I am pleased to report that Tyco International delivered strong performance in fiscal 2011. We achieved solid growth in our revenue, operating margin and earnings while further strengthening our core security, fire protection and flow control businesses.
Our progress in 2011 and over the four previous years positioned us to take an important step to promote future growth and value creation. In September 2011, we announced plans to separate Tyco International into three independent, publicly traded companies. Following a thorough assessment by our Board of Directors and senior leadership, we concluded that creating three companies from our current portfolio of businesses was the best way to unlock the full potential of Tyco International.
Before discussing these exciting plans in further detail, let me highlight some of our company's many accomplishments during 2011.
Business Performance
Fiscal 2011 revenue of $17.4 billion grew 9%, excluding the results of our electrical and metal products business. Our organic revenue (which excludes the impact of acquisitions, divestitures and foreign currency) grew 4%, reflecting improving conditions in a number of our end markets. Operating margins expanded 160 basis points to 11.9%. This strong revenue and margin expansion helped drive earnings sharply higher. Income from continuing operations grew 39% to $1.6 billion, or $3.27 per diluted share, from $1.1 billion, or $2.31 per diluted share. Excluding special items, income from continuing operations totaled $3.24 per diluted share for 2011 compared to $2.68 for 2010—a 21% gain. We continued to generate strong cash flow, finishing the year with $1.4 billion in cash.
Operational and Strategic Accomplishments
We continued to invest in growth opportunities last year by increasing our capital spending 12%. We also increased our research and development spending by 12% to support the work of our R&D teams around the world in developing new technology and innovative solutions for our customers. Additionally, we increased our sales and marketing spending by 5%, focusing on strengthening our presence in key vertical and emerging markets and building awareness around product offerings.
One such offering is ADT Pulse, our interactive security platform that we introduced in the North American residential market in fiscal 2010. We are now introducing ADT Pulse to our small business customers to strengthen our position in this important segment of the security industry. ADT Pulse makes it possible for anyone with a web-enabled device to remotely access and control not only a security system, but also lights, thermostats, video cameras and other appliances in their home or small business. In our fire protection business, we launched the Simplex 4100ES (eServices) fire alarm system, a product featuring Internet-based technology that's designed to simplify installation, improve serviceability and reduce life-cycle costs for engineers and end-user customers. Groundbreaking features include remote service diagnostics, remote program downloads over the customer's IT network, and mass storage of vital system data within the system's panel. The Simplex 4100ES represents one of our most important fire alarm system launches in recent years and has been well received by our customers.
Our investment in growth opportunities also included several strategic acquisitions. In our security solutions segment, we purchased Signature Security to strengthen our sales, installation and service capabilities in Australia and New Zealand. Additionally, we acquired Visonic Ltd., a leader in developing advanced wireless technology for the security industry. Visonic has a strong presence in Europe, the Middle East and Africa. In our fire protection segment, we added Chemguard, Inc., broadening our global fire suppression offerings while augmenting our presence in the Middle East and Latin America. And in the flow control segment, we acquired a 75% stake in KEF Holdings, gaining a local valve manufacturing presence in the Middle East, while broadening our product and service offerings in that region. Meanwhile, we took a further step to streamline our portfolio with the sale of a majority stake in our electrical and metal products business. Through these portfolio moves, we strengthened our competitive position in our core platforms while increasing our recurring and service revenues that are sources of consistency and stability. These revenues grew to 45% of total revenues last year.
During the year, we continued to focus on improving productivity through cost-containment initiatives and restructuring programs. In recent quarters, productivity gains—in conjunction with the gradual upturn in the global economy and the resulting increases in organic growth—have fueled the improvement in our operating margin.
We also made very good progress last year in the area of capital allocation. In addition to funding organic growth and acquisitions, we continued to return excess cash to shareholders. We used $1.3 billion of cash to repurchase 6% of our outstanding shares and increased our annual dividend by approximately 20% during fiscal 2011.
Positioning Tyco for the Future
We are on track with our plan to separate Tyco International into three independent, publicly traded companies, consisting of a standalone ADT North America residential and small business security company; a standalone flow control company; and a standalone fire protection and security company. Each will have highly skilled employees and talented, experienced leaders. All three will have industry-leading positions in large and fragmented industries. Importantly, the new companies will have greater flexibility to pursue their own strategies to achieve growth—both organically and through acquisitions—than they would under Tyco's current corporate structure. See Creating Three Independent Companies for overviews of the proposed new companies.
Each company will have its own independent board of directors. We expect that a number of current Tyco board members will serve on the boards of the three companies. Upon completion of the transaction, I expect to become non-executive chairman of the fire protection and security company, a director of the flow control company and a consultant to the ADT North America company. In addition, current Tyco directors are expected to serve as non-executive chairmen of the flow control company and the ADT North America company.
With all three businesses well positioned to operate as separate entities, we expect the transition to proceed smoothly and seamlessly. The separation of Tyco International into three separate companies requires your approval. We plan to hold a special general meeting of shareholders in the fourth quarter of 2012; pending your approval, the new companies are expected to begin operations by October 2012.
In Closing
Tyco's separation into three standalone companies should truly unlock the potential of our businesses. I am proud of the progress we have made on many fronts since I came on board in 2002. It was difficult then to envision what this company has become today—a global leader in all of its businesses with a reputation for transparency, honesty and integrity. That progress would not have been possible without the passion, hard work and commitment of our more than 100,000 employees around the world. To our dedicated employees and all Tyco stakeholders, I offer my most sincere thanks for your continued and loyal support of our company.
Edward D. Breen
Chairman and Chief Executive Officer