Sunbeam 2005 Annual Report Download - page 21

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Management’s Discussion and Analysis of Financial Condition and
Results of Operations (cont’d)
Results of Operations – Comparing 2004 to 2003
Years Ended
December 31,
2004 2003
(in millions)
Kitchen products(1) ...................................................... $205.8 $194.4
Home improvement products(2) ........................................... 138.1 41.0
Playing cards products(3) ................................................. 80.5 —
Other specialty products(1)(2)(3) ............................................ 48.7 22.5
Total branded consumables(1)(2)(3) ...................................... 473.1 257.9
Consumer solutions(4) ............................................... 222.1 216.1
Other(5) ........................................................... 195.6 151.9
Intercompany eliminations(6) ......................................... (52.2) (38.2)
Total net sales ................................................. $838.6 $587.7
(1) The Diamond Brands wood manufacturing operation and branded product distribution business is
included in the branded consumables segment effective February 1, 2003.
(2) The Lehigh business is included in the branded consumables segment effective September 2, 2003.
(3) The USPC business is included in the branded consumables segment effective June 28, 2004.
(4) The consumer solutions segment was created upon the purchase of Tilia, effective April 1, 2002.
(5) The Diamond Brands plastic manufacturing operation is included in the other business segment
effective February 1, 2003.
(6) Intersegment sales are recorded at cost plus an agreed upon intercompany profit.
We reported net sales of $839 million in 2004, a 42.7% increase from net sales of $588 million in 2003.
On a segment by segment basis, the increase in net sales from 2003 to 2004 is comprised as follows:
‰Our branded consumables segment reported net sales of $473 million compared to $258 million in
2003. This increase of 83.5% was principally a result of acquisitions. Excluding the effects of
acquisitions, net sales of our branded consumables segment were $7.4 million or 2.9% higher than
2003, principally due to higher home canning sales and home improvement sales.
‰Our consumer solutions segment reported net sales of $222 million compared to $216 million in
net sales in 2003. This increase of 2.8% was principally the result of the tuck-in acquisition of
VillaWare in the fourth quarter of 2003. Net sales of our FoodSaver®branded machines were lower
in 2004 compared to 2003 due to a market shift to lower priced FoodSaver®machines, partially
offset by sales volume increases for FoodSaver®machines and increased bag unit sales.
‰Our other segment reported net sales of $196 million compared to $152 million in 2003. The
principal reason for this increase was both an increase in sales of plastic cutlery to our branded
consumables segment, as well as a full year effect of these sales due to the addition of the plastic
manufacturing business acquired in the Diamond Acquisition in February 2003. Excluding
intercompany sales, net sales were higher due to increased sales to certain existing OEM
customers and new international sales. Additionally in 2004, our other segment reported net sales
of $67.5 million compared to $42.8 million in 2003 in the zinc business. The principal reasons for
this increase of 57.7% were a full year’s effect on net sales resulting from the effects of purchasing
rather than tolling zinc on behalf of certain customers, increases in the price of zinc which were
passed through to customers and strength in industrial zinc and low denomination coinage sales.
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