What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-13 compared with 2024-02-15 · 182 added, 245 removed, 933 unchanged (31% of the section changed)

30 unchanged sentences

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.

Accounting for Income Taxes

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Cash and cash equivalents $ 901 $ 137

Accounts receivable, net of allowances for doubtful accounts of $ 1 million each as of December 31, 2023 and 2022

Accounts receivable, net of allowances for doubtful accounts of $ 1 million each as of December 31, 2024 and 2023, respectively

Inventories, net 693 804

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Operating income 742 481 529

Other (loss) income, net:

Foreign exchange loss ( 2 ) ( 3 ) ( 5 )

Other income (loss), net:

Foreign exchange gain (loss) 5 ( 2 ) ( 3 )

Interest (expense) income, net ( 98 ) ( 133 ) 23

14 unchanged sentences

Other comprehensive income (loss), net of tax:

Changes in unrealized gains and losses on anticipated sales hedging transactions 6 ( 29 ) 46

Changes in unrealized gains (losses) on sales hedging 27 6 ( 29 )

Foreign currency translation adjustment ( 17 ) 6 ( 8 )

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Balance at December 31, 2021 53,415,275 $ 1 $ 462 $ ( 1,023 ) $ 3,573 $ ( 29 ) $ 2,984

Issuances of treasury shares related to share-based compensation plans, net of forfeitures 150,097 — ( 9 ) ( 4 ) — — ( 13 )

Shares withheld to fund withholding tax obligations related to share-based compensation plans ( 87,789 ) — — ( 43 ) — — ( 43 )

Net share issuances and tax withholding payments related to share-based compensation plans 63,767 — 11 ( 25 ) — — ( 14 )

Share-based compensation — — 88 — — — 88

1 unchanged sentence

Net income — — — — 463 — 463

Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) — — — — — 46 46

Changes in unrealized gains and losses on sales hedging (net of income taxes) — — — — — ( 29 ) ( 29 )

Foreign currency translation adjustment — — — — — ( 8 ) ( 8 )

Balance at December 31, 2022 51,451,500 $ 1 $ 561 $ ( 1,799 ) $ 4,036 $ ( 66 ) $ 2,733

Issuances of treasury shares related to share-based compensation plans, net of forfeitures 126,309 — 11 ( 1 ) — — 10

Shares withheld to fund withholding tax obligations related to share-based compensation plans ( 62,542 ) — — ( 24 ) — — ( 24 )

Net share issuances and tax withholding payments related to share-based compensation plans 121,681 — ( 1 ) ( 7 ) — — ( 8 )

Share-based compensation — — 55 — — — 55

1 unchanged sentence

Net income — — — — 296 — 296

Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) — — — — — ( 29 ) ( 29 )

Changes in unrealized gains and losses on sales hedging (net of income taxes) — — — — — 6 6

Foreign currency translation adjustment — — — — — 6 6

Balance at December 31, 2023 51,378,862 $ 1 $ 615 $ ( 1,858 ) $ 4,332 $ ( 54 ) $ 3,036

Issuances of treasury shares related to share-based compensation plans, net of forfeitures 155,478 — ( 1 ) 3 — — 2

Shares withheld to fund withholding tax obligations related to share-based compensation plans ( 33,797 ) — — ( 10 ) — — ( 10 )

Net share issuances and tax withholding payments related to share-based compensation plans 257,757 — ( 35 ) 5 — — ( 30 )

Share-based compensation — — 89 — — — 89

1 unchanged sentence

Net income — — — — 528 — 528

Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes) — — — — — 6 6

Changes in unrealized gains and losses on sales hedging (net of income taxes) — — — — — 27 27

Foreign currency translation adjustment — — — — — ( 17 ) ( 17 )

Balance at December 31, 2024 51,506,059 $ 1 $ 669 $ ( 1,900 ) $ 4,860 $ ( 44 ) $ 3,586

Certain prior period amounts have been reclassified to conform with the current period presentation.

See accompanying Notes to Consolidated Financial Statements.

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Net income $ 528 $ 296 $ 463

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 172 176 204

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Deferred income taxes ( 94 ) ( 36 ) ( 210 )

Unrealized loss (gain) on forward interest rate swaps 17 ( 89 ) ( 30 )

Unrealized gain on forward interest rate swaps ( 31 ) ( 9 ) ( 83 )

Other, net 14 3 5

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Settlement liability ( 45 ) ( 180 ) 225

Cash receipts (payments) on forward interest rate swaps 86 26 ( 6 )

Other operating activities ( 1 ) 9 ( 13 )

Net cash (used in) provided by operating activities ( 4 ) 488 1,069

Net cash provided by (used in) operating activities 1,013 ( 4 ) 488

Cash flows from investing activities:

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Purchases of property, plant and equipment ( 59 ) ( 87 ) ( 75 )

Purchases of short-term investments ( 4 ) — ( 1 )

Proceeds from sale (purchases) of short-term investments 5 ( 4 ) —

Purchases of long-term investments ( 3 ) ( 1 ) ( 12 )

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Cash flows from financing activities:

Proceeds from issuance of long-term debt 440 1,284 46

Payments of long term-debt ( 245 ) ( 247 ) ( 303 )

Proceeds from issuance of debt 651 440 1,284

Payments of debt ( 694 ) ( 245 ) ( 247 )

Payment of debt issuance costs, extinguishment costs and discounts ( 9 ) — ( 8 )

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Change in unremitted cash collections from servicing factored receivables ( 61 ) ( 18 ) ( 11 )

Net cash provided by (used in) financing activities 117 253 ( 371 )

Net cash (used in) provided by financing activities ( 190 ) 117 253

Effect of exchange rate changes on cash and cash equivalents, including restricted cash ( 3 ) — —

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Income taxes paid $ 124 $ 252 $ 168

Interest paid $ 111 $ 58 $ 32

Interest paid inclusive of forward interest rate swaps $ 55 $ 111 $ 58

Certain prior period amounts included in Net cash provided by (used in) operating activities have been reclassified to conform with the current period presentation.

See accompanying Notes to Consolidated Financial Statements.

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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 software subscriptions, that capture and move data.

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) offerings in the automatic identification and data capture offerings industry.

We design, manufacture, and sell a broad range of offerings, including cloud-based software subscriptions, that capture and move data.

We also provide a full range of services, including maintenance, technical support, repair, managed and professional services.

End-users of our products, solutions and services include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries.

We provide our products, solutions and services globally through a direct sales force and an extensive network of channel partners.

In the second quarter of 2023, our advanced location technology solutions business, which is primarily comprised of radio frequency identification devices (“RFID”) and real-time location solution offerings (“RTLS”), moved from our Enterprise Visibility & Mobility (“EVM”) segment into our Asset Intelligence & Tracking (“AIT”) segment contemporaneous with a change in our organizational structure and management of the business.

We have reported our segment results reflecting this change, including historical periods, on a comparable basis.

This change does not have an impact on the Consolidated Financial Statements.

See Note 20, Segment Information & Geographic Data for additional information related to each segment’s results.

End-users of our offerings include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries.

We provide our offerings globally through a direct sales force and an extensive network of channel partners.

Note 2 Significant Accounting Policies

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Interim fiscal quarters end on a Saturday and generally include 13 weeks of operating activity.

During the 2023 fiscal year, the Company’s quarter end dates were April 1, July 1, September 30, and December 31.

During the 2024 fiscal year, the Company’s quarter end dates were March 30, June 29, September 28, and December 31.

Use of Estimates

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Cash consists primarily of deposits with banks.

Cash equivalents include highly liquid short-term deposits with banks and other investments with original maturities of less than or equal to three months.

Cash equivalents include deposits with banks and other highly liquid investments with original maturities of less than or equal to three months.

Cash equivalents are readily convertible to known amounts of cash and are so near their maturity that they present insignificant risk of a change in value because of changes in interest rates.

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Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values as well as to record liabilities on non-cancellable purchase commitments.

These provisions are based on forecasted demand, experience with specific customers or suppliers, the age and nature of the inventory or committed purchase, and the ability to redistribute inventory to other programs or rework it into other consumable inventory as well as renegotiate contractual terms with a supplier.

Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation.

Depreciation is computed primarily using the straight-line method over the estimated useful lives of the various classes of property, plant and equipment, which are thirty years for buildings and range from three to ten years for all other asset categories.

Depreciation is computed primarily using the straight-line method over the estimated useful lives of the various classes of property, plant and equipment, which are thirty

years for buildings and range from three to ten years for all other asset categories.

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or ten years .

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Revenue Recognition

Revenues are primarily comprised of sales of hardware, supplies, services, solutions and software offerings.

Revenues are primarily comprised of sales of hardware, supplies, services, and software offerings.

We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration that we expect to receive, which includes estimates of variable consideration, in exchange for those goods or services.

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Substantially all revenues for tangible products, supplies, and perpetual or term software licenses are recognized at a point in time, which is generally upon shipment, when control and the risks and rewards of ownership have transferred to the customer, and the Company has a contractual right to payment.

Revenues for our service offerings are recognized over time.

Revenues for our service offerings and Company-hosted software and solution offerings are typically recognized over time.

Our service offerings include repair and maintenance service contracts, as well as professional services such as installation, integration and provisioning that typically occur in the early stages of a project.

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Professional service arrangements range in duration from a day to several weeks or months.

Revenues for solutions, including Company-hosted software license and maintenance agreements, are typically recognized over time.

The Company elects to exclude sales and other governmental taxes that are collected by the Company from a customer, from the transaction price.

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In general, the Company provides warranty coverage of one year on mobile computers and batteries.

Printers are warrantied from one to two years , depending on the model.

Printers are warrantied from one to three years , depending on the product.

Advanced data capture products are warrantied from one to five years , depending on the product.

Thermal printheads are warrantied for six months and battery-based products, such as location tags, are covered by a 90-day warranty.

Thermal printheads are warrantied from six months to one year , depending on the product, and battery-based products, such as location tags, are covered by a 90-day warranty.

A provision for warranty expense is adjusted quarterly based on historical and expected warranty experience.

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Fair value is 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.

Our financial assets and liabilities that are accounted for at fair value generally include our employee deferred compensation plan investments, foreign currency forwards, and interest rate swaps.

Our financial assets and liabilities that are accounted for at fair value have generally included our employee deferred compensation plan investments, foreign currency forwards, and interest rate swaps.

In accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”) , we recognize derivative instruments and hedging activities as either assets or liabilities on the Consolidated Balance Sheets and measure them at fair value.

Accounting for the gains and losses on our derivatives resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.

Accounting for the

gains and losses on our derivatives resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.

The Company utilizes foreign currency forwards to hedge certain foreign currency exposures.

We use broker quotations or market transactions, in either the listed or over-the-counter markets, to value our foreign currency exchange contracts.

The Company also has interest rate swaps to hedge a portion of the variability in future cash flows on debt.

The Company also periodically utilizes interest rate swaps to hedge a portion of the variability in future cash flows on debt.

We use relevant observable market inputs at quoted intervals, such as forward yield curves and the Company’s own credit risk, to value our interest rate swaps.

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Recently Adopted Accounting Pronouncements

The Company did not adopt any material new accounting standards during the year ended December 31, 2023.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

In the current year, the Company adopted Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

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Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”).

This ASU will be effective for the Company’s fiscal December 31, 2024 year-end and interim periods beginning in fiscal 2025, with early adoption permitted.

We are assessing the impact of this guidance on our disclosures;

it will not have an impact on our results of operations, cash flows, or financial condition.

This ASU did not have an impact on our results of operations, cash flows, or financial condition.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

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it will not have an impact on our results of operations, cash flows, or financial condition.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain categories of expenses that are included within expense captions presented on the Consolidated Statements of Operations on an annual and interim basis.

This ASU will be effective for the Company’s fiscal

December 31, 2027 year-end and interim periods thereafter, with early adoption permitted.

We are assessing the impact of this guidance on our disclosures;

it will not have an impact on our results of operations, cash flows, or financial condition.

Note 3 Revenues

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Revenues for tangible products are generally recognized upon shipment, whereas revenues for services and solution offerings are generally recognized over time 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 over time using a time-based method, depending upon how control is transferred to the customer.

