Contractor segment sales increased 13 percent for the quarter and 3 percent for the year. Sales for the quarter increased 25 percent in the Americas, but decreased 4 percent in Europe and 6 percent in Asia Pacific. For the year, sales increased 5 percent in the Americas, decreased 5 percent in Europe (flat at consistent translation rates) and increased 4 percent in Asia Pacific. Higher sales and the leveraging of expenses led to improvement in operating earnings as a percentage of sales.
Lubrication segment sales decreased 3 percent for the quarter and increased 7 percent for the year. Sales for the quarter increased 8 percent in the Americas and 16 percent in Europe, and decreased 39 percent in Asia Pacific. For the year, sales increased 13 percent in the Americas, 2 percent in Europe (7 percent at consistent translation rates) and decreased 10 percent in Asia Pacific. For both the quarter and the year, improved gross margin rate and leveraging of expenses led to improvement in operating earnings as a percentage of sales.
On April 2, 2012, the Company completed the purchase of the finishing businesses of Illinois Tool Works Inc., first announced in April 2011. The acquisition includes Powder Finishing and Liquid Finishing equipment operations, technologies and brands. Results of the Powder Finishing business have been included in the Industrial segment since the date of acquisition.In December 2011, the United States Federal Trade Commission (“FTC”) filed a formal complaint to challenge the proposed acquisition on the grounds that the addition of the Liquid Finishing businesses to Graco would be anti-competitive, a position which Graco denied. In March 2012, the FTC issued an order (the “Hold Separate Order”) that allowed the acquisition to proceed to closing on April 2, 2012, subject to certain conditions while it evaluated a settlement proposal from Graco. Pursuant to the Hold Separate Order, the Liquid Finishing businesses were to be held separate from the rest of Graco’s businesses until the FTC determined which portions, if any, of the Liquid Finishing businesses Graco must divest.
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