Zebra Technologies 10-Q 2022-07-02

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 July 2, 2022

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)

Delaware			36-2675536
(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 class						Trading Symbol(s)						Name of exchange on which registered
Class A Common Stock, par value $.01 per share						ZBRA						The 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 July 29, 2022, there were 51,789,941 shares of Class A Common Stock, $.01 par value, outstanding.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

QUARTER ENDED JULY 2, 2022

TABLE OF CONTENTS

						PAGE
PART I - FINANCIAL INFORMATION						3
Item 1.			Consolidated Financial Statements			3
			Consolidated Balance Sheets as of July 2, 2022 (unaudited) and December 31, 2021			3
			Consolidated Statements of Operations (unaudited) for the three and six months ended July 2, 2022 and July 3, 2021			4
			Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended July 2, 2022 and July 3, 2021			5
			Consolidated Statements of Stockholders’ Equity (unaudited) for the three and six months ended July 2, 2022 and July 3, 2021			6
			Consolidated Statements of Cash Flows (unaudited) for the six months ended July 2, 2022 and July 3, 2021			8
			Notes to Consolidated Financial Statements (unaudited)			8
			Note 1: Description of Business and Basis of Presentation			9
			Note 2: Significant Accounting Policies			9
			Note 3: Revenues			10
			Note 4: Inventories			11
			Note 5: Business Acquisitions			11
			Note 6: Goodwill & Other Intangibles			12
			Note 7: Investments			13
			Note 8: Fair Value Measurements			13
			Note 9: Derivative Instruments			15
			Note 10: Long-Term Debt			17
			Note 11: Leases			19
			Note 12: Accrued Liabilities, Commitments and Contingencies			19
			Note 13: Share-Based Compensation			20
			Note 14: Income Taxes			23
			Note 15: Earnings Per Share			24
			Note 16: Accumulated Other Comprehensive Income (Loss)			24
			Note 17: Accounts Receivable Factoring			25
			Note 18: Segment Information & Geographic Data			26
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
			Overview			27
			Results of Operations			29
			Results of Operations by Segment			31
			Liquidity and Capital Resources			34
			Significant Customers			36
			Safe Harbor			37
			New Accounting Pronouncements			37
			Non-GAAP Measures			37
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			38
Item 4.			Controls and Procedures			38
PART II - OTHER INFORMATION						39
Item 1.			Legal Proceedings			39
Item 1A.			Risk Factors			39
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			40
Item 6.			Exhibits			41
Signatures						42

PART I - FINANCIAL INFORMATION

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

			July 2, 2022						December 31, 2021
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			$	98					$	332
Accounts receivable, net of allowances for doubtful accounts of $1 million each as of July 2, 2022 and December 31, 2021			925						752
Inventories, net			632						491
Income tax receivable			20						8
Prepaid expenses and other current assets			131						106
Total Current assets			1,806						1,689
Property, plant and equipment, net			265						272
Right-of-use lease assets			174						131
Goodwill			3,929						3,265
Other intangibles, net			659						469
Deferred income taxes			311						192
Other long-term assets			241						197
Total Assets			$	7,385					$	6,215
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt			$	144					$	69
Accounts payable			827						700
Accrued liabilities			714						639
Deferred revenue			413						380
Income taxes payable			15						12
Total Current liabilities			2,113						1,800
Long-term debt			2,017						922
Long-term lease liabilities			155						121
Deferred income taxes			71						6
Long-term deferred revenue			318						315
Other long-term liabilities			198						67
Total Liabilities			4,872						3,231
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued			—						—
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares			1						1
Additional paid-in capital			512						462
Treasury stock at cost, 20,196,863 and 18,736,582 shares as of July 2, 2022 and December 31, 2021, respectively			(1,652)						(1,023)
Retained earnings			3,680						3,573
Accumulated other comprehensive loss			(28)						(29)
Total Stockholders’ Equity			2,513						2,984
Total Liabilities and Stockholders’ Equity			$	7,385					$	6,215

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

			Three Months Ended												Six Months Ended
			July 2, 2022						July 3, 2021						July 2, 2022						July 3, 2021
Net sales:
Tangible products			$	1,259					$	1,192					$	2,466					$	2,345
Services and software			209						185						434						379
Total Net sales			1,468						1,377						2,900						2,724
Cost of sales:
Tangible products			685						618						1,366						1,209
Services and software			109						101						223						202
Total Cost of sales			794						719						1,589						1,411
Gross profit			674						658						1,311						1,313
Operating expenses:
Selling and marketing			151						148						303						282
Research and development			148						141						285						281
General and administrative			97						92						196						174
Settlement and related costs			372						—						372						—
Amortization of intangible assets			35						26						68						52
Acquisition and integration costs			14						4						18						5
Exit and restructuring costs			2						—						2						—
Total Operating expenses			819						411						1,244						794
Operating (loss) income			(145)						247						67						519
Other (loss) income, net:
Foreign exchange (loss) gain			(3)						(1)						5						1
Interest (expense) income, net			(3)						(7)						27						(5)
Other (expense) income, net			(2)						(1)						(2)						(1)
Total Other (expense) income, net			(8)						(9)						30						(5)
(Loss) income before income tax			(153)						238						97						514
Income tax (benefit) expense			(55)						19						(10)						67
Net (loss) income			$	(98)					$	219					$	107					$	447
Basic (loss) earnings per share			$	(1.87)					$	4.10					$	2.04					$	8.36
Diluted (loss) earnings per share			$	(1.87)					$	4.07					$	2.02					$	8.29

