Graco 2012 Annual Report Download - page 37

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31
Operating income for 2012 was $72.7 million, or 9.9% of net sales, an increase of $21.1 million, or 40.9%, from $51.6 million,
or 7.6% of net sales, for 2011. The 230 basis point increase in operating margin is attributable to productivity, favorable mix, and
better leverage of constant currency SG&A costs on the net sales increase, partially offset by input cost inflation.
Specialty
Net sales for 2012 were $540.6 million, a decrease of $13.0 million, or 2.3%, from $553.6 million for 2011. Core sales decreased
0.4%, primarily due to declines in the window hardware and interactive teaching technologies product lines, partially offset by
increases in labeling. Excluding the impacts of currency, sales at the segment’s North American businesses increased 0.9% while
sales declined 2.7% at international businesses. Foreign currency had an unfavorable impact of 1.9%.
Operating income for 2012 was $68.2 million, or 12.6% of net sales, an increase of $8.0 million, or 13.3%, from $60.2 million,
or 10.9% of net sales, for 2011. The 170 basis point increase in operating margin is attributable to a 280 basis point decrease in
constant currency SG&A costs as a percentage of net sales, driven by reductions in strategic SG&A activities, partially offset by
input cost inflation.
2011 vs. 2010 Business Segment Operating Results
Net sales by segment were as follows for the years ended December 31, (in millions, except percentages):
2011 2010 % Change
Home Solutions $ 1,710.2 $ 1,678.0 1.9%
Writing 1,399.3 1,355.8 3.2
Tools 779.6 687.6 13.4
Commercial Products 741.5 683.1 8.5
Baby & Parenting 680.4 700.2 (2.8)
Specialty 553.6 553.5 —
Total net sales $ 5,864.6 $ 5,658.2 3.6
The following table sets forth an analysis of changes in net sales in each segment for 2011 as compared to 2010:
Home
Solutions Writing Tools Commercial
Products Baby &
Parenting Specialty
Core sales 1.2% 0.8% 10.3% 7.4% (5.5)% (2.1)%
Foreign currency 0.7 2.4 3.1 1.1 2.7 2.1
Total change in net sales 1.9% 3.2% 13.4% 8.5% (2.8)% 0.0 %
Operating income (loss) by segment was as follows for the years ended December 31, (in millions, except percentages):
2011 2010 % Change
Home Solutions $ 228.9 $ 228.3 0.3 %
Writing 246.9 222.4 11.0
Tools 119.1 93.0 28.1
Commercial Products 108.3 134.2 (19.3)
Baby & Parenting 51.6 53.4 (3.4)
Specialty 60.2 66.5 (9.5)
Impairment charges (382.6) — NMF
Restructuring costs (50.1)(77.4) 35.3
Corporate(3) (125.1)(96.9) (29.1)
Total operating income $ 257.2 $ 623.5 (58.7)%
NMF - Not meaningful figure
(3) Includes restructuring-related costs of $37.4 million and $15.2 million for 2011 and 2010, respectively, associated with the European Transformation Plan,
and 2011 also includes $6.3 million of incremental costs associated with the Company’s Chief Executive Officer transition in 2011.