Actual results may differ materially from those indicated as a result of various risk factors, including those identified in Item 1A of and Exhibit 99 to the company’s 2011 Annual Report on Form 10-Q; and in Item 1A of the company’s most recent quarterly report on Form 10-Q. These reports are available on the company’s website at www.graco.com/ir and the SEC’s website at www.sec.gov. Forward-looking statements reflect management’s current views and speak only as of the time they are made. The company undertakes no obligation to update statements in light of new information for future events.
I would like to turn the conference over to Caroline Chambers, Vice President and Controller. Please go ahead.
Caroline M. Chambers
Good morning, everyone. I'm here this morning with Pat McHale; Jim Graner; and Christian Rothe. I'll start by providing some top level discussion of our overall financial results for the second quarter and since this is the first quarter that the new Powder Finishing business is consolidated, on those effects of that business and the effective purchase accounting and acquisition relating items also. I'll follow with the brief discussion of the accounting implications of the Federal Trade Commission's Hold Separate Order for the liquid finishing business and how that investment is presented in our financial statement. I'll be happy to review further later in the call if you have additional questions. Slides are available to accompany our call and can be accessed in our website.Page 4 of our slides provides an overview of our consolidated results and also notes acquisition-related items. There's further discussion of the impacts of the Powder business on Pages 5 and 6 as well. Sales sold [ph] $268 million for the quarter including $31 million for the Powder Finishing business. Changes in currency translation rates had a significant impact on the quarter and decreased sales by approximately $7 million and decreased net earnings by approximately $3 million. Net earnings totaled $34 million or $0.56 per diluted share for the quarter. Cost and expenses related to the acquisition led to lower earnings as compared to last year. Gross profit margins as a percent of sales were 52% for the quarter, down 4 percentage points from the second quarter last year. Nonrecurring purchase accounting effects, totaling $7 million related to inventory, reduced the margin rate by approximately 3 percentage points for the quarter. Unfavorable currency translation effects reduced the margin rate by approximately 1 percentage point. Realized pricing and improved factory efficiencies more than offset higher cost as compared to last year. Again, we can review this during the question-and-answer session of the call if anyone likes. Total operating expenses increased $13 million for the quarter. Total operations accounted for $8 million of the increase, of which $2 million was intangible amortization. The amortization number is a good run rate for the rest of the year. And beyond 2012, I will draw your attention to the 10-Q that we filed momentarily and which gives you anticipated amounts [ph] for all of 2012 and going forward.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV