Please recognize that today's discussion contains forward-looking statements. Actual results could differ materially from management's current expectations and plans. The company undertakes no obligation to publicly update or revise any forward-looking statements. Please review the cautionary statements in the earnings release in our most recent 10-Q.And now with that, let me turn it over to Mike Polk for his comments. Michael B. Polk Thank you, Nancy. Good morning, everyone, and thanks for joining us. My objective today is twofold. First, I'll review our fourth quarter and full year results and share some observations about our performance. Second, I'll explain our thinking about 2012 and provide guidance for the year. Let's get into the results. We posted a solid Q4, delivering 3.7% core sales growth. Q4 was the strongest quarter of the year, driving second half core sales growth to 3.5% and full year core growth to 1.8%, versus our guidance range of 1% to 3%. Reported sales in Q4 were also up 3.7%, resulting in full year reported sales growth of 3.6%. Q4 normalized EPS was $0.40, resulting in a full year normalized EPS of $1.59, up 6% versus prior year and in the middle of our guidance range of $1.55 to $1.62. While our effective tax rate was substantially higher than prior year in Q4, we did benefit from a better rate than expected. This benefit was driven by improved European profitability, which enabled us to access more NOLs than we had anticipated. In Q4, we delivered 150 basis points of operating margin expansion, driven by tough discretionary cost discipline, the very early impact of Project Renewal and favorable management incentive costs. We achieved this result despite gross margin being down 10 basis points versus prior year. Importantly, we generated strong cash flow of $561 million in 2011, at the high end of our guidance range of $520 million to $560 million. Our solid cash flow enabled us to pay down $183 million of debt in 2011. And as a result, our strengthened balance sheet has taken another step toward our target leverage ratios. We also used just over $46 million to buy back 3.4 million shares in 2011, a little more than 1% of our float at an average share price of $13.72.
In Q4, all 3 operating groups grew reported and core sales. Tools, Hardware & Commercial Products had another strong quarter, with reported sales up 7.7% and core sales up 8.0%. Office Products delivered reported sales growth of 3.7%, with core sales up 3.8%. Home & Family delivered reported sales growth of 1.2%, with core sales up 0.9%. In Q4, 10 of our 13 global business units grew core sales, 4 of the 13 grew core sales greater than 5% and 3 grew core sales greater than 10%. Baby & Parenting delivered core sales growth of 4.5% in Q4 and close to 2% in the second half of 2011, as a result of very strong growth of Aprica in Asia and progress towards stabilizing Graco in North America.While there's more work to be done here, this is a step in the right direction. In 2011, our top 14 brands delivered 4.9% reported growth, with the best absolute contributions coming from IRWIN, Lenox, Rubbermaid Commercial and Aprica. Together, these 4 brands grew reported sales over 11%. In the emerging markets, core sales grew over 10% in Q4, with double-digit core sales growth in most of the major emerging market countries. Our Q4 core sales growth was 2.5% in the developed world, with strong growth in Japan and solid results in North America, partially offset by a decline in Western Europe. Our key growth initiatives are yielding the results we expect. Industrial Products & Services achieved their eighth consecutive quarter of double-digit core growth behind strengthened selling capabilities in the emerging markets and the successful launch of our Speed Slot Hole Saw. Parker Ingenuity has been successfully launched into 11 countries now, to positive critical acclaim and terrific sell-through, particularly in Asia and via e-tailers in North America. IRWIN delivered strong growth as a result of our new GrooveLock Pliers and levels and measuring launches. Paper Mate InkJoy has been launched into virtually all countries where Paper Mate is sold, with the bulk of the marketing support still to come. Rubbermaid Medical increased revenues over 80%, as we continue to scale this brand. Sharpie and Paper Mate were successfully launched in Brazil and are making good early progress. And as mentioned, Aprica had a terrific second half in Asia, as virtually every new item we've launched exceeded expectations. Aprica Asia had Q4 core sales growth of over 20%. And Calphalon had an excellent year behind the expansion of kitchen electrics, the new bronze contemporary nonstick line and the distribution win at J.C. Penney.
On the cost side, our efforts to unlock the Kraft capacity for growth are also progressing well. Project Renewal is up and running. We've reset my top team. Our new group in GBU architecture was announced in November and the North American restructuring is well underway. We're strengthening the U.S. selling organization and our consumer-facing businesses, deploying integrated cross-functional customer and channel teams in the U.S. And we've announced that we will close our Rubbermaid Consumer factory in Greenville, Texas and consolidate production in our Winfield, Kansas and Mogadore, Ohio factories. There've been many people impacted by these decisions, and I'd once again like to thank all of our employees for how professionally they're leading through change.On the other side of the Atlantic, we're moving rapidly toward the April 2012 SAP and European principal company cutover. I spent time with the transition team 2 weeks ago in the U.K. outside of Newcastle and Sunderland. They've made a tremendous amount of progress. And while we have a lot of work still to do, the team is focused and energized by the challenge. This is, by far, the most comprehensive systems project we've implemented. And while we have the finish line in sight, we need to cross over a series of testing hurdles before we throw the go-live switch. So far, so good, but lots to do. Importantly, despite a tougher year than planned, we have the changed agenda, associated with the SAP and EPC, EMEA, delivered slightly better than 10% operating margin in 2011, about a year ahead of our targeted delivery date and 800 basis points above the 2009 baseline. Read the rest of this transcript for free on seekingalpha.com