Motorola 2011 Annual Report Download - page 38

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32
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our financial position and results of operations for each of the
three years in the period ended December 31, 2011. This commentary should be read in conjunction with our
consolidated financial statements and the notes thereto appearing under “Item 8: Financial Statements and
Supplementary Data.”
Executive Overview
What businesses are we in?
We report financial results for two operating segments:
Government: Our Government segment includes sales of public safety mission-critical communication
systems, commercial two-way radio systems and devices, software and services.
Enterprise: Our Enterprise segment includes sales of rugged and enterprise-grade mobile computers and
tablets, laser/imaging/RFID based data capture products, WLAN and iDEN infrastructure, software and
services.
What were our 2011 financial results?
• We increased net sales by 8% to $8.2 billion in 2011, compared to net sales of $7.6 billion in 2010.
• We generated operating earnings of $858 million in 2011, compared to $751 million in 2010. Operating
margin was 10.5% of net sales in 2011, compared to 9.9% of net sales in 2010.
• We had earnings from continuing operations of $747 million, or $2.20 per diluted common share, in 2011,
compared to earnings from continuing operations of $244 million, or $0.72 per diluted common share, in 2010.
• We generated cash from operating activities of $848 million in 2011, compared to $803 million of cash from
operating activities in 2010.
• We returned $1.1 billion in cash to shareholders through share repurchases and paid $72 million in cash
dividends during 2011.
• We used approximately $1.2 billion to retire long-term debt.
What were the financial results for our two operating segments in 2011?
•In our Government segment: Net sales were $5.4 billion in 2011, an increase of 6% compared to net sales of
$5.0 billion in 2010. On a geographic basis, net sales increased in North America, Latin America, and Asia,
while Europe, Middle East and Africa region (“EMEA”) was down slightly due to the sale of the Israel-based
module business in the first quarter of 2011. Operating margin improved in 2011 to 11.5% from 10.6% in
2010 primarily due to increased leverage in SG&A expenses and R&D expenditures. Operating earnings
were $616 million in 2011, compared to operating earnings of $534 million in 2010.
•In our Enterprise segment: Net sales were $2.8 billion in 2011, an increase of 11% compared to net sales of
$2.6 billion in 2010. On a geographic basis, net sales increased in all regions. Operating earnings were $242
million in 2011, compared to operating earnings of $217 million in 2010. Operating margin remained flat in
2011 compared to 2010 as a result of increased expenses recorded in Other charges, offset by increased
leverage in SG&A expenses and R&D expenditures.
What were our major accomplishments in 2011?
•In our Government segment: In 2011, sales, operating earnings, and operating leverage were higher than in
2010. Despite the budget challenges facing many of the U.S. government customers and in parts of Western
Europe, our customers continue to prioritize funding of their public safety communication needs, and
demand for our products and solutions in the government and public safety market increased as compared to
2010. In 2011, our continued commitment to quality, enhancements to our comprehensive portfolio, and a
strong customer base contributed to higher sales to our U.S. government customers.