Motorola 2008 Annual Report Download - page 51

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We conduct our business in highly competitive markets, facing both new and established competitors. The
markets for many of our products are characterized by rapidly changing technologies, frequent new product
introductions, changing consumer trends, short product life cycles and evolving industry standards. Market
disruptions caused by new technologies, the entry of new competitors into markets we serve, and frequent
consolidations among our customers and competitors, among other matters, can introduce volatility into our
operating performance and cash flow from operations. As we enter 2009, we face a very challenging global
economic environment and with reduced visibility and slowing demand. Meeting all of these challenges requires
consistent operational planning and execution and investment in technology, resulting in innovative products that
meet the needs of our customers around the world. As we execute on meeting these objectives, we remain focused
taking the necessary action to design and deliver differentiated and innovative products and services that will
advance the way the world connects by simplifying and personalizing communications and enhancing mobility.
Results of Operations
(Dollars in millions, except per share
amounts) 2008 %of
sales 2007 %of
sales 2006 %of
sales
Years Ended December 31
Net sales $30,146 $36,622 $42,847
Costs of sales 21,751 72.2% 26,670 72.8% 30,120 70.3%
Gross margin 8,395 27.8% 9,952 27.2% 12,727 29.7%
Selling, general and administrative expenses 4,330 14.4% 5,092 13.9% 4,504 10.5%
Research and development expenditures 4,109 13.6% 4,429 12.1% 4,106 9.5%
Other charges 2,347 7.7% 984 2.7% 25 0.1%
Operating earnings (loss) (2,391) (7.9)% (553) (1.5)% 4,092 9.6%
Other income (expense):
Interest income, net 48 0.1% 91 0.2% 326 0.8%
Gains on sales of investments and businesses, net 82 0.3% 50 0.1% 41 0.1%
Other (376) (1.2)% 22 0.1% 151 0.3%
Total other income (expense) (246) (0.8)% 163 0.4% 518 1.2%
Earnings (loss) from continuing operations before
income taxes (2,637) (8.7)% (390) (1.1)% 4,610 10.8%
Income tax expense (benefit) 1,607 5.4% (285) (0.8)% 1,349 3.2%
Earnings (loss) from continuing operations (4,244) (14.1)% (105) (0.3)% 3,261 7.6%
Earnings from discontinued operations, net of tax — 0.0% 56 0.2% 400 0.9%
Net earnings (loss) $ (4,244) (14.1)% $ (49) (0.1)% $ 3,661 8.5%
Earnings (loss) per diluted common share:
Continuing operations $ (1.87) $ (0.05) $ 1.30
Discontinued operations — 0.03 0.16
$ (1.87) $ (0.02) $ 1.46
Geographic market sales measured by the locale of the end customer as a percent of total net sales for 2008,
2007 and 2006 are as follows:
Geographic Market Sales by Locale of End Customer
2008 2007 2006
United States 49% 51% 44%
Latin America 14% 12% 10%
Europe 13% 13% 15%
Asia, excluding China 10% 9% 11%
China 7% 7% 11%
Other Markets 7% 8% 9%
100% 100% 100%
43
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS