recognized either upon delivery or over time using a time-based method, depending on how control is transferred to the customer. In cases where a bundle of products, services, solutions and/or software are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

Disaggregation of Revenue
The following table presents our Net sales disaggregated by product category for each of our segments (in millions):

Three Months Ended
September 28, 2024September 30, 2023
SegmentTangible ProductsServices and SoftwareTotalTangible ProductsServices and SoftwareTotal
AIT$382 $28 $410 $295 $29 $324 
EVM637 208 845 434 198 632 
Total$1,019 $236 $1,255 $729 $227 $956 
Nine Months Ended
September 28, 2024September 30, 2023
SegmentTangible ProductsServices and SoftwareTotalTangible ProductsServices and SoftwareTotal
AIT$1,115 $84 $1,199 $1,222 $83 $1,305 
EVM1,816 632 2,448 1,663 607 2,270 
Total$2,931 $716 $3,647 $2,885 $690 $3,575 

In addition, refer to Note 16, Segment Information & Geographic Data for Net sales to customers by geographic region.

Performance Obligations
The Company’s remaining performance obligations relate to services and software solutions. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $1.24 billion and $1.13 billion, inclusive of deferred revenue, as of September 28, 2024 and December 31, 2023, respectively. On average, remaining performance obligations as of September 28, 2024 and December 31, 2023 are expected to be recognized over a period of approximately two years.

Contract Balances
Progress on satisfying performance obligations under contracts with customers related to billed revenues is reflected on the Consolidated Balance Sheets in Accounts receivable, net. Progress on satisfying performance obligations under contracts with customers related to unbilled revenues (“contract assets”) is reflected on the Consolidated Balance Sheets as Prepaid expenses and other current assets for revenues expected to be billed within the next twelve months, and Other long-term assets for revenues expected to be billed thereafter. The total contract asset balances were $13 million and $16 million as of September 28, 2024 and December 31, 2023, respectively. These contract assets result from timing differences between billing and satisfying performance obligations, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Contract assets are evaluated for impairment and no impairment losses have been recognized during the three and nine months ended September 28, 2024 and September 30, 2023, respectively.

10
Deferred revenue on the Consolidated Balance Sheets consists of payments and billings in advance of our performance. The combined short-term and long-term deferred revenue balances were $736 million and $770 million as of September 28, 2024 and December 31, 2023, respectively. During the three and nine months ended September 28, 2024, the Company recognized $107 million and $374 million in revenue, which was previously included in the beginning balance of deferred revenue as of December 31, 2023. During the three and nine months ended September 30, 2023, the Company recognized $100 million and $349 million in revenue, which was previously included in the beginning balance of deferred revenue as of December 31, 2022.

Note 4 Inventories

The categories of Inventories, net are as follows (in millions): 
 September 28,
2024		December 31,
2023
Raw materials (1)
$270 $403 
Work in process3 4 
Finished goods366 397 
Total Inventories, net$639 $804 

(1) Raw material inventories primarily consist of product components as well as supplies used in repair operations.

Note 5 Investments

The carrying value of the Company’s long-term investments, which are included in Other long-term assets on the Consolidated Balance Sheets, was $110 million and $113 million as of September 28, 2024 and December 31, 2023.

During the nine months ended September 28, 2024 and September 30, 2023, the Company paid $3 million and $1 million, respectively, for the purchase of long-term investments. Net gains and losses related to the Company’s long-term investments are included within Other expense, net on the Consolidated Statements of Operations. There were no net gains or losses during the three months ended September 28, 2024. The Company recognized net losses of $6 million during the nine months ended September 28, 2024. Net gains and losses were not significant for the three and nine months ended September 30, 2023.

Note 6 Exit and Restructuring Costs
Total charges associated with the 2022 Productivity Plan, which was completed in the third quarter of 2024, and the U.S. voluntary retirement plan, which was completed in 2023, were $127 million incurred to date, including $4 million and $17 million recorded during the three and nine months ended September 28, 2024. The costs of these plans are classified within Exit and restructuring on the Consolidated Statements of Operations. The Company’s remaining payment obligations of $5 million, are reflected within Accrued liabilities on the Consolidated Balance Sheets.

