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Executive Summary

To Our Investors:

We made significant progress in 2016 toward meeting our long-term strategic and financial objectives. We launched exciting and highly innovative new solutions, extended our industry leadership, improved our positioning with our customers, and moved into the final phase of the integration of our Enterprise Visibility and Mobility business.  

We drove steady improvement in our business, returning to organic sales growth in the fourth quarter. Our strong execution and improved capital management enabled us to pay down $382 million in debt for the year, a significant step toward achieving our goal to reduce debt by $650 million over the 2016 - 2017 two-year period. This outperformance was driven by higher earnings, effective working capital management, and proceeds from the divestiture of our non-core wireless LAN business.

In 2016, we announced new offerings that cemented our leadership in the Enterprise Asset Intelligence (EAI) category. These include refreshed smart devices in mobile computing, data capture, and printing, for various use cases in the field, warehouse, and store. Customer feedback has been exceptional. In fact, the launch of our TC51 mobile computing device was the strongest ever and serves as an example of how we are capitalizing on the key trends in our retail / ecommerce and healthcare verticals.

Zebra’s vision is to connect the physical and digital worlds to increase visibility into business operations and workflows. The real-time insight that our solutions provide is a key competitive differentiator. We are staying ahead of an evolving technology landscape through focused investment and close collaboration with our customers and partners, and our positioning remains unmatched.

Additionally, we have rolled out services that enable customers’ visibility into the health, utilization, and availability of their entire inventory of Zebra devices, as well as a tool that enables customers in the transportation and logistics sector to monitor and optimize load efficiency. All of our solutions give our customers’ operations a digital voice, which enables them to improve productivity, comply with regulations, and deliver a superior level of customer service.

Building on this strong foundation, we are focused on several areas to further solidify our leading position globally and to drive growth:

•    First, we are leveraging our scale, technological expertise, and strategic relationships with customers and partners to continue to extend our lead in the vertical markets that we serve.
•    Second, Zebra is advancing the EAI vision for our customers and taking advantage of key megatrends, including mobility, cloud computing, the Internet of Things, and the proliferation of smart devices. Zebra is capitalizing on this opportunity by leveraging our deep understanding of our enterprise customers’ workflows and our innovative portfolio of solutions.
•    Third, we are executing on the final phase of the integration of the Enterprise business in 2017, which includes a global Enterprise Resource Planning (ERP) system implementation.
•    And fourth, we are enhancing Zebra’s financial strength by continuing to boost profitability, improve cash flow, and optimize our capital structure. Our top capital allocation priority is to aggressively reduce acquisition debt to achieve an investment-grade credit profile.

Before I conclude, I would like to thank Zebra employees around the globe for their strong commitment and many contributions in helping us realize our One Zebra vision. I am also very grateful for the continued support from our partners and customers.

Zebra is well positioned to meet its objectives in 2017 and beyond. We are excited by the opportunities that lie ahead to deliver value to our shareholders 

Sincerely,

Anders Gustafsson
Anders Gustafsson