Revenues for software are recognized either upon delivery or over time using a time-based method, depending on how control is transferred to the customer.

In cases where a bundle of products, services, solutions and/or software are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

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EVM 3,187 757 3,944

Corporate (1)

— ( 6 ) ( 6 )

Total $ 4,915 $ 866 $ 5,781

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

In addition, refer to Note 20, Segment Information & Geographic Data for Net sales to customers by geographic region.

Performance Obligations

The Company’s remaining performance obligations relate to repair and support services, as well as software solutions.

The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $ 1,127 million and $ 1,105 million, inclusive of deferred revenue, as of December 31, 2023 and 2022, respectively.

The Company’s remaining performance obligations relate to services and software solutions.

The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $ 1.19 billion and $ 1.13 billion, inclusive of deferred revenue, as of December 31, 2024 and 2023, respectively.

On average, remaining performance obligations as of December 31, 2024 and 2023 are expected to be recognized over a period of approximately two years .

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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 twelve months, and Other long-term assets for revenues expected to be billed thereafter.

The total contract asset balances were $ 16 million as of December 31, 2023 and 2022.

The total contract asset balances were $ 11 million and $ 16 million as of December 31, 2024 and 2023, respectively.

These contract assets result from timing differences between billing and satisfying performance obligations, 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 no impairment losses have been recognized during the years ended December 31, 2023, 2022 and 2021.

Contract assets are evaluated for impairment and no impairment losses have been recognized during the years ended December 31, 2024, 2023 and 2022, respectively.

Deferred revenue on the Consolidated Balance Sheets consists of payments and billings in advance of our performance.

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(1) Raw material inventories primarily consist of product components as well as supplies used in repair operations.

(2) Categories of inventories for the period ended December 31, 2022 include a change to correct an immaterial misclassification without impact to Inventories, net as presented on the Consolidated Balance Sheets.

Note 5 Business Acquisitions

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Total identifiable intangible assets $ 297

On October 7, 2021, the Company acquired Antuit Holdings Pte.

(“Antuit”), a provider of demand-sensing and pricing optimization software solutions for retail and consumer products companies.

Through this acquisition, the Company intends to enhance its solution offerings to customers in these industries by combining Antuit’s platform with its existing software solutions and EVM products.

The acquisition was accounted for under the acquisition method of accounting for business combinations.

The Company’s purchase consideration was $ 145 million in cash paid, net of Antuit’s cash on-hand.

The Company utilized estimated fair values as of the acquisition date to allocate the total purchase consideration to the identifiable assets acquired and liabilities assumed.

The fair value of the net assets acquired was based on several estimates and assumptions, as well as customary valuation techniques, primarily the excess earnings method for technology and patent intangible assets.

The purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):

Identifiable intangible assets $ 47

Accounts receivable 9

Other assets acquired 4

Deferred tax liabilities ( 5 )

Other liabilities assumed ( 11 )

Net assets acquired $ 44

Goodwill on acquisition 101

Total purchase price $ 145

The $ 101 million of goodwill, which is non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned expansion of Antuit’s portfolio and integration with the Company’s existing solution offerings as well as expansion into current and new markets, industries and product offerings.

The purchase price allocation to identifiable intangible assets acquired was as follows:

Fair Value (in millions) Useful Life (in years)

Technology and patents $ 39 8

Customer and other relationships 7 2

Trade names 1 2

Total identifiable intangible assets $ 47

On August 9, 2021, the Company acquired Fetch Robotics, Inc.

(“Fetch”), a provider of autonomous mobile robot solutions for customers who operate in the manufacturing, distribution, and fulfillment industries, enabling customers to optimize workflows through robotic automation.

Through this acquisition, the Company intends to expand its automation solution offerings within these industries.

The acquisition was accounted for under the acquisition method of accounting for business combinations.

The Company’s total purchase consideration was $ 301 million, which consisted of $ 290 million in cash paid, net of Fetch’s cash on-hand, and the fair value of the Company’s existing ownership interest in Fetch of $ 11 million, as remeasured upon acquisition.

This remeasurement resulted in a $ 1 million gain reflected in Other (expense) income, net on the Consolidated Statements of Operations.

The Company utilized estimated fair values as of the acquisition date to allocate the total purchase consideration to the identifiable assets acquired and liabilities assumed.

The purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):

Identifiable intangible assets $ 114

Right-of-use lease asset 11

Inventories 5

Deferred tax assets 6

Other assets acquired 4

Lease liability ( 11 )

Other liabilities assumed ( 4 )

Net assets acquired $ 125

Goodwill on acquisition 176

Total purchase price $ 301

The $ 176 million of goodwill, which is non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned geographic expansion and integration of Fetch into the Company’s manufacturing and warehouse automation offerings.

The purchase price allocation to identifiable intangible assets acquired was as follows:

Fair Value (in millions) Useful Life (in years)

Technology and patents $ 100 7

Customer and other relationships 5 2

Trade names 9 5

Total identifiable intangible assets $ 114

In connection with the acquisition of Fetch, the Company granted share-based compensation awards, principally as a replacement for unvested Fetch stock options, in the form of stock-settled restricted stock units.

The total fair value of approximately $ 23 million is attributable to post-acquisition service and will generally be expensed over a three-year service period.

Adaptive Vision

On May 17, 2021, the Company acquired Adaptive Vision Sp.

(“Adaptive Vision”), a provider of graphical machine vision software with applications in the manufacturing industry, as well as a provider of libraries and other offerings for machine vision developers.

The acquisition was accounted for under the acquisition method of accounting for business combinations.

The Company’s cash purchase consideration of $ 18 million, net of cash on-hand, was primarily allocated to technology-related intangible assets of $ 13 million and associated deferred tax liabilities, and goodwill of $ 7 million.

The goodwill, which is non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned expansion of the Adaptive Vision technologies into new product offerings and markets.

The operating results of each acquired company have been included in the Company’s Consolidated Balance Sheets and Statements of Operations beginning on their respective acquisition dates.

The Company has not included unaudited pro forma results for the year preceding each acquisition, as doing so would not yield materially different results.

The operating results have been included in the Company’s Consolidated Balance Sheets and Statements of Operations beginning on the acquisition date.

