Graco 2011 Annual Report Download - page 28

2011 Financial Statements and Related Information
26 NEWELL RUBBERMAID 2011 Annual Report
BUSINESS SEGMENT OPERATING RESULTS
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 & Family $ 2,390.5 $ 2,378.4 0.5%
Office Products 1,778.8 1,708.9 4.1
Tools, Hardware & Commercial Products 1,695.3 1,570.9 7.9
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:
Tools, Hardware &
Home & Family Office Products Commercial Products
Core sales (0.8)% 1.5% 6.0%
Foreign currency 1.3 2.6 1.9
Total change in net sales 0.5% 4.1% 7.9%
Operating income (loss) by segment was as follows for the year ended December 31, (in millions, except percentages):
2011 2010 % Change
Home & Family $ 280.5 $ 281.8 (0.5)%
Office Products 300.2 269.4 11.4
Tools, Hardware & Commercial Products 234.3 246.6 (5.0)
Impairment charges
(382.6) — NMF
Corporate (1) (125.1) (96.9) (29.1)
Restructuring costs
(50.1) (77.4) 35.3
Total operating income $ 257.2 $ 623.5 (58.7)%
NMF — Not meaningful
(1) Includes restructuring-related costs of $37.4 million and $15.2 million for 2011 and 2010, respectively, associated with the European Transformation Plan, and also includes
$6.3 million of incremental costs associated with the Company’s Chief Executive Officer transition in 2011.
Home & Family
Net sales for 2011 were $2,390.5 million, an increase of $12.1 million, or 0.5%, from $2,378.4 million for 2010. Core sales declined
0.8%, which was primarily attributable to a mid-single-digit core sales decline in the Baby & Parenting GBU, particularly in the North
American and European markets, due to continued economic pressure and recent declines in birth rates. The decline at the Baby &
Parenting GBU was partially offset by high single-digit core sales growth in the Culinary Lifestyles GBU, due to new product launches
and distribution gains. Foreign currency had a favorable impact of 1.3%.
Operating income for 2011 was $280.5 million, or 11.7% of net sales, a decrease of $1.3 million, or 0.5%, from $281.8 million, or
11.8% of net sales, for 2010. The 10 basis point decline in operating margin is primarily attributable to input cost inflation, partially offset
by pricing, productivity and lower structural SG&A costs. In constant currency, SG&A costs as a percentage of net sales decreased
50 basis points due to lower structural SG&A costs partially offset by higher SG&A spend to support geographic expansion and
distribution gains.
Office Products
Net sales for 2011 were $1,778.8 million, an increase of $69.9 million, or 4.1%, from $1,708.9 million for 2010. Core sales increased
1.5% with low- to mid-single-digit core sales growth in the Fine Writing & Luxury Accessories and Technology GBUs, partially offset by a
modest core sales decline in the Everyday Writing GBU. Core sales growth for the Everyday Writing and Markers, Highlighters, Art &
Office Organization GBUs was impacted by an estimated $5 to $10 million of sales shifted from 2011 to the fourth quarter of 2010 due
to customer order acceleration to qualify for annual volume rebates. Foreign currency had a favorable impact of 2.6%.
Operating income for 2011 was $300.2 million, or 16.9% of net sales, an increase of $30.8 million, or 11.4%, from $269.4 million,
or 15.8% of net sales, for 2010. The 110 basis point increase in operating margin is attributable to pricing, productivity, improved
product mix, and leverage of SG&A, partially offset by input cost inflation. In constant currency, SG&A costs as a percentage of net sales
decreased 30 basis points due to the increase in core sales, as lower structural SG&A costs, including lower incentive compensation,
was offset by increased strategic SG&A spending to support new market entries, expanded sales forces and geographic expansion.