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended												Six Months Ended
			July 2, 2022						July 3, 2021						July 2, 2022						July 3, 2021
Net (loss) income			$	(98)					$	219					$	107					$	447
Other comprehensive income (loss), net of tax:
Changes in unrealized gains on anticipated sales hed

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Overview

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader respected for 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. These products and solutions include mobile computers; barcode scanners and imagers; radio frequency identification device (“RFID”) readers; specialty printers for barcode labeling and personal identification; fixed industrial scanning and machine vision; real-time location systems (“RTLS”); related accessories and supplies, such as self-adhesive labels and other consumables; and related software applications. We also provide a full range of services, including maintenance, technical support, repair, managed and professional services, as well as various workflow optimization solutions, including cloud-based software subscriptions and robotic automation solutions. 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 the following regions: North America; Europe, Middle East, and Africa (“EMEA”); Asia-Pacific; and Latin America.

Our customers have traditionally benefited from proven solutions that increase productivity and improve asset efficiency and utilization. The Company is poised to drive, and capitalize on, the evolution of the data capture industry into the broader EAI industry, supported by technology trends including the Internet of Things (“IoT”), ubiquitous mobility, automation, cloud computing, and the increasingly on-demand global economy. EAI solutions offer additional benefits to our customers including real-time, data-driven insights that improve operational visibility and drive workflow optimization.

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, 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, location solutions, RFID, 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.

In the first quarter of 2022, the location solutions offering, which provides a range of RTLS and services that generate on-demand information about the physical location and status of high-valued assets, equipment, and people, moved from our AIT segment into our EVM segment contemporaneous with a change in our organizational structure and management of the business. We have reported our results reflecting this change, including historical periods, on a comparable basis. This change did not have an impact to the Consolidated Financial Statements.

Recent Developments

Share Repurchase

On May 17, 2022, the Company announced that its Board of Directors authorized an incremental $1 billion share repurchase program of its outstanding shares of common stock. This authorization augments the previous $1 billion share repurchase authorization which was announced in July 2019.

Debt Refinancing

On May 26, 2022, the Company announced that it amended its long-term credit facilities which increased its borrowing under Term Loan A from $875 million to $1.75 billion and also its borrowing capacity under the Revolving Credit Facility from $1 billion to $1.5 billion. As part of the refinancing, the Company extended the maturities of its long-term credit facilities to May 25, 2027 and replaced LIBOR with SOFR as the benchmark reference rate.

Matrox Acquisition

On June 3, 2022, the Company acquired Matrox Electronic Systems, Ltd. (“Matrox”) for $878 million. The Company’s total purchase consideration comprised of $875 million in cash paid at closing, net of Matrox’s cash on-hand and an additional $3 million of cash that will be paid in the third quarter of 2022. Matrox is a leading provider of advanced machine vision components and software serving a number of end-markets. Through its acquisition of Matrox, the Company intends to expand its machine vision products and software offerings. The operating results of Matrox are included in the EVM segment.

License and Settlement Agreement

On June 30, 2022, the Company announced it entered into a License and Settlement Agreement (“Settlement”) resulting in a $372 million pre-tax charge, inclusive of $12 million of external legal fees, within Operating expenses on the Consolidated Statement of Operations. Under the Settlement, Zebra will pay $360 million to the counterparty in eight quarterly payments of $45 million beginning in the current quarter. See Item 1, Legal Proceedings for additional information.

Russia and Ukraine War

On March 5, 2022, we announced the suspension of our business operations in Russia. Neither Russia nor Ukraine comprises a material portion of our business, and therefore, the war thus far has not had a significant effect on our results of operations. Additionally, the war has not significantly affected our ability to source supplies or deliver our products and services to our customers in the surrounding EMEA region. We continue to closely monitor this for potential significant adverse impacts on our business.

COVID-19 Outbreak

The global coronavirus (“COVID-19”) pandemic continues to evolve. Governmental agencies, to varying degrees, have imposed, and continue to impose, several protocols and regulations restricting activities of individuals in an effort to limit the spread of COVID-19 when rates of infection rise, with some relaxation of these measures when infections rates are relatively low. We have implemented a number of measures in an effort to protect our employees’ health and well-being over the course of the pandemic tailored to address the local impacts, including having the majority of office workers work remotely during the height of the pandemic and high risk times and gradually returning to offices as restrictions are lifted when risks decrease, limiting employee travel, and implementing more strenuous health and safety measures for hosting and attending in-person industry events. Throughout the pandemic, distribution centers and repair centers have remained open at varying capacity levels to ensure continued support to our customers, many of whom provide essential goods and services to communities. As governments have eased their restrictions, our employees continue to return to our offices, with modified business practices, consistent with government regulations and current medical guidance.

While customer demand has remained strong, the limited availability of certain product components has resulted in lengthened lead times and higher input costs, including freight, and in some cases, has impacted our ability to meet customer demand. The Company expects input costs to remain elevated for some period of time, which we believe will be partially mitigated through higher pricing where permitted by market conditions. The limited availability of certain component parts may continue to negatively impact our ability to meet forecasted customer demand. The Company’s 2021 sales and profitability, particularly in the first half of the year, benefited from pent-up demand from customers who we believe had previously delayed purchases due to the pandemic, as well as the resulting acceleration of the underlying trend to digitize and automate workflows.

Other Acquisitions

Antuit.ai: On October 7, 2021, the Company acquired Antuit Holdings Pte. Ltd. (“Antuit”) for $145 million in cash, net of cash acquired. Antuit is a provider of demand-sensing and pricing optimization software solutions for retail and consumer products companies. Through this acquisition, the Company expands its portfolio of software solution offerings to customers in these industries by combining Antuit’s platform with its existing software solutions and EVM products. The operating results of Antuit are included in the EVM segment.