The Company has not included unaudited pro forma results for the year preceding the acquisition, as doing so would not yield materially different results.

Acquisition and integration costs

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These costs are included within Acquisition and integration costs on the Consolidated Statements of Operations and are primarily related to third-party transaction and advisory fees, and integration activities associated with our business acquisitions .

On December 27, 2024, the Company entered into a definitive agreement to acquire Photoneo, a leading developer and manufacturer of 3D machine vision solutions.

The purchase price of approximately € 60 million is expected to be funded with cash on hand.

The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2025.

The acquired business will become part of the EVM segment.

Note 6 Goodwill and Other Intangibles

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Goodwill as of December 31, 2023 $ 229 $ 3,666 $ 3,895

Matrox acquisition — 640 640

Fetch purchase price allocation adjustments — 2 2

Antuit purchase price allocation adjustments — ( 4 ) ( 4 )

Foreign exchange impact — ( 4 ) ( 4 )

Goodwill as of December 31, 2024 $ 229 $ 3,662 $ 3,891

Advanced location technology business move to AIT, effective April 2, 2023 60 ( 60 ) —

Matrox purchase price allocation adjustments — ( 1 ) ( 1 )

Foreign exchange impact — ( 3 ) ( 3 )

Goodwill as of December 31, 2023 $ 229 $ 3,666 $ 3,895

See Note 5, Business Acquisitions for further details related to the Company’s acquisitions and purchase price allocation adjustments.

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Depreciation expense was $ 68 million, $ 72 million and $ 68 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company retired a significant level of substantially depreciated assets in the current year.

Note 8 Investments

The carrying value of the Company’s long-term investments was $ 113 million as of both December 31, 2023 and 2022, which are included in Other long-term assets on the Consolidated Balances Sheets.

The carrying value of the Company’s long-term investments was $ 110 million and $ 113 million as of December 31, 2024 and 2023, respectively, which are included in Other long-term assets on the Consolidated Balances Sheets.

The Company paid $ 3 million, $ 1 million and $ 12 million for the purchases of long-term investments during the years ended December 31, 2024, 2023 and 2022, respectively.

Net gains and losses related to the Company’s long-term investments are included within Other expense, net on the Consolidated Statements of Operations and were not significant for the years ended December 31, 2023, 2022 and 2021.

Net gains and losses related to the Company’s long-term investments are included within Other expense, net on the Consolidated Statements of Operations.

The Company recognized net losses of $ 6 million during the year ended December 31, 2024.

Net gains and losses were no t significant for the years ended December 31, 2023 and 2022.

Note 9 Exit and Restructuring Costs

In the current year, the Company expanded the scope of the 2022 Productivity Plan and also initiated a voluntary retirement plan (“VRP”) applicable to retirement-eligible U.S.

Employees who participated in the VRP agreed to retire in 2023 in exchange for cash severance and other benefits.

During the first quarter of 2024, the Company committed to additional actions under the 2022 Productivity Plan which will bring the total expected cost of the programs to approximately $ 130 million.

Total charges associated with these programs, which are classified within Exit and restructuring on the Consolidated Statements of Operations, were $ 110 million to date, including $ 98 million and $ 12 million for the years ended December 31, 2023 and 2022, respectively.

The actions under the VRP have been completed in the current year and the remaining actions under the 2022 Productivity Plan are expected to be substantially completed in the first half of 2024.

The Company’s payment obligations as of December 31, 2023 are reflected within Accrued liabilities on the Consolidated Balance Sheets.

These obligations are expected to be settled by the first quarter of 2024.

The Company’s liability associated with Exit and restructuring was:

Total charges associated with the 2022 Productivity Plan, which was completed in the third quarter of 2024, and the U.S.

voluntary retirement plan, which was completed in 2023, were $ 127 million, including $ 17 million, $ 98 million and $ 12 million for the years ended December 31, 2024, 2023 and 2022 respectively.

The costs of these plans are classified within Exit and restructuring on the Consolidated Statements of Operations.

The Company’s remaining payment obligations of $ 4 million, are reflected within Accrued liabilities on the Consolidated Balance Sheets.

The rollforward of the liability associated with Exit and restructuring activities is:

Balance as of December 31, 2023 $ 22

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Balance as of December 31, 2024 $ 4

The Company incurred Exit and restructuring costs, under previously announced programs of $ 2 million and $ 7 million for the years ended December 31, 2022 and 2021, respectively.

The Company incurred Exit and restructuring costs, under previously announced programs of $ 2 million for the year ended December 31, 2022.

Note 10 Fair Value Measurements

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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.

ASC Topic 820 established a fair

value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

ASC Topic 820 established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

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Level 1 Level 2 Level 3 Total

Forward interest rate swap contracts (2)

Foreign exchange contracts (1)

$ 1 $ 30 $ — $ 31

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Total Assets at fair value $ 42 $ 30 $ — $ 72

Foreign exchange contracts (1)

$ 1 $ 6 $ — $ 7

Forward interest rate swap contracts (2)

Liabilities related to the deferred compensation plan $ 41 $ — $ — $ 41

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$ 1 $ 6 $ — $ 7

Forward interest rate swap contracts (2)

Liabilities related to the deferred compensation plan 41 — — 41

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

• Fair value of hedges against net assets denominated in foreign currencies 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).

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Derivative instruments designated as hedges:

Foreign exchange contracts Prepaid expenses and other current assets $ 30 $ —

Foreign exchange contracts Accrued liabilities — ( 6 )

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Derivative instruments not designated as hedges:

Foreign exchange contracts Prepaid expenses and other current assets $ 1 $ —

Forward interest rate swaps Prepaid expenses and other current assets — 34

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Total net derivative asset $ 31 $ 48

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

(Losses) Gains Recognized in Income

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

Gains (Losses) Recognized in Income

Statements of Operations Classification Year Ended December 31,

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Derivative instruments not designated as hedges:

Foreign exchange contracts Foreign exchange loss $ ( 4 ) $ 2 $ 7

Foreign exchange contracts Foreign exchange gain (loss) $ 4 $ ( 4 ) $ 2

Forward interest rate swaps Interest (expense) income, net 31 9 83

Total net gain recognized in income $ 35 $ 5 $ 85

Activities related to derivative instruments are reflected within Net cash (used in) provided by operating activities on the Consolidated Statements of Cash Flows.

Activities related to derivative instruments are reflected within Net cash provided by (used in) operating activities on the Consolidated Statements of Cash Flows.

Credit and Market Risk Management

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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 would have been increased by $ 1 million and $ 4 million as of December 31, 2023 and December 31, 2022, respectively.

If the derivative financial instruments had been presented gross on the Consolidated Balance Sheets, the asset and liability positions would have not been significant as of December 31, 2024 and December 31, 2023, respectively.

Foreign Currency Exchange Risk Management

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The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations.

Realized amounts reclassified to Net sales were $ 15 million of losses for the year ended December 31, 2023, $ 87 million of gains for the year ended December 31, 2022 and $ 2 million of losses for the year ended December 31, 2021.

Realized amounts reclassified to Net sales were $ 11 million of gains for the year ended December 31, 2024, $ 15 million of losses for the year ended December 31, 2023 and $ 87 million of gains for the year ended December 31, 2022.

As of December 31, 2024 and 2023, the notional amounts of the Company’s foreign exchange cash flow hedges were € 592 million and € 485 million, respectively.

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Dollar zł 53 zł 116

Net fair value of liabilities of outstanding contracts $ 1 $ 5

Net fair value of assets (liabilities) of outstanding contracts $ 1 $ ( 1 )

Interest Rate Risk Management

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 12, Long-Term Debt for further details related to these borrowings.

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

The Company has interest rate swap agreements with a total notional amount of $ 800 million to lock into a fixed SOFR interest rate base, which are subject to monthly net cash settlements effective through October 2027.

In the second quarter, the Company entered into new interest rate swap agreements that contain a total notional amount of $ 400 million to lock into a variable interest rate base designed to offset a portion of the Company’s existing swap agreements.

These agreements are subject to monthly cash settlements effective through October 2027.

At the same time, the Company entered into additional new interest rate swap agreements that contain a total notional amount of $ 400 million to lock into a fixed SOFR interest rate base, which are subject to monthly cash settlements effective through June 2030.

As a result of these transactions, the Company maintained fixed interest rates on a total notional amount of $ 800 million through October 2027 and a total notional amount of $ 400 million through June 2030.

There was no cash settlement, or significant impact on the Consolidated Statement of Operations upon entering into these agreements.

The Company is exposed to market risk associated with interest rate payments on its borrowings under a term loan (“Term Loan A”), Revolving Credit Facility, and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins.

The Company manages its exposure to changes in interest rates by issuing both fixed and variable rate borrowings as well as periodically utilizing interest rate swaps to economically hedge interest rate exp osure based on current and projected market conditions.

In the second quarter of 2024, the Company terminated all of its interest rate swap agreements, none of which were designated as hedges, resulting in a $ 77 million cash receipt that is classified within Cash flows from operating activities on the Consolidated Statements of Cash Flows.

Total cash receipts for the fiscal year ended 2024 were $ 86 million.

Note 12 Long-Term Debt

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Term Loan A $ 1,575 $ 1,684

Senior Notes 500 —

Revolving Credit Facility — 413

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As of December 31, 2024, the future maturities of debt are as follows (in millions):

Thereafter 500

Total future maturities of debt $ 2,183

All borrowings as of December 31, 2024 were denominated in U.S.

The estimated fair value of the Company’s debt approximated $ 2.2 billion and $ 2.0 billion as of December 31, 2023 and 2022, respectively.

The estimated fair value of the Company’s debt approximated $ 2.2 billion as of both December 31, 2024 and 2023, 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 do not represent the settlement value of these liabilities to the Company.

The fair value of 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.

In May 2022, the Company refinanced its long-term credit facilities by entering into its third amendment to the Amended and Restated Credit Agreement, which increased the Company’s borrowing under Term Loan A from $ 875 million to $ 1.75 billion and the Company’s borrowing capacity under the Revolving Credit Facility from $ 1 billion to $ 1.5 billion, extended the maturities of the facilities to May 25, 2027, and replaced LIBOR with SOFR as the benchmark reference rate.

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in March 2024 and the majority due upon maturity in 2027.

The Company may 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.

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in the second quarter of 2026 and the majority due upon maturity in 2027.

The Company has and may 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.

As of December 31, 2024, the Term Loan A interest rate was 5.71 %.

Interest payments are made monthly and are subject to variable rates plus an applicable margin.

In the second quarter of 2024, the Company completed a private offering of $ 500 million senior unsecured notes (the “Senior Notes”) with a 6.5 % fixed interest rate.

The net proceeds of the issuance, after deducting debt issuance costs which were deferred, were approximately $ 492 million.

The Senior Notes mature on June 1, 2032, and interest is payable semi-annually in arrears in June and December of each year, commencing on December 1, 2024.

The Company may 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.

The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of Zebra’s existing and future subsidiaries.

The Senior Notes contain covenants that, among other things, limit the ability of Zebra to:

(i) grant or incur liens;

(ii) have its subsidiaries guarantee debt without becoming guarantors;

and (iii) merge or consolidate with another company or sell all or substantially all of its assets.

Revolving Credit Facility

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The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facilities

The Company has two Receivables Financing Facilities with financial institutions that have a combined total borrowing limit of up to $ 280 million.

Receivables Financing Facility

As of December 31, 2024, the Company has a Receivables Financing Facility with a borrowing limit of up to $ 180 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 facilities as secured borrowings.

The Company’s first facility allows for borrowings of up to $ 180 million and matures on March 19, 2024.

The Company’s second facility allows for borrowings of up to $ 100 million and matures on May 13, 2024.

As of December 31, 2023, the Company’s Consolidated Balance Sheets included $ 483 million of gross receivables that were pledged under the facilities.

As of December 31, 2023, $ 129 million had been borrowed and was classified as current.

Borrowings under the facilities bear interest at a variable rate plus an applicable margin.

As of December 31, 2023, the facilities had an average interest rate of 6.81 %.

The Company has accounted for transactions under this facility as secured borrowings.

During the first quarter of 2024, the Company amended this facility to extend the maturity to March 19, 2027 but otherwise did not substantially change the terms of the facility.

As of December 31, 2024, the Company’s Consolidated Balance Sheets included $ 638 million of gross receivables that were pledged under the facility.

As of December 31, 2024, $ 108 million had been borrowed, of which $ 79 million was classified as current.

Borrowings under the facility bear interest at a variable rate plus an applicable margin.

As of December 31, 2024, the facility had an average interest rate of 5.38 %.

Interest is paid monthly on these borrowings.

Each of the Company’s borrowings 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.

The Company’s borrowings 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 periodically uses interest rate swaps to manage the interest rate risk associated with its debt.

See Note 11, Derivative Instruments for further information.

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Expenses related to short-term leases were not significant.

Cash payments for leases are included within Net cash (used in) provided by operating activities on the Consolidated Statements of Cash Flows.

Cash payments for leases are included within Net cash provided by (used in) operating activities on the Consolidated Statements of Cash Flows.

ROU assets obtained in exchange for lease obligations include new lease arrangements entered into by the Company as well as contract modifications that extend lease terms and/or provide us additional rights, changes in assessments that render it reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period, as well as lease arrangements obtained through acquisitions.

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The weighted average remaining term of the Company’s leases was approximately 6 years each as of December 31, 2024, 2023 and 2022.

The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 6 % as of December 31, 2023, and 5 % as of December 31, 2022 and 2021.

The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 6 % as of both December 31, 2024 and December 31, 2023, respectively, and 5 % as of December 31, 2022.

Future minimum lease payments under non-cancellable leases as of December 31, 2024 were as follows (in millions):

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The components of Accrued liabilities are as follows (in millions):

Unremitted cash collections due to banks on factored accounts receivable $ 112 $ 130

Incentive compensation $ 174 $ 47

Payroll and benefits 76 83

Settlement 45 180

Current portion of lease liabilities 42 37

Customer rebates 56 40

Incentive compensation 47 107

Unremitted cash collections due to banks on factored accounts receivable 51 112

Current portion of lease liabilities 36 42

Warranty 26 27

Exit and restructuring 22 9

Freight and duty 12 10

Foreign exchange contracts 7 19

Exit and restructuring 4 22

Settlement — 45

Accrued liabilities $ 503 $ 504

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Commitments under these multi-year contracts, which exclude routine purchase orders for goods and services, are as follows (in millions):

We record a liability for non-cancellable purchase commitments for quantities in excess of our forecasted demand consistent with the assessment of net realizable value of our inventory.

As of December 31, 2023 , the liability for these purchase commitments wa s $ 11 million and is included within Current liabilities on the Consolidated Balance Sheets.

In addition, the Company recorded a $ 10 million charge in the current year, associated with the partial cancellation of a purchase commitment, which is also included within Current liabilities on the Consolidated Balance Sheets as of December 31, 2023.

There were no significant liabilities related to purchase commitments as of December 31, 2022.

We record a liability for non-cancellable purchase commitments for quantities in excess of our forecasted demand consistent with the assessment of net realizable value of our inventory, which is included within Current liabilities on the Consolidated Balance Sheets.

There was no liability for these purchase commitments as of December 31, 2024 and an $ 11 million liability as of December 31, 2023.

Contingencies

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The payment terms under the Settlement consisted of 8 quarterly payments of $ 45 million that began in the second quarter of 2022.

The final remaining quarterly payment will be paid in the first quarter of 2024 and is included within Accrued liabilities on the Consolidated Balance Sheets.

The final quarterly payment was paid in the first quarter of 2024.

Note 15 Share-Based Compensation

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As of December 31, 2024, the Company had 1,841,117 shares of Class A Common Stock remaining available to be issued under the 2018 Plan.

The compensation expense from the Company’s share-based compensation plans and associated income tax benefit, excluding the effects of excess tax benefits or shortfalls, were included in the Consolidated Statements of Operations as follows (in millions):

The compensation expense from the Company’s share-based compensation plans and associated income tax benefit, excluding the effects of excess tax benefits or shortfalls, are included in the Consolidated Statements of Operations as follows (in millions):

Year Ended December 31,

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The Company’s awards are typically time-vested with stock-settled RSUs and RSAs vesting ratably in three annual installments and stock-settled PSUs and PSAs vesting at the end of the three-year period.

No RSAs or PSAs were issued to employees in the current year.

Vesting for each participant is subject to restrictions, such as continuous employment, except in certain cases as set forth in each stock agreement.

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The expected attainment of the performance goals for the stock-settled PSUs and PSAs is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary.

The Company also issues RSAs to non-employee directors.

The Company issues RSAs to non-employee directors.

The number of shares granted to each non-employee director is determined by dividing the value of the annual grant by the price of a share of the Company’s Class A Common Stock.

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Year Ended December 31, 2024

RSUs PSUs RSAs PSAs

Units Weighted-Average Grant Date Fair Value Units Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value

RSUs PSUs RSAs

Units Weighted-Average Grant Date Fair Value Units Weighted-Average Grant Date Fair Value Shares Weighted-Average Grant Date Fair Value

Outstanding at beginning of year 437,379 $ 299.19 195,932 $ 334.59 433 $ 477.74

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Released ( 210,972 ) 322.67 ( 35,597 ) 482.42 ( 6,697 ) 330.15

Forfeited (1)

( 21,730 ) 293.83 ( 6,418 ) 304.52 — —

Outstanding at end of year 482,067 $ 295.39 241,946 $ 304.44 — $ —

(1) The increase in forfeitures for RSUs and PSUs as compared to previous years was primarily due to the Company’s 2022 Productivity Plan and VRP.

Year Ended December 31, 2023

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SARs were previously granted primarily as part of the Company’s annual share-based compensation incentive program.

Beginning in 2021, the Company no longer included SARs in its annual share-based compensation award issuances and did not issue any SARs during the years ended December 31, 2023, 2022 or 2021.

The total fair value of SARs granted during the year ended December 31, 2020 was $ 6 million, which was estimated on the respective dates of grant using a binomial model.

Beginning in 2021, the Company no longer included SARs in its annual share-based compensation award issuances.

A summary of the Company’s SARs is as follows:

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Cash-settled awards

The Company also issues cash-settled share-based compensation awards, including cash-settled stock appreciation rights, cash-settled restricted stock units and cash-settled performance stock units that are classified as liability awards.

The Company also issues cash-settled share-based compensation awards, including cash-settled restricted stock units and cash-settled performance stock units that are classified as liability awards.

These awards are expensed over the vesting period of the related award, which is typically three years .

Compensation cost is calculated as the fair value on grant date multiplied by the number of share-equivalents granted.

The expected attainment of the performance goals for the cash-settled performance stock units is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary.

Compensation cost is calculated as the fair market value of the Company’s Class A Common Stock on the grant date multiplied by the number of share-equivalents granted, net of forfeitures.

The fair value for all cash-settled awards and the expected attainment of the performance goals for the cash-settled performance stock units is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary.

Cash settlement is based on the fair value of share equivalents at the time of vesting, which was $ 13 million, $ 9 million and $ 5 million in 2024, 2023 and 2022, respectively.

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For the year ended December 31, 2024, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefit related to foreign earnings subject to U.S.

taxation, and the generation of tax credits.

For the year ended December 31, 2023, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefit related to foreign earnings subject to U.S.

taxation, remeasurements of deferred taxes, and the generation of tax credits.

For the year ended December 31, 2022, the Company’s effective tax rate was lower than the federal statutory rate of 21% due to lower tax rates in foreign jurisdictions, the generation of tax credits and the favorable impacts of foreign earnings subject to U.S.

For the year ended December 31, 2021, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to lower tax rates in foreign jurisdictions, the generation of tax credits and the favorable impacts of share-based compensation benefits.

In December of 2021, the Organization for Economic Co-operation and Development (“OECD”) released Pillar Two Model Rules defining the global minimum tax rules, which contemplate a global minimum tax rate of 15%.

Several member countries have enacted Pillar Two provisions that are effective in 2024.

The Company believes it will qualify for safe harbor exemptions in many of these jurisdictions and any remaining impact to future effective tax rates and corporate tax liability will be minimal.

The Organization for Economic Co-Operation and Development (OECD) has implemented a global minimum tax framework of 15% for companies with annual revenues greater than €750 million, referred to as Pillar 2.

Aspects of Pillar 2 are effective beginning January 1, 2024 and 2025, in various jurisdictions in which the Company operates.

There is uncertainty about whether the U.S.

will enact legislation to adopt Pillar 2.

As a result of the Company’s operational footprint, Management has assessed the jurisdictions where legislation is enacted and applicable Transitional Safe Harbor provisions, and has determined an immaterial impact on the Company’s financial results.

The Company earns a significant amount of its operating income outside of the U.S.

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and Singapore.

The Company had an incentivized tax rate from the Singapore Economic Development Board, which reduced the income tax rate in that jurisdiction effective for calendar years 2019 to 2023.

The Company has not renewed the incentivized tax rate for future years, which did not have a significant impact on our current year effective tax rate nor is it expected to have a significant impact on future year effective tax rates.

In Singapore, the Company previously benefited from an incentivized corporate income tax rate from the Singapore

Economic Development Board of 10.5% and a full exemption from withholding taxes.

Without these benefits, the corporate tax rate in Singapore is 17% and the withholding tax rate is 10%.

The Company decided to forgo a renewal of this benefit beyond 2023;

therefore the 2024 tax rate is computed using the standard corporate rate of 17%.

Under current U.S.

Foreign Tax Credit rules, any withholding taxes paid are creditable for U.S.

tax purposes, negating any impact of the increased withholding rate.

Tax effects of temporary differences that resulted in deferred tax assets and liabilities are as follows (in millions):

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The effect of this new provision is an increase of approximately $ 74 million and $ 100 million to deferred tax assets for the years ended December 31, 2024 and 2023, respectively, with corresponding increases to the current tax liabilities.

The Company’s valuation allowance primarily relates to Luxembourg reorganization activities in 2019, which had resulted in the realization of deferred tax liabilities and a corresponding increase in valuation allowances related to depreciation and amortization.

The Company’s valuation allowance also consists of certain net operating loss (“NOL”) and credit carryforwards for which the Company believes it is more likely than not that a tax benefit will not be realized.

The Company’s valuation allowance consists of certain net operating loss (“NOL”) and credit carryforwards for which the Company believes it is more likely than not that a tax benefit will not be realized.

With respect to all other deferred tax assets, the Company believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize a tax benefit.

There were no significant adjustments to the Company’s valuation allowance during the year ended December 31, 2023.

The Company’s valuation allowance decreased by $ 18 million from 2023, primarily due to the impact of remeasuring deferred taxes resulting from a reduction in a statutory tax rate which becomes effective in 2025.

As of December 31, 2024, the Company had approximately $ 400 million (tax effected) of “NOLs” and $ 45 million of credit carryforwards.

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state taxing jurisdictions.

As of December 31, 2023, no significant uncertain tax positions are expected to be settled within the next twelve months.

Amounts associated with positions the Company expects to be settled within the next twelve months are classified as current assets or current liabilities on the Consolidated Balance Sheets.

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.

The Company recognized less than $ 1 million of net tax benefit associated with interest and penalties related to income tax matters during the years ended December 31, 2023 and 2022.

The Company recognized no expense or benefit for interest and penalties during the year ended December 31, 2021.

The Company did not recognize any net tax benefits associated with interest and penalties related to income tax matters during the year ended December 31, 2024.

The Company recognized a net tax benefit of less than $ 1 million associated with interest and penalties related to income tax matters during the years ended December 31, 2023 and 2022.

The expense or benefit associated with interest and penalties is reflected within Income tax expense on the Consolidated Statements of Operations.

The Company has included $ 4 million and $ 5 million of estimated interest and penalty obligations within Other long-term liabilities on the Consolidated Balance Sheets each as of December 31, 2023 and 2022 , respectively.

The Company has included $ 4 million of estimated interest and penalty obligations within Other long-term liabilities on the Consolidated Balance Sheets each as of December 31, 2024 and 2023, respectively.

Note 17 Earnings Per Share

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

• Unrealized (loss) gain on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales.

• Unrealized gain (loss) on sales hedging 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.

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The changes in each component of AOCI during the three years ended December 31, 2024, 2023 and 2022 were as follows (in millions):

Unrealized (loss) gain on sales hedging Foreign currency translation adjustments Total

Balance at December 31, 2020 $ ( 28 ) $ ( 41 ) $ ( 69 )

Other comprehensive income (loss) before reclassifications 55 ( 6 ) 49

Amounts reclassified from AOCI (1)

Tax effect ( 11 ) — ( 11 )

Other comprehensive income (loss), net of tax 46 ( 6 ) 40

Unrealized gain (loss) on sales hedging Foreign currency translation adjustments Total

Balance at December 31, 2021 $ 18 $ ( 47 ) $ ( 29 )

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Balance at December 31, 2023 ( 5 ) ( 49 ) ( 54 )

(1) See Note 11, Derivative Instruments regarding timing of reclassifications to operating results.

Other comprehensive income (loss) before reclassifications 47 ( 17 ) 30

Amounts reclassified from AOCI (1)

( 11 ) — ( 11 )

Tax effect ( 9 ) — ( 9 )

Other comprehensive income (loss), net of tax 27 ( 17 ) 10

Balance at December 31, 2024 $ 22 $ ( 66 ) $ ( 44 )

(1) See Note 11, Derivative Instruments regarding the timing of reclassifications to operating results.

Note 19 Accounts Receivable Factoring

The Company has 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.

The Company has a Receivables Factoring arrangement, pursuant to which certain receivables originated from the EMEA and Asia-Pacific regions up to a maximum of € 75 million, as amended, are sold to a bank without recourse in exchange for cash.

Transactions under the Receivables Factoring arrangement 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.

The Company does not maintain any beneficial interest in the receivables sold.

The bank’s purchase of eligible receivables is subject to a maximum amount of uncollected receivables.

The Company services the receivables on behalf of the bank, 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 Cash flows from operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Cash flows from financing activities on the Consolidated Statements of Cash Flows.

The Company has two Receivables Factoring arrangements.

One arrangement allows for the factoring of up to € 150 million of uncollected receivables originated from the EMEA and Asia-Pacific regions.

In the third quarter, the Company amended its second arrangement to allow the factoring of uncollected receivables originated from the EMEA region from up to $ 25 million to $ 50 million.

Otherwise, the amendment did not substantially change the terms of the arrangement.

The Company may be 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 $ 1 million and $ 12 million as of December 31, 2023 and December 31, 2022, respectively, and is classified within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

During the years ended December 31, 2024, 2023 and 2022, the Company received cash proceeds of $ 1,019 million, $ 1,404 million and $ 1,496 million, respectively, from the sales of accounts receivables under its factoring arrangements.

As of December 31, 2024 and 2023, there were a total of $ 28 million and $ 56 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

As servicer of sold receivables, the Company had $ 112 million and $ 130 million of obligations that were not yet remitted to banks as of December 31, 2023 and 2022, respectively.

These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Net cash provided by (used in) financing activities on the Consolidated Statements of Cash Flows.

As servicer of sold receivables, the Company had $ 51 million and $ 112 million of obligations that were not yet remitted to the bank as of December 31, 2024 and 2023, respectively.

These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Cash flows from financing activities on the Consolidated Statements of Cash Flows.

Fees incurred in connection with these arrangements are included within Other expense, net on the Consolidated Statements of Operations and were $ 9 million, $ 11 million and $ 5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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Segment results

The Company’s operations consist of two reportable segments:

Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”).

Our operations consist of two reportable segments that provide complementary offerings to our customers:

Asset Intelligence & Tracking (“AIT”), which includes barcode and card printing, RFID and RTLS offerings, supplies, and services;

and Enterprise Visibility & Mobility (“EVM”), which includes mobile computing, data capture, fixed industrial scanning and machine vision, services, and workflow optimization solutions.

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, as well as certain other non-recurring costs (such as the Settlement costs in the prior year).

The CODM reviews adjusted operating income to assess segment profitability primarily during the Company’s annual budget and forecasting process.

The CODM assesses the profitability of each segment relative to its long-term growth objectives in evaluating resource allocation priorities.

Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

In the second quarter of 2023, our advanced location technology solutions business, which is primarily comprised of RFID devices and RTLS offerings, moved from our EVM segment into our AIT segment contemporaneous with a change in our organizational structure and management of the business.

We have reported our segment results reflecting this change, including historical periods, on a comparable basis.

This change does not have an impact on the Consolidated Financial Statements.

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

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EVM 3,334 2,933 3,944

Total segment Net sales 4,584 5,781 5,633

Corporate (1)

Total Net sales $ 4,981 $ 4,584 $ 5,781

Operating income:

Cost of sales:

AIT 854 864 1,042

EVM 1,714 1,597 2,115

Operating expenses:

1,086 993 1,118

Operating income:

Total segment operating income $ 869 $ 689 $ 1,072

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Total Operating income $ 742 $ 481 $ 529

(1) To the extent applicable, amounts included in Corporate 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, as well as certain other non-recurring costs (such as the Settlement costs in the prior year).

(1) AIT and EVM segment operating expenses include Selling and marketing, Research and development, and General and administrative expenses, excluding the amounts classified within Corporate.

(2) AIT and EVM segment operating income includes depreciation and share-based compensation expense.

The amounts of depreciation and share-based compensation expense are proportionate to each segment’s Net sales.

The depreciation and share-based compensation expense amounts are proportionate to each segment’s Net sales.

(3) To the extent applicable, amounts included in Corporate consist of Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (such as the Settlement costs in 2022, impairment of goodwill and other intangibles, and business acquisition purchase accounting adjustments).

Sales to significant customers

The Company has three customers, who are distributors of the Company’s products and solutions, that individually accounted for more than 10% of total Company Net sales during the years ended December 31, 2023, 2022 and 2021.

The approximate percentage of our segment and Company total Net sales to these customers were as follows:

The Company has three customers, who are distributors of the Company’s offerings, that individually accounted for more than 10% of total Company Net sales during the years ended December 31, 2024, 2023 and 2022.

The approximate percentage of Company total Net sales by segment to these customers were as follows:

Year Ended December 31,

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data