Graco 2012 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2012 Graco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

32
Home Solutions
Net sales for 2011 were $1,710.2 million, an increase of $32.2 million, or 1.9%, from $1,678.0 million for 2010. Core sales
increased 1.2%, driven by high-single-digit core sales growth at Calphalon due to new product launches and distribution gains.
Excluding the impacts of currency, sales at the segment’s North American businesses increased 1.4% while sales declined 6.0%
at international businesses. Foreign currency had a favorable impact of 0.7%.
Operating income for 2011 was $228.9 million, or 13.4% of net sales, an increase of $0.6 million, or 0.3%, from $228.3 million
or 13.6% of net sales, for 2010. The 20 basis point decline in operating margin is primarily attributable to input cost inflation,
partially offset by pricing and productivity. In constant currency, SG&A costs as a percentage of net sales decreased 110 basis
points due to lower incentive compensation costs.
Writing
Net sales for 2011 were $1,399.3 million, an increase of $43.5 million, or 3.2%, from $1,355.8 million for 2010. Core sales
increased 0.8% with low-single-digit core sales growth in fine writing products, partially offset by a modest core sales decline in
everyday writing products. Core sales growth for everyday writing products 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.
Excluding the impacts of currency, sales at the segment’s North American businesses remained unchanged while sales increased
2.0% at international businesses. Foreign currency had a favorable impact of 2.4%.
Operating income for 2011 was $246.9 million, or 17.6% of net sales, an increase of $24.5 million, or 11.0%, from $222.4 million,
or 16.4% of net sales, for 2010. The 120 basis point increase in operating margin is attributable to a 60 basis point increase in
gross margin, as pricing and productivity were partially offset by input cost inflation. In constant currency, SG&A costs as a
percentage of net sales decreased 60 basis points due to lower structural SG&A costs, including lower incentive compensation,
partially offset by higher strategic SG&A spending to support geographic expansion, new market entries and distribution gains.
Tools
Net sales for 2011 were $779.6 million, an increase of $92.0 million, or 13.4%, from $687.6 million for 2010. Core sales increased
10.3%, driven by double- and high-single-digit core sales growth across the segment. Excluding the impacts of currency, sales at
the segment’s North American and international businesses increased 8.4% and 13.1%, respectively. Foreign currency had a
favorable impact of 3.1%.
Operating income for 2011 was $119.1 million, or 15.3% of net sales, an increase of $26.1 million, or 28.1%, from $93.0 million,
or 13.5% of net sales, for 2010. The 180 basis point increase in operating margin is attributable to a 190 basis point decrease in
constant currency SG&A as a percentage of net sales due to better leverage of structural SG&A as a result of increased sales,
partially offset by the effects of input cost inflation net of pricing and productivity.
Commercial Products
Net sales for 2011 were $741.5 million, an increase of $58.4 million, or 8.5%, from $683.1 million for 2010. Core sales increased
7.4%. Excluding the impacts of currency, sales at the segment’s North American businesses increased 9.2% while sales declined
1.2% at international businesses, primarily due to weakness in the European markets. Foreign currency had a favorable impact of
1.1%.
Operating income for 2011 was $108.3 million, or 14.6% of net sales, a decrease of $25.9 million, or 19.3%, from $134.2 million,
or 19.6% of net sales, for 2010. The 500 basis point decrease in operating margin is primarily attributable to input cost inflation
and unfavorable product mix, partially offset by pricing. In constant currency, SG&A costs as a percentage of net sales increased
130 basis points due to increases in brand building, other strategic SG&A and structural spending to support products and initiatives,
partially offset by lower incentive compensation.
Baby & Parenting
Net sales for 2011 were $680.4 million, a decrease of $19.8 million, or 2.8%, from $700.2 million for 2010. Core sales declined
5.5% due primarily to continued economic pressure and declining birth rates in the North American and European markets.
Excluding the impacts of currency, sales at the segment’s North American and international businesses decreased 8.2% and 1.0%,
respectively. Foreign currency had a favorable impact of 2.7%.
Operating income for 2011 was $51.6 million, or 7.6% of net sales, a decrease of $1.8 million, or 3.4%, from $53.4 million, or
7.6% of net sales, for 2010. Operating margins were favorably impacted by pricing and productivity, which more than offset the
impacts of inflation. In constant currency, SG&A costs as a percentage of net sales increased 90 basis points due primarily to the