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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 30, 2010
NEWELL RUBBERMAID INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 1-9608 | 36-3514169 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| Three Glenlake Parkway Atlanta, Georgia |
30328 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (770) 418-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. Results of Operations and Financial Condition.
The information in this Item 2.02, and the Exhibit attached to this Report, are furnished pursuant to Item 2.02 of Form 8-K. Consequently, such items are not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. Such items may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.
On July 30, 2010, Newell Rubbermaid Inc. (the “Company”) reported its results for the fiscal quarter ended June 30, 2010. The Company’s press release, dated July 30, 2010, and Additional Financial Information, is attached as Exhibit 99.1.
The press release and Additional Financial Information contain non-GAAP financial measures. For purposes of Securities and Exchange Commission Regulation G, a “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Operating and statistical measures and certain ratios and other statistical measures are not non-GAAP financial measures. For purposes of the definition, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, the Company has provided, as a part of the press release and Additional Financial Information, a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure.
The Company has used certain financial measures that are included in the press release and Additional Financial Information both in presenting its results to stockholders and the investment community and in its internal evaluation and management of its businesses. The Company’s management believes that these measures — including those that are “non-GAAP financial measures” — and the information they provide are useful to investors since these measures:
| • | enable investors and analysts to compare the current non-GAAP measures with the corresponding non-GAAP measures used in the past, and |
| • | permit investors to view the Company’s performance using the same tools that Company management uses to evaluate the Company’s past performance, reportable business segments and prospects for future performance and to gauge the Company’s progress in achieving its stated goals. |
The Company’s management believes that operating income, excluding charges, as well as “Normalized” earnings are also useful because they provide investors with a meaningful perspective on the current underlying performance of the Company’s continuing operations. The Company’s management believes that free cash flow, defined by the Company as cash generated from operations less capital expenditures, is useful to investors because it is an indication of amounts of cash flow that may be available for dividends, repayment of debt and further investment in future growth initiatives. The Company’s management believes that adjusted sales, as reflected in the Currency Analysis included in Exhibit 99.1, is useful to investors because it demonstrates the effect of foreign currency translation on reported sales. The Company’s management believes that “Normalized” earnings per share, which excludes restructuring charges and one-time events such as tax benefits and certain other items, is useful to investors because it permits investors to better understand year-over-year changes in underlying operating performance. Another purpose for which the Company uses “Normalized” earnings per share and free cash flow is as performance goals that help determine the amount, if any, of cash bonuses for corporate management and other employees under the Company’s management cash bonus plan.
While the Company believes that these non-GAAP financial measures are useful in evaluating the Company’s performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
| Item 7.01. | Regulation FD Disclosure. |
The information set forth under Item 2.02 above and in Exhibit 99.1 to this Report is also intended to be furnished under this Item 7.01 and is hereby incorporated by reference.
| Item 8.01. | Other Events. |
As previously reported, the Company has received an IRS Revenue Agent Report for tax years 2005 and 2006, assessing additional tax and interest relating to the Company’s 2005 and 2006 U.S. federal income tax returns. The Company filed a protest against certain adjustments within the Revenue Agent Report and requested a conference with the IRS Appeals Office. The Company is in on-going settlement discussions with the Appeals Office that may resolve this dispute and finalize the examination of these returns. If resolved, the Company may reduce its unrecognized tax benefits balance and related accruals, the aggregate amount of which may be material, although a reasonable estimate of the range cannot be made. The Company does not expect to make additional material cash payments upon settlement of the examination. However, there can be no assurance that the Company will be able to finalize the examination on the terms currently under discussion, or on any terms that would result in a reduction in the Company’s unrecognized tax benefits balance and reversal of related accruals.
| Item 9.01. | Financial Statements and Exhibits. |
(c) Exhibits.
| Exhibit |
Description | |
| 99.1 | Press Release, dated July 30, 2010 issued by Newell Rubbermaid Inc., and Additional Financial Information | |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NEWELL RUBBERMAID INC. | ||||||
| Date: July 30, 2010 | By: | /s/ John K. Stipancich | ||||
| John K. Stipancich Senior Vice President, General Counsel and Corporate Secretary | ||||||
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| Exhibit No. |
Description | |
| 99.1 | Press Release, dated July 30, 2010, issued by Newell Rubbermaid Inc., and Additional Financial Information | |
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Exhibit 99.1
> News Release |
Newell Rubbermaid Reports Second Quarter 2010 Results
Normalized EPS of $0.51; Raising FY2010 Guidance
Gross Margin Expansion of 220 Basis Points
Strong Operating Cash Flow
ATLANTA, July 30, 2010 – Newell Rubbermaid (NYSE: NWL) today announced second quarter 2010 financial results, including normalized earnings per share of $0.51, an 8.5 percent improvement over prior year results, and gross margin expansion of 220 basis points. The company also reported operating cash flow of $154.0 million, a 55.2 percent improvement over the prior year quarter.
“I am very pleased with the performance of our business,” said Mark Ketchum, President and Chief Executive Officer. “We delivered strong second quarter results across almost all metrics, including core sales growth of almost 4 percent, if adjusted for the customer orders shift from the second quarter to the first quarter in advance of an April SAP implementation. This growth was the result of a combination of market share gains and distribution wins as well as strong consumer demand in Latin American and developing markets in EMEA. We also generated significant improvement in gross margin this quarter driven by productivity gains and improved product mix. The solid progress we’ve made year to date despite a lackluster economy gives us increased confidence that our business model is working.”
Net sales in the second quarter were $1.50 billion, down 0.5 percent compared with the prior year. Core sales improved 1.5 percent. Core sales growth was 3.8 percent if adjusted for a timing shift in customer buying patterns from the second quarter to the first quarter in advance of an April SAP implementation at the Rubbermaid Consumer and Rubbermaid Commercial Products business units. The year over year impact of last year’s product line exits reduced net sales by 1.9 percent, and foreign currency translation had a nominal impact on sales.
Gross margin for the quarter was 39.3 percent, up 220 basis points from last year as productivity gains and improved product mix more than offset the impact of input cost inflation.
Operating income was $226.3 million, or 15.1 percent of sales, excluding $22.8 million of Project Acceleration restructuring costs and restructuring related costs incurred in connection with the European Transformation Plan. In 2009, operating income was $229.0 million, or 15.2 percent of sales, excluding Project Acceleration restructuring costs of $29.5 million.
