Graco 2011 Annual Report Download - page 29

2011 Financial Statements and Related Information
NEWELL RUBBERMAID 2011 Annual Report 27
Tools, Hardware & Commercial Products
Net sales for 2011 were $1,695.3 million, an increase of $124.4 million, or 7.9%, from $1,570.9 million for 2010. Core sales
increased 6.0%. Double-digit cores sales growth in the Industrial Products & Services GBU and high single-digit core sales growth in
the Construction Tools & Accessories and Commercial Products GBUs were partially offset by a core sales decline in the Hardware
GBU. Excluding the impacts of currency, the segment’s international sales increased high single-digits due to strong core sales growth
in emerging markets, and North American sales increased mid-single-digits. Foreign currency had a favorable impact of 1.9%.
Operating income for 2011 was $234.3 million, or 13.8% of net sales, a decrease of $12.3 million, or 5.0%, from $246.6 million,
or 15.7% of net sales, for 2010. The 190 basis point decrease in operating margin is attributable to input cost inflation and unfavorable
product mix, partially offset by pricing and productivity. Increases in structural SG&A costs and increased investments in strategic
SG&A costs were commensurate with the increase in core sales.
2010 vs. 2009 Business Segment Operating Results
Net sales by segment were as follows for the year ended December 31, (in millions, except percentages):
2010 2009 % Change
Home & Family $ 2,378.4 $ 2,377.2 0.1%
Office Products 1,708.9 1,674.7 2.0
Tools, Hardware & Commercial Products 1,570.9 1,431.5 9.7
Total net sales $ 5,658.2 $ 5,483.4 3.2%
The following table sets forth an analysis of changes in net sales in each segment for 2010 as compared to 2009:
Tools, Hardware &
Home & Family Office Products Commercial Products
Core sales 0.5% 7.4% 8.3%
Foreign currency 0.9 (2.4) 1.4
Product line exits and rationalizations (1.3) (3.0) —
Total change in net sales 0.1% 2.0% 9.7%
Operating income (loss) by segment was as follows for the year ended December 31, (in millions, except percentages):
2010 2009 % Change
Home & Family $ 281.8 $ 274.7 2.6%
Office Products 269.4 235.2 14.5
Tools, Hardware & Commercial Products 246.6 246.0 0.2
Corporate (2) (96.9) (80.6) (20.2)
Restructuring costs (77.4) (100.0) 22.6
Total operating income $ 623.5 $ 575.3 8.4%
(2) Includes restructuring-related costs of $15.2 million for 2011 associated with the European Transformation Plan.
Home & Family
Net sales for 2010 were $2,378.4 million, an increase of $1.2 million from $2,377.2 million for 2009. Core sales increased 0.5% as core
sales growth in the Beauty & Style and Culinary Lifestyle GBUs was partially offset by declines in the Baby & Parenting and Rubbermaid
Consumer GBUs. The increase in core sales was largely attributable to consumer-relevant innovation and increased advertising and
promotion resulting in shelf space gains and incremental distribution. The impact of product line exits and rationalizations reduced sales
by 1.3%, while foreign currency had a favorable impact of 0.9%.
Operating income for 2010 was $281.8 million, or 11.8% of net sales, an increase of $7.1 million, or 2.6%, from $274.7 million, or
11.6% of net sales, for 2009. The slight increase in operating margin is attributable to productivity gains and reduced structural SG&A
partially offset by input cost inflation and increased spend on brand-building and other strategic initiatives.
Office Products
Net sales for 2010 were $1,708.9 million, an increase of $34.2 million, or 2.0%, from $1,674.7 million for 2009. Core sales increased
7.4%, which was primarily attributable to core sales growth across the entire segment with the Technology and Markers, Highlighters,
Art & Office Organization GBUs generating double-digit and high single-digit core sales growth, respectively. Product line exits and
rationalizations and foreign currency reduced net sales 3.0% and 2.4%, respectively.
Operating income for 2010 was $269.4 million, or 15.8% of net sales, an increase of $34.2 million, or 14.5%, from $235.2 million,
or 14.0% of net sales for 2009. The 180 basis point improvement in operating margin is attributable to productivity gains, improved
product mix, partially offset by the impacts of input cost inflation and a 100 basis point increase in constant currency SG&A costs as a
percentage of net sales due to increased spend for strategic brand, volume-building and other strategic SG&A activities.