ZEBRATECHNOLOGIESCORPORATION

Transcription

1 UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION WASHINGTON,DC20549 FORM8-K CURRENTREPORT PursuanttoSection13or15(d) ofthesecuritiesexchangeactof1934 Dateofreport(Dateofearliesteventreported):May8,2018 ZEBRATECHNOLOGIESCORPORATION (ExactNameofRegistrantasSpecifiedinCharter) Delaware (StateorOtherJurisdiction ofincorporation) (Commission FileNumber) (IRSEmployer IdentificationNo.) 3OverlookPoint,Lincolnshire,Illinois (AddressofPrincipalExecutiveOffices) Registrant stelephonenumber,includingareacode: (ZipCode) (FormerNameorFormerAddress,ifChangedSinceLastReport) ChecktheappropriateboxbelowiftheForm8-Kfilingisintendedtosimultaneouslysatisfythefilingobligationoftheregistrantunderanyofthefollowing provisions: WrittencommunicationspursuanttoRule425undertheSecuritiesAct(17CFR ) SolicitingmaterialpursuanttoRule14a-12undertheExchangeAct(17CFR240.14a-12) Pre-commencementcommunicationspursuanttoRule14d-2(b)undertheExchangeAct(17CFR240.14d-2(b)) Pre-commencementcommunicationspursuanttoRule13e-4(c)undertheExchangeAct(17CFR240.13c-4(c)) IndicatebycheckmarkwhethertheregistrantisanemerginggrowthcompanyasdefinedinRule405oftheSecuritiesActof1933( ofthischapter)or Rule12b-2oftheSecuritiesExchangeActof1934( b-2ofthischapter). Emerginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanynewor revisedfinancialaccountingstandardsprovidedpursuanttosection13(a)oftheexchangeact.

2 Item2.02. ResultsofOperationsandFinancialConditions. TheinformationcontainedinthisForm8-Kshallnotbedeemed"filed"forpurposesofSection18oftheSecuritiesExchangeActof1934,asamended (the"exchangeact"),orincorporatedbyreferenceinanyfilingunderthesecuritiesactof1933,asamended,ortheexchangeact,exceptasshallbeexpressly setforthbyspecificreferenceinsuchafiling. OnMay8,2018,weannouncedourresultsofoperationsandfinancialpositionasofandforthefirstquarterendedMarch31,2018.Thepressreleaseis attachedheretoasexhibit99.1andisincorporatedhereinbyreference. Item9.01. FinancialStatementsandExhibits. (d)exhibits.thefollowingexhibitisbeingfurnishedherewith: ExhibitNumber DescriptionofExhibits 99.1 Registrant spressreleasedatedmay8,2018

3 SIGNATURES PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned hereuntodulyauthorized. ZEBRATECHNOLOGIESCORPORATION Date:May8,2018 By: /s/jimkaput JimKaput SVP,GeneralCounsel