Normalized earnings were $0.51 per diluted share, compared to prior year results of $0.47 per diluted share, driven primarily by improved gross margin and a lower tax rate resulting from the resolution of a tax examination. For the second quarter 2010, normalized diluted earnings per share exclude $0.06 per diluted share for restructuring and restructuring related costs, net of tax, $0.05 per diluted share of dilution related to the conversion feature of the convertible notes issued
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
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> News Release |
in March 2009 and the impact of associated hedge transactions, and a benefit of $0.01 per diluted share related to the impact of hyperinflationary accounting for the company’s Venezuelan operations. For the second quarter 2009, normalized earnings per share exclude $0.08 per diluted share for Project Acceleration restructuring costs, net of tax, $0.01 per diluted share of dilution related to the conversion feature of the convertible notes issued in March 2009 and the impact of associated hedge transactions, and one-time costs of $0.01 per diluted share incurred for the early retirement of $325 million principal amount of medium-term notes. (A reconciliation of the “as reported” results to “normalized” results is included below.)
Net income, as reported, was $130.4 million, or $0.41 per diluted share, for the second quarter. This compares to $105.7 million, or $0.37 per diluted share, in the prior year.
The company generated operating cash flow of $154.0 million during the second quarter, compared to $99.2 million in the comparable period last year. The improvement was driven by increased earnings and working capital improvement. Capital expenditures were $37.8 million in the second quarter, compared to $38.3 million in the prior year.
A reconciliation of the second quarter 2010 and last year’s results is as follows:
| Q2 2010 | Q2 2009 | ||||||
| Diluted earnings per share (as reported) |
$ | 0.41 | $ | 0.37 | |||
| Restructuring and restructuring related costs, net of tax |
$ | 0.06 | $ | 0.08 | |||
| Convertible notes dilution |
$ | 0.05 | $ | 0.01 | |||
| Other items, net of tax |
($ | 0.01 | ) | $ | 0.01 | ||
| “Normalized” EPS |
$ | 0.51 | $ | 0.47 | |||
Six Months Results
Net sales for the six months ended June 30, 2010 increased 3.5 percent to $2.80 billion, compared to $2.71 billion in the prior year. Core sales increased 4.1 percent for the six months. Foreign currency translation increased net sales by 1.0 percent, while the year over year impact of last year’s product line exits lowered net sales by 1.6 percent.
Gross margin was 37.8 percent, a 160 basis point improvement versus the prior year. Productivity gains and improved product mix more than offset the effect of input cost inflation.
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
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> News Release |
Normalized earnings, which exclude the same items as those in the second quarter 2010, were $0.77 per diluted share, compared to $0.67 per diluted share in the prior year. (A reconciliation of the “as reported” results to “normalized” results is included below.)
Net income, as reported, was $188.8 million, or $0.61 per diluted share. This compares to $139.4 million, or $0.49 per diluted share, in the prior year.
The company generated operating cash flow of $183.4 million during the first six months of 2010, compared to $88.0 million in the prior year, driven by increased earnings and working capital improvement. Capital expenditures were $69.3 million, compared to $70.7 million in the prior year.
A reconciliation of the first six months 2010 and last year’s results is as follows:
| YTD Q2 2010 | YTD Q2 2009 | ||||
| Diluted earnings per share (as reported) |
$0.61 | $0.49 | |||
| Restructuring and restructuring related costs, net of tax |
$0.10 | $0.16 | |||
| Convertible notes dilution |
$0.07 | $0.01 | |||
| Other items, net of tax |
($0.01 | ) | $0.01 | ||
| “Normalized” EPS |
$0.77 | $0.67 | |||
2010 Full Year Outlook
The company continues to expect 2010 net sales growth in the low to mid single digit range. However, the company is raising its expectations for core sales growth to mid single digits, as compared with low to mid single digits in its previous guidance. The impact of 2009 product exits is expected to be a negative one to two percent, and the impact from foreign currency is expected to be modestly negative.
The company still expects gross margin to improve 75 to 100 basis points with the combination of productivity, mix and pricing more than offsetting the impact of expected input cost inflation.
The company is raising its guidance for expected 2010 normalized earnings from its previously communicated range of $1.38 to $1.48 per diluted share to its new expectation of $1.40 to $1.50 per diluted share.
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
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> News Release |
Operating cash flow is expected to exceed $500 million for the full year, including approximately $70 to $100 million in restructuring cash payments. The company expects capital expenditures of approximately $160 to $170 million.
A reconciliation of the 2010 earnings outlook is as follows:
| FY 2010 | ||||
| Diluted earnings per share |
$ | 1.16 to $1.26 | ||
| Restructuring and restructuring related costs, net of tax |
$ | 0.20 to $0.30 | ||
| Other items, net of tax |
($0.01 | ) | ||
| Convertible notes dilution |
(A | ) | ||
| “Normalized” EPS |
$ | 1.40 to $1.50 | ||
| (A) | No provision is made in the 2010 outlook for potential dilution from the conversion feature of the convertible notes issued in March 2009 and associated hedge transactions, as the amount of full year 2010 dilution is dependent on the average stock price in each quarter of 2010. The conversion feature of the convertible notes and associated hedge transactions resulted in dilution of $0.07 per diluted share in the first six months of 2010 and $0.06 per diluted share for the full year 2009. |
Conference Call
The company’s second quarter 2010 earnings conference call is scheduled for today, July 30, 2010, at 9:00 am ET. To listen to the webcast, use the link provided under Events & Presentations in the Investor Relations section of Newell Rubbermaid’s Web site at www.newellrubbermaid.com. The webcast will be available for replay for two weeks. A brief supporting slide presentation will be available prior to the call under Quarterly Earnings in the Investor Relations section on the company’s Web site.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this release is a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2009 sales of approximately $5.6 billion and a strong portfolio of brands, including Rubbermaid®, Sharpie®, Graco®, Calphalon®, Irwin®, Lenox®, Levolor®, Paper Mate®, Dymo®, Waterman®, Parker®, Goody®, Technical ConceptsTM and Aprica®.
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
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> News Release |
This press release and additional information about Newell Rubbermaid are available on the company’s Web site, www.newellrubbermaid.com.
Contacts:
| Nancy O’Donnell Vice President, Investor Relations +1 (770) 418-7723 |
David Doolittle Vice President, Corporate Communications +1 (770) 418-7519 |
Caution Concerning Forward-Looking Statements
Statements in this press release that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income or gross margin improvements or declines, Project Acceleration, the European Transformation Plan, capital and other expenditures, cash flow, dividends, restructuring costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, and management’s plans, projections and objectives for future operations and performance. These statements are accompanied by words such as “anticipate,” “expect,” “project,” “will,” “believe,” “estimate” and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the global economic slowdown; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers’ strong bargaining power; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands; our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; our ability to implement successfully information technology solutions throughout our organization; our ability to improve productivity and streamline operations; our ability to refinance short-term debt on terms acceptable to us, particularly given the uncertainties in the global credit markets; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations and those factors listed in the company’s latest quarterly report on Form 10-Q, and exhibit 99.1 thereto, filed with the Securities and Exchange Commission. Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of “As Reported” Results to “Normalized” Results
| Three Months Ended June 30, | |||||||||||||||||||||||||||
| 2010 | 2009 | YOY % Change |
|||||||||||||||||||||||||
| As Reported | Excluded Items (1) |
Normalized | As Reported | Excluded Items (2) |
Normalized | ||||||||||||||||||||||
| Net sales |
$ | 1,496.2 | $ | — | $ | 1,496.2 | $ | 1,504.3 | $ | — | $ | 1,504.3 | (0.5 | )% | |||||||||||||
| Cost of products sold |
908.9 | — | 908.9 | 946.0 | — | 946.0 | |||||||||||||||||||||
| GROSS MARGIN |
587.3 | — | 587.3 | 558.3 | — | 558.3 | 5.2 | % | |||||||||||||||||||
| % of sales |
39.3 | % | 39.3 | % | 37.1 | % | 37.1 | % | |||||||||||||||||||
| Selling, general & administrative expenses |
362.6 | (1.6 | ) | 361.0 | 329.3 | — | 329.3 | 9.6 | % | ||||||||||||||||||
| % of sales |
24.2 | % | 24.1 | % | 21.9 | % | 21.9 | % | |||||||||||||||||||
| Restructuring costs |
21.2 | (21.2 | ) | — | 29.5 | (29.5 | ) | — | |||||||||||||||||||
| OPERATING INCOME |
203.5 | 22.8 | 226.3 | 199.5 | 29.5 | 229.0 | (1.2 | )% | |||||||||||||||||||
| % of sales |
13.6 | % | 15.1 | % | 13.3 | % | 15.2 | % | |||||||||||||||||||
| Nonoperating expenses: |
|||||||||||||||||||||||||||
| Interest expense, net |
33.2 | — | 33.2 | 40.3 | — | 40.3 | |||||||||||||||||||||
| Other (income) expense, net |
(5.9 | ) | 5.6 | (0.3 | ) | 1.2 | (4.7 | ) | (3.5 | ) | |||||||||||||||||
| 27.3 | 5.6 | 32.9 | 41.5 | (4.7 | ) | 36.8 | (10.6 | )% | |||||||||||||||||||
| INCOME BEFORE INCOME TAXES |
176.2 | 17.2 | 193.4 | 158.0 | 34.2 | 192.2 | 0.6 | % | |||||||||||||||||||
| % of sales |
11.8 | % | 12.9 | % | 10.5 | % | 12.8 | % | |||||||||||||||||||
| Income taxes |
45.8 | 2.2 | 48.0 | 52.3 | 8.0 | 60.3 | (20.4 | )% | |||||||||||||||||||
| Effective rate |
26.0 | % | 24.8 | % | 33.1 | % | 31.4 | % | |||||||||||||||||||
| NET INCOME (3) |
$ | 130.4 | $ | 15.0 | $ | 145.4 | $ | 105.7 | $ | 26.2 | $ | 131.9 | 10.2 | % | |||||||||||||
| % of sales |
8.7 | % | 9.7 | % | 7.0 | % | 8.8 | % | |||||||||||||||||||
| EARNINGS PER SHARE: |
|||||||||||||||||||||||||||
| Basic |
$ | 0.46 | $ | 0.06 | $ | 0.52 | $ | 0.38 | $ | 0.09 | $ | 0.47 | |||||||||||||||
| Diluted |
$ | 0.41 | $ | 0.10 | $ | 0.51 | $ | 0.37 | $ | 0.10 | $ | 0.47 | |||||||||||||||
| AVERAGE SHARES OUTSTANDING: |
|
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| Basic |
281.5 | 281.5 | 280.8 | 280.8 | |||||||||||||||||||||||
| Diluted |
315.4 | 292.6 | 286.8 | 290.1 | |||||||||||||||||||||||
| (1) | Items excluded from “normalized” results for 2010 consist of $1.6 million of restructuring related costs incurred in connection with the European Transformation Plan, net of tax effects, $21.2 million of Project Acceleration restructuring costs, including asset impairment charges and employee termination and other costs, net of tax effects, the net of tax impact of a $5.6 million gain resulting from hyperinflationary accounting for the Company’s Venezuelan operations, as well as the dilutive impact of the conversion feature of the convertible notes issued in March 2009 and the associated hedge transactions. |
| (2) | Items excluded from “normalized” results for 2009 consist of $29.5 million of restructuring costs, including asset impairment charges and employee termination and other costs, and the associated tax effects, $4.7 million of debt extinguishment charges, net of tax effects, as well as the dilutive impact of the conversion feature of the convertible notes issued in March 2009 and the associated hedge transactions. |
| (3) | Net income attributable to noncontrolling interests was not material in either of the periods presented. |
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of “As Reported” Results to “Normalized” Results
| Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2010 | 2009 | YOY % Change |
|||||||||||||||||||||||||
| As Reported | Excluded Items (1) |
Normalized | As Reported | Excluded Items (2) |
Normalized | ||||||||||||||||||||||
| Net sales |
$ | 2,802.6 | $ | — | $ | 2,802.6 | $ | 2,708.2 | $ | — | $ | 2,708.2 | 3.5 | % | |||||||||||||
| Cost of products sold |
1,743.6 | — | 1,743.6 | 1,727.1 | — | 1,727.1 | |||||||||||||||||||||
| GROSS MARGIN |
1,059.0 | — | 1,059.0 | 981.1 | — | 981.1 | 7.9 | % | |||||||||||||||||||
| % of sales |
37.8 | % | 37.8 | % | 36.2 | % | 36.2 | % | |||||||||||||||||||
| Selling, general & administrative expenses |
688.2 | (1.6 | ) | 686.6 | 640.8 | — | 640.8 | 7.1 | % | ||||||||||||||||||
| % of sales |
24.6 | % | 24.5 | % | 23.7 | % | 23.7 | % | |||||||||||||||||||
| Restructuring costs |
37.2 | (37.2 | ) | — | 60.0 | (60.0 | ) | — | |||||||||||||||||||
