Zebra(ZBRA) - 2023 Q4 - Annual Report

Business Operations and Growth - The company has expanded operations and customer offerings both organically and through acquisitions, leading to increased complexities in the business[83]. - Future growth depends on the ability to identify and successfully acquire businesses at appropriate prices, with macroeconomic factors potentially influencing acquisition opportunities[84]. - The company expects non-U.S. customers to continue accounting for a material portion of net sales, relying on third-party contract manufacturing services[94]. - The company faces risks related to geopolitical instability, including the war between Russia and Ukraine, which could impact sales and increase costs[96]. - The company must adapt to rapidly changing technological needs and customer demands to remain competitive in a highly competitive industry[89]. - The company may face challenges in retaining customers and managing relationships from acquired entities, which could affect operating results[87]. - The ability to innovate and develop new technologies is crucial for the company's success in addressing user needs and market demands[89]. Risks and Compliance - The company is dependent on third-party operating systems and software, and any disruption in their development could adversely affect business operations[99]. - Emerging issues related to artificial intelligence (AI) could lead to legal or regulatory actions, impacting the company's reputation and business[100]. - Cybersecurity incidents pose a risk to business operations, with potential disruptions and loss of sensitive information[101]. - There is a risk of product liability claims due to design or manufacturing defects, which could lead to recalls and significant costs[106]. - The company has not suffered significant harm from software errors, but future undetected issues could impair market acceptance and financial results[107]. - Global health crises, such as the COVID-19 pandemic, have impacted supply chains and could adversely affect operations and financial conditions[110]. - The company enters into large, multi-year contracts that expose it to technological, financial, and cybersecurity risks[111]. - Fixed-price contracts may lead to losses if cost estimates are inaccurate, especially with new technologies[112]. - The reliance on subcontractors for contract performance could negatively impact the company's obligations and financial results[113]. - Outsourcing certain operations limits control and exposes the company to risks from partners' actions[114]. - Third-party dealers and distributors' effectiveness in promoting products is crucial, as their failure could negatively impact sales and financial results[117]. - The company faces risks from changes in accounting standards and subjective management estimates, which could affect reported financial performance[133]. - Compliance with evolving data protection laws may result in increased costs and legal claims against the company[135]. - The company is subject to various product regulatory and safety laws, which could impact production capabilities and financial performance[137]. - Increased public awareness of environmental issues may lead to additional costs and changes in manufacturing practices due to new regulations[140]. Financial Performance - Total net sales for 2023 were $4.584 billion, a decrease of 20.7$5.781 billion in 2022[240]. - Gross profit for 2023 was $2.123 billion, down from$2.624 billion in 2022, reflecting a gross margin of 46.3%[240]. - Net income for 2023 was $296 million, a decline of 36.1$463 million in 2022, resulting in diluted earnings per share of $5.72[240]. - As of December 31, 2023, total debt outstanding was approximately$2.2 billion, with a one percentage point change in interest rates impacting annual interest expense by about $14 million[222]. - The company reported a foreign exchange loss of$2 million in 2023, compared to a loss of $3 million in 2022[240]. - Current assets decreased to$1.672 billion in 2023 from $1.883 billion in 2022, primarily due to a reduction in accounts receivable and inventories[238]. - Total liabilities decreased to$4.270 billion in 2023 from $4.796 billion in 2022, with a significant reduction in current liabilities[238]. - Research and development expenses for 2023 were$519 million, a decrease of 8.9% from $570 million in 2022[240]. - The company has exposure to foreign exchange risk, with a one percentage point change in exchange rates potentially impacting pre-tax income by approximately$1 million[224]. - The company’s goodwill as of December 31, 2023, was $3.895 billion, slightly down from$3.899 billion in 2022[238]. - Comprehensive income for 2023 was $308 million, down from$426 million in 2022, reflecting a decline of 28%[243]. - Cash flows from operating activities resulted in a net cash used of $4 million in 2023, compared to a net cash provided of$488 million in 2022[249]. - The company reported a cash and cash equivalents balance of $138 million at the end of 2023, up from$117 million at the end of 2022[249]. - The company incurred $52 million in payments for repurchases of common stock in 2023, significantly lower than$751 million in 2022[249]. - The company’s total assets at the end of 2023 were $4,332 million, reflecting an increase from$4,036 million at the end of 2022[246]. - The company’s share-based compensation expense was $55 million in 2023, down from$88 million in 2022[249]. - The company reported an unrealized gain on forward interest rate swaps of $17 million in 2023, compared to an unrealized loss of$89 million in 2022[249]. Acquisitions and Goodwill - The company accounts for acquired businesses using the acquisition method, with excess purchase price recorded as goodwill[280]. - The acquisition of Matrox for $881 million significantly expanded the company's machine vision product offerings, with$639 million of goodwill allocated to the EVM segment[300][301]. - The acquisition of Fetch Robotics for $301 million aimed to enhance automation solutions, with$176 million of goodwill allocated to the EVM segment[311]. - Goodwill as of December 31, 2023, totaled $3,895 million, with the EVM segment holding$3,666 million and the AIT segment holding $229 million[316]. - The company completed its annual goodwill impairment testing in Q4 2023, with estimated fair values exceeding carrying values by at least 40$110 million to date, with $98 million attributed to the year ended December 31, 2023[324]. - The balance of the Company's liability associated with exit and restructuring was$22 million as of December 31, 2023[325]. - The Company has entered into multi-year purchase commitments totaling $124 million, primarily related to semiconductors and cloud services[358].