Gross profit margin, expressed as a percentage of sales, was 52 percent for the quarter and 54 percent year-to-date, down 4 percentage points from the second quarter last year and 3 percentage points lower than last year-to-date. Non-recurring purchase accounting effects totaling $7 million related to inventory, reduced the margin rate by approximately 3 percentage points for the quarter and 1½ points year-to date. Unfavorable currency translation effects reduced the margin rate by approximately 1 percentage point for both the quarter and year-to-date.
Total operating expenses increased $13 million for the quarter and $20 million year-to-date. Powder Finishing operations accounted for $8 million of the quarter and year-to-date increases. Acquisition expenses accounted for another $5 million of the increase for the quarter and $9 million of the year-to-date increase.
Interest expense increased $4 million for the quarter and $7 million year-to-date due to higher borrowing levels. Other expense (income) includes $4 million of dividends received from the Liquid Finishing businesses that are required to be held separate from the Company’s other businesses and accounted for as a cost-method investment.
The effective income tax rates of 32 percent for the quarter and 33 percent for the year-to-date are consistent with the comparable periods last year. This year’s rate is reduced by the effect of the investment income from the Liquid Finishing businesses held separate. Last year’s rate was reduced by the effect of the federal R&D credit that is not available in 2012.
Certain measurements of segment operations are summarized below:
|Thirteen Weeks||Twenty-six Weeks|
|Net sales (in millions)||$||158.2||$||82.1||$||27.9||$||292.3||$||154.1||$||55.9|
|from last year|
|Operating earnings as a|
|percentage of net sales|