Fargo Electronics Discusses Agreement Not To Further Pursue Acquisition By Zebra Technologies; Establishes Investor Guidance for 2002.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--March 27, 2002

As stated in a joint release issued today by Fargo Electronics, Inc. (Nasdaq:FRGO) and Zebra Technologies Corporation (Nasdaq:ZBRA) Zebra and Fargo have mutually decided not to further pursue the acquisition of Fargo by Zebra. "Despite the best efforts of Fargo and Zebra, it is now clear to both companies that the Federal Trade Commission will not approve the proposed acquisition of Fargo by Zebra," said Gary R. Holland, Fargo's president and CEO. "As a result, Fargo will continue to operate as an independent, publicly traded company, headquartered in Eden Prairie, Minnesota," he stated.

In reviewing the status of the transaction yesterday and arriving at a decision with Zebra to terminate the acquisition agreement, the Fargo Board of Directors considered many factors that had changed since the announcement of the transaction on August 1, 2001. Some of these factors, Holland noted, include:

-- A large, established market share in the fast growing, global security
market

-- Accelerating worldwide interest in smart cards, proximity cards, advanced
security cards, especially after the tragic events of September 11

-- New advanced technology products now in production, with the introduction of
more new technology products coming in April

-- Profitable, proprietary consumable supplies

-- A pipeline of future new technologies to drive growth

"During the FTC's review under the Hart-Scott-Rodino Antitrust Improvements Act, it was appropriate that Fargo's management continue to run the business as an independent entity," Holland said. "During the past eight months, we have competed vigorously in the marketplace, and are fully prepared to move forward as a stand-alone company. We will continue to build our competitive advantages, serve our customers, and increase shareholder value.

"In March, we introduced two new models to our Professional Series: the HDP820 and the Pro-LX, both next generation upgrades from our previous models. We anticipate introducing highly innovative, exciting new products at the CardTech/SecureTech trade show, a conference and exposition for advanced ID card, biometrics, and security technology, in late April 2002, and expect additional product introductions later this year," Holland said.

"Because of the uncertainties generated by the length of time the acquisition was under consideration," he said, "Fargo now faces two new challenges:

-- A large, established market share in the fast growing, global security
market

-- Accelerating worldwide interest in smart cards, proximity cards, advanced
security cards, especially after the tragic events of September 11

-- New advanced technology products now in production, with the introduction of
more new technology products coming in April

-- Profitable, proprietary consumable supplies

-- A pipeline of future new technologies to drive growth

Reestablishing our communication with current and prospective

investors

"We intend to aggressively communicate with current and prospective investors, because we believe that management can present a compelling story supporting investment in Fargo common stock," Holland stated.

"Because we have been in the midst of the transaction, Fargo management had previously declined to offer guidance for 2002. Before any costs related to the acquisition, we currently estimate that Fargo will achieve earnings of 6 to 9 cents per common share in the first quarter of 2002," he said. "Our estimates are for earnings of 50 to 65 cents per common share for the year 2002, or an increase of 47 to 91 percent over the 34 cents per common share we achieved in 2001.

"We believe that this would be very strong performance for Fargo over 2001, especially in light of the uncertainty created by the now terminated transaction. We continue to believe our earlier assertion that Fargo is on track to increase earnings five times by the end of 2003 over 2000 results, which were 24 cents per share," Holland added.

Re-building our distribution channels

"Our biggest operating challenge will be to rebuild Fargo's relationships with our distribution channels. As a result of the agreement to be acquired by Zebra, many of our established dealers reexamined their relationship to Fargo. Dealers who relied exclusively or predominantly on Fargo looked at other options, and some chose to begin adding products from the competition," he said.

"Fargo will work vigorously to reverse this trend, and strengthen our ties to our network of Professional Series Distributors (PSDs), Fargo Solution Providers (FSPs), Import Suppliers, and International Distributors. We have plans in place to address these issues and believe that, in the long run, we can re-invigorate these relationships with our distribution network. We realize, however, that this process will take some time," Holland noted.

Building Fargo's Competitive Advantage

Holland stated that Fargo's competitive advantages include:

-- A large, established market share in the fast growing, global security
market

-- Accelerating worldwide interest in smart cards, proximity cards, advanced
security cards, especially after the tragic events of September 11

-- New advanced technology products now in production, with the introduction of
more new technology products coming in April

-- Profitable, proprietary consumable supplies

-- A pipeline of future new technologies to drive growth

"Fargo will continue to aggressively build our brand and seek to gain added market share in a growing global market," Holland said. "We continue to see many opportunities as smart and proximity card usage grows. In March, we introduced the HDP820 and Pro-LX to the market. Along with the DTC500 Series, these three printers make up Fargo's Professional Series.

"We also see continued success in our profitable, proprietary consumable supplies business. With a broad range of systems Fargo offers end users the best solutions in the card personalization industry. Fargo is well-positioned to help business, education and government address their security concerns through the installation or upgrading of card personalization systems that print and encode plastic identification cards for physical, transaction, and information security," he said.

"In 2001, Fargo achieved improved financial results through strong operating expense controls, diligent inventory management, and reduced interest expense. We succeeded in significantly strengthening our balance sheet, with strong cash flow. We paid down $8,900,000 of our bank debt during the year. Fargo grew in a year that was difficult for many manufacturing companies who did not have the uncertainty of an acquisition clouding their future. We continue to be profitable, and will strive towards increasing our sales and profitability, as evidenced by our 2002 projections.

Forward-looking Statements

Statements made in this release concerning the company's expectations about future results or events are "forward-looking statements." Such statements are subject to the safe harbor created by the Private Securities Reform Act of 1995, and are necessarily subject to risks and uncertainties. Actual results may differ materially from those reflected in these forward-looking statements.

These risks include: product acceptance and customer demand for Fargo's card personalization systems and proprietary supplies; actions taken and alternative products marketed by Fargo's competitors, including Zebra Technologies; supplier relationships; domestic and international regulations and standards; adverse economic and business conditions, including conditions resulting from the terrorist attack on the U.S. on September 11, 2001 and the resulting hostilities; adverse changes in the Company's business as a result of the announcement of the now terminated acquisition of the Company by Zebra Technologies Corporation; and continuing legal, professional, and investment banking expenses related to this now terminated acquisition.

For more detail, see the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2000, and 10-Q for the quarters ended March 31, 2001, June 30, 2001, and September 30, 2001. Fargo anticipates filing its Form 10-K for the year ended Dec. 31, 2001 on or about April 1, 2002.

About Fargo

Fargo Electronics, Inc. (Nasdaq:FRGO) is the world's leader in innovative technologies for desktop plastic card personalization systems. Based in Eden Prairie, Minnesota, Fargo creates printing systems that personalized plastic identification cards, complete with digital images and text, lamination, and electronically encoded information.

Personalized identification cards provide physical, information and transaction security for a wide variety of applications including retail stores, e-commerce, government installations, schools, sports and recreation facilities, clubs and associations, and correctional facilities. More than 60,000 Fargo systems are currently installed throughout the U.S. and in over 100 other countries. For more information, visit Fargo's Web site at http://www.fargo.com.