Sunbeam 2012 Annual Report Download - page 21

Jarden Corporation Annual Report 2012 19
Management’s Discussion and Analysis
Jarden Corporation Annual Report 2012
Net Sales
Net sales for 2012 increased $16.2 million, or 0.2%, to $6.7 billion versus the prior year. Unfavorable foreign currency translation
accounted for a decrease in net sales of approximately 2%. Excluding the impact of certain exited product categories and
acquisitions, net sales on a currency-neutral basis increased approximately 2%, primarily due to increased sell-through in certain
product categories and expanded product offerings, partially offset by weakness in certain product categories and the timing of
seasonal sales in certain categories.
Net sales in the Outdoor Solutions segment decreased $79.2 million, or 2.9%. Unfavorable foreign currency translation accounted
for a decrease in net sales of approximately 2%. Excluding the net unfavorable impact of certain exited product categories and
acquisitions of approximately 2%, net sales on a currency-neutral basis increased approximately 1%, primarily due to increased sales
on a currency-neutral basis in the fishing and technical apparel businesses, which provided an increase in net sales of approximately
3%, largely related to expanded product offerings, increased point of sale and favorable weather conditions in North America,
partially offset by a decrease in net sales on a currency-neutral basis in the camping and outdoor and winter sports businesses
(approximately 2%), primarily due to, unfavorable weather conditions, weakness in certain product categories and decreased
demand in Europe due to unfavorable economic conditions.
Net sales in the Consumer Solutions segment increased $60.6 million, or 3.2%. On a currency-neutral basis, net sales increased by
approximately 2%. Excluding the net favorable impact of certain exited product categories and acquisitions (approximately 2%), net
sales on a currency-neutral basis increased by approximately 2%. The increase is primarily due to increased demand in Latin America,
which accounted for an increase in net sales of approximately 2%, primarily due to increased point of sale, expanded distribution and
new product offerings, partially offset by a decrease in domestic net sales, which accounted for a decrease in net sales of approximately
1%, as increased appliance sales were more than offset by weakness in certain personal care and wellness categories.
Net sales in the Branded Consumables segment increased $18.7 million, or 1.1%. Unfavorable foreign currency translation
accounted for a decrease of approximately 3% in net sales. Increased sales on a currency-neutral basis in the baby care, home care,
leisure and entertainment and safety and security businesses provided an increase in net sales of approximately 4%, in part due to
increased sales in certain product categories, especially the food preservation category, primarily due to increased point of sale,
favorable weather conditions and expanded distribution, partially offset by softness in firelog sales, which were negatively affected
by unfavorable weather conditions.
Net sales in the Process Solutions segment increased 7.3% on a period-over-period basis, primarily due to increased sales within
each of its business units.
Cost of Sales
Cost of sales for 2012 decreased $50.2 million, or 1.0%, to $4.8 billion versus the prior year. The decrease is primarily due to
foreign currency translation (approximately $70 million), partially offset by approximately $30 million related to the net impact on
cost of sales of higher sales, partially offset by improved margins, which is driven by manufacturing improvement projects, stable
commodity prices, new products and product mix. Cost of sales as a percentage of net sales for 2012 and 2011 was 71.3% and
72.2%, respectively.
SG&A
SG&A for 2012 increased $61.3 million, or 4.9%, to $1.3 billion versus the prior year. The increase is primarily due to an increase in
marketing and product development costs (approximately $18 million) related to the Company’s investment in brand equity, an
increase in stock-based compensation (approximately $43 million) and approximately $13 million in acquisition-related and other
costs, partially offset by favorable foreign currency translation (approximately $27 million).
Operating Earnings
Operating earnings for 2012 in the Outdoor Solutions segment decreased $25.7 million, or 9.3%, versus the prior year, primarily
due to a gross profit decrease (approximately $25 million), primarily due to the gross margin impact of lower sales. Operating
earnings for 2012 in the Consumer Solutions segment decreased $4.4 million, or 1.9%, versus the prior year, primarily due to an
increase in SG&A (approximately $21 million) and an increase in reorganization costs (approximately $12 million), partially offset by
a gross profit increase (approximately $28 million), primarily due to expanded margins and the gross margin impact of higher sales.
Operating earnings for 2012 in the Branded Consumables segment increased $104 million, or 98%, versus the prior year, primarily
due to a gross profit increase (approximately $45 million), primarily due to improved margins, a decrease in the charges recorded
related to the impairment of goodwill, intangibles and other assets (approximately $52 million) and a decrease in reorganization
costs (approximately $6 million). Operating earnings for 2012 in the Process Solutions segment increased $11.7 million, or 53.4%,
versus the prior year, primarily due to an increase in gross profit, primarily due to improved margins and the gross margin impact of
higher sales.