Fetch: On August 9, 2021, the Company acquired Fetch Robotics, Inc. (“Fetch”) for total purchase consideration of $301 million, which consisted of $290 million in cash paid, net of cash acquired, and the fair value of the Company’s existing minority ownership interest in Fetch of $11 million, as remeasured upon acquisition. Fetch is a provider of autonomous mobile robot solutions for customers who operate in the manufacturing, distribution, and fulfillment industries, enabling customers to

optimize workflows through robotic automation. Through this acquisition, the Company intends to expand its automation solution offerings within these industries. The operating results of Fetch are included within the EVM segment.

Adaptive Vision: On May 17, 2021, the Company acquired Adaptive Vision Sp. z o.o. (“Adaptive Vision”) for $18 million in cash, net of cash acquired. Adaptive Vision is a provider of graphical machine vision software with applications in the manufacturing industry, as well as a provider of libraries and other offerings for machine vision developers. The operating results of Adaptive Vision are included within the EVM segment.

Results of Operations

Consolidated Results of Operations

(amounts in millions, except percentages)

			Three Months Ended																								Six Months Ended
			July 2, 2022						July 3, 2021						$ Change						% Change						July 2, 2022						July 3, 2021						$ Change						% Change
Net sales:
Tangible products			$	1,259					$	1,192					$	67					5.6		%				$	2,466					$	2,345					$	121					5.2		%
Services and software			209						185						24						13.0		%				434						379						55						14.5		%
Total Net sales			1,468						1,377						91						6.6		%				2,900						2,724						176						6.5		%
Gross profit			674						658						16						2.4		%				1,311						1,313						(2)						(0.2)		%
Gross margin			45.9		%				47.8		%										(190) bps						45.2		%				48.2		%										(300) bps
Operating expenses			819						411						408						99.3		%				1,244						794						450						56.7		%
Operating (loss) income			$	(145)					$	247					$	(392)					(158.7)		%				$	67					$	519					$	(452)					(87.1)		%

Net sales to customers by geographic region were as follows (amounts in millions, except percentages):

			Three Months Ended																								Six Months Ended
			July 2, 2022						July 3, 2021						$ Change						% Change						July 2, 2022						July 3, 2021						$ Change						% Change
North America			$	714					$	707					$	7					1.0		%				$	1,413					$	1,380					$	33					2.4		%
EMEA			521						464						57						12.3		%				1,021						954						67						7.0		%
Asia-Pacific			152						137						15						10.9		%				301						257						44						17.1		%
Latin America			81						69						12						17.4		%				165						133						32						24.1		%
Total Net sales			$	1,468					$	1,377					$	91					6.6		%				$	2,900					$	2,724					$	176					6.5		%

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

			Three Months Ended																								Six Months Ended
			July 2, 2022						July 3, 2021						As a % of Net sales												July 2, 2022						July 3, 2021						As a % of Net sales
						2022						2021												2022						2021
Selling and marketing			$	151					$	148					10.3		%				10.7		%				$	303					$	282					10.4		%				10.4		%
Research and development			148						141						10.1		%				10.2		%				285						281						9.8		%				10.3		%
General and administrative			97						92						6.6		%				6.7		%				196						174						6.8		%				6.4		%
Settlement and related costs			372						—						NM						NM						372						—						NM						NM
Amortization of intangible assets			35						26						NM						NM						68						52						NM						NM
Acquisition and integration costs			14						4						NM						NM						18						5						NM						NM
Exit and restructuring costs			2						—						NM						NM						2						—						NM						NM
Total Operating expenses			$	819					$	411					55.8		%				29.8		%				$	1,244					$	794					42.9		%				29.1		%

Consolidated Organic Net sales growth:

			Three Months Ended						Six Months Ended
			July 2, 2022						July 2, 2022
Reported GAAP Consolidated Net sales growth			6.6		%				6.5		%
Adjustments:
Impact of foreign currency translation (1)			2.0		%				0.8		%
Impact of acquisitions (2)			(1.7)		%				(1.2)		%
Consolidated Organic Net sales growth (3)			6.9		%				6.1		%

(1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.

(2)For purposes of computing Organic Net sales growth, amounts directly attributable to the acquisitions of Adaptive Vision, Fetch, Antuit and Matrox are excluded for twelve months following their respective acquisitions.

(3)Consolidated Organic Net sales growth is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

Second quarter 2022 compared to second quarter 2021

Total Net sales increased $91 million or 6.6% compared to the prior year as our customers continue to digitize and automate their workflows. Net sales grew across both of our segments and all of our regions. Current year Net sales included the negative effects of supply constraints, which were particularly pronounced in EVM. Prior year Net sales of both segments benefited from pent-up demand from customers who we believe delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Excluding the effects of currency changes and acquisitions, the increase in Consolidated Organic Net sales was 6.9%.

Gross margin decreased to 45.9% for the current quarter compared to 47.8% for the prior year. Gross margins were lower in both of our segments primarily due to higher premium freight and component part costs, as well as the negative impact of foreign currency changes, which were partially offset by favorable business mix and higher support service margins. The prior year gross margin included the benefit of partial recovery of Chinese import tariffs.

Operating expenses for the quarters ended July 2, 2022 and July 3, 2021 were $819 million and $411 million, or 55.8% and 29.8% of Net sales, respectively. Excluding the Settlement charge, Operating expenses were 30.4% of Net Sales for the quarter ended July 2, 2022. The increase in Operating expenses over the prior quarter, excluding the Settlement charge in the current quarter, was primarily due to the inclusion of operating expenses and amortization of intangible assets associated with recently acquired businesses, increased Acquisition and integration costs as well as increased employee travel as in-person activities continued to resume. These increases were partially offset by lower employee incentive-based compensation.