4 EXHIBITINDEX ExhibitNumber DescriptionofExhibits 99.1 Registrant spressreleasedatedmay8,2018

5 Exhibit99.1 ZebraTechnologiesCorporation 3OverlookPoint Lincolnshire,IL60069USA T: F: ZebraTechnologiesAnnouncesFirst-Quarter2018Results First-Quarter Financial Highlights Strongnetsalesof$977million;year-over-yeargrowthof13% Netincomeof$109millionandnetincomeperdilutedshareof$2.01 Non-GAAPdilutedEPSincreased87%year-over-yearto$2.56 AdjustedEBITDAincreased37%year-over-yearto$204million;andadjustedEBITDAmarginexpanded370basispointsyearover-yearto20.9% $116millionofcashfromoperationsand$98millionoffreecashflow;$95millionreductionoftotaldebt Lincolnshire,Ill.,May8,2018 ZebraTechnologiesCorporation(NASDAQ:ZBRA),themarketleaderinruggedmobilecomputers, barcodescannersandbarcodeprintersenhancedwithsoftwareandservicestoenablereal-timeenterprisevisibility,todayannouncedresults forthefirstquarterendedmarch31,2018. Ourfirstquarterresultsweredrivenbystrongbroad-basedmarketdemandforoursolutionsandexcellentoperationalexecutionbyour team.wedeliverednetsales,ebitdamargin,andearningspershareabovetherespectiveguidanceranges.wealsocontinuedto aggressivelyretiredebt,reducingournetleverageratioto2.8x, saidandersgustafsson,chiefexecutiveofficerofzebratechnologies. Givenoursalesandmarginoutperformance,weareraisingourfull-yearoutlookforsalesgrowth,EBITDAmargin,andfreecashflow.We continuetobelaserfocusedonprovidinginnovativesolutionsthatgiveourcustomersaperformanceedgeonthefrontlinesoftheirbusiness operations. $inmillions,exceptpershareamounts 1Q18 1Q17 Change Selectreportedmeasures: Netsales $ 977 $ % Grossprofit % Netincome NM Netincomeperdilutedshare $ 2.01 $ 0.16 NM SelectNon-GAAPmeasures: Adjustednetsales $ 977 $ % Organic net sales growth 9.8% Adjustedgrossprofit % Adjusted gross margin 47.7% 46.4% 130 bps AdjustedEBITDA % Adjusted EBITDA margin 20.9% 17.2% 370 bps Non-GAAPnetincome $ 138 $ % Non-GAAPearningsperdilutedshare $ 2.56 $ % Reported(GAAP)results Netsaleswere$977millioninthefirstquarterof2018comparedto$865millioninthefirstquarterof2017.NetsalesintheEnterprise Visibility&Mobility("EVM")segmentwere$625millioninthefirstquarterof2018comparedwith$544millioninthefirstquarterof 2017.AssetIntelligence&Tracking("AIT")segmentnetsaleswere$352millioninthefirstquarterof2018comparedto$322millioninthe prioryearperiod.first-quarter2018

6 grossprofitwas$465millioncomparedto$401millioninthecomparableprioryearperiod.netincomeforthefirstquarterof2018was$ 109million,or$2.01perdilutedshare,comparedtonetincomeof$8million,or$0.16perdilutedshare,forthefirstquarterof2017. AsofJanuary1,2018,thecompanyadoptedrevenuestandardASC606.Revenuewouldhavebeen$1millionhigherforthethree-month periodendedmarch31,2018hadthecompanycontinuedtofollowouraccountingpoliciesunderthepreviousrevenuerecognitionguidance. Adjusted(Non-GAAP)results Consolidatedadjustednetsaleswere$977millioninthefirstquarterof2018comparedto$866millionintheprioryearperiod,anincrease of12.8%.consolidatedorganicnetsalesgrowthforthefirstquarterwas9.8%reflectinggrowthacrossallregions,mostnotablyemeaand NorthAmerica.First-quarteryear-over-yearorganicnetsalesgrowthwas11.7%intheEVMsegmentand6.4%intheAITsegment. Consolidatedadjustedgrossmarginforthefirstquarterof2018was47.7%,comparedto46.4%intheprioryearperiod.Thisincreasewas duetofavorablebusinessmixandthefavorableimpactofcurrencychanges,primarilyintheemearegion.adjustedoperatingexpenses increasedinthefirstquarterof2018to$282millionfrom$272millionintheprioryearperiodprimarilyduetogrowthinthebusinessand increasedincentivecompensationexpenserelatedtoimprovedoperatingresults. AdjustedEBITDAforthefirstquarterof2018increasedto$204million,or20.9%ofadjustednetsales,comparedto$149million,or 17.2%ofadjustednetsales,forthefirstquarterof2017primarilyduetohighersalesandgrossprofitmargin. Non-GAAPnetincomeforthefirstquarterof2018was$138million,or$2.56perdilutedshare,comparedwith$72million,or$1.37per dilutedshare,forthefirstquarterof2017.lowerinterestcostsandalowertaxratealsodroveyear-over-yearimprovement. BalanceSheetandCashFlow AsofMarch31,2018,thecompanyhadcashandcashequivalentsof$64millionandtotaldebtof$2,133million. Freecashflowinthefirstquarterof2018was$98million,consistingof$116millionofcashflowfromoperationsandcapitalexpenditures of$18million.inthefirstquarter,thecompanymade$95millioninlong-termdebtpaymentsand$26millioninscheduledcashinterest payments. Outlook SecondQuarter2018 Thecompanyenteredthesecondquarterof2018withastrongorderbacklogandexpectssecond-quarter2018netsalestoincrease approximately9%to12%fromthesecondquarterof2017.thisexpectationincludesanapproximately3percentagepointpositiveimpact fromforeigncurrencytranslation. AdjustedEBITDAmarginisexpectedtobeintherangeof18.5%to19.0%forthesecondquarter2018,favorabletotheprioryearperiod. Non-GAAPearningsperdilutedshareareexpectedtobeintherangeof$2.10to$2.30.Thisassumesaneffectivetaxrateofapproximately 16%to17%. FullYear2018 Thecompanynowexpectsfullyear2018netsalesgrowthtoincreaseapproximately6%to9%,whichisfavorabletoourprioroutlookand includesananticipated2percentagepointpositiveimpactfromforeigncurrencytranslation. AdjustedEBITDAmarginisnowexpectedtobeapproximately20%forthefullyear2018,whichisfavorabletoourprioroutlookandan improvementcomparedtothefullyear2017. Forthefullyear2018,thecompanyexpectsfreecashflowtoexceed$500million,whichisfavorabletoourprioroutlook,andtoreduce financialleverage.

