Graco 2008 Annual Report Download - page 26

Newell Rubbermaid Inc. 2008 Annual Report
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Operating income for 2008 was $238.6 million, or 11.1% of sales, a decrease of $34.7 million from $273.3 million, or 13.0% of sales, in 2007.
Significant raw material inflation, particularly in resin, and lower manufacturing volume more than offset the contribution from favorable pricing and the
Technical Concepts acquisition during 2008.
Office Products
Net sales for 2008 were $2,005.8 million, a decrease of $36.5 million, or 1.8%, from $2,042.3 million in 2007. Favorable foreign currency and growth in the
segment’s international businesses in local currency was more than offset by a decline in domestic sales driven by adverse economic conditions in the U.S.,
including lower consumer demand and inventory management at U.S. retailers. The European business benefited in comparison to prior year from softer
sales in 2007 driven mainly by service level interruptions that did not repeat in 2008.
Operating income for 2008 was $215.8 million, or 10.8% of sales, a decrease of $102.1 million from $317.9 million, or 15.6% of sales, in 2007, as
positive pricing and favorable foreign currency were more than offset by raw material inflation, unfavorable mix and core sales declines in North America.
Additionally, in response to significant sales declines during the fourth quarter of 2008, the Company reduced production at certain manufacturing facilities
and accelerated SKU rationalization efforts. These efforts contributed to the decline in operating income year-over-year.
Tools & Hardware
Net sales for 2008 were $1,200.3 million, a decrease of $88.4 million, or 6.9%, from $1,288.7 million in 2007. Contributions from favorable foreign currency
and positive pricing were more than offset by declines in core sales in the segment’s domestic businesses, attributable to continued declines in the U.S.
residential construction market, retail inventory management and increased softness in industrial and commercial channels.
Operating income for 2008 was $145.3 million, or 12.1% of sales, a decrease of $36.2 million from $181.5 million, or 14.1% of sales, in 2007, as
contributions from SG&A expenses reduction initiatives, favorable pricing and productivity improvements were more than offset by raw material inflation,
unfavorable mix and core sales declines in North America.
Home & Family
Net sales for 2008 were $1,117.2 million, an increase of $137.3 million, or 14.0%, from $979.9 million in 2007. The Aprica acquisition increased sales
$95.5 million, or 9.7%. The remaining increase of $41.8 million, or 4.3%, was primarily attributable to high single-digit growth in the Baby & Parenting
Essentials business attributable to product launches and favorable pricing during 2008.
Operating income for 2008 was $102.7 million, or 9.2% of sales, a decrease of $32.9 million from $135.6 million, or 13.8% of sales, in 2007, as
contributions from core sales increases and positive pricing were more than offset by unfavorable mix, sourced product inflation and an increase in
strategic SG&A spending for new product launches and brand-building investments, mainly related to Aprica. Additionally, child safety protection laws
enacted during the latter half of 2008 contributed to the year-over-year decline in operating income for the Baby & Parenting Essentials business unit.
2007 vs. 2006 Business Segment Operating Results
Net sales by segment were as follows for the year ended December 31, (in millions, except percentages):
2007 2006 % Change
Cleaning, Organization & Décor $2,096.4 $1,995.7 5.0)%
Office Products 2,042.3 2,031.6 0.5
Tools & Hardware 1,288.7 1,262.2 2.1
Home & Family 979.9 911.5 7.5
Total Net Sales $6,407.3 $6,201.0 3.3)%
Operating income by segment was as follows for the year ended December 31, (in millions, except percentages):
2007 2006 % Change
Cleaning, Organization & Décor $ 273.3 $ 209.1 30.7)%
Office Products 317.9 287.0 10.8
Tools & Hardware 181.5 185.0 (1.9)
Home & Family 135.6 117.9 15.0
Corporate (82.0) (76.0) (7.9)
Restructuring costs (86.0) (66.4)
Total Operating Income $ 740.3 $ 656.6 12.7)%
Cleaning, Organization & Décor
Net sales for 2007 were $2,096.4 million, an increase of $100.7 million, or 5.0%, from $1,995.7 million in 2006, driven by double-digit sales growth in
Rubbermaid Commercial, resulting from new product launches during the year, mid single-digit growth in Rubbermaid Home due to growth in sales of home
organization and insulated products, and low single-digit growth in the Rubbermaid Food and Décor businesses.