Operating income decreased 158.7% to a $145 million loss for the current quarter compared to $247 million income for the prior year. The decrease was due to higher Operating expenses, partially offset by higher Gross profit.

Net income decreased 144.7% compared to the prior year due to lower Operating income, which was partially offset by favorability in Income tax (benefit) expense, and Other income, net as follows:

• Other income, net was an expense of $8 million in the current year compared to an expense of $9 million in the prior year primarily due to lower interest expense in the current year. The current year interest expense benefited from an $11 million gain on interest rate swaps compared to a $3 million loss in the prior year, which was partially offset by higher interest rates and average outstanding debt levels.

• The Company’s effective income tax rate for the three months ended July 2, 2022 and July 3, 2021 was 35.9% and 8.0%, respectively. The increase in the effective tax rate was primarily due to the discrete tax benefit recorded in the current quarter related to the Settlement.

Diluted earnings per share decreased to $(1.87) as compared to $4.07 in the prior year primarily due to lower Net income, partially offset by lower average shares outstanding.

Year to date 2022 compared to Year to date 2021

Total Net sales increased $176 million or 6.5% compared to the prior year as our customers continue to digitize and automate their workflows. EVM Net sales growth was partially offset by a decline in AIT Net sales. Current year Net sales of both segments included the negative effects of supply constraints, which were most pronounced in AIT during the first quarter and EVM in the second quarter. Prior year Net sales of both segments benefited from pent-up demand from customers who we believe delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Excluding the effects of acquisitions and currency changes, the increase in Consolidated Organic Net sales was 6.1%.

Gross margin decreased to 45.2% for the current period compared to 48.2% for the prior year. Gross margins were lower in both of our segments primarily due to higher premium freight and component part costs, as well as unfavorable business mix, which were partially offset by higher support service margins. The prior year gross margin included the benefit of partial recovery of Chinese import tariffs.

Operating expenses for the period ended July 2, 2022 and July 3, 2021 were $1,244 million and $794 million, or 42.9% and 29.1% of Net sales, respectively. Excluding the Settlement charge, Operating expenses were 30.1% of Net Sales for the period ended July 2, 2022. The increase in Operating expenses over the prior year, excluding the Settlement charge in the current period, was primarily due to the inclusion of operating expenses and amortization of intangible assets associated with recently acquired businesses, increased Acquisition and integration costs, as well as increased employee travel as in-person activities resumed. These increases were partially offset by lower employee incentive-based compensation.

Operating income decreased 87.1% to $67 million for the current year compared to $519 million for the prior year. The decrease was due to higher Operating expenses and lower Gross Profit.

Net income decreased 76.1% compared to the prior year due to lower Operating income, which was partially offset by favorability in Income tax (benefit) expense, and Other income, net as follows:

• Other income, net was income of $30 million in the current year compared to an expense of $5 million in the prior year primarily due to higher interest income and foreign exchange gains in the current year. The current year interest income benefited from a $45 million gain on interest rate swaps compared to a $5 million gain in the prior year, which was partially offset by higher interest rates and average outstanding debt levels.

• The Company’s effective income tax rate for the six months ended July 2, 2022 and July 3, 2021 was (10.3)% and 13.0%, respectively. The decrease in the effective tax rate was primarily due to the discrete tax benefit recorded in the second quarter related to the Settlement.

Diluted earnings per share decreased to $2.02 as compared to $8.29 in the prior year primarily due to lower Net income, partially offset by lower average diluted shares outstanding.

Results of Operations by Segment

The following commentary should be read in conjunction with the financial results of each operating business segment as detailed in Note 18, Segment Information & Geographic Data in the Notes to Consolidated Financial Statements. To the extent applicable, segment results exclude purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, and exit and restructuring costs, as well as certain other non-recurring costs (such as the Settlement and related costs in the current year).

Asset Intelligence & Tracking Segment (“AIT”)

(in millions, except percentages)

			Three Months Ended																								Six Months Ended
			July 2, 2022						July 3, 2021						$ Change						% Change						July 2, 2022						July 3, 2021						$ Change						% Change
Net sales:
Tangible products			$	422					$	390					$	32					8.2		%				$	792					$	797					$	(5)					(0.6)		%
Services and software			24						24						—						—		%				48						46						2						4.3		%
Total Net sales			446						414						32						7.7		%				840						843						(3)						(0.4)		%
Gross profit			195						199						(4)						(2.0)		%				349						406						(57)						(14.0)		%
Gross margin			43.7		%				48.1		%										(440) bps						41.5		%				48.2		%										(670) bps
Operating expenses			98						99						(1)						(1.0)		%				192						195						(3)						(1.5)		%
Operating income			$	97					$	100					$	(3)					(3.0)		%				$	157					$	211					$	(54)					(25.6)		%

AIT Organic Net sales growth:

			Three Months Ended						Six Months Ended
			July 2, 2022						July 2, 2022
AIT Reported GAAP Net sales growth			7.7		%				(0.4)		%
Adjustments:
Impact of foreign currency translation (1)			2.0		%				1.1		%
AIT Organic Net sales growth (2)			9.7		%				0.7		%

(1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.