7 ConferenceCallNotification InvestorsareinvitedtolistentoalivewebcastofZebra sconferencecallregardingthecompany sfinancialresultsforthefirstquarterof 2018.Theconferencecallwillbeheldtoday,Tuesday,May8,at7:30a.m.CentralTime(8:30a.m.EasternTime).Toviewthewebcast,visit theinvestorrelationssectionofthecompany swebsiteatinvestors.zebra.com. AboutZebra WiththeunparalleledoperationalvisibilityZebra(NASDAQ:ZBRA)provides,enterprisesbecomeassmartandconnectedastheworldwe livein.real-timeinformation gleanedfromvisionarysolutionsincludinghardware,softwareandservices givesorganizationsthe competitiveedgetheyneedtosimplifyoperations,knowmoreabouttheirbusinessesandcustomers,andempowertheirmobileworkersto succeedintoday sdata-centricworld.formoreinformation,visitwww.zebra.comorsignupforournewsalerts.followusonlinkedin, TwitterandFacebook. Forward-LookingStatements Thispressreleasecontainsforward-lookingstatements,asdefinedbythePrivateSecuritiesLitigationReformActof1995,including, withoutlimitation,thestatementsregardingthecompany soutlook.actualresultsmaydifferfromthoseexpressedorimpliedinthe company sforward-lookingstatements.thesestatementsrepresentestimatesonlyasofthedatetheyweremade.zebraundertakesno obligation,otherthanasmayberequiredbylaw,topubliclyupdateorreviseanyforward-lookingstatements,whetherasaresultofnew information,futureevents,changedcircumstancesoranyotherreasonafterthedateofthisrelease. Theseforward-lookingstatementsarebasedoncurrentexpectations,forecastsandassumptionsandaresubjecttotherisksanduncertainties inherentinzebra sindustry,marketconditions,generaldomesticandinternationaleconomicconditions,andotherfactors.thesefactors includecustomeracceptanceofzebra shardwareandsoftwareproductsandcompetitors productofferings,andthepotentialeffectsof technologicalchanges.thecontinueduncertaintyoverfutureglobaleconomicconditions,theavailabilityofcreditandcapitalmarkets volatilitymayhaveadverseeffectsonzebra,itssuppliersanditscustomers.inaddition,adisruptioninourabilitytoobtainproductsfrom vendorsasaresultofsupplychainconstraints,naturaldisastersorothercircumstancescouldrestrictsalesandnegativelyaffectcustomer relationships.profitsandprofitabilitywillbeaffectedbyzebra sabilitytocontrolmanufacturingandoperatingcosts.becauseofitsdebt, interestratesandfinancialmarketconditionswillalsohaveanimpactonresults.foreignexchangerateswillhaveaneffectonfinancial resultsbecauseofthelargepercentageofourinternationalsales.theoutcomeoflitigationinwhichzebramaybeinvolvedisanotherfactor. Thesuccessofintegratingacquisitionscouldalsoaffectprofitability,reportedresultsandthecompany scompetitivepositioninitsindustry. TheseandotherfactorscouldhaveanadverseeffectonZebra ssales,grossprofitmarginsandresultsofoperationsandincreasethe volatilityofourfinancialresults.whenusedinthisreleaseanddocumentsreferenced,thewords anticipate, believe, outlook, and expect andsimilarexpressions,astheyrelatetothecompanyoritsmanagement,areintendedtoidentifysuchforward-lookingstatements, butarenottheexclusivemeansofidentifyingthesestatements.descriptionsoftherisks,uncertaintiesandotherfactorsthatcouldaffectthe company sfutureoperationsandresultscanbefoundinzebra sfilingswiththesecuritiesandexchangecommission,includingthe company smostrecentform10-k. InformationregardingtheimpactoftheTCJAconsistsofpreliminaryestimates,basedoncurrentcalculations,interpretations,assumptions andexpectations.theseestimatesmaychangemateriallyaswelearnadditionalinformationaboutandobtainadditionalguidanceonthe TCJA. UseofNon-GAAPFinancialInformation ThispressreleasecontainscertainNon-GAAPfinancialmeasures,consistingof adjustednetsales, adjustedgrossprofit, EBITDA, AdjustedEBITDA, Non-GAAPnetincome, Non-GAAPearningspershare, freecashflow, organicnetsalesgrowth, and adjustedoperatingexpenses. Managementpresentsthesemeasurestofocusontheon-goingoperationsandbelievesitisusefultoinvestors becausetheyenablethemtoperformmeaningfulcomparisonsofpastandpresentoperatingresults.thecompanybelievesitisusefulto presentnon-gaapfinancialmeasures,whichexcludecertainsignificantitems,asameanstounderstandtheperformanceofitsongoing operationsandhowmanagementviewsthebusiness.pleaseseethe ReconciliationofGAAPtoNon-

8 GAAPFinancialMeasures tablesandaccompanyingdisclosuresattheendofthispressreleaseformoredetailedinformationregardingnon- GAAPfinancialmeasuresherein,includingtheitemsreflectedinadjustednetearningscalculations.Thesemeasures,however,shouldnotbe construedasanalternativetoanyothermeasureofperformancedeterminedinaccordancewithgaap. Thecompanydoesnotprovideareconciliationfornon-GAAPestimatesonaforward-lookingbasis(includingtheinformationunder Outlook above)whereitisunabletoprovideameaningfuloraccuratecalculationorestimationofreconcilingitemsandtheinformationis notavailablewithoutunreasonableeffort.thisisduetotheinherentdifficultyofforecastingthetimingoramountofvariousitemsthathave notyetoccurred,areoutofthecompany scontroland/orcannotbereasonablypredicted,andthatwouldimpactdilutednetearningsper share,themostdirectlycomparableforward-lookinggaapfinancialmeasure.forthesamereasons,thecompanyisunabletoaddressthe probablesignificanceoftheunavailableinformation.forward-lookingnon-gaapfinancialmeasuresprovidedwithoutthemostdirectly comparablegaapfinancialmeasuresmayvarymateriallyfromthecorrespondinggaapfinancialmeasures. Asaglobalcompany,Zebra'soperatingresultsreportedinU.S.dollarsareaffectedbyforeigncurrencyexchangeratefluctuationsbecause theunderlyingforeigncurrenciesinwhichthecompanytransactschangeinvalueovertimecomparedtotheu.s.dollar;accordingly,the companypresentscertainorganicgrowthfinancialinformation,whichincludesimpactsofforeigncurrencytranslation,toprovidea frameworktoassesshowthecompany sbusinessesperformedexcludingtheimpactofforeigncurrencyexchangeratefluctuations.foreign currencyimpactrepresentsthedifferenceinresultsthatareattributabletofluctuationsinthecurrencyexchangeratesusedtoconvertthe resultsforbusinesseswherethefunctionalcurrencyisnottheu.s.dollar.thisimpactiscalculatedbytranslating,forcertaincurrencies, currentperiodresultsatthecurrencyexchangeratesusedinthecomparableperiodintheprioryear,ratherthantheexchangeratesineffect duringthecurrentperiod.inaddition,thecompanyexcludestheimpactofitsforeigncurrencyhedgingprograminboththecurrentyearand prioryearperiods.thecompanybelievesthesemeasuresshouldbeconsideredasupplementtoandnotinlieuofthecompany sperformance measurescalculatedinaccordancewithgaap. Contacts InvestorsMedia MichaelSteele,CFA,IRCThereseVanRyne VicePresident,InvestorRelationsDirector,GlobalPublicRelations Phone: Phone:

9 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES CONSOLIDATEDBALANCESHEETS (Inmillions,exceptsharedata) Assets Currentassets: March31,2018 (Unaudited) December31,2017 Cashandcashequivalents $ 64 $ 62 Accountsreceivable,netofallowancesfordoubtfulaccountsof$2millionand$3millionasofMarch31, 2018andDecember31,2017,respectively Inventories,net Incometaxreceivable Prepaidexpensesandothercurrentassets TotalCurrentassets 1,053 1,063 Property,plantandequipment,net Goodwill 2,463 2,465 Otherintangibles,net Long-termdeferredincometaxes Otherlong-termassets TotalAssets $ 4,249 $ 4,275 LiabilitiesandStockholders Equity Currentliabilities: Currentportionoflong-termdebt $ 43 $ 51 Accountspayable Accruedliabilities Deferredrevenue Incometaxespayable TotalCurrentliabilities 932 1,000 Long-termdebt 2,090 2,176 Long-termdeferredrevenue Otherlong-termliabilities TotalLiabilities 3,268 3,441 Stockholders Equity: Preferredstock,$.01parvalue;authorized10,000,000shares;noneissued ClassAcommonstock,$.01parvalue;authorized150,000,000shares;issued72,151,857shares 1 1 Additionalpaid-incapital Treasurystockatcost,18,755,228and18,915,762sharesatMarch31,2018andDecember31,2017, respectively (616) (620) Retainedearnings 1,376 1,248 Accumulatedothercomprehensiveloss (46) (52) TotalStockholders Equity TotalLiabilitiesandStockholders Equity $ 4,249 $ 4,275-5-

10 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES CONSOLIDATEDSTATEMENTSOFOPERATIONS (Inmillions,exceptsharedata) (Unaudited) ThreeMonthsEnded March31, 2018 Netsales April1, 2017 Netsalesoftangibleproducts $ 839 $ 735 Revenuefromservicesandsoftware TotalNetsales Costofsales: Costofsalesoftangibleproducts Costofservicesandsoftware TotalCostofsales Grossprofit Operatingexpenses: Sellingandmarketing Researchanddevelopment Generalandadministrative Amortizationofintangibleassets Acquisitionandintegrationcosts 2 27 Exitandrestructuringcosts 4 4 TotalOperatingexpenses Operatingincome Otherexpenses: Foreignexchangeloss (1) Interestexpense,net (11) (41) TotalOtherexpenses (11) (42) Income(loss)beforeincometaxes 133 (2) Incometaxexpense(benefit) 24 (10) Netincome $ 109 $ 8 Basicearningspershare $ 2.04 $ 0.16 Dilutedearningspershare $ 2.01 $ 0.16 Basicweightedaveragesharesoutstanding 53,286,249 51,842,025 Dilutedweightedaverageandequivalentsharesoutstanding 53,985,755 52,946,883-6-

11 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES CONSOLIDATEDSTATEMENTSOFCASHFLOWS (Inmillions) (Unaudited) ThreeMonthsEnded March31, 2018 Cashflowsfromoperatingactivities: April1, 2017 Netincome $ 109 $ 8 Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Depreciationandamortization Amortizationofdebtissuancecostsanddiscounts 2 4 Share-basedcompensation 10 7 Deferredincometaxes (2) (9) Unrealizedgainonforwardinterestrateswaps (12) Other,net (1) 1 Changesinoperatingassetsandliabilities: Accountsreceivable,net 9 79 Inventories,net 6 (31) Otherassets (7) 17 Accountspayable (12) (52) Accruedliabilities (74) Deferredrevenue Incometaxes 22 (2) Otheroperatingactivities 4 (4) Netcashprovidedbyoperatingactivities Cashflowsfrominvestingactivities: Purchasesofproperty,plantandequipment (18) (13) Purchasesoflong-terminvestments (2) Netcashusedininvestingactivities (20) (13) Cashflowsfromfinancingactivities: Paymentsoflong-termdebt (95) (80) Proceedsfromexerciseofstockoptionsandstockpurchaseplanpurchases 3 4 Taxespaidrelatedtonetsharesettlementofequityawards (2) Netcashusedinfinancingactivities (92) (78) Effectofexchangeratechangesoncash (2) (2) Netincreaseincashandcashequivalents 2 24 Cashandcashequivalentsatbeginningofperiod Cashandcashequivalentsatendofperiod $ 64 $ 180 Supplementaldisclosuresofcashflowinformation: Incometaxespaid $ 2 $ 5 Interestpaid $ 26 $ 16-7-

12 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES RECONCILIATIONOFORGANICNETSALESGROWTH (UNAUDITED) ThreeMonthsEnded March31,2018 AIT EVM Consolidated ReportedGAAPConsolidatedNetsalesgrowth 9.3% 14.9% 12.9% Adjustments: Impactofforeigncurrencytranslation (1) (2.9)% (3.2)% (3.1)% OrganicNetsalesgrowth 6.4% 11.7% 9.8% (1)OperatingresultsreportedinU.S.dollarsareaffectedbyforeigncurrencyexchangeratefluctuations. Foreigncurrencytranslationimpactrepresentsthedifferenceinresultsthatareattributabletofluctuationsin thecurrencyexchangeratesusedtoconverttheresultsforbusinesseswherethefunctionalcurrencyisnotthe U.S.dollar.Thisimpactiscalculatedbytranslating,forcertaincurrencies,thecurrentperiodresultsatthe currencyexchangeratesusedinthecomparableprioryearperiod,ratherthantheexchangeratesineffect duringthecurrentperiod.inaddition,weexcludetheimpactofthecompany sforeigncurrencyhedging programinboththecurrentandprioryearperiods. -8-

13 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES RECONCILIATIONOFGAAPTONON-GAAPGROSSMARGIN (Inmillions) (Unaudited) ThreeMonthsEnded March31,2018 April1,2017 AIT EVM Consolidated AIT EVM Consolidated (1) GAAP ReportedNetsales (1) $ 352 $ 625 $ 977 $ 322 $ 544 $ 865 ReportedGrossprofit GrossMargin 52.0% 45.1% 47.6% 50.3% 44.1% 46.4% Non-GAAP AdjustedNetsales $ 352 $ 625 $ 977 $ 322 $ 544 $ 866 AdjustedGrossprofit (2) AdjustedGrossMargin 52.0% 45.3% 47.7% 50.3% 44.1% 46.4% (1) Fiscal2017consolidatedresultsincludecorporateeliminationswhicharerelatedtotheEnterpriseAcquisitioninOctober2014andarenotreportedin segmentresults. (2) AdjustedGrossprofitexcludespurchaseaccountingadjustmentsandshare-basedcompensationexpense. -9-

14 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES RECONCILIATIONOFGAAPTONON-GAAPNETINCOME (Inmillions,exceptsharedata) (Unaudited) ThreeMonthsEnded March31, 2018 April1, 2017 Netincome $ 109 $ 8 AdjustmentstoNetsales (1) Purchaseaccountingadjustments 1 TotaladjustmenttoNetsales 1 AdjustmentstoCostofsales (1) Share-basedcompensation 1 TotaladjustmentstoCostofsales 1 AdjustmentstoOperatingexpenses (1) Amortizationofintangibleassets Acquisitionandintegrationcosts 2 27 Share-basedcompensation 10 8 Exitandrestructuringcosts 4 4 TotaladjustmentstoOperatingexpenses AdjustmentstoOtherexpenses,net (1) Amortizationofdebtissuancecostsanddiscounts 2 4 Foreignexchangeloss 1 Forwardinterestrateswapsgain (12) TotaladjustmentstoOtherexpenses,net (10) 5 Incometaxeffectofadjustments (2) Reportedincometaxexpense(benefit) 24 (10) Adjustedincometaxexpense (25) (21) Totaladjustmentstoincometax (1) (31) Totaladjustments Non-GAAPNetincome $ 138 $ 72 GAAPearningspershare Basic $ 2.04 $ 0.16 Diluted $ 2.01 $ 0.16 Non-GAAPearningspershare Basic $ 2.59 $ 1.40 Diluted $ 2.56 $ 1.37 Non-GAAPweightedaveragesharesoutstanding (3) Basic 53,286,249 51,842,025 Diluted 53,985,755 52,946,883 (1)Presentedonapre-taxbasis. (2)RepresentstheadjustmenttotheGAAPbasistaxprovisioncommensuratewithnon-GAAPadjustments. (3)Inperiodsofloss,Non-GAAPweighted-averagesharesexcluderestrictedstockawardsandperformancestockawardswithinbasicanddilutiveweighted-averageshare computations.share-basedcompensationawardsthataredilutiveinnatureareincludedwithinweighted-averagedilutivesharecomputations. -10-

15 ZEBRATECHNOLOGIESCORPORATIONANDSUBSIDIARIES GAAPtoNON-GAAPRECONCILIATION (Inmillions) (Unaudited) EBITDA ThreeMonthsEnded March31, 2018 April1, 2017 Netincome $ 109 $ 8 Addback: Depreciation Amortizationofintangibleassets TotalOtherexpenses,net Incometaxexpense 24 (10) EBITDA(Non-GAAP) AdjustmentstoNetsales Purchaseaccountingadjustments 1 TotaladjustmentstoNetsales 1 AdjustmentstoCostofsales Share-basedcompensation 1 TotaladjustmentstoCostofsales 1 AdjustmentstoOperatingexpenses Acquisitionandintegrationcosts 2 27 Share-basedcompensation 10 8 Exitandrestructuringcosts 4 4 TotaladjustmentstoOperatingexpenses TotaladjustmentstoEBITDA AdjustedEBITDA(Non-GAAP) $ 204 $ 149 AdjustedEBITDA%ofAdjustedNetSales 20.9% 17.2% FREECASHFLOW ThreeMonthsEnded March31, 2018 April1, 2017 Netcashprovidedbyoperatingactivities $ 116 $ 117 Less:Purchasesofproperty,plantandequipment (18) (13) Freecashflow(Non-GAAP) (1) $ 98 $ 104 (1)FreecashflowisdefinedasNetcashprovidedbyoperatingactivitiesinaperiodminuspurchasesofproperty,plantandequipment(capitalexpenditures)madeinthat period.thismeasuredoesnotrepresentresidualcashflowsavailablefordiscretionaryexpendituresasthemeasuredoesnotdeductthepaymentsrequiredfordebtserviceand othercontractualobligationsorpaymentsforfuturebusinessacquisitions.therefore,webelieveitisimportanttoviewfreecashflowasameasurethatprovidessupplemental informationtoourentirestatementsofcashflows. -11-