UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 28, 2020~~April 3, 2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



			For the transition period from to

Commission File Number: 000-19406

Zebra Technologies Corporation

(Exact name of registrant as specified in its charter)



Delaware			36-2675536
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3 Overlook Point,, Lincolnshire,, IL 60069

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (~~847~~) (847) 634-6700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Class A Common Stock, par value $.01 per share

ZBRA

The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April ~~21, 2020,~~27, 2021, there were ~~53,091,564~~53,511,255 shares of Class A Common Stock, $.01 par value, outstanding.

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

QUARTER ENDED ~~MARCH 28, 2020~~APRIL 3, 2021

TABLE OF CONTENTS



				PAGE
PART I - FINANCIAL INFORMATION				43
Item 1.			Consolidated Financial Statements	43
			Consolidated Balance Sheets as of ~~March 28, 2020~~April 3, 2021 (unaudited) and December 31, ~~2019~~2020	43
			Consolidated Statements of Operations (unaudited) for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~	54
			Consolidated Statements of Comprehensive Income (unaudited) for thethree months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~	65
			Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~	76
			Consolidated Statements of Cash Flows (unaudited) for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~	87
			Notes to Consolidated Financial Statements (unaudited)	98
			Note 1: Description of Business and Basis of Presentation	98
			Note 2: Significant Accounting Policies	98
			Note 3: Revenues	98
			Note 4: Inventories	109
			Note ~~5: Business Acquisitions~~ 5 : Investments	109
			Note 6:6 : Exit and Restructuring Costs	1110
			Note 7:7 : Fair Value Measurements	1110
			Note 8:8 : Derivative Instruments	1211
			Note 9:9 : Long-Term Debt	1413
			Note ~~10:~~1 0 : Commitments and Contingencies	1514
			Note ~~11:~~1 1 : Income Taxes	1615
			Note ~~12:~~1 2 : Earnings Per Share	1716
			Note ~~13:~~1 3 : Accumulated Other Comprehensive Income (Loss)	1716
			Note ~~14:~~1 4 : Accounts Receivable Factoring	1817
			Note ~~15:~~1 5 : Segment Information & Geographic Data	1817
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	2019
			Overview	2019
			Results of Operations	21
			Results of Operations by Segment	2322
			~~New Accounting Pronouncements~~	25
	Liquidity and Capital Resources	25
			Significant Customers	27
			Safe Harbor	27
			~~Non-GAAP Measures~~New Accounting Pronouncements	28
			Non-GAAP Measures	28
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.			Controls and Procedures	28
PART II - OTHER INFORMATION				30
Item 1.			Legal Proceedings	30
Item 1A.			Risk Factors	30
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.			Exhibits	3231
Signatures				3332

Table of Contents

PART I - FINANCIAL INFORMATION



Item 1.			Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


	March 28, 2020			December 31, 2019				April 3, 2021		December 31, 2020
	(Unaudited)							(Unaudited)
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	24		$	30		Cash and cash equivalents	$	177	$	168
Accounts receivable, net of allowances for doubtful accounts of $2 million as of March 28, 2020 and December 31, 2019	500			613
Accounts receivable, net of allowances for doubtful accounts of $1 million as of April 3, 2021 and December 31, 2020							Accounts receivable, net of allowances for doubtful accounts of $1 million as of April 3, 2021 and December 31, 2020	521		508
Inventories, net	443			474			Inventories, net	528		511
Income tax receivable	36			32			Income tax receivable	7		16
Prepaid expenses and other current assets	48			46			Prepaid expenses and other current assets	110		70
Total Current assets	1,051			1,195			Total Current assets	1,343		1,273
Property, plant and equipment, net	257			259			Property, plant and equipment, net	269		274
Right-of-use lease assets	102			107			Right-of-use lease assets	129		135
Goodwill	2,618			2,622			Goodwill	2,989		2,988
Other intangibles, net	258			275			Other intangibles, net	376		402
Deferred income taxes	129			127			Deferred income taxes	133		139
Other long-term assets	125			126			Other long-term assets	172		164
Total Assets	$	4,540		$	4,711		Total Assets	$	5,411	$	5,375
Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Current liabilities:							Current liabilities:
Current portion of long-term debt	$	230		$	197		Current portion of long-term debt	$	134	$	364
Accounts payable	447			552			Accounts payable	573		601
Accrued liabilities	280			379			Accrued liabilities	457		559
Deferred revenue	252			238			Deferred revenue	344		308
Income taxes payable	28			38			Income taxes payable	38		19
Total Current liabilities	1,237			1,404			Total Current liabilities	1,546		1,851
Long-term debt	1,167			1,080			Long-term debt	956		881
Long-term lease liabilities	95			100			Long-term lease liabilities	122		129

Long-term deferred revenue	226			221			Long-term deferred revenue	287		273
Other long-term liabilities	88			67			Other long-term liabilities	89		97
Total Liabilities	2,813			2,872			Total Liabilities	3,000		3,231
Stockholders’ Equity:							Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued	—			—
Preferred stock, $.01 par value; authorized 10,000,000 shares; NaN issued							Preferred stock, $.01 par value; authorized 10,000,000 shares; NaN issued	0		0
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares	1			1			Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares	1		1
Additional paid-in capital	346			339			Additional paid-in capital	405		395
Treasury stock at cost, 19,086,234 and 18,148,925 shares as of March 28, 2020 and December 31, 2019, respectively	(890		)	(689		)
Treasury stock at cost, 18,641,691 and 18,689,775 shares as of April 3, 2021 and December 31, 2020, respectively							Treasury stock at cost, 18,641,691 and 18,689,775 shares as of April 3, 2021 and December 31, 2020, respectively	(919)		(919)
Retained earnings	2,321			2,232			Retained earnings	2,964		2,736
Accumulated other comprehensive loss	(51		)	(44		)	Accumulated other comprehensive loss	(40)		(69)
Total Stockholders’ Equity	1,727			1,839			Total Stockholders’ Equity	2,411		2,144
Total Liabilities and Stockholders’ Equity	$	4,540		$	4,711		Total Liabilities and Stockholders’ Equity	$	5,411	$	5,375

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)


	Three Months Ended							Three Months Ended
	March 28, 2020			March 30, 2019				April 3, 2021		March 28, 2020
Net sales:							Net sales:
Tangible products	$	901		$	924		Tangible products	$	1,153	$	901
Services and software	151			142			Services and software	194		151
Total Net sales	1,052			1,066			Total Net sales	1,347		1,052
Cost of sales:							Cost of sales:
Tangible products	486			471			Tangible products	591		486
Services and software	93			94			Services and software	101		93
Total Cost of sales	579			565			Total Cost of sales	692		579
Gross profit	473			501			Gross profit	655		473
Operating expenses:							Operating expenses:
Selling and marketing	122			122			Selling and marketing	134		122
Research and development	105			111			Research and development	140		105
General and administrative	74			76			General and administrative	82		74
Amortization of intangible assets	16			28			Amortization of intangible assets	26		16
Acquisition and integration costs	1			4			Acquisition and integration costs	1		1
Exit and restructuring costs	4			1			Exit and restructuring costs	0		4
Total Operating expenses	322			342			Total Operating expenses	383		322
Operating income	151			159			Operating income	272		151
Other expenses:
Foreign exchange loss	(3		)	(3		)
Interest expense, net	(45		)	(24		)
Other, net	—			(1		)
Total Other expenses, net	(48		)	(28		)
Other income (expense):							Other income (expense):
Foreign exchange gain (loss)							Foreign exchange gain (loss)	2		(3)
Interest income (expense), net							Interest income (expense), net	2		(45)

Total Other income (expense), net							Total Other income (expense), net	4		(48)
Income before income tax	103			131			Income before income tax	276		103
Income tax expense	14			16			Income tax expense	48		14
Net income	$	89		$	115		Net income	$	228	$	89
Basic earnings per share	$	1.66		$	2.14		Basic earnings per share	$	4.26	$	1.66
Diluted earnings per share	$	1.65		$	2.12		Diluted earnings per share	$	4.22	$	1.65

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended						Three Months Ended
	March 28, 2020			March 30, 2019			April 3, 2021		March 28, 2020
Net income	$	89		$	115	Net income	$	228	$	89
Other comprehensive income, net of tax:
Other comprehensive income (loss), net of tax:						Other comprehensive income (loss), net of tax:
Changes in unrealized gains and losses on anticipated sales hedging transactions	2			4		Changes in unrealized gains and losses on anticipated sales hedging transactions	32		2

Foreign currency translation adjustment	(9		)	—		Foreign currency translation adjustment	(3)		(9)
Comprehensive income	$	82		$	119	Comprehensive income	$	257	$	82

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(Unaudited)


	Three Months Ended April 3, 2021
	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, 2020	53,462,082	$	1	$	395	$	(919)	$	2,736	$	(69)	$	2,144

Issuances of treasury shares related to share-based compensation plans, net of forfeitures	48,584	—		(6)		—		—		—		(6)
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(400)	—		—		—		—		—		—
Share-based compensation	—	—		16		—		—		—		16
Repurchases of common stock	(100)	—		—		—		—		—		—
Net income	—	—		—		—		228		—		228
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—	—		—		—		—		32		32

Foreign currency translation adjustment	—	—		—		—		—		(3)		(3)
Balance at April 3, 2021	53,510,166	$	1	$	405	$	(919)	$	2,964	$	(40)	$	2,411


	Three Months Ended March 28, 2020
	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, 2019	54,002,932	$	1	$	339	$	(689)	$	2,232	$	(44)	$	1,839

Issuances of treasury shares related to share-based compensation plans, net of forfeitures	15,792	—		—		—		—		—		—
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(4,361)	—		—		(1)		—		—		(1)
Share-based compensation	—	—		7		—		—		—		7
Repurchases of common stock	(948,740)	—		—		(200)		—		—		(200)
Net income	—	—		—		—		89		—		89
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—	—		—		—		—		2		2

Foreign currency translation adjustment	—	—		—		—		—		(9)		(9)
Balance at March 28, 2020	53,065,623	$	1	$	346	$	(890)	$	2,321	$	(51)	$	1,727

Three Months Ended March 28, 2020
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, 2019 54,002,932
$ 1
$ 339
$ (689 ) $ 2,232
$ (44 ) $ 1,839
Issuances of treasury shares related to share based-compensation plans, net of forfeitures 15,792
—
—
—
—
—
—
Shares withheld to fund withholding tax obligations related to share-based compensation plans (4,361 ) —
—
(1 ) —
—
(1 )
Share-based compensation —
—
7
—
—
—
7
Repurchases of common stock (948,740 ) —
—
(200 ) —
—
(200 )
Net income —
—
—
—
89
—
89
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) —
—
—
—
—
2
2
Foreign currency translation adjustment —
—
—
—
—
(9 ) (9 )
Balance at March 28, 2020 53,065,623
$ 1
$ 346
$ (890 ) $ 2,321
$ (51 ) $ 1,727

Table of Contents

Three Months Ended March 30, 2019
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, 2018 53,871,184
$ 1
$ 294
$ (613 ) $ 1,688
$ (35 ) $ 1,335
Issuances of treasury shares related to share based-compensation plans, net of forfeitures 110,382
—
1
3
—
—
4
Shares withheld to fund withholding tax obligations related to share-based compensation plans (5,829 ) —
—
(1 ) —
—
(1 )
Share-based compensation —
—
10
—
—
—
10
Net income —
—
—
—
115
—
115
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) —
—
—
—
—
4
4
Balance at March 30, 2019 53,975,737
$ 1
$ 305
$ (611 ) $ 1,803
$ (31 ) $ 1,467

~~See accompanying Notes to Consolidated Financial Statements.~~

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three Months Ended							Three Months Ended
	March 28, 2020			March 30, 2019				April 3, 2021		March 28, 2020
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	89		$	115		Net income	$	228	$	89
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	34			47			Depreciation and amortization	44		34
Amortization of debt issuance costs and discounts	1			1

Share-based compensation	7			10			Share-based compensation	16		7

Deferred income taxes	(2		)	(10		)	Deferred income taxes	(2)		(2)
Unrealized loss on forward interest rate swaps	34			8
Unrealized (gain) loss on forward interest rate swaps							Unrealized (gain) loss on forward interest rate swaps	(12)		34
Other, net	(1		)	1			Other, net	(1)		0
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable, net	108			28			Accounts receivable, net	(15)		108
Inventories, net	33			23			Inventories, net	(17)		33
Other assets	(4		)	(10		)	Other assets	(18)		(4)
Accounts payable	(109		)	(97		)	Accounts payable	(30)		(109)
Accrued liabilities	(87		)	(94		)	Accrued liabilities	(47)		(87)
Deferred revenue	19			18			Deferred revenue	50		19
Income taxes	(16		)	2			Income taxes	28		(16)
Other operating activities	2			—			Other operating activities	0		2
Net cash provided by operating activities	108			42			Net cash provided by operating activities	224		108
Cash flows from investing activities:							Cash flows from investing activities:

Purchases of property, plant and equipment	(13		)	(15		)	Purchases of property, plant and equipment	(10)		(13)
Acquisition of businesses, net of cash acquired	—			(179		)
Proceeds from sale of long-term investments	—			10

Purchases of long-term investments	(2		)	—			Purchases of long-term investments	(13)		(2)
Net cash used in investing activities	(15		)	(184		)	Net cash used in investing activities	(23)		(15)
Cash flows from financing activities:							Cash flows from financing activities:

Payments of long-term debt	(36		)	(37		)	Payments of long-term debt	(156)		(36)
Proceeds from issuance of long-term debt	157			183			Proceeds from issuance of long-term debt	0		157

Payments for repurchases of common stock	(200		)	—			Payments for repurchases of common stock	0		(200)
Net payments related to share-based compensation plans	(1		)	3			Net payments related to share-based compensation plans	(6)		(1)
Change in unremitted cash collections from servicing factored receivables	(22		)	12			Change in unremitted cash collections from servicing factored receivables	(19)		(22)
Other financing activities	4			—			Other financing activities	0		4
Net cash (used in) provided by financing activities	(98		)	161
Effect of exchange rate changes on cash	(1		)	(2		)
Net (decrease) increase in cash and cash equivalents	(6		)	17
Cash and cash equivalents at beginning of period	30			44
Net cash used in financing activities							Net cash used in financing activities	(181)		(98)
Effect of exchange rate changes on cash and cash equivalents, including restricted cash							Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(2)		(1)
Net increase (decrease) in cash and cash equivalents, including restricted cash							Net increase (decrease) in cash and cash equivalents, including restricted cash	18		(6)
Cash and cash equivalents, including restricted cash, at beginning of period							Cash and cash equivalents, including restricted cash, at beginning of period	192		30
Cash and cash equivalents, including restricted cash, at end of period							Cash and cash equivalents, including restricted cash, at end of period	$	210	$	24
Less restricted cash, included in Prepaid expenses and other current assets							Less restricted cash, included in Prepaid expenses and other current assets	(33)		0
Cash and cash equivalents at end of period	$	24		$	61		Cash and cash equivalents at end of period	$	177	$	24
Supplemental disclosures of cash flow information:							Supplemental disclosures of cash flow information:
Income taxes paid	$	30		$	22		Income taxes paid	$	22	$	30
Interest paid	$	9		$	16		Interest paid	$	9	$	9

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

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 subscriptions, that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, and managed ~~services, including cloud-based subscriptions.~~and professional services. End-users of our products, solutions and services include those in retail and e-commerce, manufacturing, transportation and logistics, ~~manufacturing,~~ healthcare, ~~hospitality, warehouse~~public sector, and ~~distribution, energy and utilities, and education~~other industries around the world. 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 consolidated 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, ~~2019.~~2020.

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 28, 2020,~~April 3, 2021, and the Consolidated Statements of Operations, Comprehensive Income, ~~and~~ Stockholders’ Equity, ~~for the three months ended March 28, 2020~~ and ~~March 30, 2019, and the Consolidated Statements of~~ Cash Flows for the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019.~~2020. These results, however, are not necessarily indicative of the results expected for the full fiscal year ending December 31, ~~2020.~~2021.

Effective January 1, 2021, we moved our retail solutions offering from our Asset Intelligence & Tracking (“AIT”) segment into our Enterprise Visibility & Mobility (“EVM”) segment contemporaneous with a change in our organizational structure and management of the business. Prior period results have been reclassified to conform to the current period’s presentation. This change does not have an impact to the Consolidated Financial Statements. See Note 15, Segment Information & Geographic Data for additional information related to each segment’s results.

Note 2 Significant Accounting Policies

~~Recently Adopted Accounting Pronouncements~~

~~On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13,~~
~~Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments~~ ~~(“ASU 2016-13”). ASU 2016-13 requires the measurement and recognition of expected credit losses for financialassets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which~~will result in more timely recognition of credit losses. With respect to the Company’s financial assets, including trade receivables and contract assets, a cumulative effect transition approach was applied. In order to determine the transition impact of ASU 2016-13, the Company considered historical loss experience, the short duration of its trade receivables and durations of other financial assets, and expectations of the future economic environment. The adoption of ASU 2016-13 did not have a significant impact to the Company’s financial statements upon transition or for the three months ended March 28, 2020.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board issued ~~ASU~~Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). Subject to meeting certain criteria, ASU 2020-04 provides optional expedients and exceptions to applying contract modification accounting under existing generally accepted accounting principles for contracts that are modified to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) ~~by the end of 2021.~~. Some of the Company’s contracts with respect to its borrowings and interest rate swap contracts already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR, while for others, the Company anticipates negotiating comparable replacement rates with its counterparties. At this stage of its contract assessment, the Company does not expect ASU 2020-04 to have a material impact toon its financial ~~statements.~~results.

Note 3 Revenues

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

~~We recognize revenue arising from performance obligations outlined in contracts with our customers that~~Revenues for products are ~~satisfied at a point in time and over time. Substantially all revenue for tangible products is~~generally recognized ~~at a point in time, whereby revenue~~upon shipment, whereas revenues for services and solutions offerings are generally recognized 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 using a time-based method, depending upon how control is ~~predominantly recognized over time.~~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

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The following table presents our Net sales disaggregated by product category for each of our segments, ~~Asset Intelligence & Tracking (“AIT”)~~AIT and ~~Enterprise Visibility & Mobility (“EVM”),~~EVM, for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~ (in millions):


	Three Months Ended
	April 3, 2021						March 28, 2020
Segment	Tangible Products		Services and Software		Total		Tangible Products		Services and Software		Total
AIT	$	410	$	26	$	436	$	333	$	22	$	355
EVM	743		171		914		568		129		697
Corporate, eliminations(1)	0		(3)		(3)		0		0		0
Total	$	1,153	$	194	$	1,347	$	901	$	151	$	1,052

March 28, 2020 March 30, 2019
Segment Tangible Products Services and Software Total Tangible Products Services and Software Total
AIT $ 333
$ 38
$ 371
$ 320
$ 37
$ 357
EVM 568
113
681
604
105
709
Total $ 901
$ 151
$ 1,052
$ 924
$ 142
$ 1,066

(1)Amounts included in Corporate, eliminations consist of purchase accounting adjustments.

In addition, refer to Note 15, Segment Information & Geographic Data for Net sales to customers by geographic region.

Performance Obligations

The Company’s remaining performance obligations ~~that are greater than one year in duration~~primarily relate ~~primarily~~ to repair and support ~~services.~~services, as well as solutions offerings. The aggregated transaction price allocated to remaining performance obligations ~~related to these types of service~~for arrangements with an original term exceeding one year was $1,019 million and $974 million, inclusive of deferred revenue, ~~was $732 million and $724 million~~ as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. On average, remaining performance obligations as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019~~2020 are expected to be recognized over a period of approximately two years.

Contract Balances

Progress on satisfying performance obligations under contracts with customers is ~~recorded~~reflected on the Consolidated Balance Sheets in Accounts receivable, net for billed revenues. 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 12twelve months, and Other long-term assets for revenues expected to be billed thereafter. The total ~~closing~~ contract asset balances were $8$10 million each as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019.~~2020. These contract assets result from timing differences between the billing and delivery schedules of products, services and software, 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 no0 impairment losses have been recognized during the three months ended April 3, 2021 and March 28, ~~2020 and March 30, 2019.~~2020.

Deferred revenue on the Consolidated Balance Sheets ~~consist~~consists of payments and billings in advance of our performance. The combined short-term and long-term deferred revenue balances were ~~$478~~$631 million and ~~$459~~$581 million as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. During the three months ended ~~March 28, 2020 and March 30, 2019~~April 3, 2021, the Company recognized ~~$73 million and $70~~$110 million in revenue, ~~respectively,~~ which was previously included in the beginning balance of deferred ~~revenue.~~

revenue as of December 31, 2020. During the three months ended March 28, 2020, the Company recognized $73 million in revenue, which was previously included in the beginning balance of deferred revenue as of December 31, 2019.

Note 4 Inventories

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


	April 3, 2021		December 31, 2020
Raw materials	$	117	$	117
Work in process	3		4
Finished goods	408		390
Total Inventories, net	$	528	$	511

March 28,
2020 December 31,
2019
Raw material $ 122
$ 128
Work in process 5
4
Finished goods 316
342
Total inventories, net $ 443
$ 474

Note 5 ~~Business Acquisitions~~Investments

The carrying value of the Company’s investments was $91 million and $77 million as of April 3, 2021 and December 31, 2020, respectively, which are included in Other long-term assets on the Consolidated Balance Sheets. During the first quarter of 2021, the Company paid $13 million for the purchases of 2 new long-term investments.

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During the first quarter of ~~2020,~~2021, the Company ~~finalized the purchase price allocations~~recognized a net gain of approximately $1 million related to one of its ~~February 21, 2019 acquisition of Temptime Corporation (“Temptime”), May 31, 2019 acquisition of Profitect, Inc. (“Profitect”), and November 5,~~

investments.

~~2019 acquisition of Cortexica Vision Systems Limited.~~ ~~In conjunction therewith, the Company did not record any significant measurement period adjustments.~~

Note 6 Exit and Restructuring Costs

In the fourth quarter of 2019, the Company committed to certain organizational changes designed to generate operational efficiencies (collectively referred to as the “2019 Productivity Plan”). The organizational design changes under the 2019 Productivity Plan ~~will~~ principally ~~occur~~occurred within the North America and Europe, Middle East, and Africa (“EMEA”) ~~regions, relate~~regions. The 2019 Productivity Plan was completed in the fourth quarter of 2020. Exit and restructuring charges, primarily related to employee severance and ~~related~~ benefits, ~~and are expected to be substantially completed in fiscal 2020. Exit and restructuring charges~~ for the 2019 Productivity Plan were $4 million during the ~~quarter~~three months ended March 28, ~~2020, and $12 million cumulatively through the quarter ended March 28,~~ 2020. ~~Estimated remaining costs to be incurred in fiscal 2020 under the 2019 Productivity Plan are expected to be up to $6 million.~~

As of March 28, 2020, the Company’s total remaining obligations under its exit and restructuring programs were $7 million, which are expected to be mostly settled within the next year and are reflected within Accrued liabilities on the Consolidated Balance Sheets.

