Graco 2012 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2012 Graco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

65
December 31,
2010 December 31,
2011
Segment Balance Provision Costs Incurred Balance
Home Solutions $ — $ 7.8 $ (0.7) $ 7.1
Writing — 1.9 (0.5) 1.4
Baby & Parenting — 2.4 (0.4) 2.0
Specialty — 3.7 (1.3) 2.4
Corporate — 15.4 (12.6) 2.8
$ — $ 31.2 $ (15.5) $ 15.7
European Transformation Plan
In June 2010, the Company announced a program to centralize its European business (the “European Transformation Plan”). The
European Transformation Plan includes initiatives designed to transform the European organizational structure and processes to
centralize certain operating activities, improve performance, leverage the benefits of scale, and to contribute to a more efficient
and cost-effective implementation of an enterprise resource planning program in Europe, all with the aim of increasing operating
margin in the European region to approximately10%. The implementation of the European Transformation Plan was complete as
of December 31, 2012, with cumulative restructuring costs over the life of the initiative totaling $37.7 million.
Restructuring charges incurred in connection with the European Transformation Plan are reported in the Company’s Corporate
segment and were $18.8 million and $18.9 million in 2012 and 2011, respectively, while restructuring charges in 2010 were not
material.
Restructuring provisions were determined based on estimates prepared at the time the restructuring actions were approved by
management, are periodically updated for changes and also include amounts recognized as incurred. The following table depicts
the activity in accrued restructuring reserves for the European Transformation Plan for 2012 and 2011 (in millions):
December 31,
2011 December 31,
2012
Balance Provision Costs Incurred Balance
Employee severance, termination benefits and relocation costs $ 6.0 $ 14.8 $ (9.9) $ 10.9
Exited contractual commitments and other 2.1 4.0 (4.1) 2.0
$ 8.1 $ 18.8 $ (14.0) $ 12.9
December 31,
2010 December 31,
2011
Balance Provision Costs Incurred Balance
Employee severance, termination benefits and relocation costs $ — $ 14.9 $ (8.9) $ 6.0
Exited contractual commitments and other — 4.0 (1.9) 2.1
$ — $ 18.9 $ (10.8) $ 8.1
Project Acceleration
In 2010, the Company completed a global initiative referred to as Project Acceleration aimed at strengthening and transforming
the Company’s portfolio. Project Acceleration was designed to reduce manufacturing overhead, better align the Company’s
distribution and transportation processes to achieve logistical excellence, and reorganize the Company’s overall business structure
to align with the Company’s core organizing concept, the global business unit, to achieve best total cost. In July 2008, the Company
expanded Project Acceleration to include initiatives to exit certain product categories to create a more focused and more profitable
platform for growth by eliminating selected low-margin, commodity-like, mostly resin-intensive product categories and reduce
the Company’s exposure to volatile commodity markets, particularly resin. The implementation of Project Acceleration was
complete as of December 31, 2010, with cumulative restructuring costs over the life of the initiative totaling $498.4 million.