| OPERATING INCOME |
333.6 | 38.8 | 372.4 | 280.3 | 60.0 | 340.3 | 9.4 | % | |||||||||||||||||||
| % of sales |
11.9 | % | 13.3 | % | 10.4 | % | 12.6 | % | |||||||||||||||||||
| Nonoperating expenses: |
|||||||||||||||||||||||||||
| Interest expense, net |
65.2 | — | 65.2 | 70.9 | — | 70.9 | |||||||||||||||||||||
| Other (income) expense, net |
(6.2 | ) | 5.6 | (0.6 | ) | 1.9 | (4.7 | ) | (2.8 | ) | |||||||||||||||||
| 59.0 | 5.6 | 64.6 | 72.8 | (4.7 | ) | 68.1 | (5.1 | )% | |||||||||||||||||||
| INCOME BEFORE INCOME TAXES |
274.6 | 33.2 | 307.8 | 207.5 | 64.7 | 272.2 | 13.1 | % | |||||||||||||||||||
| % of sales |
9.8 | % | 11.0 | % | 7.7 | % | 10.1 | % | |||||||||||||||||||
| Income taxes |
85.8 | 4.7 | 90.5 | 68.1 | 16.7 | 84.8 | 6.7 | % | |||||||||||||||||||
| Effective rate |
31.2 | % | 29.4 | % | 32.8 | % | 31.2 | % | |||||||||||||||||||
| NET INCOME (3) |
$ | 188.8 | $ | 28.5 | $ | 217.3 | $ | 139.4 | $ | 48.0 | $ | 187.4 | 16.0 | % | |||||||||||||
| % of sales |
6.7 | % | 7.8 | % | 5.1 | % | 6.9 | % | |||||||||||||||||||
| EARNINGS PER SHARE: |
|||||||||||||||||||||||||||
| Basic |
$ | 0.67 | $ | 0.10 | $ | 0.77 | $ | 0.50 | $ | 0.17 | $ | 0.67 | |||||||||||||||
| Diluted |
$ | 0.61 | $ | 0.16 | $ | 0.77 | $ | 0.49 | $ | 0.18 | $ | 0.67 | |||||||||||||||
| AVERAGE SHARES OUTSTANDING: |
|
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| Basic |
281.3 | 281.3 | 280.7 | 280.7 | |||||||||||||||||||||||
| Diluted |
311.6 | 283.6 | 283.7 | 281.2 | |||||||||||||||||||||||
| (1) | Items excluded from “normalized” results for 2010 consist of $1.6 million of restructuring related costs incurred in connection with the European Transformation Plan, net of tax effects, $37.2 million of Project Acceleration restructuring costs, including asset impairment charges and employee termination and other costs, net of tax effects, the net of tax impact of a $5.6 million gain resulting from hyperinflationary accounting for the Company’s Venezuelan operations, as well as the dilutive impact of the conversion feature of the convertible notes issued in March 2009 and the associated hedge transactions. |
| (2) | Items excluded from “normalized” results for 2009 consist of $60.0 million of restructuring costs, including asset impairment charges and employee termination and other costs, and the associated tax effects, $4.7 million of debt extinguishment charges, net of tax effects, as well as the dilutive impact of the conversion feature of the convertible notes issued in March 2009 and the associated hedge transactions. |
| (3) | Net income attributable to noncontrolling interests was not material in either of the periods presented. |
Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
| June 30, 2010 |
June 30, 2009 | |||||
| Assets: |
||||||
| Cash and cash equivalents |
$ | 259.8 | $ | 418.1 | ||
| Accounts receivable, net |
1,037.6 | 1,096.2 | ||||
| Inventories, net |
802.4 | 848.4 | ||||
| Deferred income taxes |
195.7 | 129.6 | ||||
| Prepaid expenses and other |
105.3 | 110.5 | ||||
| Total Current Assets |
2,400.8 | 2,602.8 | ||||
| Property, plant and equipment, net |
536.3 | 603.1 | ||||
| Goodwill |
2,701.7 | 2,722.0 | ||||
| Other intangible assets, net |
636.6 | 645.6 | ||||
| Other assets |
289.1 | 342.7 | ||||
| Total Assets |
$ | 6,564.5 | $ | 6,916.2 | ||
| Liabilities and Stockholders’ Equity: |
||||||
| Accounts payable |
$ | 597.2 | $ | 460.8 | ||
| Accrued compensation |
122.0 | 111.8 | ||||
| Other accrued liabilities |
651.0 | 659.2 | ||||
| Short-term debt |
1.0 | 7.1 | ||||
| Current portion of long-term debt |
393.0 | 627.1 | ||||
| Total Current Liabilities |
1,764.2 | 1,866.0 | ||||
| Long-term debt |
2,049.3 | 2,393.5 | ||||
| Deferred income taxes |
25.7 | — | ||||
| Other non-current liabilities |
826.4 | 873.9 | ||||
| Stockholders’ Equity—Parent |
1,895.4 | 1,779.2 | ||||
| Stockholders’ Equity—Noncontrolling Interests |
3.5 | 3.6 | ||||
| Total Stockholders’ Equity |
1,898.9 | 1,782.8 | ||||
| Total Liabilities and Stockholders’ Equity |
$ | 6,564.5 | $ | 6,916.2 | ||
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
| Six Months Ended June 30, | ||||||||
| 2010 | 2009 | |||||||
| Operating Activities: |
||||||||
| Net income |
$ | 188.8 | $ | 139.4 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
86.9 | 83.9 | ||||||
| Deferred income taxes |
16.7 | 14.8 | ||||||
| Non-cash restructuring costs |
1.9 | 13.3 | ||||||
| Stock-based compensation expense |
18.8 | 16.6 | ||||||
| Other |
12.7 | 12.9 | ||||||
| Changes in operating assets and liabilities, excluding the effects of acquisitions: |
||||||||
| Accounts receivable |
(165.1 | ) | (115.3 | ) | ||||
| Inventories |
(131.8 | ) | 78.3 | |||||
| Accounts payable |
172.4 | (77.8 | ) | |||||
| Accrued liabilities and other |
(17.9 | ) | (78.1 | ) | ||||
| Net cash provided by operating activities |
$ | 183.4 | $ | 88.0 | ||||
| Investing Activities: |
||||||||
| Acquisitions and acquisition related activity |
$ | (1.5 | ) | $ | (12.1 | ) | ||
| Capital expenditures |
(69.3 | ) | (70.7 | ) | ||||
| Proceeds from sales of non-current assets |
8.7 | 5.7 | ||||||
| Other |
(2.0 | ) | — | |||||
| Net cash used in investing activities |
$ | (64.1 | ) | $ | (77.1 | ) | ||
| Financing Activities: |
||||||||
| Proceeds from issuance of debt, net of debt issuance costs |
$ | 2.4 | $ | 759.8 | ||||
| Proceeds from issuance of warrants |
— | 32.7 | ||||||
| Purchase of call options |
— | (69.0 | ) | |||||
| Payments on notes payable and debt |
(108.4 | ) | (517.2 | ) | ||||
| Cash dividends |
(28.0 | ) | (43.4 | ) | ||||
| Purchase of noncontrolling interests in consolidated subsidiaries |
— | (29.0 | ) | |||||
| Other, net |
(3.1 | ) | (4.1 | ) | ||||
| Net cash (used in) provided by financing activities |
$ | (137.1 | ) | $ | 129.8 | |||
| Currency rate effect on cash and cash equivalents |
$ | (0.7 | ) | $ | 2.0 | |||
| (Decrease) increase in cash and cash equivalents |
$ | (18.5 | ) | $ | 142.7 | |||
| Cash and cash equivalents at beginning of period |
278.3 | 275.4 | ||||||
| Cash and cash equivalents at end of period |
$ | 259.8 | $ | 418.1 | ||||
Newell Rubbermaid Inc.