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. It establishes 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 onin 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 to the extent possible. 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 28, 2020,~~April 3, 2021, are classified below (in millions):


	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:									Assets:
Foreign exchange contracts⁽¹⁾	$	—	$	6	$	—	$	6	Foreign exchange contracts (1)	$	4	$	6	$	0	$	10
Money market investments related to the deferred compensation plan	21		—		—		21

Money market investments related to deferred compensation plan									Money market investments related to deferred compensation plan	33		0		0		33
Total Assets at fair value	$	21	$	6	$	—	$	27	Total Assets at fair value	$	37	$	6	$	0	$	43
Liabilities:									Liabilities:
Foreign exchange contracts ⁽¹⁾	$	1	$	—	$	—	$	1

Forward interest rate swap contracts ⁽²⁾	—		48		—		48		Forward interest rate swap contracts (2)	$	0	$	34	$	0	$	34
Liabilities related to the deferred compensation plan	21		—		—		21		Liabilities related to the deferred compensation plan	33		0		0		33
Total Liabilities at fair value	$	22	$	48	$	—	$	70	Total Liabilities at fair value	$	33	$	34	$	0	$	67

The Company’s financial assets and liabilities carried at fair value as of December 31, ~~2019,~~2020, are classified below (in millions):


	Level 1		Level 2		Level 3		Total
Assets:


Money market investments related to deferred compensation plan	$	30	$	0	$	0	$	30
Total Assets at fair value	$	30	$	0	$	0	$	30
Liabilities:
Foreign exchange contracts (1)	$	3	$	34	$	0	$	37
Forward interest rate swap contracts (2)	0		46		0		46
Liabilities related to the deferred compensation plan	30		0		0		30
Total Liabilities at fair value	$	33	$	80	$	0	$	113

(1)The fair value of the foreign exchange contracts is calculated as follows:

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Level 1 Level 2 Level 3 Total
Assets:
Foreign exchange contracts ⁽¹⁾
$ —
$ 3
$ —
$ 3
Money market investments related to the deferred compensation plan 24
—
—
24
Total Assets at fair value $ 24
$ 3
$ —
$ 27
Liabilities:
Forward interest rate swap contracts ⁽²⁾
$ —
$ 13
$ —
$ 13
Liabilities related to the deferred compensation plan 24
—
—
24
Total Liabilities at fair value $ 24
$ 13
$ —
$ 37
•Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.


~~(1)~~	~~The fair value of the foreign exchange contracts is calculated as follows:~~


a.	~~Fair value of regular forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.~~


b.	Fair value of hedges against net assets 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.

•Fair value of hedges against net assets is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at year 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 Sheet Classification March 28,
2020 December 31,
2019
Derivative instruments designated as hedges:
    Foreign exchange contracts Prepaid expenses and other current assets $ 6
$ 3
Total derivative instruments designated as hedges
$ 6
$ 3

Derivative instruments not designated as hedges:

    Foreign exchange contracts Accrued liabilities $ (1 ) $ —
    Forward interest rate swaps Accrued liabilities (15 ) (5 )
    Forward interest rate swaps Other long-term liabilities (33 ) (8 )
Total derivative instruments not designated as hedges $ (49 ) $ (13 )
Total net derivative liability $ (43 ) $ (10 )


	Asset (Liability)
		Fair Values as of
	Balance Sheet Classification	April 3, 2021		December 31, 2020
Derivative instruments designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	6	$	0
Foreign exchange contracts	Accrued liabilities	0		(34)


Total derivative instruments designated as hedges		$	6	$	(34)

Derivative instruments not designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	4	$	0


Foreign exchange contracts	Accrued liabilities	0		(3)
Forward interest rate swaps	Accrued liabilities	(17)		(17)
Forward interest rate swaps	Other long-term liabilities	(17)		(29)
Total derivative instruments not designated as hedges		$	(30)	$	(49)
Total net derivative liability		$	(24)	$	(83)

The following table presents the ~~losses~~net gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):


	Losses Recognized in Income								Gains (Losses) Recognized in Income
		Three Months Ended								Three Months Ended
	Statements of Operations Classification	March 28, 2020			March 30, 2019				Statements of Operations Classification	April 3, 2021		March 28, 2020
Derivative instruments not designated as hedges:								Derivative instruments not designated as hedges:
Foreign exchange contracts	Foreign exchange loss	$	(1	)	$	(2	)	Foreign exchange contracts	Foreign exchange gain (loss)	$	6	$	(1)
Forward interest rate swaps	Interest expense, net	(35		)	(8		)	Forward interest rate swaps	Interest income (expense), net	8		(35)
Total loss recognized in income		$	(36	)	$	(10	)
Total gains (losses) recognized in income								Total gains (losses) recognized in income		$	14	$	(36)

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Activities related to derivative instruments are reflected within Net cash provided by 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 each would have been increased by ~~$2 million and $3~~$5 million as of ~~March 28, 2020~~April 3, 2021 and would have been unchanged as of December 31, ~~2019, respectively.~~2020.

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 to the fullest extent possible 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 ~~gains~~amounts reclassified to Net sales were $12 million of losses and $8 million ~~and $11 million~~of gains for the three months ended April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~ respectively. As of ~~March 28, 2020,~~April 3, 2021 and December 31, ~~2019,~~2020, the notional amounts of the Company’s foreign exchange cash flow hedges were ~~€545~~€565 million and ~~€564~~€585 million, respectively. The Company has reviewed its cash flow hedges for effectiveness and determined that they are highly ~~effective~~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 value of these outstanding contracts are as follows (in millions):


	April 3, 2021		December 31, 2020
Notional balance of outstanding contracts:
British Pound/U.S. Dollar	£	28	£	10
Euro/U.S. Dollar	€	157	€	123

Canadian Dollar/U.S. Dollar	C$	4	C$	0




Japanese Yen/U.S. Dollar	¥	173	¥	354
Singapore Dollar/U.S. Dollar	S$	17	S$	12
Mexican Peso/U.S. Dollar	Mex$	62	Mex$	36


Polish Zloty/U.S. Dollar	zł	48	zł	0
Net fair value of assets (liabilities) of outstanding contracts	$	4	$	(3)

March 28,
2020 December 31,
2019
Notional balance of outstanding contracts:
British Pound/U.S. Dollar £ 13
£ 14
Euro/U.S. Dollar € 53
€ 36
Canadian Dollar/U.S. Dollar C$ 2
C$ 1
Australian Dollar/U.S. Dollar A$ 9
A$ 42
Japanese Yen/U.S. Dollar ¥ 148
¥ 264
Singapore Dollar/U.S. Dollar S$ 19
S$ 19
Mexican Peso/U.S. Dollar Mex$ 107
Mex$ 115
Chinese Yuan/U.S. Dollar ¥ 43
¥

South African Rand/U.S. Dollar R 38
R 42
Net fair value of liabilities of outstanding contracts $ 1
$ —

The Company’s use of non-designated forward contracts to manage Euro currency exposure is limited, as Euro-denominated borrowings under the Revolving Credit Facility naturally hedge part of such risk. See Note 9, ~~Long-Term Debt~~ ~~for further discussion of Euro-denominated borrowings.~~

Interest Rate Risk Management

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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 about these borrowings.

The Company manages its exposure to changes in interest rates by utilizing interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions.

In December 2017, the Company entered into a long-term forward interest rate swap agreement with a notional amount of $800 million to lock into a fixed LIBOR interest rate base for its debt facilities subject to monthly interest payments. Under the terms of the agreement, $800 million in variable-rate debt will be swapped for a fixed interest rate with net settlement terms ~~due effective~~ starting in December 2018 and ending in December 2022. During the third quarter of 2019, the Company entered into additional long-term forward interest rate swap agreements with a total notional amount of $800 million, containing net ~~settlements effective starting~~settlement terms, which start in December 2022 and ~~ending~~end in August 2024. The additional interest rate swap agreements effectively extend the risk management initiative of the Company to coincide with the maturities of Term Loan A and the Revolving Credit Facility. ~~The Company’s~~These interest rate swaps are not designated as hedges and changes in fair value are recognized immediately as Interest expense, net on the Consolidated Statements of Operations.

Note 9 Long-Term Debt

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


	April 3, 2021		December 31, 2020
Term Loan A	$	888	$	917
2020 Term Loan	0		100

Receivables Financing Facilities	208		235

Total debt	$	1,096	$	1,252
Less: Debt issuance costs	(4)		(5)
Less: Unamortized discounts	(2)		(2)
Less: Current portion of debt	(134)		(364)
Total long-term debt	$	956	$	881

March 28,
2020 December 31,
2019
Term Loan A $ 917
$ 917
Revolving Credit Facility 258
103
Receivables Financing Facilities 230
266
Total debt $ 1,405
$ 1,286
Less: Debt issuance costs (5 ) (6 )
Less: Unamortized discounts (3 ) (3 )
Less: Current portion of debt (230 ) (197 )
Total long-term debt $ 1,167
$ 1,080

As of ~~March 28, 2020,~~April 3, 2021, the future maturities of debt, excluding debt discounts and issuance costs, ~~were~~are as follows (in millions):

2020 $ 100
2021 160
2022 56
2023 81
2024 1,008
Total future debt maturities $ 1,405


2021	$	122
2022	56
2023	81
2024	837


Total future debt maturities	$	1,096

All borrowings as of ~~March 28, 2020~~April 3, 2021 were denominated in U.S. ~~Dollars, except for €92 million under the Revolving Credit Facility that was borrowed in Euros.~~

Dollars.

The estimated fair value of the Company’s debt approximated $1.1 billion and $1.3 billion as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019.~~2020, 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 ~~does~~do not represent the settlement value of these ~~debt~~ liabilities to the Company. The fair value of the 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.

~~Credit Facilities~~Term Loan A

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in ~~June 2021~~March 2022 and the majority due upon ~~its~~the August 9, 2024 ~~maturity.~~maturity date. The Company may make prepayments, ~~against Term Loan A,~~ in whole or in part, without premium or ~~penalty. The Company~~penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of ~~March 28, 2020,~~April 3, 2021, the Term Loan A interest rate was ~~2.27%~~1.37%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

~~The Revolving Credit Facility is available for working capital and other general corporate purposes, including letters~~2020 Term Loan

Table of ~~credit. As of March 28,~~Contents

In September 2020, the Company ~~had letters~~entered into a new $200 million term loan (“2020 Term Loan”), with the proceeds used to partly fund the acquisition of ~~credit totaling $5~~Reflexis Systems, Inc. The Company repaid $100 million ~~which reduced funds available for borrowings under~~of principal in the ~~agreement from $1 billion to $995 million. As~~fourth quarter of ~~March 28,~~ 2020 and repaid the ~~Revolving Credit Facility had an average interest rate~~remaining $100 million of ~~1.83%. Interest payments are made monthly and are subject to variable rates plus an applicable margin. All remaining~~ principal ~~is due upon~~in the ~~Revolving Credit Facility’s maturity on August 9, 2024.~~first quarter of 2021.

Receivables Financing Facilities

The Company has 2 Receivables Financing Facilities with financial institutions ~~carrying~~that have a combined total borrowing ~~limits~~limit of up to $280 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under its Receivables Financing Facilities as secured borrowings. The Company’s first Receivables Financing Facility, which was originally entered into in December 2017 and most recently amended in March 2021, allows for borrowings of up to $180 million and will mature on March 19, 2024. The most recent amendment to the first Receivables Financing Facility extended the maturity through March 19, 2024 but otherwise did not significantly change the facility. The Company’s second Receivable Financing Facility, which was originally entered into in May 2019 and amended in May 2020, allows for borrowings of up to $100 million and will mature on May 17, 2021.

As of ~~March 28, 2020,~~April 3, 2021, the Company’s Consolidated Balance Sheets included ~~$507~~$498 million of receivables that were pledged under the 2 Receivables Financing Facilities. As of ~~March 28, 2020, $230~~April 3, 2021, $208 million had been borrowed, ~~all~~ of which $122 million was classified as current. Borrowings under the Receivables Financing Facilities bear interest at a variable rate plus an applicable margin. As of ~~March 28, 2020,~~April 3, 2021, the Receivables Financing Facilities had an average interest rate of ~~1.85%~~1.04%. Interest is paid on these borrowings on a monthly basis.

Revolving Credit Facility

The ~~Company’s first Receivables Financing~~Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit. As of April 3, 2021, the Company had letters of credit totaling $5 million, which ~~was originally~~reduced funds available for borrowings under the Revolving Credit Facility from $1 billion to $995 million. NaN borrowings were outstanding under the Revolving Credit Facility as of April 3, 2021. Upon borrowing, interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on August 9, 2024.

Uncommitted Short-Term Credit Facility

The Company also entered into an uncommitted short-term credit facility (“Uncommitted Facility”) in ~~December 2017~~August 2020. The Uncommitted Facility matures on August 26, 2021 and ~~was amended in May 2019,~~ allows for borrowings of up to ~~$180 million~~$20 million. Each borrowing must be repaid within 90 days, or earlier if the facility matures beforehand, and ~~will mature on March 29, 2021. The~~bears interest at a variable rate plus an applicable margin. Along with the Company’s ~~second Receivable Financing Facility, which was entered into in May 2019, allows for borrowings of up to $100 million and will mature on May 18, 2020.~~

~~Both the~~ Revolving Credit Facility, the Uncommitted Facility is available for working capital and ~~Receivables Financing Facilities~~other general business purposes. As of April 3, 2021, the Company had 0 outstanding borrowings under the Uncommitted Facility.

