27 Metal-adjusted net sales in the Europe and Mediterranean segment increased $ 24.1 million , or 1% , in 2012 compared to 201 1 due to favorable selling price and product mix of $ 130.3 million and higher sales volumes of $21.9 million partially of fset by unfavorable foreign currency exchange rate changes of $ 128.1 million , primarily due to a weaker Euro relative to the U.S. dollar . V olume, as measured by metal pounds sold, increased by 8.2 million pounds, or 3% , in 2012 compared to 201 1 . The increase in volume is primarily attributable to the demand for utility products in France and increased exports from our Spanish facilities. Metal-adjusted net sales in the ROW segment increased $ 106.0 million , or 6% , due to favorable selling price and product mix of $ 176.3 million and net sales of $39.8 million attributable to acquisitions partially of fset by lower sales volume of $34.5 million and unfavorable foreign currency exchange rate changes of $ 75.6 million , primarily due to the weakening of certain currencies in Central and South America relative to the U.S. dollar . V olume, as measured by metal pounds sold, decreased by 3.2 million pounds, or 1% , in 2012 compared to 201 1 , which includes the benefit of 9.7 million pounds due to acquisitions. Excluding acquisitions, metal pounds sold decreased 12.9 million pounds, or 3%. The decline in metal pounds shipped is primarily attributable to aerial transmission product shipments in Brazil. Cost of Sales Cost of sales increased $ 141.1 million , or 3% , from 201 1 , principally due to higher sales volumes associated with acquisitions executed in 2012 . The increase in volume is of fset by lower average copper and aluminum costs in 2012 . As previously noted, cost of sales is raw material intensive with copper and aluminum comprising the major cost components for most of the Company's cable products. At current metal prices, material costs are approximately 85% of total product costs with copper and aluminum metal costs comprising approximately 55% of total product cost for the year ended December 31, 2012 . Gr oss Pr ofit Gross profit remained relatively flat in 2012 as compared to 201 1 . Gross profit as a percentage of sales was 10% in 2012 and 201 1 . Gross profit in the fourth quarter of 2012 was significantly impacted by changes in cost estimates relating to certain submarine turnkey projects in the European segment. In total, the changes in estimates across all submarine turnkey projects resulted in a reduction to gross profit of $27.5 million, with $20.8 million of the reduction associated with one certain submarine turnkey project at the Company's German submarine power cable manufacturing facility . Equipment failure at the German facility resulted in costs, for this particular project, related to cable damage, equipment repairs and ship rental of $13.3 million. Further revision of this project's profitability , due to changes in estimates, resulted in a reduction of mar gin by $7.5 million. The project is approximately 40% complete as of December 31, 2012 . There was no material impacts to gross profit as a result of changes in estimates related to revenue recognition under the percentage of completion method in 201 1 or 2010. Selling, General and Administrative Expense Selling, general and administrative expense increased $ 41.8 million , or 1 1% , in 2012 from 201 1 . The increase in selling, general, and administrative expense is primarily a result of $22.0 million in additional expenses associated with acquired businesses in 2012 and $9.1 million of costs related to the 2012 acquisitions and restatements. In addition, SG&A increased due to a settlement loss of $6.1 million in 2012 associated with the termination of a legacy pension plan in the United Kingdom which was allocated amongst the segments. Operating Income The following table sets forth operating income by segment, in millions of dollars. Operating Income (Loss) Y ear Ended   Dec 31, 2012 Dec 31, 2011   Amount % Amount % North America $ 126.1 65 % $ 121.8 53 % Europe and Mediterranean (13.0 ) (7 )% 30.3 13 % ROW 81.7 42 % 78.0 34 % Total operating income $ 194.8 100 % $ 230.1 100 % The increase in operating income for the North America segment of $ 4.3 million  was primarily attributable to increases in sales volume due to acquisitions executed in 2012, favorable market demand for bare aluminum transmission products related to aerial transmission grid projects as well as increased volume due to specialty cables. The increases to operating income were partially of fset by an increase in SG&A expense for costs related to the acquisitions and to the restatements of $9.1 million in 2012 . The decrease in operating income for the Europe and Mediterranean segment of $ 43.3 million was primarily attributable to changes in cost estimates relating to certain submarine turnkey projects of $27.5 million and continued weak demand and pricing due to T able of Contents