Financial Worksheet
(In Millions)
| 2010 | 2009 | Year-over-year changes | ||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation (1) | Reconciliation (1) | Net Sales | Normalized OI | |||||||||||||||||||||||||||||||||||||||||||||
| Net Sales |
Reported OI |
Excluded Items |
Normalized OI |
Operating Margin |
Net Sales |
Reported OI |
Excluded Items |
Normalized OI |
Operating Margin |
$ | % | $ | % | |||||||||||||||||||||||||||||||||||
| Q1: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Home & Family |
$ | 556.9 | $ | 68.8 | $ | — | $ | 68.8 | 12.4 | % | $ | 557.7 | $ | 60.3 | $ | — | $ | 60.3 | 10.8 | % | $ | (0.8 | ) | (0.1 | )% | $ | 8.5 | 14.1 | % | |||||||||||||||||||
| Office Products |
351.6 | 47.3 | — | 47.3 | 13.5 | % | 318.2 | 31.1 | — | 31.1 | 9.8 | % | 33.4 | 10.5 | % | 16.2 | 52.1 | % | ||||||||||||||||||||||||||||||
| Tools, Hardware & Commercial Products |
397.9 | 51.6 | — | 51.6 | 13.0 | % | 328.0 | 38.0 | — | 38.0 | 11.6 | % | 69.9 | 21.3 | % | 13.6 | 35.8 | % | ||||||||||||||||||||||||||||||
| Restructuring Costs |
— | (16.0 | ) | 16.0 | — | — | (30.5 | ) | 30.5 | — | ||||||||||||||||||||||||||||||||||||||
| Corporate |
— | (21.6 | ) | — | (21.6 | ) | — | (18.1 | ) | — | (18.1 | ) | (3.5 | ) | (19.3 | )% | ||||||||||||||||||||||||||||||||
| Total |
$ | 1,306.4 | $ | 130.1 | $ | 16.0 | $ | 146.1 | 11.2 | % | $ | 1,203.9 | $ | 80.8 | $ | 30.5 | $ | 111.3 | 9.2 | % | $ | 102.5 | 8.5 | % | $ | 34.8 | 31.3 | % | ||||||||||||||||||||
| 2010 | 2009 | Year-over-year changes | ||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation (2) | Reconciliation (1) | Net Sales | Normalized OI | |||||||||||||||||||||||||||||||||||||||||||||
| Net Sales |
Reported OI |
Excluded Items |
Normalized OI |
Operating Margin |
Net Sales |
Reported OI |
Excluded Items |
Normalized OI |
Operating Margin |
$ | % | $ | % | |||||||||||||||||||||||||||||||||||
| Q2: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Home & Family |
$ | 592.0 | $ | 75.6 | $ | — | $ | 75.6 | 12.8 | % | $ | 617.2 | $ | 80.4 | $ | — | $ | 80.4 | 13.0 | % | $ | (25.2 | ) | (4.1 | )% | $ | (4.8 | ) | (6.0 | )% | ||||||||||||||||||
| Office Products |
483.5 | 99.4 | — | 99.4 | 20.6 | % | 496.9 | 99.2 | — | 99.2 | 20.0 | % | (13.4 | ) | (2.7 | )% | 0.2 | 0.2 | % | |||||||||||||||||||||||||||||
| Tools, Hardware & Commercial Products |
420.7 | 70.1 | — | 70.1 | 16.7 | % | 390.2 | 67.6 | — | 67.6 | 17.3 | % | 30.5 | 7.8 | % | 2.5 | 3.7 | % | ||||||||||||||||||||||||||||||
| Restructuring Costs |
— | (21.2 | ) | 21.2 | — | — | (29.5 | ) | 29.5 | — | ||||||||||||||||||||||||||||||||||||||
| Corporate |
— | (20.4 | ) | 1.6 | (18.8 | ) | — | (18.2 | ) | — | (18.2 | ) | (0.6 | ) | (3.3 | )% | ||||||||||||||||||||||||||||||||
| Total |
$ | 1,496.2 | $ | 203.5 | $ | 22.8 | $ | 226.3 | 15.1 | % | $ | 1,504.3 | $ | 199.5 | $ | 29.5 | $ | 229.0 | 15.2 | % | $ | (8.1 | ) | (0.5 | )% | $ | (2.7 | ) | (1.2 | )% | ||||||||||||||||||
| 2010 | 2009 | Year-over-year changes | ||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation (2) | Reconciliation (1) | Net Sales | Normalized OI | |||||||||||||||||||||||||||||||||||||||||||||
| Net Sales |
Reported OI |
Excluded Items |
Normalized OI |
Operating Margin |
Net Sales |
Reported OI |
Excluded Items |
Normalized OI |
Operating Margin |
$ | % | $ | % | |||||||||||||||||||||||||||||||||||
| YTD: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Home & Family |
$ | 1,148.9 | $ | 144.4 | $ | — | $ | 144.4 | 12.6 | % | $ | 1,174.9 | $ | 140.7 | $ | — | $ | 140.7 | 12.0 | % | $ | (26.0 | ) | (2.2 | )% | $ | 3.7 | 2.6 | % | |||||||||||||||||||
| Office Products |
835.1 | 146.7 | — | 146.7 | 17.6 | % | 815.1 | 130.3 | — | 130.3 | 16.0 | % | 20.0 | 2.5 | % | 16.4 | 12.6 | % | ||||||||||||||||||||||||||||||
| Tools, Hardware & Commercial Products |
818.6 | 121.7 | — | 121.7 | 14.9 | % | 718.2 | 105.6 | — | 105.6 | 14.7 | % | 100.4 | 14.0 | % | 16.1 | 15.2 | % | ||||||||||||||||||||||||||||||
| Restructuring Costs |
— | (37.2 | ) | 37.2 | — | (60.0 | ) | 60.0 | — | |||||||||||||||||||||||||||||||||||||||
| Corporate |
— | (42.0 | ) | 1.6 | (40.4 | ) | (36.3 | ) | — | (36.3 | ) | (4.1 | ) | (11.3 | )% | |||||||||||||||||||||||||||||||||
| Total |
$ | 2,802.6 | $ | 333.6 | $ | 38.8 | $ | 372.4 | 13.3 | % | $ | 2,708.2 | $ | 280.3 | $ | 60.0 | $ | 340.3 | 12.6 | % | $ | 94.4 | 3.5 | % | $ | 32.1 | 9.4 | % | ||||||||||||||||||||
| (1) | Excluded items are related to Project Acceleration costs. |
| (2) | Excluded items are related to Project Acceleration costs and restructuring related costs incurred in connection with the European Transformation Plan. |
Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
| Three Months Ended June 30, |
||||||||
| 2010 | 2009 | |||||||
| Free Cash Flow (in millions): |
||||||||
| Net cash provided by operating activities |
$ | 154.0 | $ | 99.2 | ||||
| Capital expenditures |
(37.8 | ) | (38.3 | ) | ||||
| Free Cash Flow |
$ | 116.2 | $ | 60.9 | ||||
| Six Months Ended June 30, |
||||||||
| 2010 | 2009 | |||||||
| Free Cash Flow (in millions): |
||||||||
| Net cash provided by operating activities |
$ | 183.4 | $ | 88.0 | ||||
| Capital expenditures |
(69.3 | ) | (70.7 | ) | ||||
| Free Cash Flow |
$ | 114.1 | $ | 17.3 | ||||
| (1) | Free Cash Flow is defined as cash flow provided by operating activities less capital expenditures. |
Newell Rubbermaid Inc.
