Item 1. Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

			March 30, 2024						December 31, 2023
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			$	127					$	137
Accounts receivable, net of allowances for doubtful accounts of $1 each as of March 30, 2024 and December 31, 2023			599						521
Inventories, net			705						804
Income tax receivable			36						63
Prepaid expenses and other current assets			160						147
Total Current assets			1,627						1,672
Property, plant and equipment, net			304						309
Right-of-use lease assets			166						169
Goodwill			3,894						3,895
Other intangibles, net			501						527
Deferred income taxes			455						438
Other long-term assets			312						296
Total Assets			$	7,259					$	7,306
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt			$	272					$	173
Accounts payable			467						456
Accrued liabilities			437						504
Deferred revenue			456						458
Income taxes payable			11						7
Total Current liabilities			1,643						1,598
Long-term debt			1,815						2,047
Long-term lease liabilities			151						152
Deferred income taxes			66						67
Long-term deferred revenue			304						312
Other long-term liabilities			111						94
Total Liabilities			4,090						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 capital			629						615
Treasury stock at cost, 20,751,889 and 20,772,995 shares as of March 30, 2024 and December 31, 2023, respectively			(1,858)						(1,858)
Retained earnings			4,447						4,332
Accumulated other comprehensive loss			(50)						(54)
Total Stockholders’ Equity			3,169						3,036
Total Liabilities and Stockholders’ Equity			$	7,259					$	7,306

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
			March 30, 2024						April 1, 2023
Net sales:
Tangible products			$	929					$	1,170
Services and software			246						235
Total Net sales			1,175						1,405
Cost of sales:
Tangible products			498						618
Services and software			114						120
Total Cost of sales			612						738
Gross profit			563						667
Operating expenses:
Selling and marketing			148						161
Research and development			138						146
General and administrative			81						99
Amortization of intangible assets			26						26
Acquisition and integration costs			1						—
Exit and restructuring costs			10						10
Total Operating expenses			404						442
Operating income			159						225
Other income (loss), net:
Foreign exchange gain			3						1
Interest expense, net			(17)						(37)
Other expense, net			(3)						(4)
Total Other expense, net			(17)						(40)
Income before income tax			142						185
Income tax expense			27						35
Net income			$	115					$	150
Basic earnings per share			$	2.24					$	2.92
Diluted earnings per share			$	2.23					$	2.90

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended
			March 30, 2024						April 1, 2023
Net income			$	115					$	150
Other comprehensive income (loss), net of tax:
Changes in unrealized gains (losses) on sales hedging			9						(3)
Foreign currency translation adjustment			(5)						3
Comprehensive income			$	119					$	150

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(Unaudited)

						Class A Common Stock Shares						Class A Common Stock Value						Additional Paid-in Capital						Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Loss						Total
Balance at December 31, 2023						51,378,862						$	1					$	615					$	(1,858)					$	4,332					$	(54)					$	3,036
Issuances of treasury shares related to share-based compensation plans, net of forfeitures						21,312						—						(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, 2024						51,399,968						$	1					$	629					$	(1,858)					$	4,447					$	(50)					$	3,169

						Class A Common Stock Shares						Class A Common Stock Value						Additional Paid-in Capital						Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Loss						Total
Balance at December 31, 2022						51,451,500						$	1					$	561					$	(1,799)					$	4,036					$	(66)					$	2,733
Issuances of treasury shares related to share-based compensation plans, net of forfeitures						29,784						—						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, 2023						51,424,969						$	1					$	584					$	(1,814)					$	4,186					$	(66)					$	2,891

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

			Three Months Ended
			March 30, 2024						April 1, 2023
Cash flows from operating activities:
Net income			$	115					$	150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			43						44
Share-based compensation			17						18
Deferred income taxes			(21)						(20)
Unrealized (gain) loss on forward interest rate swaps			(13)						13
Other, net			1						2
Changes in operating assets and liabilities:
Accounts receivable, net			(80)						33
Inventories, net			98						26
Other assets			(9)						(27)
Accounts payable			13						(212)
Accrued liabilities			(28)						(82)
Deferred revenue			(9)						22
Income taxes			43						5
Settlement liability			(45)						(45)
Other operating activities			—						(3)
Net cash provided by (used in) operating activities			125						(76)
Cash flows from investing activities:
Purchases of property, plant and equipment			(14)						(16)
Proceeds from sale of short-term investments			3						—
Purchases of long-term investments			—						(1)
Net cash used in investing activities			(11)						(17)
Cash flows from financing activities:
Payments of long-term debt			(284)						(119)
Proceeds from issuance of long-term debt			151						191
Payments for repurchases of common stock			—						(15)
Net (payments) proceeds related to share-based compensation plans			(3)						5
Change in unremitted cash collections from servicing factored receivables			9						8
Other financing activities			3						—
Net cash (used in) provided by financing activities			(124)						70
Effect of exchange rate changes on cash and cash equivalents, including restricted cash			(1)						(1)
Net decrease in cash and cash equivalents, including restricted cash			(11)						(24)
Cash and cash equivalents, including restricted cash, at beginning of period			138						117
Cash and cash equivalents, including restricted cash, at end of period			$	127					$	93
Less restricted cash, included in Prepaid expenses and other current assets			—						(8)
Cash and cash equivalents at end of period			$	127					$	85
Supplemental disclosures of cash flow information:
Income taxes paid			$	3					$	54
Interest paid			$	30					$	24

See accompanying Notes to Consolidated Financial Statements.

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 March 30, 2024, the Consolidated Statements of Operations, Comprehensive Income, Stockholders’ Equity, and Cash Flows for the three months ended March 30, 2024 and April 1, 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.

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
			March 30, 2024																		April 1, 2023
Segment			Tangible Products						Services and Software						Total						Tangible Products						Services and Software						Total
AIT			$	365					$	27					$	392					$	495					$	27					$	522
EVM			564						219						783						675						208						883
Total			$	929					$	246					$	1,175					$	1,170					$	235					$	1,405

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 repair and support services, as well as software solutions. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $1,126 million and $1,127 million, inclusive of deferred revenue, as of March 30, 2024 and December 31, 2023, respectively. On average, remaining performance obligations as of March 30, 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 $17 million and $16 million as of March 30, 2024 and December 31, 2023. 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 months ended March 30, 2024 and April 1, 2023, respectively.

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 $760 million and $770 million as of March 30, 2024 and December 31, 2023, respectively. During the three months ended March 30, 2024, the Company recognized $146 million in revenue, which was previously included in the beginning balance of deferred revenue as of December 31, 2023. During the three months ended April 1, 2023, the Company recognized $135 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):

			March 30, 2024						December 31, 2023
Raw materials (1)			$	370					$	403
Work in process			5						4
Finished goods			330						397
Total Inventories, net			$	705					$	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 $113 million as of both March 30, 2024 and December 31, 2023.

The Company did not make any payments for the purchase of long-term investments during the three months ended March 30, 2024. During the three months ended April 1, 2023, the Company paid $1 million 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 and were not significant for the three months ended March 30, 2024 or April 1, 2023.

Note 6 Exit and Restructuring Costs

Total charges associated with the 2022 Productivity Plan and the U.S. voluntary retirement plan, which was completed in 2023, were $120 million incurred to date, including $10 million recorded during the three months ended March 30, 2024. The Company expects to incur an additional $10 million in the current year associated with its 2022 Productivity Plan. The costs of these plans are classified within Exit and restructuring on the Consolidated Statements of Operations. The Company’s remaining payment obligations of $12 million, are reflected within Accrued liabilities on the Consolidated Balance Sheets.

The Company’s liability associated with Exit and restructuring was:

Balance as of December 31, 2023			$	22
Exit and restructuring charges			10
Non-cash utilization			(1)
Cash payments			(19)
Balance as of March 30, 2024			$	12

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).

• 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 March 30, 2024, are classified below (in millions):

			Level 1						Level 2						Level 3						Total
Assets:
Foreign exchange contracts (1)			$	—					$	6					$	—					$	6
Forward interest rate swap contracts (2)			—						100						—						100
Investments related to the deferred compensation plan			43						—						—						43
Total Assets at fair value			$	43					$	106					$	—					$	149
Liabilities:
Forward interest rate swap contracts (2)			$	—					$	33					$	—					$	33
Liabilities related to the deferred compensation plan			43						—						—						43
Total Liabilities at fair value			$	43					$	33					$	—					$	76

The Company’s financial assets and liabilities carried at fair value as of December 31, 2023, are classified below (in millions):

			Level 1						Level 2						Level 3						Total
Assets:
Forward interest rate swap contracts (2)			$	—					$	83					$	—					$	83
Investments related to the deferred compensation plan			41						—						—						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 plan			41						—						—						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.

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 Classification						March 30, 2024						December 31, 2023
Derivative instruments designated as hedges:
Foreign exchange contracts			Prepaid expenses and other current assets						$	6					$	—
Foreign exchange contracts			Accrued liabilities						—						(6)
Total derivative instruments designated as hedges									$	6					$	(6)
Derivative instruments not designated as hedges:
Forward interest rate swaps			Prepaid expenses and other current assets						$	36					$	34
Forward interest rate swaps			Other long-term assets						64						49
Foreign exchange contracts			Accrued liabilities						—						(1)
Forward interest rate swaps			Accrued liabilities						(13)						(12)
Forward interest rate swaps			Other long-term liabilities						(20)						(16)
Total derivative instruments not designated as hedges									$	67					$	54
Total net derivative asset									$	73					$	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 Ended
			Statements of Operations Classification						March 30, 2024						April 1, 2023
Derivative instruments not designated as hedges:
Foreign exchange contracts			Foreign exchange gain						$	1					$	(5)
Forward interest rate swaps			Interest expense, net						20						(7)
Total net gain (loss) recognized in income									$	21					$	(12)

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

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 been increased by $1 million as of both March 30, 2024 and December 31, 2023, respectively.

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 $1 million of gains and $3 million of losses for the three months ended March 30, 2024 and April 1, 2023, respectively. As of March 30, 2024 and December 31, 2023, the notional amounts of the Company’s foreign exchange cash flow hedges were €551 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):

			March 30, 2024						December 31, 2023
Notional balance of outstanding contracts:
British Pound/U.S. Dollar			£	6					£	11
Euro/U.S. Dollar			€	96					€	80
Euro/Czech Koruna			€	16					€	17
Japanese Yen/U.S. Dollar			¥	120					¥	685
Singapore Dollar/U.S. Dollar			S$	19					S$	14
Mexican Peso/U.S. Dollar			Mex$	174					Mex$	144
Polish Zloty/U.S. Dollar			zł	19					zł	116
Net fair value of assets (liabilities) of outstanding contracts			$	—					$	(1)

Interest Rate Risk Management

The Company’s debt consists of borrowings under a term loan (“Term Loan A”), Revolving Credit Facility, and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins. As a result, the Company is exposed to market risk associated with the variable interest rate payments on these borrowings. See Note 9, Long-Term Debt for further details related to these borrowings.

The Company manages its exposure to changes in interest rates by utilizing long-term forward interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus variable-rate debt, based on current and projected market conditions. The Company has interest rate swap agreements with a total notional amount of $800 million and $400 million, through October 2027 and June 2030, respectively, that are intended to result in a fixed interest rate on a portion of its variable rate debt. These agreements are subject to monthly net cash settlements.

Note 9 Long-Term Debt

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

			March 30, 2024						December 31, 2023
Term Loan A			$	1,641					$	1,684
Revolving Credit Facility			172						413
Receivables Financing Facilities			280						129
Total debt			$	2,093					$	2,226
Less: Debt issuance costs			(2)						(2)
Less: Unamortized discounts			(4)						(4)
Less: Current portion of debt			(272)						(173)
Total long-term debt			$	1,815					$	2,047

As of March 30, 2024, the future maturities of debt are as follows (in millions):

2024 (9 months remaining)						$	261
2025						66
2026						88
2027						1,678
Total future maturities of debt						$	2,093

All borrowings as of March 30, 2024 were denominated in U.S. Dollars.

The estimated fair value of the Company’s debt approximated $2.1 billion and $2.2 billion as of March 30, 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 2025 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 March 30, 2024, the Term Loan A interest rate was 6.68%. Interest payments are 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 March 30, 2024, the Company had letters of credit totaling $11 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,489 million. As of March 30, 2024, the Revolving Credit Facility had an average interest rate of 6.68%. 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 facilities as secured borrowings. During the first quarter of 2024, the Company amended its first facility, which allows for borrowings up to $180 million, to extend the maturity to March 19, 2027, but otherwise did not substantially change the terms of the facility. The Company’s second facility allows for borrowings of up to $100 million, matures on May 13, 2024 and is not expected to be renewed.

As of March 30, 2024, the Company’s Consolidated Balance Sheets included $504 million of gross receivables that were pledged under the facilities. As of March 30, 2024, $280 million had been borrowed, of which $261 million was classified as current. Borrowings under the facilities bear interest at a variable rate plus an applicable margin. As of March 30, 2024, the facilities had an average interest rate of 6.56%. Interest is paid monthly on these borrowings.

Each of 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.

The Company uses interest rate swaps to manage the interest rate risk associated with its debt. See Note 8**,** Derivative Instruments for further information.

As of March 30, 2024, the Company was in compliance with all debt covenants.

Note 10 Leases

During the three months ended March 30, 2024, the Company recorded an additional $10 million of right-of-use (“ROU”) assets obtained in exchange for lease obligations primarily related to the commencement of a new office facility lease as well as contract modifications that extended existing lease terms.

Future minimum lease payments under non-cancellable leases as of March 30, 2024 were as follows (in millions):

2024 (9 months remaining)						$	40
2025						42
2026						36
2027						28
2028						24
Thereafter						64
Total future minimum lease payments						$	234
Less: Interest						(42)
Present value of lease liabilities						$	192
Reported as of March 30, 2024:
Current portion of lease liabilities						$	41
Long-term lease liabilities						151
Present value of lease liabilities						$	192

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):

			March 30, 2024						December 31, 2023
Unremitted cash collections due to banks on factored accounts receivable			$	121					$	112
Payroll and benefits			61						83
Incentive compensation			61						47
Current portion of lease liabilities			41						42
Customer rebates			37						40
Warranty			27						27
Short-term interest rate swaps			13						12
Freight and duty			12						10
Exit and restructuring			12						22
Settlement			—						45
Other			52						64
Accrued liabilities			$	437					$	504

Warranties

The following table is a summary of the Company’s accrued warranty obligations (in millions):

			Three Months Ended
			March 30, 2024						April 1, 2023
Balance at the beginning of the period			$	27					$	26
Warranty expense			7						7
Warranties fulfilled			(7)						(7)
Balance at the end of the period			$	27					$	26

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 months ended March 30, 2024 and April 1, 2023 was 19.0% and 18.9%, respectively. In the current and prior period, 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.

Note 13 Earnings Per Share

Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income 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 per share (in millions, except share data):

			Three Months Ended
			March 30, 2024						April 1, 2023
Basic:
Net income			$	115					$	150
Weighted-average shares outstanding			51,387,570						51,420,536
Basic earnings per share			$	2.24					$	2.92
Diluted:
Net income			$	115					$	150
Weighted-average shares outstanding			51,387,570						51,420,536
Dilutive shares			402,931						327,533
Diluted weighted-average shares outstanding			51,790,501						51,748,069
Diluted earnings per share			$	2.23					$	2.90

Anti-dilutive share-based compensation awards are excluded from diluted earnings per share calculations. There were 18,095 and 56,291 shares that were anti-dilutive for the three months ended March 30, 2024 and April 1, 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 three months ended March 30, 2024 and April 1, 2023 were as follows (in millions):

						Unrealized gain (loss) on sales hedging												Foreign currency translation adjustments						Total
Balance at December 31, 2022						$	(11)											$	(55)					$	(66)
Other comprehensive (loss) income before reclassifications						(7)												3						(4)
Amounts reclassified from AOCI(1)						3												—						3
Tax effect						1												—						1
Other comprehensive (loss) income, net of tax						(3)												3						—
Balance at April 1, 2023						$	(14)											$	(52)					$	(66)
Balance at December 31, 2023						$	(5)											$	(49)					$	(54)
Other comprehensive income (loss) before reclassifications						13												(5)						8
Amounts reclassified from AOCI(1)						(1)												—						(1)
Tax effect						(3)												—						(3)
Other comprehensive income (loss), net of tax						9												(5)						4
Balance at March 30, 2024						$	4											$	(54)					$	(50)

(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 may be required to maintain a portion of sales proceeds as deposits in a restricted cash account that is released to the Company as it satisfies its obligations as servicer of sold receivables, which totaled $0 million and $1 million as of March 30, 2024 and December 31, 2023, respectively, and is classified within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

During the three months ended March 30, 2024 and April 1, 2023, the Company received cash proceeds of $346 million and $373 million, respectively, from the sales of accounts receivables under its factoring arrangements. As of March 30, 2024 and December 31, 2023, there were a total of $43 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 $121 million and $112 million of obligations that were not yet remitted to banks as of March 30, 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 Ended
			March 30, 2024						April 1, 2023
Net sales:
AIT			$	392					$	522
EVM			783						883
Total Net sales			$	1,175					$	1,405
Operating income:
AIT(2)			$	76					$	129
EVM(2)			120						133
Total segment operating income			196						262
Corporate (1)			(37)						(37)
Total Operating income			$	159					$	225

(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.

Net sales by region were as follows (in millions):

			Three Months Ended
			March 30, 2024						April 1, 2023
North America			$	612					$	725
EMEA			380						443
Asia-Pacific			112						154
Latin America			71						83
Total Net sales			$	1,175					$	1,405