The rollforward of the liability associated with Exit and restructuring activities is:

Balance as of December 31, 2023$22 
Exit and restructuring charges17
Non-cash utilization(4)
Cash payments(30)
Balance as of September 28, 2024$5 


Note 7 Fair Value Measurements

Financial assets and liabilities are measured using inputs from three levels of the fair value hierarchy in accordance with Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements. Fair value is defined as 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. ASC Topic 820 established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:
•Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries and money market funds).
11
•Level 2: Observable prices that are based on inputs not quoted in 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, the Company utilizes valuation techniques that maximize the use of observable inputs. In addition, the Company considers counterparty credit risk in the assessment of fair value.
The Company’s financial assets and liabilities carried at fair value as of September 28, 2024, are classified below (in millions):
 Level 1Level 2Level 3Total
Assets:
Investments related to the deferred compensation plan$41 $— $— $41 
Total Assets at fair value$41 $— $— $41 
Liabilities:
Foreign exchange contracts (1)
$1 $14 $— $15 
Liabilities related to the deferred compensation plan41 — — 41 
Total Liabilities at fair value$42 $14 $— $56 
The Company’s financial assets and liabilities carried at fair value as of December 31, 2023, are classified below (in millions):
Level 1Level 2Level 3Total
Assets:
Forward interest rate swap contracts (2)
$— $83 $— $83 
Investments related to the deferred compensation plan41 — — 41 
Total Assets at fair value$41 $83 $— $124 
Liabilities:
Foreign exchange contracts (1)
$1 $6 $— $7 
Forward interest rate swap contracts (2)
— 28 — 28 
Liabilities related to the deferred compensation plan41 — — 41 
Total Liabilities at fair value$42 $34 $— $76 

(1)The fair value of the foreign exchange contracts is calculated as follows:
•Fair value of forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.
•Fair value of hedges against net assets denominated in foreign currencies is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period-end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1).

(2)The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms.

12
Note 8 Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC Topic 815, Derivatives and Hedging (“ASC 815”). The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes.

In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions):
Asset (Liability)
Fair Values as of
Balance Sheets ClassificationSeptember 28,
2024		December 31,
2023
Derivative instruments designated as hedges:
    Foreign exchange contractsAccrued liabilities$(14)$(6)
Total derivative instruments designated as hedges$(14)$(6)
Derivative instruments not designated as hedges:
    Forward interest rate swapsPrepaid expenses and other current assets$— $34 
    Forward interest rate swapsOther long-term assets— 49 
    Foreign exchange contractsAccrued liabilities(1)(1)
    Forward interest rate swapsAccrued liabilities— (12)
    Forward interest rate swapsOther long-term liabilities— (16)
Total derivative instruments not designated as hedges$(1)$54 
Total net derivative (liability) asset$(15)$48 
The following table presents the net gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):
Gains (Losses) Recognized in Income
 Three Months EndedNine Months Ended
Statements of Operations ClassificationSeptember 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Derivative instruments not designated as hedges:
Foreign exchange contractsForeign exchange (loss) gain$(7)$1 $(5)$(3)
Forward interest rate swapsInterest expense, net— 23 31 34 
Total net (loss) gain recognized in income$(7)$24 $26 $31 

Activities related to derivative instruments are reflected within Net cash provided by (used in) operating activities on the Consolidated Statements of Cash Flows.

Interest Rate Risk Management
The Company is exposed to market risk associated with interest rate payments on its borrowings under a term loan (“Term Loan A”), Revolving Credit Facility, and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins. The Company manages its exposure to changes in interest rates by issuing both fixed and variable rate borrowings as well as periodically utilizing interest rate swaps to economically hedge interest rate exposure based on current and projected market conditions.
13

In the second quarter, the Company terminated all of its interest rate swap agreements, none of which were designated as hedges, resulting in a $77 million cash receipt that is classified within Cash flows from operating activities on the Consolidated Statements of Cash Flows. Total cash receipts for the nine months ended September 28, 2024 were $86 million. See Note 9, Long-Term Debt for further details related to the Company’s borrowings and interest rate exposure.

Credit and Market Risk Management
Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit policies are designed to mitigate concentrations of credit risk.