Three Months Ended June 30, 2010
In Millions
Currency Analysis
| 2010 | 2009 | Year-Over-Year (Decrease) Increase | ||||||||||||||||||||
| Sales as Reported |
Currency Impact |
Adjusted Sales |
Sales as Reported |
Excluding Currency |
Including Currency |
Currency Impact |
||||||||||||||||
| By Segment | ||||||||||||||||||||||
| Home & Family |
$ | 592.0 | $ | (5.1 | ) | $ | 586.9 | $ | 617.2 | (4.9 | )% | (4.1 | )% | 0.8 | % | |||||||
| Office Products |
483.5 | 13.8 | 497.3 | 496.9 | 0.1 | % | (2.7 | )% | (2.8 | )% | ||||||||||||
| Tools, Hardware & Commercial Products |
420.7 | (6.5 | ) | 414.2 | 390.2 | 6.2 | % | 7.8 | % | 1.7 | % | |||||||||||
| Total Company |
$ | 1,496.2 | $ | 2.2 | $ | 1,498.4 | $ | 1,504.3 | (0.4 | )% | (0.5 | )% | (0.1 | )% | ||||||||
| By Geography | ||||||||||||||||||||||
| United States |
$ | 1,042.0 | $ | — | $ | 1,042.0 | $ | 1,071.7 | (2.8 | )% | (2.8 | )% | 0.0 | % | ||||||||
| Canada |
88.0 | (10.6 | ) | 77.4 | 85.5 | (9.5 | )% | 2.9 | % | 12.4 | % | |||||||||||
| Total North America |
1,130.0 | (10.6 | ) | 1,119.4 | 1,157.2 | (3.3 | )% | (2.4 | )% | 0.9 | % | |||||||||||
| Europe, Middle East and Africa |
215.2 | 10.8 | 226.0 | 208.8 | 8.2 | % | 3.1 | % | (5.2 | )% | ||||||||||||
| Latin America |
67.2 | 8.2 | 75.4 | 61.7 | 22.2 | % | 8.9 | % | (13.3 | )% | ||||||||||||
| Asia Pacific |
83.8 | (6.2 | ) | 77.6 | 76.6 | 1.3 | % | 9.4 | % | 8.1 | % | |||||||||||
| Total International |
366.2 | 12.8 | 379.0 | 347.1 | 9.2 | % | 5.5 | % | (3.7 | )% | ||||||||||||
| Total Company |
$ | 1,496.2 | $ | 2.2 | $ | 1,498.4 | $ | 1,504.3 | (0.4 | )% | (0.5 | )% | (0.1 | )% | ||||||||
Newell Rubbermaid Inc.
Six Months Ended June 30, 2010
In Millions
Currency Analysis
| 2010 | 2009 | Year-Over-Year (Decrease) Increase | ||||||||||||||||||||
| Sales as Reported |
Currency Impact |
Adjusted Sales |
Sales as Reported |
Excluding Currency |
Including Currency |
Currency Impact |
||||||||||||||||
| By Segment | ||||||||||||||||||||||
| Home & Family |
$ | 1,148.9 | $ | (15.9 | ) | $ | 1,133.0 | $ | 1,174.9 | (3.6 | )% | (2.2 | )% | 1.4 | % | |||||||
| Office Products |
835.1 | 10.2 | 845.3 | 815.1 | 3.7 | % | 2.5 | % | (1.3 | )% | ||||||||||||
| Tools, Hardware & Commercial Products |
818.6 | (21.7 | ) | 796.9 | 718.2 | 11.0 | % | 14.0 | % | 3.0 | % | |||||||||||
| Total Company |
$ | 2,802.6 | $ | (27.4 | ) | $ | 2,775.2 | $ | 2,708.2 | 2.5 | % | 3.5 | % | 1.0 | % | |||||||
| By Geography | ||||||||||||||||||||||
| United States |
$ | 1,946.6 | $ | — | $ | 1,946.6 | $ | 1,933.0 | 0.7 | % | 0.7 | % | 0.0 | % | ||||||||
| Canada |
166.0 | (22.6 | ) | 143.4 | 147.0 | (2.4 | )% | 12.9 | % | 15.4 | % | |||||||||||
| Total North America |
2,112.6 | (22.6 | ) | 2,090.0 | 2,080.0 | 0.5 | % | 1.6 | % | 1.1 | % | |||||||||||
| Europe, Middle East, and Africa |
404.0 | (2.3 | ) | 401.7 | 368.4 | 9.0 | % | 9.7 | % | 0.6 | % | |||||||||||
| Latin America |
122.9 | 12.2 | 135.1 | 115.4 | 17.1 | % | 6.5 | % | (10.6 | )% | ||||||||||||
| Asia Pacific |
163.1 | (14.7 | ) | 148.4 | 144.4 | 2.8 | % | 13.0 | % | 10.2 | % | |||||||||||
| Total International |
690.0 | (4.8 | ) | 685.2 | 628.2 | 9.1 | % | 9.8 | % | 0.8 | % | |||||||||||
| Total Company |
$ | 2,802.6 | $ | (27.4 | ) | $ | 2,775.2 | $ | 2,708.2 | 2.5 | % | 3.5 | % | 1.0 | % | |||||||
 Q2 2010 Earnings Call Presentation
July 30, 2010 |
 2
Forward-Looking Statement
2
Statements in this presentation that are not historical in nature constitute forward-looking
statements. These forward-looking statements relate to information or assumptions about the
effects of sales, income/(loss), earnings per share, operating income or gross margin
improvements or declines, Project Acceleration, the European Transformation Plan, capital and
other expenditures, cash flow, dividends, restructuring costs, costs and cost savings,
inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, and
management's plans, projections and objectives for future operations and performance. These statements
are accompanied by words such as "anticipate," "expect," "project,"
"will," "believe," "estimate" and similar expressions. Actual results
could differ materially from those expressed or implied in the forward-looking statements. Important
factors that could cause actual results to differ materially from those suggested by the
forward-looking statements include, but are not limited to, our dependence on the strength
of retail, commercial and industrial sectors of the economy in light of the global economic
slowdown; currency fluctuations; competition with other manufacturers and distributors of
consumer products; major retailers' strong bargaining power; changes in the prices of raw materials
and sourced products and our ability to obtain raw materials and sourced products in a timely manner
from suppliers; our ability to develop innovative new products and to develop, maintain and
strengthen our end-user brands; our ability to expeditiously close facilities and move
operations while managing foreign regulations and other impediments; our ability to implement
successfully information technology solutions throughout our organization; our ability to
