The following are excerpts from the Zebra Technologies Corporation Form 10-K. Item 1. Business The Company Zebra delivers products and solutions that improve our customers' ability to put their critical assets to work smarter by identifying, tracking, and managing assets, transactions, and people. We design, manufacture, and sell specialty printing devices that print variable infor- mation on demand at the point of issuance. These devices are used worldwide by manu- facturers, service and retail organizations, and governments for automatic identification, data collection, and personal identification in applications that improve productivity, deliver better customer service, and provide more effective security. Our product range consists of direct thermal and thermal transfer label and receipt printers, passive radio frequency identification (RFID) printer/encoders, and dye sublimation card printers. We also sell a comprehensive range of specialty supplies consisting of self-adhesive labels, thermal transfer ribbons, thermal printheads, batteries, and other accessories, including software for label design and printer network management. Note 7 Goodwill and Other Intangible Asset Data During the fourth quarter of 2008, we determined that certain impairment indicators existed related to identified intangible assets and conducted an additional impairment test of intan- gibles. Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our goodwill and other intangible assets were impaired, requiring total estimated impairment charges of $157,600,000 at December 31, 2008, Note 17 Income Taxes The provision for income taxes differs from the amount computed by applying the U.S. statutory Federal income tax rate of 35% to income before income taxes. The reconcil- iation of statutory and effective income taxes is presented below in thousands): Provision computed at statutory rate State income tax, net of Federal tax benefit Tax-exempt interest income Acquisition related items Asset impairment charges Domestic manufacturing deduction Research and experimental credit Foreign rate differential Other Provision for income taxes Year Ended December 31, 2010 2009 2008 $ 50,727 $ 24,683 $(4,170) 1.666 566 1.127 (554) (1.047) (1.997) (315) (2.450) 35,360 (70) (700) (1.715) (950) (600) (400) (7,799) (1.263) 1,094 452 1.780 (341) $43.157 $ 23,419 $ 26.508 ZEBRA TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (Amounts in thousands, except per share data) Year Ended December 31, 2010 2009 2008 Net sales Net sales of tangible products $855.269 $701.044 $871.587 Revenue from services and software 101.579 102.541 105.113 Total net sales 956.848 803.585 1976.700 Cost of sales Cost of sales of tangible products 455,007 -101.727 452.2018 Cost of services and software 40.972 41.137 45.187 Total cost of sales 495.979 142.864 497 395 Gross profit 460.869 360.721 -179.305 Operating expenses: Selling and marketing 122,689 102.535 126,325 Resenrch and development 101,930 86,390 95.80) General and administrative 79.710 81.395 81.644 Amortization of intangible assets 9.573 10,466 18.575 Litigation seulement (1.082) (5,302) Exit, restructuring and integration costs 4.197 12.191 20,009 Asset impairment charges (1.058) 157,600 Total operating expenses 317,017 291919 194,651 Operating income (loss) 143.852 68.802 (15,346) Other income (expense) Investment income 2,681 Foreign exchange gain (loss) (213) Other.net (1.385) Total other income 1.083 Income (loss) before income taxes 144,935 Income taxes 43.157 Net income (loss) S101.778 Basic earnings (loss) per share $1.78 Diluted earnings (loss) per share $1.77 Basic weighted average shares outstanding 57.143 Diluted weighted average and equivalent shares outstanding 57,428 See accompanying notes to consolidated financial statements. 2.933 (45) (1.167) 1,721 70.523 23,419 S-47.104 $0.79 0.79 39.306 1.281 3.518 (1.366) 3.433 (11.913) 26,508 S(38,428 $(0.60) S(0.60) 64,524 59,425 64.524 Required: Using the Consolidated Statements of Operations and the excerpts from the Zebra Technologies Corporation Form 10-K, analyze the profitability of Zebra. Your analysis should include the following calculations for all three years: (a) Common-size income statements, (b) Gross profit margins for tangible products and services and software. (c) Growth rates of total net sales and total operating expenses. (d) Effective tax rates. LMI LUPUTE Required: Using the Consolidated Statements of Operations and the excerpts from the Zebra Technologies Corporation Form 10-K, analyze the profitability of Zebra. Your analysis should include the following calculations for all three years: (a) Common-size income statements. (b) Gross profit margins for tangible products and services and software. (e) Growth rates of total net sales and total operating expenses. (d) Effective tax rates. Your written analysis and interpretation should include explanations for why trends have occurred. The following are excerpts from the Zebra Technologies Corporation Form 10-K. Item 1. Business The Company Zebra delivers products and solutions that improve our customers' ability to put their critical assets to work smarter by identifying, tracking, and managing assets, transactions, and people. We design, manufacture, and sell specialty printing devices that print variable infor- mation on demand at the point of issuance. These devices are used worldwide by manu- facturers, service and retail organizations, and governments for automatic identification, data collection, and personal identification in applications that improve productivity, deliver better customer service, and provide more effective security. Our product range consists of direct thermal and thermal transfer label and receipt printers, passive radio frequency identification (RFID) printer/encoders, and dye sublimation card printers. We also sell a comprehensive range of specialty supplies consisting of self-adhesive labels, thermal transfer ribbons, thermal printheads, batteries, and other accessories, including software for label design and printer network management. Note 7 Goodwill and Other Intangible Asset Data During the fourth quarter of 2008, we determined that certain impairment indicators existed related to identified intangible assets and conducted an additional impairment test of intan- gibles. Due to the deterioration of the economy and a significant reduction in the price of our stock, we determined that our goodwill and other intangible assets were impaired, requiring total estimated impairment charges of $157,600,000 at December 31, 2008, Note 17 Income Taxes The provision for income taxes differs from the amount computed by applying the U.S. statutory Federal income tax rate of 35% to income before income taxes. The reconcil- iation of statutory and effective income taxes is presented below in thousands): Provision computed at statutory rate State income tax, net of Federal tax benefit Tax-exempt interest income Acquisition related items Asset impairment charges Domestic manufacturing deduction Research and experimental credit Foreign rate differential Other Provision for income taxes Year Ended December 31, 2010 2009 2008 $ 50,727 $ 24,683 $(4,170) 1.666 566 1.127 (554) (1.047) (1.997) (315) (2.450) 35,360 (70) (700) (1.715) (950) (600) (400) (7,799) (1.263) 1,094 452 1.780 (341) $43.157 $ 23,419 $ 26.508 ZEBRA TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (Amounts in thousands, except per share data) Year Ended December 31, 2010 2009 2008 Net sales Net sales of tangible products $855.269 $701.044 $871.587 Revenue from services and software 101.579 102.541 105.113 Total net sales 956.848 803.585 1976.700 Cost of sales Cost of sales of tangible products 455,007 -101.727 452.2018 Cost of services and software 40.972 41.137 45.187 Total cost of sales 495.979 142.864 497 395 Gross profit 460.869 360.721 -179.305 Operating expenses: Selling and marketing 122,689 102.535 126,325 Resenrch and development 101,930 86,390 95.80) General and administrative 79.710 81.395 81.644 Amortization of intangible assets 9.573 10,466 18.575 Litigation seulement (1.082) (5,302) Exit, restructuring and integration costs 4.197 12.191 20,009 Asset impairment charges (1.058) 157,600 Total operating expenses 317,017 291919 194,651 Operating income (loss) 143.852 68.802 (15,346) Other income (expense) Investment income 2,681 Foreign exchange gain (loss) (213) Other.net (1.385) Total other income 1.083 Income (loss) before income taxes 144,935 Income taxes 43.157 Net income (loss) S101.778 Basic earnings (loss) per share $1.78 Diluted earnings (loss) per share $1.77 Basic weighted average shares outstanding 57.143 Diluted weighted average and equivalent shares outstanding 57,428 See accompanying notes to consolidated financial statements. 2.933 (45) (1.167) 1,721 70.523 23,419 S-47.104 $0.79 0.79 39.306 1.281 3.518 (1.366) 3.433 (11.913) 26,508 S(38,428 $(0.60) S(0.60) 64,524 59,425 64.524 Required: Using the Consolidated Statements of Operations and the excerpts from the Zebra Technologies Corporation Form 10-K, analyze the profitability of Zebra. Your analysis should include the following calculations for all three years: (a) Common-size income statements, (b) Gross profit margins for tangible products and services and software. (c) Growth rates of total net sales and total operating expenses. (d) Effective tax rates. LMI LUPUTE Required: Using the Consolidated Statements of Operations and the excerpts from the Zebra Technologies Corporation Form 10-K, analyze the profitability of Zebra. Your analysis should include the following calculations for all three years: (a) Common-size income statements. (b) Gross profit margins for tangible products and services and software. (e) Growth rates of total net sales and total operating expenses. (d) Effective tax rates. Your written analysis and interpretation should include explanations for why trends have occurred