The Baby & Parenting segment net sales for the fourth quarter were $186.2 million, a 4.2 percent increase compared with the prior year quarter. Core sales in the segment increased 5.9 percent. The improvement was driven by Graco®’s strong share gains in North America and continued robust growth of Aprica® in Japan. Operating income in the Baby & Parenting segment was $12.8 million, or 6.9 percent of sales, compared with $13.5 million, or 7.6 percent of sales, in the prior year. The operating margin decline was driven by increased investments in advertising development and increased merchandising activity associated with sell in of 2013 innovation.

The Specialty segment net sales for the fourth quarter were $136.9 million, a 2.2 percent decrease compared with the prior year quarter. Core sales in the segment decreased 1.3 percent. Growth in the Dymo Office Labeling and Endicia businesses were offset by softness in Mimio® and Shur-line®. Operating income was $20.2 million, or 14.8 percent of sales, compared with $15.3 million, or 10.9 percent of sales, in the prior year. The operating margin improvement was attributable to Project Renewal-related cost reductions, which more than offset input cost inflation.

Twelve Month Results

Net sales for the twelve months ended December 31, 2012, increased 0.6 percent to $5.90 billion, compared with $5.86 billion in the prior year. Core sales increased 2.2 percent after excluding the 1.6 percent impact of unfavorable foreign currency translation. Core sales growth increased 40 basis points sequentially versus the 2011 core growth rate.

Both reported and normalized gross margin increased 20 basis points compared with prior year to 37.8 percent, as productivity gains and pricing more than offset the effect of input cost inflation.

Reported operating margin of 11.0 percent improved 660 basis points largely due to the impact of asset impairment charges in last year’s results. Normalized operating margin increased 10 basis points versus prior year to 12.6 percent.

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