Graco 2008 Annual Report Download - page 25

Newell Rubbermaid Inc. 2008 Annual Report
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SG&A expenses for 2007 were 22.3% of net sales, or $1,430.9 million, versus 21.7% of net sales, or $1,347.0 million, for 2006. Approximately 38%
of the increase is attributable to foreign currency, with the remainder due to investments in brand building, product development and other corporate
initiatives, including SAP and Shared Services. These investments were partially offset by $15 million in savings from Project Acceleration and other
structural overhead reductions.
The Company recorded restructuring costs of $86.0 million and $66.4 million for 2007 and 2006, respectively. The 2007 restructuring costs included
$27.7 million of facility and other exit costs, $36.4 million of employee severance and termination benefits and $21.9 million of exited contractual
commitments and other restructuring costs. The 2006 restructuring costs included $14.9 million of facility and other exit costs, $44.7 million of employee
severance and termination benefits and $6.8 million of exited contractual commitments and other restructuring costs. See Footnote 4 of the Notes to
Consolidated Financial Statements for further information.
Operating income for 2007 was $740.3 million, or 11.6% of net sales, versus $656.6 million, or 10.6% of net sales, in 2006. This increase was driven
by sales and gross margin expansion, partially offset by the increased investment in brand building and product development initiatives, expansion of Shared
Services and implementation of SAP.
Net nonoperating expenses for 2007 were 1.7% of net sales, or $111.4 million, versus 2.3% of net sales, or $141.7 million, for 2006. The decrease in
net nonoperating expenses was mainly attributable to a decrease in interest expense, reflecting a reduction in average debt outstanding year over year and
slightly lower average borrowing rates.
The Company recognized income tax expense of $149.7 million for 2007, compared to $44.2 million for 2006. The increase in tax expense was primarily
a result of an increase in income from continuing operations before income taxes in 2007 compared to 2006, partially offset by a decrease in income tax
benefits recorded in 2007 compared to 2006. Income tax expense for 2007 and 2006 were favorably impacted by the recognition of net income tax benefits
of $41.3 million and $102.8 million, respectively, primarily related to the favorable resolution of certain tax positions, the expiration of the statute of
limitations on certain deductions, and the reorganization of certain legal entities in Europe.
The loss from discontinued operations for 2007 was $12.1 million, compared to $85.7 million for 2006. The loss on the disposal of discontinued
operations for 2007 was $11.9 million, net of tax, compared to a gain of $0.7 million, net of tax, for 2006. The 2007 loss related primarily to the disposal of
the remaining operations of the Home Décor Europe business. The 2006 gain related primarily to the disposal of the Little Tikes business, partially offset
by the loss recognized on the disposal of portions of the Home Décor Europe business. The loss from operations of discontinued operations for 2007 was
$0.2 million, net of tax, compared to $86.4 million, net of tax, for 2006. The 2006 amount primarily relates to the Little Tikes and Home Décor Europe
businesses and includes a $50.9 million impairment charge to write off goodwill of the Home Décor Europe business. See Footnote 3 of the Notes to
Consolidated Financial Statements for further information.
BUSINESS SEGMENT OPERATING RESULTS
2008 vs. 2007 Business Segment Operating Results
Net sales by segment were as follows for the year ended December 31, (in millions, except percentages):
2008 2007 % Change
Cleaning, Organization & Décor $2,147.3 $2,096.4 2.4)%
Office Products 2,005.8 2,042.3 (1.8)
Tools & Hardware 1,200.3 1,288.7 (6.9)
Home & Family 1,117.2 979.9 14.0
Total net sales $6,470.6 $6,407.3 1.0)%
Operating income by segment was as follows for the year ended December 31, (in millions, except percentages):
2008 2007 % Change
Cleaning, Organization & Décor $ 238.6 $273.3 (12.7)%
Office Products 215.8 317.9 (32.1)
Tools & Hardware 145.3 181.5 (19.9)
Home & Family 102.7 135.6 (24.3)
Corporate (81.9) (82.0) 0.1
Impairment charges (299.4) —
Restructuring costs (120.3) (86.0)
Total operating income $ 200.8 $740.3 (72.9)%
Cleaning, Organization & Décor
Net sales for 2008 were $2,147.3 million, an increase of $50.9 million, or 2.4%, from $2,096.4 million in 2007. The Technical Concepts acquisition
increased sales $109.2 million, or 5.2%. Excluding the impact of acquisitions, sales decreased $58.3 million, or 2.8%, as high single-digit growth in the
Rubbermaid Food business and mid single-digit growth in the Rubbermaid Commercial business were more than offset by softness in the Rubbermaid
Home and Décor businesses.