Eme r s on 2013 Ann u al R e por t 21 the share repurchase the impact of the sale is expected to be approximately neutral to 2014 earnings per share See Note 3 In October 2013 fscal 2014 the Company paid 506 million and assumed debt of 76 million to acquire Virgo Valves and Controls LTD a leading manufacturer of ball valves and automation systems and Enardo LLC a manufacturer of tank and terminal safety equipment used in the oil and gas chemical and other industries Both of these businesses are in the Process Management segment and will complement the existing portfolio and create opportunities for additional growth In 2012 the Company acquired Avtron Loadbank in Network Power and a marine controls and software solutions business in Climate Technologies Two smaller businesses were also acquired during 2012 in Process Management and Network Power Total cash paid for acquisitions in 2012 was approximately 187 million C OS t OF Sale S Cost of sales for 2013 and 2012 were 147 billion and 146 billion resulting in gross proft of 100 billion or 403 percent of sales in 2013 and 98 billion or 400 percent of sales in 2012 The increases in gross proft and margin primarily refect higher volume particularly in Process Management and materials cost containment and savings from cost reduction actions across the businesses Deleverage in Industrial Automation and Network Power product mix and pension and other costs were unfavorable Costs of sales for 2012 and 2011 were 146 billion and 147 billion resulting in gross proft of 98 billion or 400 percent of sales in 2012 and 96 billion or 395 percent of sales in 2011 Cost of sales was essentially fat due to savings from cost reduction actions offset by higher wage and other costs and incremental costs related to the Thailand supply chain disruption The increase in gross margin primarily refects leverage on higher volume and selling prices Additionally gross proft was negatively impacted by foreign currency translation due to the stronger US dollar Sell I n G Gene R al and a d MI n IS t R at I ve e x P en S e S Selling general and administrative SGA expenses of 56 billion increased 212 million compared with prior year SGA as a percent of sales was 229 percent in 2013 a 06 percentage point increase versus 223 percent in 2012 The increase in SGA primarily refects costs associated with higher volume 121 million of higher incentive stock compensation expense from the overlap of two performance shares programs and a higher stock price as well as higher pension and other costs Cost containment and the comparison effect of a 17 million charge in 2012 related to post65 supplemental retiree medical benefts had a favorable impact SGA expenses for 2012 were 54 billion or 223 percent of net sales an increase of 108 million and 03 percentage points compared with 53 billion and 220 percent for 2011 The increase in SGA as a percent of sales was largely due to the business mix impact from higher Process Management volume and deleverage on lower volume in Network Power Climate Technologies and Industrial Automation partially offset by signifcant cost reduction actions In addition SGA increased on costs associated with incremental volume and a 17 million charge related to the elimination of post65 supplemental retiree medical benefts for approximately 8000 active employees mostly offset by foreign currency translation and lower incentive stock compensation expense of 21 million G OO dw I ll I MP a IRM ent The Company has faced persistent challenges in the embedded computing and power business due to protracted weak demand structural industry developments and increased competition These challenges including weakness in telecommunication and mobile device markets continued into 2013 and sales and earnings were both below expectations In the third quarter of 2013 the Company recorded a noncash goodwill impairment charge of 503 million 475 million aftertax 065 per share Income tax charges of 70 million 010 per share for the anticipated repatriation of nonUS earnings from this business were also recorded in 2013 Additionally in the fourth quarter the Companys goodwill impairment testing indicated that the carrying value of the connectivity solutions business in Network Power exceeded its fair value due to operating results not meeting forecasted expectations resulting in a noncash pretax charge to earnings of 25 million 21 million aftertax 003 per share See Note 6 In the fourth quarter of 2012 the Company incurred an impairment charge for the embedded computing and power business and the DC power systems business after its goodwill impairment testing revealed that the carrying values of these businesses exceeded the fair values These businesses had been unable to meet operating objectives and the Company anticipated that growth in sales and earnings would be slower than previously expected given the end market circumstances noted previously The carrying value of these businesses was reduced by a noncash pretax charge to earnings totaling 592 million 528 million aftertax 072 per share In 2011 the Company recorded a 19 million 003 per share noncash impairment charge related to the Industrial Automation wind turbine pitch control business refecting a slowdown in investment for alternative energy