The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. We present the assets and liabilities of our derivative financial instruments, for which we have net settlement agreements in place, on a net basis on the Consolidated Balance Sheets. If the derivative financial instruments had been presented gross on the Consolidated Balance Sheets, the asset and liability positions would have not been significant as of September 28, 2024 and December 31, 2023.

Foreign Currency Exchange Risk Management
The Company conducts business on a multinational basis in a variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises primarily from Euro-denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company manages its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets and, once these opportunities have been exhausted, through foreign exchange forward and option contracts, as deemed appropriate.

The Company manages the exchange rate risk of anticipated Euro-denominated sales using forward contracts, which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized amounts reclassified to Net sales were $2 million and $6 million of losses for the three months ended September 28, 2024 and September 30, 2023, respectively. Realized amounts reclassified to Net sales were $4 million of gains and $16 million of losses for the nine months ended September 28, 2024 and September 30, 2023, respectively. As of September 28, 2024 and December 31, 2023, the notional amounts of the Company’s foreign exchange cash flow hedges were €622 million and €485 million, respectively. The Company has reviewed its cash flow hedges for effectiveness and determined that they are highly effective.

The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to net assets denominated in foreign currencies. These forward contracts typically mature within one month after execution. Monetary gains and losses on these forward contracts are recorded in income and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair values of these outstanding contracts were as follows (in millions):
14
 September 28,
2024		December 31,
2023
Notional balance of outstanding contracts:
British Pound/U.S. Dollar£2 £11 
Euro/U.S. Dollar€183 €80 
Euro/Czech Koruna€16 €17 
Japanese Yen/U.S. Dollar¥274 ¥685 
Singapore Dollar/U.S. DollarS$19 S$14 
Mexican Peso/U.S. DollarMex$166 Mex$144 
Polish Zloty/U.S. Dollarzł39 zł116 
Net fair value of liabilities of outstanding contracts$1 $1 

Note 9 Long-Term Debt

The following table shows the carrying value of the Company’s debt (in millions):
September 28,
2024		December 31,
2023
Term Loan A$1,575 $1,684 
Senior Notes500 — 
Revolving Credit Facility— 413 
Receivables Financing Facilities108 129 
Total debt$2,183 $2,226 
Less: Debt issuance costs(11)(2)
Less: Unamortized discounts(3)(4)
Less: Current portion of debt(89)(173)
Total long-term debt$2,080 $2,047 

As of September 28, 2024, the future maturities of debt are as follows (in millions):
2024 (3 months remaining)$89 
2025— 
202688 
20271,506 
2028— 
Thereafter500 
Total future maturities of debt$2,183 
All borrowings as of September 28, 2024 were denominated in U.S. Dollars.
The estimated fair value of the Company’s debt approximated $2.2 billion as of both September 28, 2024 and December 31, 2023, respectively. These fair value amounts, developed based on inputs classified as Level 2 within the fair value hierarchy, represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and do not represent the settlement value of these liabilities to the Company. The fair value of debt will continue to vary each period based on a number of factors, including fluctuations in market interest rates as well as changes to the Company’s credit ratings.

Term Loan A
The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in the second quarter of 2026 and the majority due upon maturity in 2027. The Company may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of September 28, 2024, the Term Loan A interest rate was 6.60%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

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Senior Notes
In the second quarter, the Company completed a private offering of $500 million senior unsecured notes (the “Senior Notes”) with a 6.5% fixed interest rate. The net proceeds of the issuance, after deducting debt issuance costs which were deferred, were approximately $492 million. The Senior Notes mature on June 1, 2032, and interest is payable semi-annually in arrears in June and December of each year, commencing on December 1, 2024. The Company has the option or could be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of Zebra’s existing and future subsidiaries. The Senior Notes contain covenants that, among other things, limit the ability of Zebra to: (i) grant or incur liens; (ii) have its subsidiaries guarantee debt without becoming guarantors; and (iii) merge or consolidate with another company or sell all or substantially all of its assets.

Revolving Credit Facility
The Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit. As of September 28, 2024, the Company had letters of credit totaling $10 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,490 million. As of September 28, 2024, the Revolving Credit Facility had an average interest rate of 6.19%. Upon borrowing, interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facility
As of September 28, 2024, the Company has a Receivables Financing Facility with a borrowing limit of up to $180 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under this facility as secured borrowings. During the first quarter of 2024, the Company amended this facility to extend the maturity to March 19, 2027 but otherwise did not substantially change the terms of the facility.