improve productivity and streamline operations; our ability to refinance short-term debt on
terms acceptable to us, particularly given uncertainties in the global credit markets; changes to our credit
ratings; significant increases in the funding obligations related to our pension plans due to
declining asset values or otherwise; the imposition of tax liabilities greater than our
provisions for such matters; the risks inherent in our foreign operations and those factors
listed in the company’s latest quarterly report on Form 10-Q, and exhibit 99.1
thereto, filed with the Securities and Exchange Commission. Changes in such assumptions or factors
could produce significantly different results. The information contained in this presentation
is as of the date indicated. The company assumes no obligation to update any forward-looking
statements contained in this presentation as a result of new information or future events or
developments. |
 3
»
Normalized EPS of $0.51; improvement versus prior year quarter
normalized EPS of $0.47 primarily driven by expanded gross margins,
offset by a return to more normal levels of brand building and other
strategic spend, and a lower tax rate due to the favorable resolution of a
tax examination
»
Net Sales of $1.5 billion, a slight decline versus the prior year, included a
1.5% increase in core sales offset by the impact of last year’s product line
exits of (1.9%); foreign currency had a nominal impact for the quarter
»
Core Sales growth in the quarter of 3.8%, after adjusting for the first
quarter pre-buying by certain customers in advance of SAP go-live
»
Gross Margin expansion of 220 basis points to 39.3%
Year-over-year expansion fueled by productivity gains and improved
product mix, which more than offset higher input costs
»
Operating Cash Flow of $154.0 million, compared to $99.2 million
last year,
driven by increased earnings and working capital improvement
Q2 2010 Summary |
 4
»
Normalized EPS of $0.77; strong improvement versus prior year’s
normalized EPS of $0.67 driven primarily by increases in core sales and
expanded gross margins
»
Net Sales of $2.8 billion, a 3.5% increase over the prior year, consisted of
a 4.1% increase in core sales and a 1.0% increase resulting from
foreign
currency, offset by the impact of last year’s product line exits of (1.6%)
»
Gross Margin expansion of 160 basis points to 37.8%
Year-over-year expansion fueled by productivity gains and improved
product mix, which more than offset the effect of input cost inflation
»
Operating Cash Flow of $183.4 million, compared to $88.0 million
last
year, driven by increased earnings and working capital improvement;
capital expenditures were $69.3 million, compared to $70.7 million in the
prior year
YTD Q2 2010 Summary |
 5
Q2 Sales: Percent Change by Segment
H&F
OP
TH&C
Total
Core Sales
(2.6)
3.1
6.1
1.5
Product Line Exits
(2.3)
(3.0)
0.0
(1.9)
Currency Translation
0.8
(2.8)
1.7
(0.1)
Total
(4.1)
(2.7)
7.8
(0.5)
5 |
 6
YTD Q2 Sales: Percent Change by Segment
H&F
OP
TH&C
Total
Core Sales
(2.2)
7.0
11.0
4.1
Product Line Exits
(1.4)
(3.2)
0.0
(1.6)
Currency Translation
1.4
(1.3)
3.0
1.0
Total
(2.2)
2.5
14.0
3.5
6 |
 7
Full Year 2010 Outlook
7
Outlook
[ 1 ]
Net Sales Growth
Low to mid single digit growth
Core Sales
Mid single digit growth
Product Line Exits
-1% to -2%
Currency Translation
Modestly negative
Gross Margin Expansion
75 to 100 basis points
"Normalized" EPS
[ 2 ]
$1.40 to $1.50
Cash Flow from Operations
> $500 million
Capital Expenditures
$160 to $170 million
[ 1
]
Reflects
outlook
communicated
in
Q2
2010
Earnings
Release
and
Earnings
Call
[ 2 ] See reconciliation included in the Appendix
|
 Appendix |
 9
Reconciliation: Q2 2010 and Q2 2009 “Normalized”
EPS
Q2 2010
Q2 2009
Diluted earnings per share (as reported):
$0.41
$0.37
Restructuring and restructuring related costs,
net of tax [ 1 ]
$0.06
$0.08
Convertible notes dilution
$0.05
$0.01
Other items, net of tax [ 2 ]
($0.01)
$0.01
"Normalized" EPS:
$0.51
$0.47
[ 1 ] Restructuring and restructuring related costs include impairment charges, employee
termination benefits and other costs associated with Project Acceleration as well as costs
associated with the European Transformation Plan, and the related tax effects.
[ 2 ] Other items in 2010 include a benefit related to the impact of hyperinflationary
accounting for the Company's Venezuelan operations. Other items in 2009 include
one-time costs for the early retirement of $325 million principal amount of
medium-term notes. 9 |
 10
Reconciliation: YTD Q2 2010 and YTD Q2 2009
“Normalized”
EPS
YTD Q2 2010
YTD Q2 2009
Diluted earnings per share (as reported):
$0.61
$0.49
Restructuring and restructuring related costs,
net of tax [ 1 ]
$0.10
$0.16
Convertible notes dilution
$0.07
$0.01
Other items, net of tax [ 2 ]
($0.01)
$0.01
Normalized EPS:
$0.77
$0.67
[ 1 ] Restructuring and restructuring related costs include impairment charges, employee
termination benefits and other costs associated with Project Acceleration as well as costs
associated with the European Transformation Plan, and the related tax effects.
