ZBRA » Topics » Enterprise Solutions Group

This excerpt taken from the ZBRA 10-Q filed Apr 30, 2008.

Enterprise Solutions Group


     Three Months Ended                   
     March 29,
    March 31,
   Percent of
Total Sales - 2008
    Percent of
Total Sales - 2007

Net sales

   $ 21,526     $ 6,681     222.2    100.0     100.0  

Cost of sales

     10,668       4,520     136.0    49.6     67.7  

Gross profit

     10,858       2,161     402.5    50.4     32.3  

Operating expenses

     17,921       5,741     212.2    83.2     85.9  

Operating loss

     (7,063 )     (3,580 )   NM    (32.8 )   (53.6 )

During 2007, Zebra acquired three companies which are being combined to make up our Enterprise Solutions Group (ESG). On January 25, 2007, we acquired WhereNet Corp., a provider of active radio frequency identification (RFID) based wireless solutions used to track and manage enterprise assets. On July 2, 2007, we acquired proveo AG, a provider of complete hardware and software systems for tracking motorized vehicles using global positioning systems (GPS). On December 14, 2007, we acquired Navis Holdings, LLC., a provider of software solutions to optimize the flow of goods through marine terminals and other operations managing cargo movement through ports and intermodal facilities. Together, these companies give Zebra the ability to deliver more high-value applications that help our customers identify, track and manage assets, transactions and people.

Sales and gross margins for both 2007 and 2008 are being affected by deferred revenue adjustments mandated by the purchase accounting requirements. Only a portion of the deferred revenue is allowed to be recognized on contracts that were in process at the acquisition dates. In addition, due to the timing of these acquisitions throughout 2007, the first quarter revenue and expense amounts for 2007 only reflect a portion of the operating expenses for ESG.

ESG operating expenses for the first quarter of 2008 reflect normal spending rates and should continue at this rate going forward. Operating expenses for ESG include amortization expense of $3,039,000 for the first quarter of 2008, and $932,000 for the first quarter of 2007. A charge for acquired in process technology $1,853,000 was also included in the first quarter of 2007.

On April 1, 2008, Zebra acquired all of the outstanding stock of Multispectral Solutions, Inc. (MSSI). MSSI is a global provider of ultra wideband (UWB) real-time locating systems and other UWB-based wireless technology. MSSI will become part of the Enterprise Solutions Group.

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