As of September 28, 2024, the Company’s Consolidated Balance Sheets included $618 million of gross receivables that were pledged under the facility. As of September 28, 2024, $108 million had been borrowed, of which $89 million was classified as current. Borrowings under the facility bear interest at a variable rate plus an applicable margin. As of September 28, 2024, the facility had an average interest rate of 5.89%. Interest is paid monthly on these borrowings.

The Company’s borrowings described above include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

As of September 28, 2024, the Company was in compliance with all debt covenants.

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Note 10 Leases

During the nine months ended September 28, 2024, the Company recorded $36 million of right-of-use (“ROU”) assets obtained in exchange for lease obligations primarily related to the extension of existing leases and the commencement of a new office facility lease.

Future minimum lease payments under non-cancellable leases as of September 28, 2024 were as follows (in millions):
2024 (3 months remaining)$16 
202546 
202639 
202732 
202830 
Thereafter83 
Total future minimum lease payments$246 
Less: Interest(44)
Present value of lease liabilities$202 
Reported as of September 28, 2024:
Current portion of lease liabilities$40 
Long-term lease liabilities162 
Present value of lease liabilities$202 

The current portion of lease liabilities is included within Accrued liabilities on the Consolidated Balance Sheets.

Note 11 Accrued Liabilities, Commitments and Contingencies

Accrued Liabilities
The components of Accrued liabilities are as follows (in millions):
September 28,
2024		December 31,
2023
Incentive compensation$134 $47 
Unremitted cash collections due to banks on factored accounts receivable77 112 
Payroll and benefits63 83 
Customer rebates50 40 
Current portion of lease liabilities40 42 
Warranty26 27 
Interest payable20 2 
Freight and duty15 10 
Exit and restructuring5 22 
Settlement— 45 
Other60 74 
Accrued liabilities$490 $504 

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Warranties
The following table is a summary of the Company’s accrued warranty obligations (in millions):
 Nine Months Ended
 September 28,
2024		September 30,
2023
Balance at the beginning of the period$27 $26 
Warranty expense19 21 
Warranties fulfilled(20)(22)
Balance at the end of the period$26 $25 

Contingencies
The Company is 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. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company’s view of these matters and their potential effects may change in the future. The Company records a liability for contingencies when a loss is deemed to be probable and the loss can be reasonably estimated.

Note 12 Income Taxes

The Company’s effective tax rate for the three and nine months ended September 28, 2024 was 8.1% and 14.5%, respectively, compared to 37.5% benefit and 16.0% expense for the three and nine months ended September 30, 2023. In the current periods, the variance from the 21% federal statutory rate was primarily due to the generation of tax credits and the favorable impacts of foreign earnings subject to U.S. taxation, offset partially by U.S. State income taxes and foreign rate differentials. In the prior periods, the difference was primarily due to a discrete tax benefit from the U.S. voluntary retirement plan, U.S. tax credits, and the favorable impacts of foreign earnings subject to U.S. taxation.

Note 13 Earnings (loss) Per Share

Basic net earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of diluted common shares outstanding. Diluted common shares outstanding is computed using the Treasury Stock method and, in periods of income, reflects the additional shares that would be outstanding if dilutive share-based compensation awards were converted into common shares during the period.

Earnings (loss) per share (in millions, except share data):
Three Months EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Basic:
Net income (loss)$137 $(15)$365 $279 
Weighted-average shares outstanding (1)
51,567,216 51,336,645 51,480,812 51,380,876 
Basic earnings (loss) per share$2.65 $(0.28)$7.09 $5.44 
Diluted:
Net income (loss)$137 $(15)$365 $279 
Weighted-average shares outstanding (1)
51,567,216 51,336,645 51,480,812 51,380,876 
Dilutive shares (2)
350,839 — 364,760 336,855 
Diluted weighted-average shares outstanding51,918,055 51,336,645 51,845,572 51,717,731 
Diluted earnings (loss) per share$2.64 $(0.28)$7.04 $5.40 

(1) In periods of a net loss, restricted stock and performance share awards, which are participating securities, are excluded from weighted-average shares outstanding.
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(2) In periods of a net loss, all unvested share-based awards are anti-dilutive and therefore excluded from diluted shares.