[ 2 ] Other items in 2010 include a benefit related to the impact of hyperinflationary
accounting for the Company's Venezuelan operations. Other items in 2009 include
one-time costs for the early retirement of $325 million principal amount of medium-term
notes. 10 |
 11
NWL Convertible Note Dilution and Warrant
Model Including Reconciliation
11
Transaction Details
Aggregate Principal Amount ($Millions)
$345
Shares Underlying
40.088
Maturity
March 15, 2014
Warrant Strike Price
$11.59
Conversion Price
$8.61
Beginning Shares Outstanding
280
Note: "In the money" warrants under the conversion feature of
the convertible notes may be settled in cash, stock or a
Shares
Shares
combination
at
NWL's
election.
The
dilution
impact
Received
Delivered
on EPS in NWL's
financial statements and in the
from
from
table below reflects the settlement of the conversion
Average
Shares
Purchased
Sold
feature as if shares were used.
Share
Noteholders
Call
Warrants
Price
Receive
¹
@ $8.61
@ $11.59
²
A
B
C
A+C
%
A+B+C
%
Below Conversion Price
Below $8.61
0
0
0
0
0
Between Conversion Price and Warrant Strike Price
$8.61
0.00
0.00
0.00
0.0%
0.00
0.0%
At
maturity,
under
purchased
call
NWL
receives
from
$9.00
1.75
(1.75)
1.75
0.6%
0.00
0.0%
counterparties shares (or equivalent cash value) equal
$10.00
5.59
(5.59)
5.59
2.0%
0.00
0.0%
to amounts delivered to noteholders.
$11.00
8.72
(8.72)
8.72
3.1%
0.00
0.0%
$11.59
10.32
(10.32)
0.00
10.32
3.7%
0.00
0.0%
Above Warrant Strike Price
$12.00
11.34
(11.34)
1.37
12.71
4.5%
1.37
0.5%
After maturity, NWL is responsible for delivering shares
$13.00
13.55
(13.55)
4.35
17.90
6.4%
4.35
1.6%
(or equivalent cash value) to counterparties for the value above
$14.00
15.45
(15.45)
6.90
22.35
8.0%
6.90
2.5%
the warrant strike price.
$15.00
17.09
(17.09)
9.11
26.20
9.4%
9.11
3.3%
$17.00
19.79
(19.79)
12.76
32.55
11.6%
12.76
4.6%
$20.00
22.84
(22.84)
16.86
39.70
14.2%
16.86
6.0%
$21.00
23.66
(23.66)
17.96
41.62
14.9%
17.96
6.4%
$22.00
24.41
(24.41)
18.97
43.38
15.5%
18.97
6.8%
$23.00
25.09
(25.09)
19.89
44.98
16.1%
19.89
7.1%
$24.00
25.71
(25.71)
20.73
46.44
16.6%
20.73
7.4%
All
shares
stated
in
Millions
$25.00
26.29
(26.29)
21.50
47.79
17.1%
21.50
7.7%
¹
[(Share Price -
Conversion Price) * Shares Underlying] / Share Price
* Represents dilution incurred upon settlement of convertible notes, purchased call
and warrant. ²
[(Share Price -
Warrant Strike Price) * Shares Underlying] / Share Price
NWL Hedge
GAAP Accounting
"Economic" Dilution*
Maturity
(Non-GAAP)
Dilution Before |
 12
Reconciliation: Full Year 2010 Outlook for “Normalized”
EPS
FY 2010
Diluted earnings per share:
$1.16 to $1.26
Restructuring and restructuring related
costs, net of tax [ 1 ]
$0.20 to $0.30
Other items, net of tax [ 2 ]
($0.01)
Convertible notes dilution [ 3 ]
TBD
"Normalized" EPS:
$1.40 to $1.50
[ 1 ] Restructuring and restructuring related costs include impairment charges, employee
termination benefits and other costs associated with Project Acceleration as well as
costs associated with the European Transformation Plan, and the related tax effects.
[ 2 ] Other items include a benefit related to the impact of hyperinflationary accounting
for the Company's Venezuelan operations.
[ 3 ] No provision is made in the 2010 outlook for potential dilution from the conversion
feature of the convertible notes issued in March 2009 and associated hedge
transactions, as the amount of full year 2010 dilution is dependent on the average
stock price in each quarter of 2010. The conversion feature of the convertible notes
and associated hedge transactions resulted in dilution of $0.07 per diluted share in
the first six months of 2010 and $0.06 per diluted share for the full year 2009.
12 |
 13
Reconciliation: Q2 2010 and Q2 2009 Operating
Income to Operating Income Excluding Charges
Q2 2010
Q2 2009
Net Sales
$1,496.2
$1,504.3
Operating Income (as reported)
$203.5
$199.5
Restructuring and Restructuring Related Costs [ 1 ]
$22.8
$29.5
Operating Income (excluding charges)
$226.3
$229.0
Operating Income (excluding charges), as a
Percent of Net Sales
15.1%
15.2%
[ 1 ] Restructuring and restructuring related costs include impairment charges, employee
termination benefits and other costs associated with Project Acceleration as well as costs
associated with the European Transformation Plan, and the related tax effects.
$ millions
13 |
 14
Reconciliation: YTD Q2 2010 and YTD Q2 2009 Operating
Income to Operating Income Excluding Charges
YTD Q2 2010
YTD Q2 2009
Net Sales
$2,802.6
$2,708.2
Operating Income (as reported)
$333.6
$280.3
Restructuring and Restructuring Related Costs [ 1 ]
$38.8
$60.0
Operating Income (excluding charges)
$372.4
$340.3
Operating Income (excluding charges), as a Percent
of Net Sales
13.3%
12.6%
[ 1 ] Restructuring and restructuring related costs include impairment charges, employee
termination benefits and other costs associated with Project Acceleration as well as costs
associated with the European Transformation Plan, and the related tax effects.
14 |
 15
Reconciliation: Q2 2010 and Q2 2009 Free Cash Flow
Q2 2010
Q2 2009
Operating Cash Flow
$154.0
$99.2
Capital Expenditures
(37.8)
(38.3)
Free Cash Flow
$116.2
$60.9
$ millions
15 |
 16
Reconciliation: YTD Q2 2010 and YTD Q2 2009
Free Cash Flow
YTD Q2 2010
YTD Q2 2009
Cash Flow From Operations
$183.4
$88.0
Capital Expenditures
(69.3)
(70.7)
Free Cash Flow
$114.1
$17.3
$ millions
16 |