Graco 2010 Annual Report Download - page 27

Newell Rubbermaid Inc. 2010 Annual Report
NEWELL RUBBERMAID 2010 Annual Report 23
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CONSOLIDATED RESULTS OF OPERATIONS
The Company believes the selected data and the percentage relationship between net sales and major categories in the
Consolidated Statements of Operations are important in evaluating the Company’s operations. The following table sets
forth items from the Consolidated Statements of Operations as reported and as a percentage of net sales for the year
ended December 31, (in millions, except percentages):
2010 2009 2008
Net sales $ 5,759.2 100.0% $ 5,577.6 100.0% $ 6,470.6 100.0%
Cost of products sold 3,588.4 62.3 3,528.1 63.3 4,347.4 67.2
Gross margin 2,170.8 37.7 2,049.5 36.7 2,123.2 32.8
Selling, general and administrative expenses 1,463.4 25.4 1,374.6 24.6 1,502.7 23.2
Impairment charges — — — — 299.4 4.6
Restructuring costs 77.5 1.3 100.0 1.8 120.3 1.9
Operating income 629.9 10.9 574.9 10.3 200.8 3.1
Nonoperating expenses:
Interest expense, net 118.4 2.1 140.0 2.5 137.9 2.1
Losses related to extinguishments of debt 218.6 3.8 4.7 0.1 52.2 0.8
Other (income) expense, net (7.4) (0.1) 2.0 — 6.9 0.1
Net nonoperating expenses 329.6 5.7 146.7 2.6 197.0 3.0
Income before income taxes 300.3 5.2 428.2 7.7 3.8 0.1
Income taxes 7.5 0.1 142.7 2.6 53.6 0.8
Income (loss) from continuing operations 292.8 5.1 285.5 5.1 (49.8) (0.8)
Loss from discontinued operations, net of tax — — — — (0.5) —
Net income (loss) 292.8 5.1 285.5 5.1 (50.3) (0.8)
Net income noncontrolling interests — — — — 2.0 —
Net income (loss) controlling interests $ 292.8 5.1% $ 285.5 5.1% $ (52.3) (0.8)%
Results of Operations — 2010 vs. 2009
Net sales for 2010 were $5,759.2 million, representing an increase of $181.6 million, or 3.3%, from $5,577.6 million for 2009.
The following table sets forth an analysis of changes in consolidated net sales for 2010 as compared to 2009 (in millions,
except percentages):
Core sales $ 261.1 4.7%
Foreign currency 2.2 —
Product line exits and rationalizations (81.7) (1.4)
Total change in net sales $ 181.6 3.3%
Core sales increased 4.7% compared to the prior year resulting from higher volumes primarily due to increases in demand,
particularly internationally, and restocking by customers in anticipation of future increases in consumer demand, particularly in
the geographic regions and channels where inventories were reduced in late 2008 and early 2009. The higher volumes were also
attributable to new products launched during 2010, distribution gains and geographic expansion. Core sales at the Company’s
North American and international businesses increased approximately 3.6% and 7.9%, respectively, versus the prior year. Last
year’s product line exits reduced year-over-year sales by 1.4% while foreign currency had a negligible impact.
Gross margin, as a percentage of net sales, for 2010 was 37.7%, or $2,170.8 million, versus 36.7% of net sales, or $2,049.5 million,
for 2009. The primary drivers of the 100 basis point gross margin improvement were productivity gains from several initiatives,
including Project Acceleration, and improved product mix, partially offset by input cost inflation.
SG&A expenses for 2010 were 25.4% of net sales, or $1,463.4 million, versus 24.6% of net sales, or $1,374.6 million for 2009,
with currency having a negligible impact on the year-over-year increase. Approximately 30 basis points of the 80 basis point
increase in SG&A expenses as a percentage of sales is attributable to restructuring related charges incurred in connection with
the European Transformation Plan in 2010. The remaining increase was mainly due to the Company’s increased spend for brand
building and other strategic SG&A activities, such as marketing initiatives, advertising and promotions, sales force increases
and the implementation of SAP.
The Company recorded restructuring costs of $77.5 million and $100.0 million for 2010 and 2009, respectively. The decrease
in restructuring costs is largely attributable to lower costs associated with reducing the Company’s manufacturing and distribution
footprint, as the Company completed Project Acceleration in 2010. In addition, the Company incurred lower restructuring costs
associated with restructuring programs focused on streamlining the organizational structure to reduce structural SG&A costs.
The restructuring costs for 2010 included $6.0 million of facility and other exit costs, $53.6 million of employee severance,
termination benefits and employee relocation costs, and $17.9 million of exited contractual commitments and other restructuring
costs. The restructuring costs for 2009 included $32.4 million of facility and other exit and impairment costs, $48.8 million of
employee severance, termination benefits and employee relocation costs, and $18.8 million of exited contractual commitments
and other restructuring costs. See Footnote 4 of the Notes to Consolidated Financial Statements for further information.