Anti-dilutive share-based compensation awards are excluded from diluted earnings (loss) per share calculations. There were 1,621 and 61,240 shares that were anti-dilutive for the three and nine months ended September 28, 2024, respectively. There were 446,331 and 250,025 shares that were anti-dilutive for the three and nine months ended September 30, 2023, respectively.

Note 14 Accumulated Other Comprehensive (Loss) Income

Stockholders’ equity includes certain items classified as AOCI, including:

•Unrealized gain (loss) on sales hedging which relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 8, Derivative Instruments for more details.

•Foreign currency translation adjustments which relates to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company translates the subsidiary functional currency financial statements to U.S. 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 AOCI.

The changes in each component of AOCI during the nine months ended September 28, 2024 and September 30, 2023 were as follows (in millions):
 Unrealized gain (loss) on sales hedgingForeign currency translation adjustmentsTotal
Balance at December 31, 2022$(11)$(55)$(66)
Other comprehensive income (loss) before reclassifications16 (2)14 
Amounts reclassified from AOCI(1)
16 — 16 
Tax effect(8)— (8)
Other comprehensive income (loss), net of tax24 (2)22 
Balance at September 30, 2023$13 $(57)$(44)
Balance at December 31, 2023$(5)$(49)$(54)
Other comprehensive income (loss) before reclassifications(3)1 (2)
Amounts reclassified from AOCI(1)
(4)— (4)
Tax effect1 — 1 
Other comprehensive income (loss), net of tax(6)1 (5)
Balance at September 28, 2024$(11)$(48)$(59)
(1) See Note 8, Derivative Instruments regarding the timing of reclassifications to operating results.

Note 15 Accounts Receivable Factoring

The Company transfers certain receivables to banks without recourse as part of its credit and cash management activities. Such transfers are accounted for as sales and the related receivables are removed from the Company’s balance sheet. The Company does not maintain any beneficial interest in the receivables sold. The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Cash flows from operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Cash flows from financing activities on the Consolidated Statements of Cash Flows.

The Company has a Receivables Factoring arrangement that was amended in the current quarter to limit the factoring of uncollected receivables originated from the EMEA and Asia-Pacific regions from €150 million to €75 million, which will revert to €150 million in the fourth quarter if not further amended. Otherwise, the amendment did not substantially change the terms
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of the arrangement. In the current quarter, the Company terminated its other arrangement, which allowed for the factoring of uncollected receivables originated from the EMEA region up to $50 million.

During the nine months ended September 28, 2024 and September 30, 2023, the Company received cash proceeds of $816 million and $1,077 million, respectively, from the sales of accounts receivables under its factoring arrangement. As of September 28, 2024 and December 31, 2023, there were a total of $7 million and $56 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

As servicer of sold receivables, the Company had $77 million and $112 million of obligations that were not yet remitted to banks as of September 28, 2024 and December 31, 2023, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Cash flows from financing activities on the Consolidated Statements of Cash Flows.

Note 16 Segment Information & Geographic Data

The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”). The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability. To the extent applicable, segment operating income excludes business acquisition purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, as well as certain other non-recurring costs. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

Financial information by segment is presented as follows (in millions):
 Three Months EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net sales:
AIT$410 $324 $1,199 $1,305 
EVM845 632 2,448 2,270 
Total Net sales$1,255 $956 $3,647 $3,575 
Operating income (loss):
AIT(2)
$83 $44 $232 $287 
EVM(2)
142 30 385 285 
Total segment operating income225 74 617 572 
Corporate (1)
(34)(86)(100)(165)
Total Operating income (loss)$191 $(12)$517 $407 

(1)To the extent applicable, amounts included in Corporate consist of business acquisition purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, and exit and restructuring costs.

(2)AIT and EVM segment operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense are proportionate to each segment’s Net sales.

Information regarding the Company’s operations by geographic area is contained in the following tables. Net sales amounts are attributed to geographic area based on customer location.

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Net sales by region were as follows (in millions):
Three Months EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
North America$628 $517 $1,839 $1,884 
EMEA405 269 1,204 1,086 
Asia-Pacific132 106 362 382 
Latin America90 64 242 223 
Total Net sales$1,255 $956 $3,647 $3,575 


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

Overview

We are a global leader in the Automatic Identification and Data Capture (“AIDC”) industry. The AIDC market consists of mobile computing, data capture, radio frequency identification devices (“RFID”), barcode printing, and other workflow automation products and services. The Company’s solutions are proven to help our customers and end-users digitize and automate their workflows to achieve their critical business objectives, including improved productivity and operational efficiency, optimized regulatory compliance, and better customer experiences.

We design, manufacture, and sell a broad range of AIDC products, including: mobile computers, barcode scanners and imagers, RFID readers, specialty printers for barcode labeling and personal identification, real-time location systems (“RTLS”), related accessories and supplies, such as labels and other consumables, and related software applications. We also provide machine vision and robotics automation solutions; a full range of services, including maintenance, technical support, repair, managed and professional services; as well as cloud-based software subscriptions. End-users of our products, solutions and services include those in the retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries within North America; Europe, Middle East, and Africa (“EMEA”); Asia Pacific; and Latin America.

We continue to advance our Enterprise Asset Intelligence (“EAI”) vision: every asset and front-line worker visible, connected, and fully optimized. Through continual innovation, we have expanded beyond the traditional AIDC market to transform activities such as factory production, packages moving through a supply chain, retail shopping, and the hospital patient journey. Data from enterprise assets, including status, condition, location, utilization, and preferences, is analyzed in the cloud to provide prioritized actionable insights. As a result, our solutions enable enterprises to “sense, analyze, and act” more effectively to optimize their activities.

The Company’s operations consist of two reportable segments that provide complementary offerings to our customers: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”).

•The AIT segment is an industry leader in barcode printing and asset tracking technologies. Its major product lines include barcode and card printers, RFID and RTLS offerings, and supplies, including temperature-monitoring labels, and services.

•The EVM segment is an industry leader in automatic information and data capture solutions. Its major product lines include mobile computing, data capture, fixed industrial scanning and machine vision, services, and workflow optimization solutions. Our workflow optimization solutions include cloud-based software subscriptions, retail solutions, and robotic automation solutions.

We are a market leader in our core businesses, which are generally considered to be comprised of our mobile computing and data capture products, printing products and supplies, as well as support and repair services. We continue to focus on growth opportunities within adjacent and expansion markets by scaling and integrating our recent business acquisitions.

Third Quarter 2024 Financial Summary and Other Recent Developments

•Net sales were $1,255 million in the current quarter compared to $956 million in the prior year.
•Operating income was $191 million in the current quarter compared to an operating loss of $12 million in the prior year.
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•Net income was $137 million, or $2.64 per diluted share in the current quarter, compared to a net loss of $15 million, or $(0.28) per diluted share in the prior year.
•Net cash provided by operating activities was $707 million for the nine months ended September 28, 2024 as compared to net cash used in operating activities of $145 million for the nine months ended September 30, 2023.

In the current quarter, we saw the continuation of a modest recovery in demand trends that began to broaden across both of our segments. Our third quarter revenues and profitability improved from the first half of the year, and particularly as compared to the prior year which was negatively impacted by broad-based demand declines and distributor inventory reductions. We expect these trends to continue into the fourth quarter.

The Company completed its actions under the 2022 Productivity Plan in the third quarter. Total charges associated with the 2022 Productivity Plan and the U.S. voluntary retirement plan (“VRP”), which was completed in 2023, were $127 million, including $4 million recorded in the current quarter. The costs of these actions are classified within Exit and restructuring on the Consolidated Statements of Operations. Together, these programs have impacted over 9% of our global employee base and are expected to result in annualized net cost savings of approximately $120 million, primarily within Operating expenses. The Company has realized $110 million in net savings to date, with $50 million in 2023 and an incremental $60 million in the first nine months of 2024.



Results of Operations

Consolidated Results of Operations
(amounts in millions, except percentages)
 Three Months EndedNine Months Ended
September 28,
2024		September 30,
2023		$ Change% ChangeSeptember 28,
2024		September 30,
2023		$ Change% Change
Net sales: