Item 1. Consolidated Financial Statements

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Item 1. Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

July 4, 2026December 31, 2025
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$157$125
Accounts receivable, net of allowances for doubtful accounts of $1 million each as of July 4, 2026 and December 31, 2025990801
Inventories, net733729
Income tax receivable5631
Prepaid expenses and other current assets126110
Total Current assets2,0621,796
Property, plant and equipment, net346353
Right-of-use lease assets168166
Goodwill4,7014,727
Other intangibles, net725809
Deferred income taxes396414
Other long-term assets239237
Total Assets$8,637$8,502
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt$2,275$141
Accounts payable738695
Accrued liabilities506558
Deferred revenue444446
Income taxes payable3512
Total Current liabilities3,9981,852
Long-term debt4932,361
Long-term lease liabilities156157
Deferred income taxes3132
Long-term deferred revenue391396
Other long-term liabilities133116
Total Liabilities5,2024,914
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 shares11
Additional paid-in capital882814
Treasury stock at cost, 24,762,921 and 22,558,911 shares as of July 4, 2026 and December 31, 2025, respectively(3,057)(2,488)
Retained earnings5,6475,279
Accumulated other comprehensive loss(38)(18)
Total Stockholders’ Equity3,4353,588
Total Liabilities and Stockholders’ Equity$8,637$8,502

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

Three Months EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Net sales:
Tangible products$1,316$1,055$2,547$2,117
Services and software241238505484
Total Net sales1,5571,2933,0522,601
Cost of sales:
Tangible products6155531,2381,095
Services and software117124247245
Total Cost of sales7326771,4851,340
Gross profit8256161,5671,261
Operating expenses:
Selling and marketing184158373319
Research and development159144324295
General and administrative114102241213
Amortization of intangible assets37257449
Acquisition and integration costs2437
Exit and restructuring costs8—16—
Total Operating expenses5044331,031883
Operating income321183536378
Other (loss) income, net:
Foreign exchange loss(2)(11)(2)(16)
Interest expense, net(35)(25)(72)(48)
Other income (expense), net1(9)(10)(11)
Total Other expense, net(36)(45)(84)(75)
Income before income tax285138452303
Income tax expense52268455
Net income$233$112$368$248
Basic earnings per share$4.89$2.20$7.61$4.85
Diluted earnings per share$4.85$2.19$7.54$4.81

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

Three Months EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Net income$233$112$368$248
Other comprehensive income, net of tax:
Changes in unrealized gains (losses) on sales hedging4(33)17(61)
Foreign currency translation adjustment(18)20(37)27
Comprehensive income$219$99$348$214

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 SharesClass A Common Stock ValueAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive LossTotal
Balance at December 31, 202549,592,946$1$814$(2,488)$5,279$(18)$3,588
Net share issuances and tax withholding payments related to share-based compensation plans84,092—(6)1——(5)
Share-based compensation——58———58
Repurchase of common stock(1,294,028)——(300)——(300)
Net income————135—135
Changes in unrealized gains and losses on sales hedging (net of income taxes)—————1313
Foreign currency translation adjustment—————(19)(19)
Balance at April 4, 202648,383,010$1$866$(2,787)$5,414$(24)$3,470
Net share issuances and tax withholding payments related to share-based compensation plans179,919—(20)3——(17)
Share-based compensation——36———36
Repurchase of common stock(1,173,993)——(268)——(268)
Excise tax on share repurchases———(5)——(5)
Net income————233—233
Changes in unrealized gains and losses on sales hedging (net of income taxes)—————44
Foreign currency translation adjustment—————(18)(18)
Balance at July 4, 202647,388,936$1$882$(3,057)$5,647$(38)$3,435
Class A Common Stock SharesClass A Common Stock ValueAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive LossTotal
Balance at December 31, 202451,506,059$1$669$(1,900)$4,860$(44)$3,586
Net share issuances and tax withholding payments related to share-based compensation plans6,550—(1)———(1)
Share-based compensation——51———51
Repurchase of common stock(374,358)——(125)——(125)
Net income————136—136
Changes in unrealized gains and losses on sales hedging (net of income taxes)—————(28)(28)
Foreign currency translation adjustment—————77
Balance at March 29, 202551,138,251$1$719$(2,025)$4,996$(65)$3,626
Net share issuances and tax withholding payments related to share-based compensation plans172,677—(18)3——(15)
Share-based compensation——32———32
Repurchase of common stock(474,667)——(125)——(125)
Net income————112—112
Changes in unrealized gains and losses on sales hedging (net of income taxes)—————(33)(33)
Foreign currency translation adjustment—————2020
Balance at June 28, 202550,836,261$1$733$(2,147)$5,108$(78)$3,617

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Six Months Ended
July 4, 2026June 28, 2025
Cash flows from operating activities:
Net income$368$248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization11384
Losses on long-term investments1510
Share-based compensation9483
Deferred income taxes9(30)
Gain on sale of business(5)—
Other, net—2
Changes in operating assets and liabilities:
Accounts receivable, net(193)81
Inventories, net(7)11
Other assets(10)10
Accounts payable35(71)
Accrued liabilities(35)(101)
Deferred revenue(8)13
Income taxes11(10)
Other operating activities—(5)
Net cash provided by operating activities387325
Cash flows from investing activities:
Acquisition of business—(62)
Proceeds from the sale of business9—
Purchases of property, plant and equipment(26)(37)
Proceeds from sale of long-term investments1—
Other investing activities1—
Net cash used in investing activities(15)(99)
Cash flows from financing activities:
Payments of debt(59)—
Proceeds from issuance of debt325—
Payments for repurchases of common stock(568)(250)
Net payments related to share-based compensation plans(21)(16)
Change in unremitted cash collections from servicing factored receivables(17)7
Other financing activities(1)2
Net cash used in financing activities(341)(257)
Effect of exchange rate changes on cash and cash equivalents12
Net increase (decrease) in cash and cash equivalents32(29)
Cash and cash equivalents at beginning of period125901
Cash and cash equivalents at end of period$157$872
Supplemental disclosures of cash flow information:
Income taxes paid$75$95
Interest paid$71$55

Certain prior period amounts included in Net cash provided by operating activities have been reclassified to conform with the current period presentation.

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 focused on digitizing and automating operations and improving enterprise workflows on the frontline in the automatic identification and data capture industry. We design, manufacture, and sell a broad range of offerings, 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 offerings include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, hospitality, public sector, and other industries. We provide our offerings globally through a direct sales force and an extensive network of channel partners.

In the fourth quarter of 2025, the Company’s reportable segments changed to Connected Frontline (“CF”) and Asset Visibility & Automation (“AVA”). This change aligns with how we are operating our business to advance our strategy and the level of detailed financial information reviewed by our chief operating decision-maker going forward. Historical segment results have been recast to conform with the current period presentation. These changes did not have an impact on our results of operations, cash flows, or financial condition.

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, 2025.

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 July 4, 2026, the Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three and six months ended July 4, 2026 and June 28, 2025, and the Consolidated Statements of Cash Flows for the six months ended July 4, 2026 and June 28, 2025. These results, however, are not necessarily indicative of the results expected for the full fiscal year ending December 31, 2026.

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, 2025. Other than our adoption of Accounting Standards Update (“ASU”) No. 2025-05 in the first quarter, there have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 3 Revenues

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

Revenues for tangible products are generally recognized upon shipment, whereas revenues for services 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, 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
July 4, 2026June 28, 2025
SegmentTangible ProductsServices and SoftwareTotalTangible ProductsServices and SoftwareTotal
CF$706$197$903$521$196$717
AVA6104465453442576
Total$1,316$241$1,557$1,055$238$1,293
Six Months Ended
July 4, 2026June 28, 2025
SegmentTangible ProductsServices and SoftwareTotalTangible ProductsServices and SoftwareTotal
CF$1,315$413$1,728$1,002$399$1,401
AVA1,232921,3241,115851,200
Total$2,547$505$3,052$2,117$484$2,601

In addition, refer to Note 18, Segment Information & Geographic Data for Net sales to customers by geographic region.

Performance Obligations

The Company’s remaining performance obligations relate to services and software solutions. The aggregate transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $1.15 billion and $1.17 billion, inclusive of deferred revenue, as of July 4, 2026 and December 31, 2025, respectively. On average, remaining performance obligations as of July 4, 2026 and December 31, 2025 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 $12 million each as of July 4, 2026 and December 31, 2025. These contract assets result from timing differences between billing and satisfying performance obligations, inclusive of any impacts 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 six months ended July 4, 2026 and June 28, 2025, 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 $835 million and $842 million as of July 4, 2026 and December 31, 2025, respectively. During the three and six months ended July 4, 2026, the Company recognized $120 million and $274 million in revenue that was previously included in the deferred revenue balance as of December 31, 2025. During the three and six months ended June 28, 2025, the Company recognized $117 million and $258 million in revenue that was previously included in the deferred revenue balance as of December 31, 2024.

Note 4 Inventories

The categories of Inventories, net are as follows (in millions):

July 4, 2026December 31, 2025
Raw materials (1)$252$230
Work in process57
Finished goods476492
Total Inventories, net$733$729

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

Note 5 Business Acquisitions

On September 30, 2025, the Company acquired Elo Holdings, Inc. (“Elo Touch”) for $1,303 million. The Company utilized estimated fair values as of the acquisition date to allocate the purchase consideration to the identifiable assets acquired and liabilities assumed. The purchase price allocation remains preliminary as of July 4, 2026 and subject to adjustment during the measurement period, which is up to one year from the acquisition date. No significant measurement period adjustments were recorded during the quarter ended July 4, 2026. The primary fair value estimates still considered preliminary include intangible assets and income tax-related items.

Note 6 Investments

A rollforward of the Company’s long-term investments is as follows (in millions):

Three Months EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Balance at the beginning of the period$96$110$103$110
Losses on long-term investments—(10)(15)(10)
Long-term investment acquired in exchange for sale of business——9—
Sale of long-term investments——(1)—
Balance at the end of the period$96$100$96$100

As further described in Note 7 Exit and Restructuring Activities, the Company acquired a long-term investment in the first quarter of 2026 as part of the consideration received for the sale of its robotics automation business.

The carrying value of the Company’s long-term investments is included in Other long-term assets on the Consolidated Balance Sheets. Net gains and losses are included within Other income (expense), net on the Consolidated Statements of Operations.

Note 7 Exit and Restructuring Activities

Robotics automation

In the first quarter of 2026, the Company completed the sale of its robotics automation business to Skild AI. The transaction resulted in a net pre-tax gain of $5 million, which was recognized in the first quarter and is included within Other income (expense), net, on the Consolidated Statements of Operations.

As part of the sale transaction, Zebra received total consideration of $20 million, consisting of $9 million in upfront cash, a minority ownership stake in Skild AI with a fair value of $9 million, and $2 million held in escrow.

2025 Productivity Plan

In the second quarter, the Company substantially completed its organizational design changes intended to better meet its strategic objectives and improve cost efficiency (referred to as the “2025 Productivity Plan”). One-time costs associated with the 2025 Productivity Plan, which primarily consisted of employee severance and benefits, were $8 million and $16 million during the three and six months ended July 4, 2026, respectively. Cumulative one-time costs associated with the 2025 Productivity Plan, including those recognized in 2025, are $37 million.

The one-time costs associated with the 2025 Productivity Plan are classified within Exit and restructuring on the Consolidated Statements of Operations.

A rollforward of the liability associated with the Company’s Exit and restructuring activities, which are reflected within Accrued liabilities on the Consolidated Balance Sheets, is as follows (in millions):

Balance as of December 31, 2025$23
Exit and restructuring charges16
Cash payments(24)
Balance as of July 4, 2026$15

Note 8 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 July 4, 2026, are classified below (in millions):

Level 1Level 2Level 3Total
Assets:
Foreign exchange contracts (1)$2$17$—$19
Investments related to the deferred compensation plan51——51
Total Assets at fair value$53$17$—$70
Liabilities:
Liabilities related to the deferred compensation plan$51$—$—$51
Total Liabilities at fair value$51$—$—$51

The Company’s financial assets and liabilities carried at fair value as of December 31, 2025, are classified below (in millions):

Level 1Level 2Level 3Total
Assets:
Investments related to the deferred compensation plan$48$—$—$48
Total Assets at fair value$48$—$—$48
Liabilities:
Foreign exchange contracts (1)$2$5$—$7
Liabilities related to the deferred compensation plan48——48
Total Liabilities at fair value$50$5$—$55

(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 (Level 2).

  • Fair value of hedges against net assets denominated in foreign currencies is calculated at the period-end exchange rate adjusted for current forward points (Level 2). However, if the hedge has matured but not yet settled as of period end, then the fair value is calculated at the amount at which the hedge is being settled (Level 1).

Note 9 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 commonly 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 ClassificationJuly 4, 2026December 31, 2025
Derivative instruments designated as hedges:
Foreign exchange contractsPrepaid expenses and other current assets$17$—
Foreign exchange contractsAccrued liabilities—(5)
Total derivative instruments designated as hedges$17$(5)
Derivative instruments not designated as hedges:
Foreign exchange contractsPrepaid expenses and other current assets$2$—
Foreign exchange contractsAccrued liabilities—(2)
Total derivative instruments not designated as hedges$2$(2)
Total net derivative asset (liability)$19$(7)

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

Interest Rate Risk Management

The Company is exposed to market risk associated with interest rate payments on its borrowings under a term loan (“Term Loan A”), Revolving Credit Facility, and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins. The Company manages its exposure to changes in interest rates by issuing both fixed and variable rate borrowings as well as periodically utilizing interest rate swaps to economically hedge interest rate exposure based on current and projected market conditions. The Company had no active interest rate swap agreements during the six months ended July 4, 2026 or the year ended December 31, 2025.

Foreign Currency Exchange Risk Management

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

The Company manages the exchange rate risk of anticipated Euro-denominated sales using forward contracts, which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized amounts reclassified to Net sales were $2 million of gains and $13 million of losses for the three months ended July 4, 2026 and June 28, 2025, respectively. Realized amounts reclassified to Net sales were $5 million of losses and $4 million of losses for the six months ended July 4, 2026 and June 28, 2025, respectively. As of July 4, 2026 and December 31, 2025, the notional amounts of the Company’s foreign exchange cash flow hedges were €637 million and €582 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. Net amounts recognized within Foreign exchange loss were $1 million of losses and $15 million of losses for the three months ended July 4, 2026 and June 28, 2025, respectively. There were no net amounts recognized within Foreign exchange loss for the six months ended July 4, 2026 and $23 million of losses for the six months ended June 28, 2025. The notional values and the net fair values of these outstanding contracts were as follows (in millions):

July 4, 2026December 31, 2025
Notional balance of outstanding contracts:
British Pound/U.S. Dollar£3£14
Euro/U.S. Dollar€128€92
Euro/Czech Koruna€12€13
Japanese Yen/U.S. Dollar¥593¥395
Singapore Dollar/U.S. DollarS$19S$16
Mexican Peso/U.S. DollarMex$281Mex$250
Polish Zloty/U.S. Dollarzł28zł71
Net fair value of assets (liabilities) of outstanding contracts$2$(2)

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 not have been significantly different as of July 4, 2026 or December 31, 2025.

Note 10 Long-Term Debt

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

July 4, 2026December 31, 2025
Term Loan A$1,531$1,575
Senior Notes500500
Revolving Credit Facility565275
Receivables Financing Facility180161
Total debt$2,776$2,511
Less: Debt issuance costs(7)(8)
Less: Unamortized discounts(1)(2)
Less: Current portion of debt(2,275)(141)
Total long-term debt$493$2,361

As of July 4, 2026, the future maturities of debt are as follows (in millions):

2026 (6 months remaining)$116
20272,160
2028—
2029—
2030—
Thereafter500
Total future maturities of debt$2,776

All borrowings as of July 4, 2026 were denominated in U.S. Dollars.

The estimated fair value of the Company’s debt approximated $2.8 billion and $2.5 billion as of July 4, 2026 and December 31, 2025, 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 third quarter of 2026 and the majority due upon maturity on May 25, 2027. The Company has made and 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 4, 2026, the Term Loan A interest rate was 4.99%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

Senior Notes

The Company’s senior unsecured notes (the “Senior Notes”) have a 6.5% fixed interest rate. The Senior Notes mature on June 1, 2032, and interest is payable semi-annually in arrears in June and December of each year. The Company has the option to or could be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

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

Revolving Credit Facility

The Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit. As of July 4, 2026, the Company had letters of credit totaling $10 million, which reduced remaining funds available for borrowings under the Revolving Credit Facility to $925 million. As of July 4, 2026, the Revolving Credit Facility had an average interest rate of 5.02%. Interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facility

The Company has a Receivables Financing Facility with a borrowing limit of up to $180 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under this facility as secured borrowings. The receivables financing facility matures on March 19, 2027.

As of July 4, 2026, the Company’s Consolidated Balance Sheets included $810 million of gross receivables that were pledged under the facility. Borrowings under the facility bear interest at a variable rate plus an applicable margin. As of July 4, 2026, the facility had an average interest rate of 4.72%. Interest is paid monthly on these borrowings.

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

As of July 4, 2026, the Company was in compliance with all debt covenants.

Note 11 Leases

During the six months ended July 4, 2026, the Company recorded $22 million of right-of-use (“ROU”) assets obtained in exchange for lease obligations related to extensions of existing leases and commencements of new leases.

Future minimum lease payments under non-cancellable leases as of July 4, 2026 were as follows (in millions):

2026 (6 months remaining)$27
202746
202840
202933
203026
Thereafter64
Total future minimum lease payments$236
Less: Interest(42)
Present value of lease liabilities$194
Reported as of July 4, 2026:
Current portion of lease liabilities$38
Long-term lease liabilities156
Present value of lease liabilities$194

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

Note 12 Accrued Liabilities, Commitments and Contingencies

Accrued Liabilities

The components of Accrued liabilities are as follows (in millions):

July 4, 2026December 31, 2025
Incentive compensation$109$150
Payroll and benefits7775
Customer rebates7463
Unremitted cash collections due to banks on factored accounts receivable6884
Current portion of lease liabilities3838
Freight and duty3026
Current portion of warranty liabilities2928
Exit and restructuring1523
Other6671
Accrued liabilities$506$558

Warranties

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

Six Months Ended
July 4, 2026June 28, 2025
Balance at the beginning of the period$34$26
Warranty expense1818
Warranties fulfilled(17)(17)
Balance at the end of the period$35$27

The current and long-term portions of our warranty obligations are included on the Consolidated Balance Sheets within Accrued liabilities and Other long-term liabilities, respectively.

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.

On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the executive branch of government to impose tariffs, which invalidated certain import tariffs enacted in 2025. The matter was remanded to the Court of International Trade and the U.S. Customs and Border Protection (“CBP”) for administration of refunds. The Company has commenced the process of seeking refunds in accordance with the process prescribed by CBP. The Company has evaluated potential refunds of previously paid IEEPA tariffs under a loss recovery model consistent with the principles of ASC 410‑30, Asset Retirement and Environmental Obligations — Environmental Obligations. In the second quarter of 2026, the Company deemed the refund of all previously paid import tariffs to be probable and recognized a benefit of approximately $73 million within Cost of Sales on the Consolidated Statements of Operations, including $46 million attributed to the CF segment and $27 million attributed to the AVA segment. As of July 4, 2026, the Company received $14 million in cash and $59 million is reflected within Accounts Receivable, net on the Consolidated Balance Sheets. An additional $27 million in cash refunds was received through July 31, 2026.

Note 13 Share-Based Compensation

On May 19, 2026, the Company’s stockholders approved the Zebra Technologies Corporation 2026 Long-Term Incentive Plan (the “2026 LTIP”). The 2026 LTIP superseded and replaced all other prior plans, except that the prior plans shall remain in effect with respect to outstanding awards issued under the prior plans until such awards have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with their terms.

The 2026 LTIP provides for incentive compensation to the Company’s non-employee directors, officers and employees. Awards available under the 2026 LTIP include stock-settled awards, such as stock-settled restricted stock units, stock-settled performance stock units, restricted stock awards, performance share awards, stock appreciation rights, incentive stock options, and nonqualified stock options. Awards available under the 2026 LTIP also include cash-settled awards, such as cash-settled restricted stock units, performance stock units, and stock appreciation rights.

The Company uses treasury shares as its source for issuing shares under the share-based compensation programs. As of July 4, 2026, 1,809,099 shares of Class A Common Stock remain available to be issued under the 2026 LTIP.

Note 14 Income Taxes

The Company’s effective tax rate for the three and six months ended July 4, 2026 was 18.2% and 18.6%, respectively, compared to 18.8% and 18.2% for the three and six months ended June 28, 2025, respectively. In both the current and prior periods, the variance from the 21% federal statutory rate was primarily attributable to U.S. tax credits and the tax benefit related to foreign earnings subject to U.S. taxation, partially offset by foreign rate differential and U.S. state income taxes.

Note 15 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 EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Basic:
Net income$233$112$368$248
Weighted-average shares outstanding47,717,20550,939,47448,364,99451,154,241
Basic earnings per share$4.89$2.20$7.61$4.85
Diluted:
Net income$233$112$368$248
Weighted-average shares outstanding47,717,20550,939,47448,364,99451,154,241
Dilutive shares412,060342,799411,555392,169
Diluted weighted-average shares outstanding48,129,26551,282,27348,776,54951,546,410
Diluted earnings per share$4.85$2.19$7.54$4.81

Anti-dilutive share-based compensation awards are excluded from diluted earnings per share calculations. There were 95,443 and 206,083 shares that were anti-dilutive for the three and six months ended July 4, 2026. There were 199,500 and 126,172 shares that were anti-dilutive for the three and six months ended June 28, 2025, respectively.

Note 16 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 9, 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 six months ended July 4, 2026 and June 28, 2025 were as follows (in millions):

Unrealized gain (loss) on sales hedgingForeign currency translation adjustmentsTotal
Balance at December 31, 2024$22$(66)$(44)
Other comprehensive (loss) income before reclassifications(85)27(58)
Amounts reclassified from AOCI(1)4—4
Tax effect20—20
Other comprehensive (loss) income, net of tax(61)27(34)
Balance at June 28, 2025$(39)$(39)$(78)
Balance at December 31, 2025$(4)$(14)$(18)
Other comprehensive income (loss) before reclassifications17(37)(20)
Amounts reclassified from AOCI(1)5—5
Tax effect(5)—(5)
Other comprehensive income (loss), net of tax17(37)(20)
Balance at July 4, 2026$13$(51)$(38)

(1) See Note 9, Derivative Instruments regarding the timing of reclassifications to operating results.

Note 17 Accounts Receivable Factoring

The Company has a Receivables Factoring arrangement, pursuant to which certain receivables originated from the EMEA and Asia-Pacific regions up to a maximum of €150 million are sold to a bank without recourse in exchange for cash. 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 bank, 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.

During the six months ended July 4, 2026 and June 28, 2025, the Company received cash proceeds of $272 million and $246 million, respectively, from the sales of accounts receivables under its factoring arrangement. As of July 4, 2026 and December 31, 2025, there were a total of $18 million and $10 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 $68 million and $84 million of obligations that were not yet remitted to the bank as of July 4, 2026 and December 31, 2025, 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 18 Segment Information & Geographic Data

The Company’s operations consist of two reportable segments that provide complementary offerings to our customers: Connected Frontline (“CF”), which includes mobile computing and related services and software-based offerings; and Asset Visibility & Automation (“AVA”), which includes barcode and card printing and related supplies and sensors, RFID and RTLS offerings, data capture, machine vision offerings, and related services.

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 operating income to assess segment profitability monthly as well as part of the Company’s budget and forecasting process. The CODM assesses the profitability of each segment relative to its long-term growth objectives in evaluating resource allocation priorities. 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 EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Net sales:
CF$903$717$1,728$1,401
AVA6545761,3241,200
Total Net sales$1,557$1,293$3,052$2,601
Cost of sales:
CF$441$378$861$729
AVA286296608604
Corporate (3)53167
Total Cost of sales$732$677$1,485$1,340
Operating expenses:
CF (1)$243$197$479$390
AVA (1)176173365354
Corporate (3)8563187139
Total Operating expenses$504$433$1,031$883
Operating income:
CF (2)$219$142$388$282
AVA (2)192107351242
Total segment operating income$411$249$739$524
Corporate (3)(90)(66)(203)(146)
Total Operating income$321$183$536$378

(1)CF and AVA segment operating expenses include Selling and marketing, Research and development, and General and administrative expenses, excluding the amounts classified within Corporate.

(2)CF and AVA segment operating income includes depreciation expense proportionate to each segment’s Net sales.

(3)To the extent applicable, amounts included in Corporate consist of Share-based compensation, Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (impairment of goodwill and other intangible assets, and business acquisition purchase accounting adjustments).

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)(1):

Three Months EndedSix Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
North America$774$638$1,502$1,277
EMEA4984181,005866
Asia-Pacific181147348284
Latin America10490197174
Total Net sales$1,557$1,293$3,052$2,601

(1)Certain prior period net sales have been recast to appropriately reflect customer location, with no impact to Zebra’s consolidated net sales.

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