Each of the Company’s borrowing arrangements 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 28, 2020,~~April 3, 2021, the Company was in compliance with all debt covenants.

Note 10 Commitments and Contingencies

Warranties

The following table is a summary of the Company’s accrued warranty obligations, which are included in Accrued liabilities on the Consolidated Balance Sheets (in millions):


	Three Months Ended
	April 3, 2021		March 28, 2020
Balance at the beginning of the period	$	24	$	21
Warranty expense	8		8
Warranties fulfilled	(8)		(7)
Balance at the end of the period	$	24	$	22

Three Months Ended
March 28,
2020 March 30,
2019
Balance at the beginning of the period $ 21
$ 22
Warranty expense 8
7
Warranties fulfilled (7 ) (6 )
Balance at the end of the period $ 22
$ 23

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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.

In 2020, the Company received approval of its exclusion request of customs duties that had been paid on certain products under Section 301 of the U.S. Trade Act of 1974 from September 1, 2019 through September 1, 2020 and commenced a process to request recovery of previously assessed amounts. Recoveries are recognized when the Company has completed all regulatory filing requirements and determined that receipt of amounts is virtually certain. Recoveries totaling $12 million were recorded in the fourth quarter of 2020, of which $4 million related to our AIT segment and $8 million related to our EVM segment. In the first quarter of 2021, the Company recorded additional recoveries of $3 million. The recoveries in the first quarter of 2021 attributable to the AIT and EVM segments were $1 million and $2 million, respectively. Both the initially incurred costs and related recoveries were included within Cost of sales for Tangible products on the Consolidated Statements of Operations. The Company ~~establishes an accrued liability for loss contingencies~~believes that additional import duties that were previously paid are potentially recoverable; however, the final amounts and the timings of any such additional recoveries remain uncertain and, therefore, the Company has not recorded any amounts related to ~~legal matters when the loss is both probable and estimable. In addition, for some matters for which a loss is probable or reasonably possible, an estimate~~potential future recoveries in its financial statements as of ~~the amount of loss or range of loss is not possible, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.~~

April 3, 2021.

Note 11 Income Taxes

The Company’s effective tax rate for the three months ended April 3, 2021 and March 28, 2020 was 17.4% and 13.6%., respectively. The variance from the 21% federal statutory rate in each period was attributable to the benefits of share-based compensation deductions, lower tax rates on foreign earnings and U.S. tax credits.

The ~~Company’s effective tax rate for~~Company is continually monitoring the three months ended March 30, 2019 was 12.2%. The variance from the 21% federal statutory rate was attributable to the benefits of lower tax rates on foreign earnings and U.S. tax credits. These benefits were partially offset by the impacts of foreign earnings taxes in the U.S. and deemed royalties taxed in the U.S. The Company’s effective tax rate also benefited from certain discrete items.

~~On March 27, 2020, the President~~provisions of the ~~United States~~American Rescue Plan Act, signed into ~~tax~~ law on March 11, 2021; the Consolidated Appropriations Act of 2021, signed into law on December 27, 2020; and the Coronavirus Aid, Relief and Economic Security Act, ~~(“CARES Act”).~~signed into law on March 27, 2020. The ~~Company does~~provisions of these laws did not ~~believe any of the provisions will be relevant~~have a significant impact to our ~~2020~~ effective tax ~~rate.~~rate in either the current or prior year. Management ~~will continue~~continues to monitor guidance regarding these laws and developments ~~and guidance on the CARES Act and~~related to other coronavirus tax relief throughout the world for ~~any~~ potential impacts.

The Company earns a significant amount of its operating income outside of the U.S. ~~Pre-tax earnings outside~~that is taxed at rates different than the U.S. federal statutory rate. The Company’s principal foreign jurisdictions that provide sources of operating income are ~~primarily generated in~~ the United Kingdom ~~Singapore,~~ and ~~Luxembourg, with statutory rates of 19%, 17%, and 25%, respectively.~~Singapore. The Company has received an incentivized tax rate by the Singapore Economic Development Board, which reduces the income tax rate ~~to 10.5% from the statutory rate of 17%, and is~~in that jurisdiction effective for calendar years 2019 to 2023. The Company has committed to making additional investments in Singapore over the period 2019 to 2022. However, should the Company not make these investments in accordance with the agreement, any incentive benefit would have to be repaid to the Singapore tax authorities.

The Company is not permanently reinvested with respect to its U.S. directly-owned foreign subsidiaries. ~~For periods after 2017, the~~The Company is subject to U.S. income tax on substantially all foreign earnings under the Global Intangible Low-Taxed Income provisions of the Tax Cuts and Jobs Act ~~enacted in December 2017~~ (the “Act”), while any remaining foreign earnings are eligible for a dividends received deduction under the Act. As a result, future ~~repatriations~~repatriation of earnings will no longer be subject to U.S. income tax but may be subject to currency translation gains or losses. Where required, the Company has recorded a deferred tax liability for foreign withholding taxes on current earnings. Additionally, gains and losses on any future taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. income tax.

~~Quarterly, management~~Management evaluates all jurisdictions based on historical pre-tax earnings and taxable income to determine the need for valuation ~~allowances.~~allowances on a quarterly basis. Based on this analysis, a valuation allowance has been recorded for any jurisdictions where, in the Company’s judgment, tax benefits are not expected to be realized.

There was no change to our valuation allowance for the three months ended April 3, 2021.

Uncertain Tax Positions

The Company is currently undergoing U.S. federal income tax audits for ~~the~~ tax years ~~2016~~2017 and ~~2017. Also,~~2018. Additionally, fiscal years 2004 through 2018 remain open to examination by multiple foreign and U.S. state taxing jurisdictions. As of ~~March 28, 2020,~~April 3, 2021, no significant uncertain tax positions are expected to be settled within the next twelve months. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlements of uncertain tax positions may change and the actual tax benefits may differ significantly from estimates.

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Note 12 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 shares assuming dilution. Dilutive 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 stock options were exercised for common shares during the period.

Earnings per share (in millions, except share data):


	Three Months Ended					Three Months Ended
	March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020
Basic:					Basic:
Net income	$	89	$	115	Net income	$	228	$	89
Weighted-average shares outstanding	53,760,873		53,905,426		Weighted-average shares outstanding	53,484,265		53,760,873
Basic earnings per share	$	1.66	$	2.14	Basic earnings per share	$	4.26	$	1.66

Diluted:					Diluted:
Net income	$	89	$	115	Net income	$	228	$	89
Weighted-average shares outstanding	53,760,873		53,905,426		Weighted-average shares outstanding	53,484,265		53,760,873
Dilutive shares	557,171		649,442		Dilutive shares	480,065		557,171
Diluted weighted-average shares outstanding	54,318,044		54,554,868		Diluted weighted-average shares outstanding	53,964,330		54,318,044
Diluted earnings per share	$	1.65	$	2.12	Diluted earnings per share	$	4.22	$	1.65

Anti-dilutive options to purchase common shares are excluded from diluted earnings per share calculations. ~~Anti-dilutive options consist primarily of stock appreciation rights with an exercise price greater than the average market closing price of the Class A Common Stock.~~ There were ~~68,554~~570 and ~~86,067~~68,554 shares that were anti-dilutive for the three months ended April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~ respectively.

Note 13 Accumulated Other Comprehensive Income (Loss)

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

•

•Unrealized gain (loss) on anticipated sales hedging transactions 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 relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company is required to translate 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.

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~~ relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company is required to translate 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 components of AOCI for the three months ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019~~ are as follows (in millions):

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Unrealized gain on sales hedging Foreign currency translation adjustments Total
Balance at December 31, 2018 $ 12
$ (47 ) $ (35 )
Other comprehensive income before reclassifications 16
—
16
Amounts reclassified from AOCI⁽¹⁾
(11 ) —
(11 )
Tax effect (1 ) —
(1 )
Other comprehensive income, net of tax 4
—
4
Balance at March 30, 2019 $ 16
$ (47 ) $ (31 )

Balance at December 31, 2019 $ 2
$ (46 ) $ (44 )
Other comprehensive income (loss) before reclassifications 11
(9 ) 2
Amounts reclassified from AOCI⁽¹⁾
(8 ) —
(8 )
Tax effect (1 ) —
(1 )
Other comprehensive income (loss), net of tax 2
(9 ) (7 )
Balance at March 28, 2020 $ 4
$ (55 ) $ (51 )


	Unrealized gain (loss) on sales hedging		Foreign currency translation adjustments		Total
Balance at December 31, 2019	$	2	$	(46)	$	(44)
Other comprehensive income (loss) before reclassifications	11		(9)		2
Amounts reclassified from AOCI(1)	(8)		0		(8)
Tax effect	(1)		0		(1)
Other comprehensive income (loss), net of tax	2		(9)		(7)
Balance at March 28, 2020	$	4	$	(55)	$	(51)

Balance at December 31, 2020	$	(28)	$	(41)	$	(69)
Other comprehensive income (loss) before reclassifications	27		(3)		24
Amounts reclassified from AOCI(1)	12		0		12
Tax effect	(7)		0		(7)
Other comprehensive income (loss), net of tax	32		(3)		29
Balance at April 3, 2021	$	4	$	(44)	$	(40)

(1) See Note 8, Derivative Instruments regarding timing of reclassifications to operating results.

Note 14 Accounts Receivable Factoring

The Company has ~~entered into~~ multiple Receivables Factoring arrangements, pursuant to which certain receivables are sold to banks without recourse in exchange for cash. Transactions under the Receivables Factoring arrangements are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s balance sheet. Under these Receivables Factoring arrangements, the Company does not maintain any beneficial interest in the receivables sold. The banks’ purchase of eligible receivables is subject to a maximum amount of uncollected receivables. The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables. ~~Transactions under~~Sale proceeds that are representative of the ~~Receivables Factoring arrangements~~fair value of factored receivables, less a factoring fee, are ~~accounted for as sales under ASC Topic 860,~~ ~~Transfers and Servicing of Financial Assets~~ ~~with related cash flows~~ reflected in Net cash provided by operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Net cash used in financing activities on the Consolidated Statements of Cash Flows.

In May 2020, the Company entered into a new Receivables Factoring arrangement with a bank, which allows for the factoring of up to €150 million of uncollected receivables originated from the EMEA and Asia-Pacific regions. The Company is 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 $33 million and $24 million as of April 3, 2021 and December 31, 2020, respectively, and is classified within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company’s other active Receivable Factoring arrangements, which were entered into prior to 2020, also allow for the factoring of up to $125 million of uncollected receivables originated from the EMEA region.

~~As of~~During the three months ended April 3, 2021 and March 28, 2020, the Company received cash proceeds of $413 million and $162 million, respectively, from the sales of accounts receivables under its factoring arrangements.As of April 3, 2021 and December 31, ~~2019,~~2020, there were a total of ~~$80~~$77 million and ~~$60~~$70 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

~~In its capacity as~~As servicer of ~~factored~~sold receivables, the Company had ~~$11~~$123 million and ~~$33~~$142 million of ~~cash collections~~obligations that were not yet remitted to banks as of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019,~~2020, respectively. These ~~amounts, whose use is not legally restricted,~~obligations are included within Accrued liabilities on the Consolidated Balance ~~Sheets. Changes~~Sheets, with changes in such ~~unremitted cash collection liabilities are~~obligations reflected within Net cash ~~(used in) provided by~~used in financing activities on the Consolidated Statements of Cash Flows.

Fees incurred in connection with these arrangements were not significant.

Note 15 Segment Information & Geographic Data

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The Company’s operations consist of 2 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, and product sourcing diversification costs. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

Effective January 1, 2021, we moved our retail solutions offering from our AIT segment into our EVM segment contemporaneous with a change in our organizational structure and management of the business. Prior period results have been revised to conform to the current segment presentation. This change does not have an impact to the Consolidated Financial Statements.

