Corporate and Other expenses decreased from lower IT and separation costs, lower performance-based compensation expense and a gain from the sale of non-core intangible assets. These factors were partially offset by the net balance sheet re-measurement losses and additional U.S. pension settlement expense, which was first triggered in the second quarter of 2012. The U.S. pension settlement expenses were not triggered in 2011 until the fourth quarter.
Net sales for the nine months ended September 30, 2012 totaled $2,920.2 million, up six percent from $2,765.7 million a year ago. Sales growth increased six percent from price and one percent from volume, reduced by one percent from foreign exchange.
Gross margin was down 140 basis points versus the first nine months of 2012 from higher dairy and other commodity costs, mainly in the North America/Europe segment. Manufacturing variances were also unfavorable, largely from lower production volume in the North America/Europe segment.EBIT for the first nine months of 2012 totaled $680.3 million, up from $628.0 million a year earlier. The EBIT increase was driven by sales growth, lower expenses due to completion of the SAP implementation in 2011 and the elimination of duplicate costs from the overlap in shared service providers in the prior year. These factors were partially offset by lower gross margins, higher demand-generation investments and earlier recognition of U.S. pension settlement expense. The effective tax rate for the nine months ended September 30, 2012 was 24.0 percent versus 27.1 percent a year ago. The lower effective tax rate was primarily attributable to changes in management’s assertion that certain current and prior years’ foreign earnings and profits are permanently invested abroad, favorable return-to-provision adjustments associated with filing our 2011 U.S. income tax return and changes in the geographic earnings mix. Net earnings attributable to shareholders for the first nine months of 2012 totaled $470.3 million, or $2.29 per diluted share, compared with $422.9 million, or $2.06 per diluted share, for the prior-year period.
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