Zebra Technologies Announces Financial Results for Third Quarter of 2006

Zebra Technologies Corporation (NASDAQ: ZBRA) announced that net sales for the quarter ended September 30, 2006, were $186,386,000, up 6.1% from $175,636,000 for the same period a year ago. Net loss for the period was $4,263,000, or $0.06 per basic and diluted share, including a pretax charge of $53,392,000 related to the previously announced settlement of a dispute and a licensing agreement with Paxar Americas, Inc. This charge reduced basic and diluted 2006 third quarter earnings by $0.51 per share. For the third quarter a year ago, net income was $28,075,000, or $0.39 per diluted share. Results for 2005 were restated to reflect the adoption of SFAS 123(R), Share-Based Payments.

“Greater traction in delivering high-value solutions to targeted vertical markets and further penetration of international regions delivered a solid result for Zebra’s third quarter,” stated Edward Kaplan, Zebra’s chairman and chief executive officer. “During the quarter, we had increased shipments into government, healthcare, route accounting and retail venues. We enter the fourth quarter with a robust deal pipeline and high backlog. Sales will also benefit from the recently completed Swecoin acquisition, which extended Zebra’s product line and customer base in the high-growth area of kiosk and other unattended printing applications. We remain optimistic about Zebra’s growth prospects, as the company continues to invest in those activities that build value for its stockholders.”

Discussion and Analysis

For the third quarter of 2006 compared with the third quarter of 2005:

• High sales growth in international regions complemented an improving trend in North American sales. All major printer product lines contributed to this growth. Supplies sales increased 18.0%.
• Gross profit margin declined to 47.1% from 49.8%. During the quarter, gross profit margin was affected by shifts in product mix and higher raw material costs.
• The company paid Paxar Americas, Inc., $63,750,000 for the settlement of a dispute and a fully paid-up, perpetual, worldwide irrevocable license to certain patents owned by Paxar. Of this amount, $53,392,000 was expensed during the quarter. The remaining $10,358,000 relates to the acquisition of the license and will be amortized over a period of four to seven years.

For the first nine months of 2006, the company had net sales of $549,621,000, up 5.1% from $522,977,000 for the same period in 2005. Year-to-date net income was $49,500,000, or $0.70 per diluted share, compared with $79,339,000, or $1.10 per diluted share, a year ago.

At September 30, 2006, Zebra had $547,623,000 in cash and investments, and no long-term debt. Inventories were $82,072,000, and accounts receivable were $116,612,000.

Fourth Quarter Outlook

Zebra also announced its financial forecast for the fourth quarter of 2006. Net sales are expected within a range of $190,000,000 and $200,000,000. Earnings are expected within a range of $0.39 and $0.43 per diluted share.

Forward-looking Statement

This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company’s financial forecast for the fourth quarter of 2006 stated in the paragraph directly above. Actual results may differ from those expressed or implied in the company’s forward-looking statements. These statements represent estimates only as of the date they were made. Zebra may elect to update forward-looking statements but expressly disclaims any obligation to do so, even if the company’s estimates change.

These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include market conditions in North America and other geographic regions and market acceptance of Zebra’s printer and software products and competitors’ product offerings and the potential effects of technological changes. Other factors include U.S. and foreign regulations that pertain to electrical and electronic equipment, including European directives relating to the collection, recycling, treatment and disposal of products and the reduction or elimination of certain specified materials in such products. Zebra’s failure to comply with these regulations may subject Zebra to penalties, prevent Zebra from selling its products in a certain country, or increase the cost of supplying the products. Profits and profitability will be affected by the company’s ability to control manufacturing and operating costs. Because of a large investment portfolio, interest rate and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra is involved, and particularly litigation or claims related to infringement of third party intellectual property rights, is another factor. These and other factors could have an adverse effect on Zebra’s revenues, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words “anticipate,” “believe,” “estimate,” 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. Descriptions of the risks, uncertainties and other factors that could affect the company’s future operations and results can be found in Zebra’s filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra’s Form 10-K for the year ended December 31, 2005, and the Risk Factors in Zebra’s Form 10-Q for the quarter ended July 1, 2006.

Zebra Technologies Corporation delivers innovative and reliable on-demand printing solutions for business improvement and security applications in 100 countries around the world. More than 90 percent of Fortune 500 companies use Zebra-brand printers. A broad range of applications benefit from Zebra-brand thermal bar code, “smart” label, receipt, and card printers, resulting in enhanced security, increased productivity, improved quality, lower costs, and better customer service. The company has sold more than 5 million printers, including RFID printer/encoders and wireless mobile solutions, as well as ZebraDesigner label formatting software, ZebraLink connectivity solutions, Genuine Zebra supplies and ZebraCare services and support. Information about Zebra bar code, card and RFID products can be found at http://www.zebra.com.

Investors are invited to listen to a live Internet broadcast of Zebra’s conference call discussing the company’s financial results for the third quarter of 2006. The conference call will be held at 11:00 Eastern Time today. To listen to the call, visit the company’s Web site at www.zebra.com.

For Information, Contact:

Maida Talhami

Momentum

Tel: +971 4 390 1630

Mobile: +971 50 7347728

Email: maida@momentum.cc

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

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Note: Figures for December 31, 2005, were restated for the adoption of SFAS 123 (R), Share-Based Payments, using the modified retrospective approach.

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Amounts in thousands, except per share data)

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