Financial information by segment is presented as follows (in millions):


	Three Months Ended
	April 3, 2021		March 28, 2020
Net sales:
AIT	$	436	$	355
EVM	914		697
Total segment Net sales	1,350		1,052
Corporate, eliminations(1)	(3)		0
Total Net sales	$	1,347	$	1,052
Operating income:
AIT(2)	$	109	$	82
EVM(2)	193		95
Total segment operating income	302		177
Corporate, eliminations(1)	(30)		(26)
Total Operating income	$	272	$	151

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

Three Months Ended
March 28,
2020 March 30,
2019
Net sales:
AIT $ 371
$ 357
EVM 681
709
Total Net sales $ 1,052
$ 1,066
Operating income:
AIT⁽¹⁾
$ 89
$ 92
EVM⁽¹⁾
88
101
Total segment operating income 177
193
Corporate, eliminations⁽²⁾
(26 ) (34 )
Total Operating income $ 151
$ 159


~~(1)~~	AIT and EVM segment operating income includes depreciation and share-based compensation expense. The amounts of depreciation and share-based compensation expense attributable to AIT and EVM are proportionate to each segment’s Net sales.


~~(2)~~	To the extent applicable, amounts included in Corporate, eliminations consist of purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs.

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

Information regarding the Company’s operations by geographic area is contained in the following table. Net sales amounts are attributed to geographic area based on customer location. We manage our business based on regions rather than by individual countries.

Geographic data for Net sales is as follows (in millions):


	Three Months Ended
	April 3, 2021		March 28, 2020
North America	$	673	$	519
EMEA	490		388
Asia-Pacific	120		97
Latin America	64		48
Total Net sales	$	1,347	$	1,052

Three Months Ended
March 28,
2020 March 30,
2019
North America $ 519
$ 510
EMEA 388
376
Asia-Pacific 97
125
Latin America 48
55
Total Net sales $ 1,052
$ 1,066

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

Overview

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader respected for innovative Enterprise Asset Intelligence (“EAI”) solutions in the automatic identification and data capture solutions industry. We design, manufacture, and sell a broad range of products and solutions, including cloud-based subscriptions, that capture and move data, including: mobile computers; barcode scanners and imagers; radio frequency identification device (“RFID”) readers; specialty printers for barcode labeling and personal identification; real-time location ~~systems;~~systems (“RTLS”); related accessories and supplies, such as self-adhesive labels and other consumables; and software ~~utilities and~~ applications. We also provide a full range of services, including maintenance, technical support, and repair, managed and professional ~~services, including cloud-based subscriptions.~~services. End-users of our products, solutions and services include those in the retail and e-commerce, manufacturing, transportation and logistics, ~~manufacturing,~~ healthcare, ~~hospitality, warehouse~~public sector, and ~~distribution, energy and utilities, government and education enterprises~~other industries around the world.

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

The Company’s operations consist of two reportable segments: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”).

•The AIT segment is an industry leader in barcode printing and asset tracking technologies. Its major product lines include barcode and card printers, supplies, services, ~~location solutions,~~ and ~~retail~~location solutions. Industries served include retail and e-commerce, manufacturing, transportation and logistics, ~~manufacturing,~~ healthcare, public sector, and other end markets within the following regions: North America; Europe, Middle East, and Africa (“EMEA”); Asia-Pacific; and Latin America.

•The EVM segment is an industry leader in automatic information and data capture solutions. Its major product lines include mobile computing, data capture, RFID, services, software-based workflow optimization solutions, and ~~services.~~retail solutions. Industries served include retail and e-commerce, manufacturing, transportation and logistics, ~~manufacturing,~~ healthcare, public sector, and other end markets within the following regions: North America; EMEA; Asia-Pacific; and Latin America.

~~Recent Developments~~

~~Coronavirus Outbreak~~

In ~~December 2019, a strain of the coronavirus surfaced in Wuhan, China. During the latter part of~~ the first quarter of ~~2020, the virus spread rapidly across nearly every region~~2021, we moved our retail solutions offering from our AIT segment into our EVM segment contemporaneous with a change in our organizational structure and management of the ~~world~~business. We have reported our results reflecting this change, including historical periods, on a comparable basis. This change does not have an impact to the Consolidated Financial Statements.

Recent Developments

COVID-19 Outbreak

The coronavirus (“COVID-19”or the “pandemic” ) has spread across the globe, with various measures, such as travel restrictions and ~~was declared a pandemic by the World Health Organization~~cancellations or limitations of in-person gatherings, remaining in March 2020. In response, there have been a broad number of governmental and commercial impacts, including business slowdowns or shutdowns and significant travel restrictions. These events have resultedeffect to certain degrees in ~~significant declines in both global economic activity and financial market valuations.~~

Many of our supply chain partners in China, who temporarily suspended or modified their business operations beginning in January 2020, have since largely resumed operations. The spread of the virus has resulted in broad global business disruption, which impacted both our supply chain activities and customer demand.several jurisdictions. We serve a diverse mix of ~~customers. Some~~customers; some of ~~our customers~~which, have experienced ~~significant~~ declines or suspensions toof their operations, whereas others have experienced increases in their business volume. While the ultimate duration of the pandemic and timing of recovery in each region remains highly uncertain, the Company expects 2021 sales and profitability to benefit from pent-up demand from customers who we believe had delayed purchases in 2020 due to the pandemic, as well as the resulting acceleration of the underlying trend to digitize and automate workflows. The negative impacts from the pandemic, including declines in customer demand and supply chain disruptions, were most pronounced in the first half of 2020 and lessened later in 2020 as the global economic recovery took shape. We have continued to mitigate the impacts of supply chain disruptions by taking exceptional actions, including alternative modes of product delivery and fulfillment, as well as providing protective equipment for our front-line employees.

Thus far in 2021, the level of demand for certain product components has resulted in lengthened lead times and higher input costs. We are currently taking steps to mitigate these impacts; however, they could become more significant. These impacts may include the potential for product shortages which could negatively impact our ability to meet forecasted customer demand

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should suppliers of necessary parts no longer be able to provide such parts or sufficiently allocate supply among their customers, including the Company.

The federal, state, and local governments as well as foreign governments, to varying degrees, have imposed, and continue to impose, several protocols and regulations restricting the physical movement or other activities of individuals in an effort to limit the spread of ~~the coronavirus.~~COVID-19. We have implemented a number of measures in an effort to protect our employees’ health and well-being, including having the majority of office workers work remotely, ~~suspending~~limiting employee travel, and withdrawing from ~~certain~~in-person industry events. AsIn addition, as governments continue to ease their restrictions and we continue to allow our employees to come back to work in our offices in a ~~result~~controlled approach, we have modified our business practices, including implementing social distancing protocols, office capacity restrictions, health screening, provision of ~~concerns over~~personal protective equipment, tracking and tracing protocols, and extensively and frequently disinfecting our workspaces. Throughout the pandemic, ~~we have experienced higher than normal employee absentee rates for employees who are unable to work from home. Distribution~~distribution centers and repair centers have remained open at varying capacity levels to ensure continued support to our customers, many of whom provide essential goods and services to communities.

~~During the first quarter of 2020, Net sales were negatively impacted by the effects of the pandemic.~~ We ~~experienced supply chain disruptions including reduced access to products manufactured in China, restrictions on travel/transportation of goods~~

~~and the temporary closure of a key distribution center supplying the Americas. In addition, we experienced declines in customer demand primarily in our Asia-Pacific region (principally within China).~~

~~During the first quarter, we~~have considered the potential impacts of the ~~coronavirus~~global pandemic in qualitative impairment assessments of our long-lived assets, including goodwill and intangible assets, property, plant and equipment and right-of-use lease assets. We have concluded that it is not more likely than not that any of our long-lived assets are ~~impaired.~~impaired during the current and prior year period. Our analysis considered, among other factors:

•the nature of our products, solutions, and services as well as our position within our industry;

•our highly variable cost structure; ~~and~~

•the assumption that the ~~impact of the virus~~negative impacts from COVID-19 will be ~~temporary,~~temporary; and that

•the Company will continue generating strong positive operating cash flows over the long-term.

We have also considered the adequacy of our capital resources, inclusive of available borrowing capacity ~~on debt~~ and other financing facilities; the results of our most recent quantitative goodwill impairment assessment, ~~as disclosed~~which was last completed in ~~our Form 10-K for~~ the ~~year ended December 31, 2019;~~fourth quarter of 2020; and ~~that~~ our market capitalization, ~~as of the end of the first quarter still~~which has continued to far ~~exceeded~~exceed total net assets. Finally, while we may experience ana temporary increase in working capital levels, at this time, we do not anticipate a material impact to the realizability of current assets, such as accounts receivable or ~~inventories, at this time.~~inventories.

The situation related to the ~~coronavirus~~pandemic and recovery from the pandemic continues to be complex and rapidly evolving. ~~There~~Certain vaccines have been authorized by major regulatory bodies to help fight the infection of COVID-19, and certain other vaccines are in the late stages of development to provide such treatment. While it is anticipated in the ensuing months that authorized vaccines will become more widely available to the public, vaccine availability remains limited in certain regions and the timeline to sufficiently mitigate the effects of the pandemic through vaccines or other measures remains uncertain. If COVID-19 persists or worsens before vaccines or other treatments are made widely available, there may be further external developments, such as restrictions imposed by government authorities or guidance issued by public health authorities, that are beyond our control and may impact our operating plans. Parts of our business ~~are experiencing~~have experienced, and may continue to experience, operational disruption and customer demand impacts. ~~We cannot reasonably estimate~~Since the ~~duration~~onset of the pandemic, ~~or fully ascertain its impact to our 2020 operating results or cash flows. We currently expect that full year net sales, net income and cash flow will be lower than 2019 and~~ we ~~will take~~have taken certain cost reduction actions to mitigate the impact to profitability and cash flow. Currently, we are unable to reasonably estimate the duration of the pandemic or fully ascertain its long-term impact to our business.

~~Product Sourcing Diversification Initiative~~Reflexis Acquisition

The Company commenced efforts in 2019 to diversify its product sourcing footprint to include sourcing products from Taiwan, Vietnam, and Malaysia, thereby reducing its reliance on Chinese-based manufacturing and the impacts of related customs duties (“tariffs”) on U.S imports from China. In conjunction with this initiative,On September 1, 2020, the Company ~~has incurred total one-time costs~~acquired Reflexis Systems, Inc. (“Reflexis”), a provider of ~~$10 million, including $5 million during~~task and workforce management, execution, and communication solutions for customers in the first quarter of 2020, which are primarily reflected within Operating expenses on the Consolidated Statements of Operations. The Company anticipates incurring additional one-time operating costs of up to $15 million, as well incremental equipment purchases of approximately $10 million, by the middle of fiscal year 2020. The operational disruption due to the coronavirus has lengthened our initial expectations, although we still expect to substantially complete these actions by the middle of fiscal year 2020. We expect these actions, along with certain U.S. pricing actionsretail, food service, hospitality, and ~~based on improved economic and operating conditions, to substantially mitigate the ongoing financial impacts of Chinese tariffs.~~

~~Restructuring Programs~~

banking industries.~~In the fourth quarter of 2019,~~Through this acquisition, the Company ~~committed~~intends to ~~certain organizational changes designed~~enhance its solutions offerings to ~~generate operational efficiencies (collectively referred~~customers in these industries by

combining Reflexis’ platform with its existing software solutions and product offerings, further empowering front line workers to asexecute the ~~“2019 Productivity Plan”).~~next best action using real time data. The ~~organizational design changes under the 2019 Productivity Plan will principally occur~~operating results of Reflexis are included within the North America and EMEA regions, relate primarily to employee severance and related benefits, and are expected to be substantially completed in fiscal 2020. Exit and restructuring charges for the 2019 Productivity Plan were $4 million during the quarter ended March 28, 2020, and are $12 million cumulatively through the quarter ended March 28, 2020. Estimated remaining costs to be incurred in fiscal 2020 under the 2019 Productivity Plan are expected to be up to $6 million. See Note 6, EVM segment.

