Graco 2011 Annual Report Download - page 83

NEWELL RUBBERMAID 2011 Annual Report 81
2011 Financial Statements and Related Information
The following table summarizes the net sales by product grouping for the years ended December 31, (in millions):
2011 2010 2009
Home & Family (1)
Rubbermaid Consumer $ 827.2 $ 819.7 $ 847.7
Baby & Parenting 680.4 700.2 703.6
Décor 464.8 458.8 450.9
Other 418.1 399.7 375.0
2,390.5 2,378.4 2,377.2
Office Products (1) 1,778.8 1,708.9 1,674.7
Tools, Hardware & Commercial Products (1) 1,695.3 1,570.9 1,431.5
$ 5,864.6 $ 5,658.2 $ 5,483.4
FOOTNOTE 20
LITIGATION AND CONTINGENCIES
The Company is involved in legal proceedings in the ordinary course of its business. These proceedings include claims for damages
arising out of use of the Company’s products, allegations of infringement of intellectual property, commercial disputes and employment
matters, as well as environmental matters. Some of the legal proceedings include claims for punitive as well as compensatory damages,
and certain proceedings may purport to be class actions.
The Company, using current product sales data and historical trends, actuarially calculates the estimate of its exposure for product
liability. The Company has product liability reserves of $39.7 million and $42.3 million as of December 31, 2011 and 2010, respectively.
The Company is insured for product liability claims for amounts in excess of established deductibles and accrues for the estimated
liability as described up to the limits of the deductibles. All other claims and lawsuits are handled on a case-by-case basis.
The Company is currently a party to two purported state class actions and one purported national Canadian class action. The cases
include allegations that a certain model car seat sold by an affiliate of the Company did not satisfy all requisite government safety
standards. The Company is vigorously defending all three actions.
In July 2007, the Company acquired all of the outstanding equity interests of PSI Systems, Inc. (“Endicia”), provider of
DYMO|Endicia Internet Postage. Endicia was party to a lawsuit against it alleging patent infringement which was filed on November 22,
2006 in the U.S. District Court for the Central District of California. In this case, Stamps.com sought unspecified damages, attorneys’
fees and injunctive relief in order to prevent Endicia from continuing to engage in activities that are alleged to infringe on Stamps.com’s
patents. In 2010, the Court entered judgment in favor of the Company terminating the action on summary judgment, and on June 15,
2011, the U.S. Court of Appeals for the Federal Circuit affirmed that judgment. Stamps.com’s petition for a rehearing before the Federal
Circuit panel was denied, and Stamps.com has no further right of appeal. A separate case, in which Endicia and Stamps.com each claim
infringement of different patents, remains pending in the same trial court as the first proceeding and is scheduled to commence trial in
March 2012. There can be no assurance the Company will be successful in defending itself in this matter.
The City of Sao Paulo’s Green and Environmental Office (the “Sao Paulo G&E Office”) is seeking fines of up to approximately
$4.0 million related to alleged improper storage of hazardous materials at the Company’s tool manufacturing facility located in Sao Paulo,
Brazil. The Company has obtained a stay of enforcement of a notice of fine due October 1, 2009 issued by the Sao Paulo G&E Office.
The Company plans to continue to contest the fines.
The Company (through two of its affiliates) has been involved in litigation originally filed in June 2008 in the U.S. District Court
for the Western District of North Carolina with Worthington Industries, Inc. (“Worthington”) over breach of a supply contract and price
increases levied by Worthington after having wrongfully terminated the contract prior to its expiration. In February 2010, a jury
determined that Worthington: (a) breached the supply agreement; (b) illegally traded upon the goodwill of the Company; and (c)
committed deceptive trade practices in violation of relevant laws. The jury awarded damages of $13.0 million to the Company, and the
Company was subsequently awarded an additional $2.8 million in pre-judgment interest and attorneys’ fees. In conjunction with the sale
of the Company’s hand torch and solder business to Worthington, the parties agreed to settle all claims. See Footnote 2 for further details.
As of December 31, 2011, the Company was involved in various matters concerning federal and state environmental laws and
regulations, including matters in which the Company has been identified by the U.S. Environmental Protection Agency and certain state
environmental agencies as a potentially responsible party (“PRP”) at contaminated sites under the Federal Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”) and equivalent state laws.
In assessing its environmental response costs, the Company has considered several factors, including the extent of the Company’s
volumetric contribution at each site relative to that of other PRPs; the kind of waste; the terms of existing cost sharing and other
applicable agreements; the financial ability of other PRPs to share in the payment of requisite costs; the Company’s prior experience with
similar sites; environmental studies and cost estimates available to the Company; the effects of inflation on cost estimates; and the
extent to which the Company’s, and other parties’, status as PRPs is disputed.