Graco 2012 Annual Report Download - page 32

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of $55 to $65 million, and substantially all of these savings have been realized and were included in the Company’s 2011 and
2012 operating results.
In April 2012, the Company migrated its enterprise resource planning systems in Europe to SAP and began operating in a centralized
European business model. Since the Company reports sales and operating income based on the region from which the products
are shipped and invoiced to external customers and the new model defines how certain regions import and export products, the
new model impacted the regions in which the Company’s sales and operating income are reported in 2012. Compared to prior
periods, the new model generally results in the European region’s sales and operating income being lower with corresponding
increases in the Company’s other regions.
One Newell Rubbermaid
The Company strives to leverage the common business activities and best practices of its segments, and to build one common
culture of shared values with a focus on collaboration and teamwork. Through this initiative, the Company has established regional
shared service centers to leverage nonmarket-facing functional capabilities to reduce costs. In addition, through the expansion of
Project Renewal, the Company will expand its focus on leveraging the common business activities and best practices by enhancing
its newly created Customer Development Organization and by reorganizing the business around two of the critical elements of
the Growth Game Plan — Brand & Category Development and Market Execution & Delivery.
The Company is also migrating multiple legacy systems and users to a common SAP global information platform in a phased,
multi-year rollout. SAP is expected to enable the Company to integrate and manage its worldwide business and reporting processes
more efficiently. Through December 31, 2012, the North American and European operations of substantially all of the Company’s
six segments have successfully gone live with their SAP implementation efforts.
The Company continues to evaluate and optimize nonstrategic SG&A expenditures throughout the organization, including
centralizing indirect procurement to better leverage the Company's spend.
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 years ended December 31, (in millions,
except percentages):
2012 2011 2010
Net sales $ 5,902.7 100.0% $ 5,864.6 100.0% $ 5,658.2 100.0%
Cost of products sold 3,673.6 62.2 3,659.4 62.4 3,509.5 62.0
Gross margin 2,229.1 37.8 2,205.2 37.6 2,148.7 38.0
Selling, general and administrative expenses 1,521.1 25.8 1,515.3 25.8 1,447.8 25.6
Impairment charges — — 382.6 6.5 — —
Restructuring costs 56.1 1.0 50.1 0.9 77.4 1.4
Operating income 651.9 11.0 257.2 4.4 623.5 11.0
Nonoperating expenses:
Interest expense, net 76.1 1.3 86.2 1.5 118.4 2.1
Losses related to extinguishments of debt 10.9 0.2 4.8 0.1 218.6 3.9
Other (income) expense, net (1.0) — 13.7 0.2 (7.3)(0.1)
Net nonoperating expenses 86.0 1.5 104.7 1.8 329.7 5.8
Income before income taxes 565.9 9.6 152.5 2.6 293.8 5.2
Income tax expense 166.3 2.8 17.9 0.3 5.6 0.1
Income from continuing operations 399.6 6.8 134.6 2.3 288.2 5.1
Income (loss) from discontinued operations 1.7 — (9.4)(0.2) 4.6 0.1
Net income $ 401.3 6.8% $ 125.2 2.1% $ 292.8 5.2%