~~Exit and Restructuring Costs~~ ~~in the Notes to Consolidated Financial Statements.~~

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Results of ~~Operations~~Operations: Quarter Ended 2021 versus 2020

Consolidated Results of Operations

(amounts in millions, except percentages)

~~The following tables present key statistics for the Company’s operations for the three ended March 28, 2020 and March 30, 2019, respectively:~~


	Three Months Ended
	April 3, 2021			March 28, 2020			$ Change		% Change
Net sales:
Tangible products	$	1,153		$	901		$	252	28.0	%
Services and software	194			151			43		28.5	%
Total Net sales	1,347			1,052			295		28.0	%
Gross profit	655			473			182		38.5	%
Gross margin	48.6		%	45.0		%			360 bps
Operating expenses	383			322			61		18.9	%
Operating income	$	272		$	151		$	121	80.1	%

Three Months Ended
March 28,
2020 March 30,
2019 $ Change % Change
Net sales $ 1,052
$ 1,066
$ (14 ) (1.3 )%
Gross profit 473
501
(28 ) (5.6 )%
Gross margin 45.0 % 47.0 % (200) bps
Operating expenses 322
342
(20 ) (5.8 )%
Operating income $ 151
$ 159
$ (8 ) (5.0 )%

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

Three Months Ended
March 28,
2020 March 30,
2019 $ Change % Change
North America $ 519
$ 510
$ 9
1.8 %
EMEA 388
376
12
3.2 %
Asia-Pacific 97
125
(28 ) (22.4 )%
Latin America 48
55
(7 ) (12.7 )%
Total net sales $ 1,052
$ 1,066
$ (14 ) (1.3 )%


	Three Months Ended
	April 3, 2021		March 28, 2020		$ Change		% Change
North America	$	673	$	519	$	154	29.7	%
EMEA	490		388		102		26.3	%
Asia-Pacific	120		97		23		23.7	%
Latin America	64		48		16		33.3	%
Total net sales	$	1,347	$	1,052	$	295	28.0	%

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


	Three Months Ended									Three Months Ended
	March 28, 2020		March 30, 2019		As a % of Net sales					April 3, 2021		March 28, 2020				As a % of Net sales
					2020		2019							2021				2020
Selling and marketing	$	122	$	122	11.6	%	11.4	%	Selling and marketing	$	134			$	122			9.9	%			11.6	%
Research and development	105		111		10.0	%	10.4	%	Research and development	140		105				10.4	%			10.0	%
General and administrative	74		76		7.0	%	7.1	%	General and administrative	82		74				6.1	%			7.0	%
Amortization of intangible assets	16		28		NM		NM		Amortization of intangible assets	26		16				NM				NM
Acquisition and integration costs	1		4		NM		NM		Acquisition and integration costs	1		1				NM				NM
Exit and restructuring costs	4		1		NM		NM		Exit and restructuring costs	—		4				NM				NM
Total operating expenses	$	322	$	342	30.6	%	32.1	%	Total operating expenses	$	383	$	322			28.4	%			30.6	%

Consolidated Organic Net sales growth:



	Three Months Ended
	~~March 28, 2020~~April 3, 2021
Reported GAAP Consolidated Net sales growth	~~(1.3~~28.0	)%
Adjustments:
Impact of foreign currency translation⁽¹⁾	~~1.4~~(1.6)	%
Impact of acquisitions⁽²⁾	~~(0.9~~(1.4)	)%
Consolidated Organic Net sales growth(3)	~~(0.8~~25.0	)%

Table of Contents

~~Consolidated Organic Net sales growth~~(1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is ~~a non-GAAP financial measure. See~~not the ~~Non-GAAP Measures~~ ~~section at the end of this item.~~


~~(1)~~	~~Operating results reported in~~ U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S.

Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.


~~(2)~~	~~For purposes of computing Organic Net sales growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisition dates.~~

(2)For purposes of computing Organic Net sales growth, amounts directly attributable to the acquisition of Reflexis are excluded for twelve months following the September 1, 2020 acquisition date.

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

Firstquarter~~2020~~ 2021 compared to first quarter ~~2019~~2020

Total Net ~~sales decreased $14~~Sales increased $295 million or ~~1.3%~~28.0% compared with the prior year ~~reflecting declines in~~primarily due to broad-based customer demand across both of our ~~Asia-Pacific~~segments and ~~Latin America~~all regions, ~~partially offset by~~inclusive of pent-up demand from customers who we believe had delayed purchases in fiscal 2020 due to the COVID-19 pandemic. Net Sales for the first quarter of 2020 included the negative impacts of supply chain disruptions within our EVM segment resulting from the temporary closure of a key distribution center supplying the Americas late in that quarter. EVM Net Sales growth ~~in our EMEA~~was 31.1% and ~~North America regions.~~AIT Net Sales growth was 22.8% compared to the prior year. Excluding the effects of acquisitions and ~~unfavorable foreign~~favorable currency changes, the ~~decrease~~increase in Consolidated Organic Net sales was 0.8%, primarily due to lower sales of mobile computing and data capture products, which were partially offset by higher sales of printing products and support services. As discussed above, global supply chain disruption and customer demand declines resulting from the coronavirus pandemic negatively impacted Net sales. The supply chain disruption impacts were most pronounced in our North American mobile computing business, while customer demand declines primarily impacted our Asia-Pacific region (principally within China)25.0%.

Gross margin ~~decreased~~increased to ~~45.0%~~48.6% for the current quarter compared to ~~47.0%~~45.0% for the prior year. Gross margins were ~~lower in both AIT and EVM reflecting~~higher than the ~~negative impacts~~prior year primarily due to favorable business mix, higher support service margins, the mitigation of Chinese import tariffs ~~elevated freight costs associated with supply chain disruptions,~~as of the fourth quarter of 2020 as well as a partial recovery of Chinese import tariffs in the current year, favorable currency changes, and ~~unfavorable business mix on tangible product sales.~~contributions from our recent higher margin EVM acquisitions. These ~~declines~~benefits were partially offset by ~~productivity gains within our service~~premium freight costs and ~~software offerings.~~surcharges on certain product components.

Operating expenses for the quarter ended April 3, 2021 and March 28, 2020, were $383 million and ~~March 30, 2019, were~~ $322 million, or 28.4% and ~~$342 million, or~~ 30.6% ~~and 32.1%~~ of Net sales, respectively. ~~As a percentage of Net sales, operating costs continue to trend favorably.~~ The ~~current year~~increase in Operating expenses ~~include lower intangible asset amortization expense as certain assets became fully amortized in late 2019, lower~~over the prior year was primarily due to higher employee incentive-based compensation associated with improved financial performance; the inclusion of operating expenses and ~~lower discretionary spending,~~amortization of intangible assets associated with recently acquired businesses; and increased investment in research and development program projects, principally within our EVM segment. These increases were partially offset by lower travel spending in the current year, as well as the prior year including costs associated with our 2019 Productivity Plan and the diversification of the Company’s product sourcing footprint, ~~and~~which were each completed by the ~~inclusion~~end of ~~operating expenses associated with business acquisitions.~~2020.

Operating income ~~decreased 5.0%~~increased 80.1% to ~~$151~~$272 million for the current ~~quarter~~year compared to ~~$159~~$151 million for the prior year. The ~~decrease~~increase was primarily due to higher Net Sales and Gross profit, which were partially offset by higher Operating expenses.

Net income increased 156% compared to the prior year due to higher Operating income and favorability in Other income (expense), partially offset by higher income tax expense, detailed as follows:

•The Company’s effective income tax rate for the quarters ended April 3, 2021 and March 28, 2020 was 17.4% and 13.6%, respectively. The Company’s effective tax rate was higher in the current year compared to the prior year primarily due to increased income in jurisdictions with higher tax rates, partially offset by increased share-based compensation deductions.

•Other income (expense), net was $4 million of income in the current year compared to $48 million of expense in the prior year primarily due to lower ~~Net sales and Gross profit, partially offset by~~interest expense in the ~~benefits of lower Operating expenses.~~

~~Total Other expenses, net was $48 million for the~~ current ~~quarter compared to $28 million for the prior~~ year. The current year interest expense benefited from ~~lower outstanding debt levels, which was more than offset by a $35~~an $8 million ~~loss~~gain on interest rate swaps compared to ~~an $8~~a $35 million loss in the prior ~~year.~~year, lower interest rates, and lower average outstanding debt levels.

~~The Company’s effective tax rates for the three months ended March 28, 2020 and March 30, 2019 were 13.6% and 12.2%, respectively. The increase in the effective tax rate~~Diluted earnings per share increased to $4.22 as compared to $1.65 in the prior year ~~was~~ primarily due to ~~lower discrete tax benefits.~~the increase in Net income.

Results of Operations by Segment

Table of Contents

The following commentary should be read in conjunction with the financial results of each operating business segment as detailed in Note 15, Segment Information & Geographic Data in the Notes to Consolidated Financial Statements. To the extent applicable, segment results exclude purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, and product sourcing diversification costs.

Asset Intelligence & Tracking Segment (“AIT”)

(in millions, except percentages)


	Three Months Ended
	April 3, 2021			March 28, 2020			$ Change		% Change
Net sales:
Tangible products	$	410		$	333		$	77	23.1	%
Services and software	26			22			4		18.2	%
Total Net sales	436			355			81		22.8	%
Gross profit	210			171			39		22.8	%
Gross margin	48.2		%	48.2		%			0 bps
Operating expenses	101			89			12		13.5	%
Operating income	$	109		$	82		$	27	32.9	%

Three Months Ended
March 28,
2020 March 30,
2019 $ Change % Change
Net sales $ 371
$ 357
$ 14
3.9 %
Gross profit 181
184
(3 ) (1.6 )%
Gross margin 48.8 % 51.5 % (270) bps
Operating expenses 92
92
—
— %
Operating income $ 89
$ 92
$ (3 ) (3.3 )%

AIT Organic Net sales growth:



		Three Months Ended
		~~March 28, 2020~~April 3, 2021
AIT Reported GAAP Net sales growth		~~3.9~~22.8		%
Adjustments:
Impact of foreign currency translation⁽¹⁾		~~1.2~~(1.4)		%

~~Impact of acquisition~~⁽²⁾		~~(1.9~~	)%
AIT Organic Net sales growth(2)	~~3.2~~21.4	%

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

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

~~(1)~~

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


~~(2)~~	For purposes of computing AIT Organic Net sales growth, amounts directly attributable to the acquisition of Temptime Corporation (“Temptime”) are excluded for twelve months following the February 21, 2019 acquisition date.

Firstquarter~~2020~~ 2021 compared to first quarter ~~2019~~2020

Total Net sales for AIT increased ~~$14~~$81 million or ~~3.9%~~22.8% compared to the prior year, including the impacts of the Temptime acquisition and unfavorable currency changes. AIT Organic Net sales growth of 3.2% was primarily due to increases in printing products in the North America and EMEA regions.

~~Gross margin decreased to 48.8% in the current period compared to 51.5% in~~ the prior year primarily due to higher sales of printing products and supplies reflecting broad-based customer demand across all regions, inclusive of pent-up demand from customers who we believe had delayed purchases in fiscal 2020 due to the ~~unfavorable impacts~~COVID-19 pandemic, as well as favorable currency changes. Excluding the impact of foreign currency changes, AIT Organic Net sales growth was 21.4%.

Gross margin was 48.2% in both the current and prior year periods. The benefits of favorable business mix, foreign currency changes, as well as the mitigation of Chinese import tariffs ~~and elevated~~as of the fourth quarter of 2020 along with partial recovery of Chinese import tariffs in the current year, were collectively offset by premium freight costs ~~associated with supply chain disruptions.~~and surcharges on certain product components.

Operating income ~~for~~increased 32.9% in the current quarter ~~decreased 3.3% primarily~~compared to the prior year period. The increase was due to ~~lower~~higher Net sales and Gross profit, ~~despite an increase in Net sales.~~which were partially offset by higher Operating expenses.

Table of Contents

Enterprise Visibility & Mobility Segment (“EVM”)

(in millions, except percentages)


	Three Months Ended
	April 3, 2021			March 28, 2020			$ Change		% Change
Net sales:
Tangible products	$	743		$	568		$	175	30.8	%
Services and software	171			129			42		32.6	%
Total Net sales	914			697			217		31.1	%
Gross profit	448			303			145		47.9	%
Gross margin	49.0		%	43.5		%			550 bps
Operating expenses	255			208			47		22.6	%
Operating income	$	193		$	95		$	98	103.2	%

Three Months Ended
March 28,
2020 March 30,
2019 $ Change % Change
Net sales $ 681
$ 709
$ (28 ) (3.9 )%
Gross profit 293
318
(25 ) (7.9 )%
Gross margin 43.0 % 44.9 % (190) bps
Operating expenses 205
217
(12 ) (5.5 )%
Operating income $ 88
$ 101
$ (13 ) (12.9 )%

EVM Organic Net sales growth:



	Three Months Ended
	~~March 28, 2020~~April 3, 2021
EVM Reported GAAP Net sales growth	~~(3.9~~31.1	)%
Adjustments:
Impact of foreign currency translation⁽¹⁾	~~1.5~~(1.7)	%
Impact of ~~acquisitions~~ acquisition⁽²⁾	~~(0.5~~(2.6)	)%
EVM Organic Net sales growth(3)	~~(2.9~~26.8	)%

(2)For purposes of computing EVM Organic Net sales growth, amounts directly attributable to the acquisition of Reflexis are excluded for twelve months following the September 1, 2020 acquisition date.

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

~~(1)~~


~~(2)~~	For purposes of computing EVM Organic Net sales growth, amounts directly attributable to the acquisitions of Profitect, Inc. and Cortexica Vision Systems Limited are excluded for twelve months following their respective acquisition dates of May 31, 2019 and November 5, 2019.

Firstquarter~~2020~~ 2021 compared to first quarter ~~2019~~2020

Total Net sales for EVM ~~decreased $28~~increased $217 million or ~~3.9%~~31.1% compared to the prior year ~~including unfavorable foreign currency changes and the benefit of acquisitions. EVM Organic Net Sales decline of 2.9% was~~ primarily due to ~~lower~~higher sales of mobile computing products, ~~associated with coronavirus-induced supply chain disruption~~support services, and ~~customer demand declines, as well as lower sales of~~ data capture products ~~which were partially offset by~~reflecting broad-based customer demand across all regions, inclusive of pent-up demand from customers who we believe had delayed purchases in fiscal 2020 due to the COVID-19 pandemic. In addition, our recent acquisitions contributed to the growth of Services and software Net sales in ~~support services.~~the current year. Net Sales for the prior year included the negative impacts of supply chain disruptions that primarily impacted our North America mobile computing business. Excluding the impacts of acquisitions and favorable foreign currency changes, EVM Organic Net Sales growth was 26.8%.

Gross margin ~~decreased~~increased to ~~43.0%~~49.0% in the current ~~period~~quarter compared to ~~44.9%~~43.5% in the prior year, primarily due to ~~unfavorable~~favorable business mix, ~~and~~higher support service margins, contributions from our higher margin acquisitions, favorable changes in foreign currency, as well as the mitigation of Chinese import tariffs as ~~well as elevated~~of the fourth quarter of 2020 along with partial recovery of Chinese import tariffs in the current year. These benefits were partially offset by premium freight ~~costs associated with supply chain disruptions.~~and surcharges on certain product components.

Operating income for the current quarter ~~decreased 12.9% primarily~~increased 103.2% compared to the prior year period. The increase was due to ~~lower~~higher Net sales and Gross profit, which were partially offset by ~~the benefits of lower~~higher Operating expenses.

Table of Contents

~~New Accounting Pronouncements~~

~~On January 1, 2020, the Company adopted Accounting Standards Update 2016-13,~~
~~Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, which did not have a significant impact to the Company’s consolidated financial statements. See Note 2,~~ ~~Significant Accounting Policies~~ ~~in the Notes to Consolidated Financial Statements for further information related to the Company’s adoption of this new accounting pronouncement.~~

Liquidity and Capital Resources

The primary factors that influence our liquidity include the amount and timing of our revenues, cash collections from our customers, cash payments to our suppliers, capital expenditures, repatriation of foreign cash, ~~and investments,~~ acquisitions, and share repurchases. While the effects of the coronavirus pandemic are expected to have a negative impact on operating cash flows, total year operating cash flows are still expected to remain positive based on management’s current business plans and operational expectations. Management believes that our existing capital resources, inclusive of available borrowing capacity on debt and other financing facilities and funds generated from operations, are sufficient to meet anticipated capital requirements and service our indebtedness.

The following table summarizes our cash flow activities for the periods indicated (in ~~millions, except percentages)~~millions):


													Three Months Ended
	Three Months Ended
Cash flows provided by (used in) from:	March 28, 2020			March 30, 2019			$ Change			% Change
Cash flows provided by (used in):												Cash flows provided by (used in):	April 3, 2021		March 28, 2020		$ Change
Operating activities	$	108		$	42		$	66		157.1	%	Operating activities	$	224	$	108	$	116
Investing activities	(15		)	(184		)	169			NM		Investing activities	(23)		(15)		(8)
Financing activities	(98		)	161			(259		)	NM		Financing activities	(181)		(98)		(83)
Effect of exchange rates on cash	(1		)	(2		)	1			NM
Net (decrease) increase in cash and cash equivalents	$	(6	)	$	17		$	(23	)	NM
Effect of exchange rates on cash balances												Effect of exchange rates on cash balances	(2)		(1)		(1)
Net increase (decrease) in cash and cash equivalents, including restricted cash												Net increase (decrease) in cash and cash equivalents, including restricted cash	$	18	$	(6)	$	24

The change in our cash and cash equivalents balance during the three months ended ~~March 28, 2020~~April 3, 2021 compared to the prior year period is reflective of the following:

~~Cash flow~~•The increase in cash provided by operating activities ~~increased by $66 million~~ compared to the prior year ~~period. The increase~~ was primarily ~~due~~attributed to ~~the~~higher operating profitability, favorable timing of ~~collections on accounts receivables,~~vendor payments compared to the prior year, and lower incentive compensation payments. These benefits were partially offset by ~~lower net income.~~less favorability in the timing of customer collections and higher inventory levels compared to the prior year.

•The ~~decrease~~increase in net cash used in investing activities compared to the prior period was primarily due to higher purchases of long-term investments in the current year.

•The increase in cash used in financing activities was primarily due to the ~~Company’s acquisition~~Company making debt repayments of ~~Temptime during the first quarter of 2019.~~

~~The increase in net cash used in financing activities during the current period was primarily due to $200~~$156 million ~~of common stock repurchases~~ in the current year, ~~unfavorable timing of unremitted cash collections from servicing of factored receivables, and lower proceeds from borrowings~~ as compared to net borrowings of $121 million and share repurchases of $200 million in the prior year.

Company Debt

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


	April 3, 2021		December 31, 2020
Term Loan A	$	888	$	917
2020 Term Loan	—		100

Receivables Financing Facilities	208		235

Total debt	$	1,096	$	1,252
Less: Debt issuance costs	(4)		(5)
Less: Unamortized discounts	(2)		(2)
Less: Current portion of debt	(134)		(364)
Total long-term debt	$	956	$	881

~~Credit Facilities~~Term Loan A

The ~~Company’s debt includes borrowings under~~principal on Term Loan A ~~and a multi-currency Revolving Credit Facility, both maturing~~is due in ~~August 2024. Borrowings under~~quarterly installments, with the facilities bear interest at a variable rate plus an applicable margin, for which the Company has entered into interest rate swap contracts to manage interest rate risk exposure. All borrowings under the credit facilities as ofnext quarterly installment due in March ~~28, 2020 were denominated in U.S. Dollars, except for €92 million in Euro-denominated borrowings under the Revolving Credit Facility. The average interest rates as of March 28, 2020 for Term Loan A~~2022 and the ~~Revolving Credit Facility were 2.27% and 1.83%, respectively. Interest is paid for each instrument on a monthly basis.~~majority due upon the August 9, 2024 maturity date. The Company ismay 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. ~~Also,~~As of April 3, 2021, the ~~Company may make prepayments against~~ Term Loan A ~~in whole or in part, without premium or penalty.~~

interest rate was 1.37%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

~~See Note 9,~~

2020 Term Loan

~~Long-Term Debt~~Table of Contents

In September 2020, the Company entered into a new $200 million term loan (“2020 Term Loan”), with the proceeds used to partly fund the acquisition of Reflexis. The Company repaid $100 million of principal in the ~~Notes to Consolidated Financial Statements for further details related to~~fourth quarter of 2020 and repaid the ~~Company’s credit facilities.~~remaining $100 million of principal in the first quarter of 2021.

Receivables Financing Facilities

The Company ~~also~~ has two Receivables Financing Facilities with financial institutions ~~carrying~~that have a combined total borrowing ~~limits~~limit of up to $280 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under its Receivables Financing Facilities as secured borrowings. ~~As of March 28, 2020, $507 million of receivables were pledged as collateral, of which $230 million was borrowed against.~~ The ~~average interest rate associated with these borrowings as of March 28, 2020 was 1.85%. Interest is paid on these borrowings on a monthly basis. The~~Company’s first Receivables Financing Facility, which was originally entered into in December 2017 and was most recently amended in ~~May 2019,~~March 2021, allows for borrowings of up to $180 ~~million and will mature on~~million. The most recent amendment to the first Receivables Financing Facility extended the maturity through March ~~29, 2021.~~19, 2024 but otherwise did not significantly change the facility. The Company’s second Receivable Financing Facility, which was entered into in May 2019 and was amended in May 2020, allows for borrowings of up to $100 million and will mature on May ~~18, 2020. Both~~17, 2021.

As of April 3, 2021, the Company’s Consolidated Balance Sheets included $498 million of receivables that were pledged under the two Receivables Financing Facilities. As of April 3, 2021, $208 million had been borrowed, of which $122 million was classified as current. Borrowings under the Receivables Financing Facilities bear interest at a variable rate plus an applicable margin. As of April 3, 2021, the Receivables Financing Facilities had an average interest rate of 1.04%. Interest is paid on these borrowings on a monthly basis.

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 April 3, 2021, the Company had letters of credit totaling $5 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1 billion to $995 million. No borrowings were outstanding under the Revolving Credit Facility as of April 3, 2021. Upon borrowing, interest payments are made monthly and ~~Receivables Financing Facilities include terms~~are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on August 9, 2024.

Uncommitted Short-Term Credit Facility

The Company also entered into an uncommitted short-term credit facility (“Uncommitted Facility”) in August 2020. The Uncommitted Facility matures on August 26, 2021 and ~~conditions that limit~~allows for borrowings of up to $20 million. Each borrowing must be repaid within 90 days, or earlier if the ~~incurrence~~facility matures beforehand, and bears interest at a variable rate plus an applicable margin. Along with the Company’s Revolving Credit Facility, the Uncommitted Facility is available for working capital and other general business purposes. As of ~~additional~~April 3, 2021, the Company had no outstanding borrowings ~~and require that certain financial ratios be maintained at designated levels.~~under the Uncommitted Facility.

See Note 9, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s ~~Receivables Financing Facilities.~~debt instruments.

Receivables Factoring

~~In addition to the Company’s borrowing arrangements described above, the~~The Company has ~~entered into Receivables Factoring arrangements. Under the~~multiple Receivables Factoring arrangements, ~~the Company sells~~pursuant to which certain receivables ~~originated from the EMEA region~~are sold to banks without recourse in exchange for ~~cash, without maintaining a beneficial interest in the receivables sold. At any time, the~~

cash.~~banks’ purchase of eligible receivables is subject to a maximum of uncollected receivables.~~ Transactions under the Receivables Factoring arrangements are accounted for as sales under Accounting Standards ~~Codification Topic~~Codifications 860, Transfers and Servicing of Financial Assets, with ~~related cash flows~~the sold receivables removed from the Company’s balance sheet. Under these Receivables Factoring arrangements, the Company does not maintain any beneficial interest in the receivables sold. The banks’ purchase of eligible receivables is subject to a maximum amount of uncollected receivables. The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Net cash provided by operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Net cash used in financing activities on the Consolidated Statements of Cash Flows. ~~The~~

In May 2020, the Company entered into a new Receivables Factoring arrangement with a bank, which allows for the factoring of up to €150 million of uncollected receivables originated from the EMEA and Asia-Pacific regions. This arrangement expands upon the Company’s ~~Receivable~~other Receivables Factoring arrangements, which allow for the factoring of up to $125 million of uncollected receivables ~~originated.~~originated from the EMEA region.

As of ~~March 28, 2020~~April 3, 2021 and December 31, ~~2019~~2020 there were a total of ~~$80~~$77 million and ~~$60~~$70 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

Table of Contents

As servicer of sold receivables, the Company had $123 million and $142 million of obligations that were not yet remitted to banks as of April 3, 2021 and December 31, 2020, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Net cash used in financing activities on the Consolidated Statements of Cash Flows.

See Note 14, Accounts Receivable Factoring in the Notes to Consolidated Financial Statements for further details.

Share Repurchases

On July 30, 2019, the Company announced that its Board of Directors authorized a share repurchase program for up to an aggregate amount of $1 billion of its outstanding shares of common stock. The share repurchase program ~~supersedes the Company’s prior share repurchase program, which was authorized in November 2011, and~~ does not have a stated expiration date. The level of the Company’s repurchases depends on a number of factors, including its financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors its management may deem relevant. The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time. Repurchases may be effected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. ~~During~~The Company’s share repurchases during the ~~three months ended March 28, 2020, the~~first quarter of 2021 were not significant. The Company repurchased 948,740 shares of common stock for $200 million during the first quarter of 2020. As of April 3, 2021, the Company has cumulatively repurchased 1,186,736 shares of common stock for $247 million under ~~this program, reducing~~ the plan, resulting in a remaining amount of share repurchases authorized under the plan toof $753 million.

Significant Customers

The Net sales to significant customers as a percentage of the Company’s total Net sales, by segment, were as follows:


	Three Months Ended
	April 3, 2021						March 28, 2020
	AIT		EVM		Total		AIT		EVM		Total
Customer A	3.6	%	9.8	%	13.4	%	5.9	%	12.5	%	18.4	%
Customer B	5.9	%	9.0	%	14.9	%	6.7	%	10.6	%	17.3	%
Customer C	9.5	%	13.8	%	23.3	%	6.5	%	13.1	%	19.6	%

Three Months Ended

March 28, 2020 March 30, 2019

AIT
EVM
Total
AIT
EVM
Total
Customer A 5.9 % 12.5 % 18.4 % 5.3 % 12.3 % 17.6 %
Customer B 6.7 % 10.6 % 17.3 % 5.1 % 9.8 % 14.9 %
Customer C 6.5 % 13.1 % 19.6 % 6.7 % 8.0 % 14.7 %

These customers accounted for ~~18.8%~~13.3%, ~~11.6%~~8.0%, and ~~21.7%~~29.7% respectively, of ~~outstanding~~ accounts receivable ~~respectively,~~ as of ~~March 28, 2020.~~April 3, 2021. No other customer accounted for more than 10% of total Net sales during ~~these~~the periods ended April 3, 2021 and March 28, 2020, or more than 10% of total outstanding accounts receivables as of ~~March 28, 2020.~~April 3, 2021. All three of the above customers are distributors of the Company’s products and solutions and not end users.

Safe Harbor

Forward-looking statements contained in this filing are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are highly dependent upon a variety of important factors, which could cause actual results to differ materially from those expressed or implied in such forward-looking statements. When used in this document and documents referenced, the words “anticipate,” “believe,” “intend,” “estimate,” “will,” and “expect” and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements but are not the exclusive means of identifying these statements. The forward-looking statements include, but are not limited to, the Company’s financial outlook for the full year of ~~2020.~~2021. These forward-looking statements are based on current expectations, forecasts and assumptions, and are subject to the risks and uncertainties inherent in the Company’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include:

•Market acceptance of the Company’s products and solution offerings and competitors’ offerings and the potential effects of technological changes,

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

•The impact of foreign exchange rates due to the large percentage of our sales and operations being outside the U.S.,

•Our ability to control manufacturing and operating costs,

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

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

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

•Success of integrating acquisitions,

•Interest rate and financial market conditions,

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

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

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

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

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

We encourage readers of this report to review Part II, Item 1A, “Risk Factors” in this report for further discussion of issues that could affect the Company’s future results. We undertake no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason after the date of this report.

New Accounting Pronouncements

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

Non-GAAP Measures

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

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



Item 3.			Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in the Company’s market risk during the quarter ended ~~March 28, 2020.~~April 3, 2021. For additional information on market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.



Item 4.			Controls and Procedures

Management’s Report on Disclosure Controls

Our management is responsible for establishing and maintaining adequate disclosure controls as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management assessed the effectiveness of our disclosure controls as of ~~March 28, 2020.~~April 3, 2021. Based on this assessment and those criteria, our management believes that, as of ~~March 28, 2020,~~April 3, 2021, our disclosure controls ~~are~~were effective.

Changes in Internal Controls over Financial Reporting

During the quarter ended ~~March 28, 2020,~~April 3, 2021, there have been no changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Inherent Limitations on the Effectiveness of Controls

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the disclosure controls and procedures or the internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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PART II - OTHER INFORMATION



Item 1.			Legal Proceedings

See Note 10, Commitments and Contingencies in the Notes to Consolidated Financial Statements included in this report.



Item 1A.			Risk Factors

In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, and the factors identified under “Safe Harbor” ~~at the end of~~in Part I, Item 2 of this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, cash flows, or results of operations. The risks described in the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently considers immaterial also may materially adversely affect its business, financial condition, and/or operating results. There have been no material changes to the risk factors included in our Annual Report for the year ended December 31, ~~2019, other than as described below.~~

2020.

~~The effects of the coronavirus pandemic could have a material adverse effect on our business, financial results, and results of operations.~~ In December 2019, a strain of the coronavirus surfaced in Wuhan, China, and over the course of the first quarter 2020, the World Health Organization escalated its assessment of the coronavirus threat, finally characterizing it as a pandemic on March 11, 2020. The situation relating to the coronavirus pandemic is complex and rapidly evolving, with a broad number of governmental and commercial efforts to contain the spread of the virus globally. The duration and extent of the impact of the coronavirus pandemic on our business, operations and financial results depends on factors that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions, and the impact of these and other factors on our employees, customers, industry partners, suppliers and third party dealers, distributors, and resellers.

The federal, state, and local governments as well as foreign governments have imposed several protocols and regulations restricting the physical movement of individuals in an effort to limit the spread of the coronavirus. We have implemented a number of measures in an effort to protect our employees’ health and well-being, including having office workers work remotely, suspending employee travel, and withdrawing from certain industry events. As a result of concerns over the pandemic, we have experienced higher than normal employee absentee rates for employees who are unable to work from home. The potential negative effects to our operations, including reductions in production levels, research and development activities, and increased costs resulting from our efforts to mitigate the impact of the coronavirus, may adversely affect our ability to provide our services and solutions.

Similarly, many of our suppliers, customers, distributors, and resellers have temporarily suspended or modified their business operations as a result of the coronavirus pandemic. We may experience disruptions to our supply chain, which could decrease our sales, earnings and liquidity or otherwise adversely affect our business and result in increased costs. In addition, our customers, distributors, and resellers may be limited in their abilities to make timely payments or they may seek to suspend or terminate existing agreements. A decrease in demand or pricing for our products could materially adversely affect our business, financial condition, and results of operations. In addition, the continued spread of the coronavirus has led to disruption and volatility in the worldwide credit and financial markets, which could limit our ability to obtain external financing and result in a higher rate of losses on our accounts receivables due to credit defaults, adversely affecting our liquidity.

If the coronavirus becomes more prevalent in the locations where our customers, suppliers, or we conduct business, we may experience more pronounced disruptions in our operations. If we are not able to respond to and manage the impact of such events effectively, our business and results of operations in future periods may be adversely affected. Moreover, the impacts of the coronavirus pandemic may exacerbate other pre-existing risks, such as global economic conditions, political, regulatory, social, financial, operational and cybersecurity, any of which could have a material adverse effect on our business.



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

The following table sets forth information with respect to repurchases of the Company’s common stock for the three months ended ~~March 28, 2020:~~April 3, 2021:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
January 1, 2021 - January 30, 2021	100	$	382.76	100	$	753
January 31, 2021 - February 27, 2021	—	—		—	753
February 28, 2021 - April 3, 2021	—	—		—	753
Total	100	$	382.76	100	$	753

(1)On July 30, 2019, the Company announced that its Board of Directors authorized a share repurchase program for up to an aggregate amount of $1 billion of its outstanding shares of common stock. Repurchases may be effected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. The program does not have a stated expiration date.

Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) ⁽¹⁾
January 1, 2020 - January 25, 2020 —
$ —
—
$ 953
January 26, 2020 - February 22, 2020 78,625
238.24
78,625
934
February 23, 2020 - March 28, 2020 870,115
208.33
870,115
753
Total 948,740
$ 210.81
948,740
$ 753

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~~(1)~~


Item 6.			Exhibits



~~Item 6.~~			~~Exhibits~~

Second Amendment to Receivables Financing Agreement, dated as of March 19, 2021 by and among Zebra Technologies RSC, LLC, the lenders from time to time party thereto, PNC Bank, National Association, Zebra Technologies, LLC, and PNC Capital Markets, LLC




31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following financial information from Zebra Technologies Corporation Quarterly Report on Form 10-Q, for the quarter ended ~~March 28, 2020,~~April 3, 2021, formatted in Inline XBRL: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. The instance document does not appear in the interactive data file because Inline XBRL tags are embedded in the iXBRL document.

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 28, 2020,~~April 3, 2021, formatted in Inline XBRL (included in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ZEBRA TECHNOLOGIES CORPORATION

Date: May 4, 2021		By:	/s/ Anders Gustafsson
			Anders Gustafsson
			Chief Executive Officer


		~~ZEBRA TECHNOLOGIES CORPORATION~~
Date: May 4, 2021		By:	/s/ Nathan Winters
~~Date: April 28, 2020~~		~~By:~~	~~/s/ Anders Gustafsson~~Nathan Winters
			~~Anders Gustafsson~~
		~~Chief Executive Officer~~

~~Date: April 28, 2020~~	~~By:~~	~~/s/ Olivier Leonetti~~
		~~Olivier Leonetti~~
		Chief Financial Officer

3332



	Three Months Ended March 30, 2019
	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, 2018	53,871,184		$	1	$	294	$	(613	)	$	1,688	$	(35	)	$	1,335
Issuances of treasury shares related to share based-compensation plans, net of forfeitures	110,382		—		1		3			—		—			4
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(5,829	)	—		—		(1		)	—		—			(1		)
Share-based compensation	—		—		10		—			—		—			10
Net income	—		—		—		—			115		—			115
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—		—		—		—			—		4			4
Balance at March 30, 2019	53,975,737		$	1	$	305	$	(611	)	$	1,803	$	(31	)	$	1,467



	March 28, 2020						March 30, 2019
Segment	Tangible Products		Services and Software		Total		Tangible Products		Services and Software		Total
AIT	$	333	$	38	$	371	$	320	$	37	$	357
EVM	568		113		681		604		105		709
Total	$	901	$	151	$	1,052	$	924	$	142	$	1,066



	March 28, 2020		December 31, 2019
Raw material	$	122	$	128
Work in process	5		4
Finished goods	316		342
Total inventories, net	$	443	$	474



	Unrealized gain on sales hedging			Foreign currency translation adjustments			Total
Balance at December 31, 2018	$	12		$	(47	)	$	(35	)
Other comprehensive income before reclassifications	16			—			16
Amounts reclassified from AOCI⁽¹⁾	(11		)	—			(11		)
Tax effect	(1		)	—			(1		)
Other comprehensive income, net of tax	4			—			4
Balance at March 30, 2019	$	16		$	(47	)	$	(31	)

Balance at December 31, 2019	$	2		$	(46	)	$	(44	)
Other comprehensive income (loss) before reclassifications	11			(9		)	2
Amounts reclassified from AOCI⁽¹⁾	(8		)	—			(8		)
Tax effect	(1		)	—			(1		)
Other comprehensive income (loss), net of tax	2			(9		)	(7		)
Balance at March 28, 2020	$	4		$	(55	)	$	(51	)