(2)AIT Organic Net sales growth is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

Second quarter 2022 compared to second quarter 2021

Total Net sales for AIT increased $32 million or 7.7% compared to the prior year primarily due to higher sales of printing products (contributing the vast majority of the total increase) and supplies. Prior year Net sales benefited from pent-up demand from customers who we believe delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Excluding the impact of foreign currency changes, AIT Organic Net sales increased 9.7%.

Gross margin decreased to 43.7% for the current quarter compared to 48.1% for the prior year primarily due to higher premium freight and component part costs, unfavorable business mix, and the negative impact of foreign currency changes, which were partially offset by the favorable effects of volume leverage. The prior year gross margin included the benefit of partial recovery of Chinese import tariffs.

Operating income decreased 3.0% in the current quarter compared to the prior year period due to lower Gross profit.

Year to date 2022 compared to Year to date 2021

Total Net sales for AIT decreased $3 million or 0.4% compared to the prior year primarily due to lower sales of printing products, which were partially offset by higher sales of supplies and support services. Current year Net sales included the negative effects of supply constraints, particularly in the first quarter, while prior year Net sales benefited from pent-up demand from customers who we believe delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Excluding the impact of foreign currency changes, AIT Organic Net sales increased 0.7%.

Gross margin decreased to 41.5% for the current period compared to 48.2% for the prior year primarily due to higher premium freight and component part costs, as well as unfavorable business mix. The prior year gross margin included the benefit of partial recovery of Chinese import tariffs.

Operating income decreased 25.6% in the current quarter compared to the prior year period. The decrease was primarily due to lower Gross profit.

Enterprise Visibility & Mobility Segment (“EVM”)

(in millions, except percentages)

			Three Months Ended																								Six Months Ended
			July 2, 2022						July 3, 2021						$ Change						% Change						July 2, 2022						July 3, 2021						$ Change						% Change
Net sales:
Tangible products			$	837					$	802					$	35					4.4		%				$	1,674					$	1,548					$	126					8.1		%
Services and software			185						164						21						12.8		%				386						339						47						13.9		%
Total Net sales			1,022						966						56						5.8		%				2,060						1,887						173						9.2		%
Gross profit			479						462						17						3.7		%				962						913						49						5.4		%
Gross margin			46.9		%				47.8		%										(90) bps						46.7		%				48.4		%										(170) bps
Operating expenses			298						282						16						5.7		%				592						542						50						9.2		%
Operating income			$	181					$	180					$	1					0.6		%				$	370					$	371					$	(1)					(0.3)		%

EVM Organic Net sales growth:

			Three Months Ended						Six Months Ended
			July 2, 2022						July 2, 2022
EVM Reported GAAP Net sales growth			5.8		%				9.2		%
Adjustments:
Impact of foreign currency translation (1)			1.8		%				1.0		%
Impact of acquisitions (2)			(2.0)		%				(1.6)		%
EVM Organic Net sales growth (3)			5.6		%				8.6		%

(1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.

(2)For purposes of computing EVM Organic Net sales growth, amounts directly attributable to the acquisitions of Adaptive Vision, Fetch, Antuit, and Matrox are excluded for twelve months following their respective acquisitions.

(3)EVM Organic Net sales growth is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

Second quarter 2022 compared to second quarter 2021

Total Net sales for EVM increased $56 million or 5.8% compared to the prior year primarily due to higher sales of mobile computing products, contributions from our recent acquisitions, and higher sales of data capture products and support services. Current year Net sales included the negative effects of supply constraints; while prior year Net sales benefited from pent-up demand from customers who we believe delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Excluding the impacts of acquisitions and foreign currency changes, EVM Organic Net sales growth was 5.6%.

Gross margin decreased to 46.9% in the current quarter compared to 47.8% in the prior year primarily due to higher premium freight and component part costs, and the negative impact of foreign currency changes, which were partially offset by favorable

business mix and higher support service margins. The prior year gross margin included the benefit of partial recovery of Chinese import tariffs.

Operating income for the current quarter increased 0.6% compared to the prior year period. The increase was due to higher Gross profit, which was partially offset by higher Operating expenses.

Year to date 2022 compared to Year to date 2021

Total Net sales for EVM increased $173 million or 9.2% compared to the prior year primarily due to higher sales of mobile computing products (contributing the majority of the total increase), data capture products, contributions from our recent acquisitions, and higher sales of support services. Current year Net sales included the negative effects of supply constraints, particularly in the second quarter, while prior year Net sales benefited from pent-up demand from customers who we believe delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Excluding the impacts of acquisitions and foreign currency changes, EVM Organic Net sales growth was 8.6%.

Gross margin decreased to 46.7% in the current period compared to 48.4% in the prior year primarily due to higher premium freight and component part costs, which were partially offset by higher support service margins. The prior year gross margin included the benefit of partial recovery of Chinese import tariffs.

Operating income for the current quarter decreased 0.3% compared to the prior year period. The decrease was due to higher Gross profit, which was more than offset by higher Operating expenses.

Liquidity and Capital Resources

The primary factors that influence our liquidity include the amount and timing of our revenues, cash collections from our customers, cash payments to our suppliers, capital expenditures, repatriation of foreign cash, acquisitions, and share repurchases. Management believes that our existing capital resources, inclusive of available borrowing capacity on debt and other financing facilities and funds generated from operations, are sufficient to meet anticipated capital requirements and service our indebtedness. The following table summarizes our cash flow activities for the periods indicated (in millions):

			Six Months Ended
Cash flows provided by (used in):			July 2, 2022						July 3, 2021						$ Change
Operating activities			$	154					$	539					$	(385)
Investing activities			(912)						(59)						(853)
Financing activities			518						(329)						847
Effect of exchange rates on cash balances			(6)						(4)						(2)
Net (decrease) increase in cash and cash equivalents, including restricted cash			$	(246)					$	147					$	(393)

The change in our cash and cash equivalents balance during the six months ended July 2, 2022 compared to the prior year period is reflective of the following:

• The decrease in cash provided by operating activities compared to the prior year was primarily due to higher inventory levels reflecting the timing of purchases during the period, higher accounts receivable balances reflecting the timing of customer transactions within the period, higher incentive compensation and income tax payments, as well as the first quarterly payment associated with the Settlement in the current period. These items were partially offset by higher accounts payable, primarily associated with the timing of inventory purchases.

• Cash used in investing activities was higher than the prior year primarily due to cash paid for the acquisition of Matrox in the current period.

• The cash provided by financing activities during the year was primarily comprised of $1,175 net debt proceeds, which were partially offset by $605 million of common stock repurchases. Net cash used in financing activities in the prior year was primarily comprised of $264 million net debt repayments, $46 million net payments related to share-based compensation plans, and $25 million of common stock repurchases.

Company Debt

The following table shows the carrying value of the Company’s debt (in millions):

			July 2, 2022						December 31, 2021
Term Loan A			$	1,750					$	888
Revolving Credit Facility			235						—
Receivables Financing Facilities			186						108
Total debt			$	2,171					$	996
Less: Debt issuance costs			(5)						(3)
Less: Unamortized discounts			(5)						(2)
Less: Current portion of debt			(144)						(69)
Total long-term debt			$	2,017					$	922

In May 2022, the Company refinanced its long-term credit facilities by entering into its third amendment to the Amended and Restated Credit Agreement (“Amendment No. 3”). Amendment No. 3 increased the Company’s borrowing under Term Loan A from $875 million to $1.75 billion and increased the Company’s borrowing capacity under the Revolving Credit Facility from $1 billion to $1.5 billion. Amendment No. 3 also extended the maturities of Term Loan A and the Revolving Credit Facility to May 25, 2027 and replaced LIBOR with SOFR as the benchmark reference rate.

This refinancing resulted in one-time charges of $2 million, which included certain third party fees and the accelerated amortization of previously deferred issuance costs. These items are included in Interest (expense) income, net on the Consolidated Statements of Operations. Additionally, $6 million of new issuance costs and fees were deferred and will be amortized over the remaining term of Term Loan A and the Revolving Credit Facility.

Term Loan A

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in September 2022 and the majority due upon the May 25, 2027 maturity date. 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 July 2, 2022, the Term Loan A interest rate was 3.10%. Interest payments are generally made monthly and are subject to variable rates plus an applicable margin.

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 July 2, 2022, the Company had letters of credit totaling $7 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,493 million. As of July 2, 2022, the Revolving Credit Facility had an average interest rate of 2.57%. 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 Facilities

The Company has two Receivables Financing Facilities with financial institutions that have a combined total borrowing limit of up to $280 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 its Receivables Financing Facilities as secured borrowings. The Company’s first Receivables Financing Facility allows for borrowings of up to $180 million and matures on March 19, 2024. The Company’s second Receivable Financing Facility allows for borrowings of up to $100 million and matures on May 15, 2023.

As of July 2, 2022, the Company’s Consolidated Balance Sheets included $763 million of receivables that were pledged under the two Receivables Financing Facilities. As of July 2, 2022, $186 million had been borrowed, of which $100 million was classified as current. Borrowings under the Receivables Financing Facilities bear interest at a variable rate plus an applicable margin. As of July 2, 2022, the Receivables Financing Facilities had an average interest rate of 2.57%. Interest is paid on these borrowings on a monthly basis.

See Note 10, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt instruments.

Receivables Factoring

The Company currently has two Receivables Factoring arrangements, pursuant to which certain receivables are sold to banks without recourse in exchange for cash. One arrangement allows for the factoring of up to $25 million of uncollected receivables originated from the EMEA region. The second arrangement allows for the factoring of up to €150 million of uncollected receivables originated from the EMEA and Asia-Pacific regions. Transactions under the Receivables Factoring arrangements are accounted for as sales under Accounting Standards Codification 860, Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s balance sheet. Under these Receivables Factoring arrangements, the Company does not maintain any beneficial interest in the receivables sold. The banks’ purchase of eligible receivables is subject to a maximum amount of uncollected receivables. 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 Net cash provided by operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Net cash used in financing activities on the Consolidated Statements of Cash Flows.

As of July 2, 2022 and December 31, 2021, there were a total of $64 million and $24 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 $113 million and $141 million of obligations that were not yet remitted to banks as of July 2, 2022 and December 31, 2021, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Net cash used in financing activities on the Consolidated Statements of Cash Flows.

See Note 17, Accounts Receivable Factoring in the Notes to Consolidated Financial Statements for further details.

Share Repurchases

On May 17, 2022, the Company announced that its Board of Directors authorized a share repurchase program for up to $1 billion of its outstanding shares of common stock. This authorization augments the previous $1 billion share repurchase authorization which was announced on July 30, 2019. The newly authorized share repurchase program does not have a stated expiration date. The level of the Company’s repurchases depends on a number of factors, including its financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors its management may deem relevant. The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time. Repurchases may be effected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. During the first six months of 2022, the Company repurchased 1,493,144 shares of common stock for approximately $605 million. As of July 2, 2022, the Company has cumulatively repurchased 2,788,855 shares of common stock for approximately $908 million under the July 30, 2019 plan, resulting in a remaining amount of share repurchases authorized under the plan of approximately $92 million. As of July 2, 2022, the total remaining aggregate amount of share repurchases authorized under both plans is $1,092 million. Subsequent to the second quarter, the Company has repurchased 152,846 shares of common stock for approximately $47 million through July 29, 2022.

Significant Customers

The Company has three customers, who are distributors of the Company’s products, services and solutions, that individually accounted for more than 10% of total Company Net sales for the periods presented. In the aggregate, the approximate percentage of our segment and Company total Net sales was as follows:

			Six Months Ended
			July 2, 2022																		July 3, 2021
			AIT						EVM						Total						AIT						EVM						Total
Significant customers as a % of Net sales			15.7		%				29.9		%				45.6		%				17.5		%				34.2		%				51.7		%

These customers accounted for 53.0% of accounts receivable as of July 2, 2022. No other customer accounted for more than 10% of total Net sales during the periods ended July 2, 2022 and July 3, 2021. There was one additional distributor customer who accounted for more than 10% of total outstanding accounts receivables as of July 2, 2022.

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. When used in this document and documents referenced, the words “anticipate,” “believe,” “intend,” “estimate,” “will,” 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. The forward-looking statements include, but are not limited to, the Company’s financial outlook for full year of 2022. These forward-looking statements are based on current expectations, forecasts and assumptions, and are subject to the risks and uncertainties inherent in the Company’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include:

• Market acceptance of the Company’s products, services and solution offerings and competitors’ offerings and the potential effects of emerging technologies and changes in customer requirements,

• The effect of global market conditions, including the North America; EMEA; Latin America; and Asia-Pacific regions in which we do business,

• The impact of changes in foreign exchange rates, customs duties and trade policies due to the large percentage of our sales and operations being outside the U.S.,

• Our ability to control manufacturing and operating costs,

• Risks related to the manufacturing of the Company’s products and conducting business operations in non-U.S. countries, including the risk of depending on key suppliers who are also in non-U.S. countries,

• The Company’s ability to purchase sufficient materials, parts, and components as well as our ability to provide services and software to meet customer demand, particularly in light of global economic conditions,

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

• Success of integrating acquisitions,

• Our ability to attract, retain, develop, and motivate key personnel,

• Interest rate and financial market conditions,

• Access to cash and cash equivalents held outside the U.S.,

• The effect of natural disasters, man-made disasters, public health issues (including pandemics), and cybersecurity incidents on our business,

• The impact of changes in foreign and domestic governmental policies, laws, or regulations,

• The outcome of litigation in which the Company may be involved, particularly litigation or claims related to infringement of third-party intellectual property rights, and

• The outcome of any future tax matters or tax law changes.

We encourage readers of this report to review Part II, Item 1A, “Risk Factors” in this report for further discussion of issues that could affect the Company’s future results. We undertake 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.

New Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material impact to our consolidated financial statements.

Non-GAAP Measures

The Company has provided reconciliations of the supplemental non-GAAP financial measures, as defined under the rules of the Securities and Exchange Commission, presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

These supplemental non-GAAP financial measures – Consolidated Organic Net sales growth, AIT Organic Net sales growth, and EVM Organic Net sales growth – are presented because our management evaluates our financial results both including and excluding the effects of business acquisitions and foreign currency translation, as applicable. Management believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of our business from period to period and trends in our historical operating results. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with the GAAP financial measures presented.

There were no material changes in the Company’s market risk during the quarter ended July 2, 2022. For additional information on market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report on Form 10-K for the year ended December 31, 2021.

Management’s Report on Disclosure Controls

Our management is responsible for establishing and maintaining adequate disclosure controls as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management assessed the effectiveness of our disclosure controls as of July 2, 2022. Based on this assessment and those criteria, our management believes that, as of July 2, 2022, our disclosure controls were effective.

Changes in Internal Controls over Financial Reporting

During the quarter ended July 2, 2022, 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 controls will prevent or detect 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 misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Zebra have been prevented or 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

Beginning in September 2021, Honeywell filed patent infringement lawsuits against Zebra in multiple jurisdictions, including the International Trade Commission and Federal District Court in the Western District of Texas in the United States, as well as foreign courts in the United Kingdom, Germany, Netherlands, and China. Honeywell made substantially similar allegations of patent infringement in all cases filed. The technology addressed in the various actions generally includes aspects of data capture, barcode reading, and scanning. The allegedly infringing Zebra products identified in the actions were described as barcode scanners, mobile computers with barcode scanning capabilities, scan engines, and components thereof. The remedies sought in these lawsuits included damages and injunctive relief. The same Zebra products and technology were implicated in all of the lawsuits. Zebra vigorously defended against these infringement allegations. In February 2022, Zebra filed patent infringement lawsuits against Honeywell in multiple jurisdictions, including the International Trade Commission and Federal District Court in the Eastern District of New York in the United States, as well as foreign courts in the United Kingdom, Germany and China. Zebra’s allegations against Honeywell in each case varied based on the underlying technology in the Zebra patent that is alleged to have been infringed by Honeywell. The technology addressed in the various actions includes scan engine functionality generally, distance scanning, power management and security. The Honeywell products that are accused of infringing Zebra’s patents in the various actions include scan engines and components thereof, barcode scanners, mobile computers, RFID printers and other wireless devices. The remedies sought in these lawsuits included damages and injunctive relief. In June 2022, the parties resolved their disputes and entered into a License and Settlement Agreement (“Settlement”). All pending matters between the parties were dismissed. The following are the relevant terms disclosed in Zebra’s Form 8-K filed on June 30, 2022: Under the Settlement, the Company and Honeywell each deny liability and agreed to a mutual general release from all past claims; entered into a covenant not to sue for patent infringement; agreed to a payment by the Company to Honeywell for past damages of $360 million which was charged in the Company’s second quarter results and will be paid in equal quarterly installments over eight quarters; and entered into a royalty-free cross-license with respect to each party’s existing patent portfolio for the lives of the licensed patents.

See Note 12, Accrued Liabilities, Commitments and Contingencies in the Notes to Consolidated Financial Statements included in this report.

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 the Annual Report on Form 10-K for the year ended December 31, 2021, and the factors identified under “Safe Harbor” in Part I, Item 2 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 the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently considers immaterial also may materially adversely affect its business, financial condition, and/or operating results. There have been no material changes to the risk factors included in our Annual Report for the year ended December 31, 2021, other than as described below.

The Company has substantial operations and sells a significant portion of our products, solutions and services outside of the U.S. and purchases important components, including final products, from suppliers located outside the U.S., many of whom with operations concentrated in China. Shipments to non-U.S. customers are expected to continue to account for a material portion of Net sales. We also expect to continue the use of third-party contract manufacturing services with non-U.S. production and assembly operations for our products.

Risks associated with operations, sales, and purchases outside the United States include:

• Fluctuating foreign currency rates could restrict sales, increase costs of purchasing, and affect collection of receivables outside of the U.S.;

• Volatility in foreign credit markets may affect the financial well-being of our customers and suppliers;

• Violations of anti-corruption laws, including the Foreign Corrupt Practices Act and the U.K. Bribery Act, could result in large fines and penalties;

• Adverse changes in, or uncertainty of, local business laws or practices, including the following:

• Imposition of burdensome tariffs, quotas, taxes, trade barriers, or capital flow restrictions;

• Restrictions on the export or import of technology may reduce or eliminate the ability to sell in, or purchase from, certain markets;

• Political and economic instability may reduce demand for our products or put our non-U.S. assets at risk;

• Limited intellectual property protection in certain countries may limit recourse against infringement on our products or may cause us to refrain from selling in certain geographic territories;

• Staffing may be difficult including higher than anticipated turnover;

• A government-controlled exchange rate and limitations on the convertibility of currencies, including the Chinese Yuan;

• Transportation delays and customs related delays may affect production and distribution of our products;

• Geopolitical uncertainty or turmoil could negatively affect our operations or those of our customers or suppliers;

• Difficulty in effectively managing and overseeing operations that are distant and remote from corporate headquarters; and

• Integration and enforcement of laws varies significantly among jurisdictions and may change over time.

Further, the war between Russia and Ukraine and the global response to this war could have an adverse impact on our business and results of operations. On March 5, 2022, we suspended our business operations in Russia. While this suspension has not had, and is not expected to have, a material impact on our operating results, it is not possible to predict the broader or long-term consequences of the war between Russia and Ukraine, which may include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, cybersecurity conditions, currency exchange rates, financial markets and energy markets. Such geopolitical instability and uncertainty could have a negative impact on our ability to sell and ship products, collect payments from and support customers in certain regions, and could increase the costs, risks and adverse impacts from supply chain and logistics challenges.

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

The following table sets forth information with respect to repurchases of the Company’s common stock for the three months ended July 2, 2022:

Period						Total Number of Shares Purchased						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
April 3, 2022 - April 30, 2022						274,166						$	395.25					274,166						$	284
May 1, 2022 - May 28, 2022						570,073						335.98						570,073						1,092
May 29, 2022 - July 2, 2022						—						—						—						1,092
Total						844,239						$	355.23					844,239						$	1,092

(1)On May 17, 2022, the Company announced that its Board of Directors authorized a share repurchase program for up to $1 billion of its outstanding shares of common stock. This authorization augments the previous $1 billion share repurchase authorization which was announced on July 30, 2019. Repurchases may be effected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. As of July 2, 2022, the Company has cumulatively repurchased 2,788,855 shares of common stock for approximately $908 million under the July 30, 2019 plan, resulting in a remaining amount of share repurchases authorized under the plan of approximately $92 million. As of July 2, 2022, the total remaining aggregate amount of share repurchases authorized under both plans is $1,092 million.

10.1			Form of 2022 performance-vested restricted stock unit agreement for employees other than the CEO
10.2			Form of 2022 time-restricted stock unit agreement for employees other than the CEO
10.3			Form of 2022 stock settled stock appreciate rights agreement for employees other than the CEO
10.4			Form of 2022 performance-vested restricted stock unit agreement for CEO
10.5			Form of 2022 time-vested restricted stock unit agreement for CEO
10.6			Second Amendment to Lease dated as of June 1, 2022 between Griffin Capital Corporation (as assignee from Northwestern Mutual Life Insurance Company) and Zebra Technologies Corporation
10.7			Conformed Amended and Restated Credit Agreement, dated July 26, 2017 (originally dated as of October 27, 2014 and amended by Amendment No. 1 dated May 31, 2018, Amendment No. 2 dated August 9, 2019, and Amendment No. 3 dated May 25, 2022), by and among Zebra, the lenders party thereto, JPMorgan Chase Bank, N.A.
31.1			Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2			Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1			Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of Principal Financial Officer 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 July 2, 2022, formatted in Inline XBRL: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. The instance document does not appear in the interactive data file because Inline XBRL tags are embedded in the iXBRL document.
104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2022, formatted in Inline XBRL (included in Exhibit 101).

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: August 2, 2022			By:						/s/ Anders Gustafsson
									Anders Gustafsson
									Chief Executive Officer
Date: August 2, 2022			By:						/s/ Nathan Winters
									Nathan Winters
									Chief Financial Officer