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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): October 26, 2006
NEWELL RUBBERMAID INC.
(Exact Name of Registrant as Specified in Its Charter)
         
Delaware
(State or Other Jurisdiction
of Incorporation)
  1-9608
(Commission
File Number)
  36-3514169
(IRS Employer
Identification No.)
     
10 B Glenlake Parkway    
Suite 300    
Atlanta, Georgia   30328
(Address of Principal Executive Offices)   (Zip Code)
Registrant’s Telephone Number, Including Area Code: (770) 407-3800
          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):
      o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
      o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
      o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
      o 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
Item 7.01 Regulation FD Disclosure
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
Press Release


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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 October 26, 2006, Newell Rubbermaid Inc. (the “Company”) reported its results for the fiscal quarter ended September 30, 2006. The Company’s press release, dated October 26, 2006, 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, income from continuing operations and diluted earnings per share from continuing operations, excluding restructuring charges related to Project Acceleration and impairment charges, 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 and further investment in future growth initiatives. Another purpose for which the Company uses diluted earnings per share from continuing operations, excluding restructuring and impairment charges, is as a performance goal that helps determine the amount, if any, of cash bonuses for corporate management employees under the Company’s management cash bonus plan. 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 and impairment charges, tax

 


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benefits, pension curtailment and certain one-time non-operating benefits, and includes a proforma stock option expense for 2005, is useful to investors because it permits investors to better understand year-over-year changes in underlying operating performance.
While the Company believes that these non-GAAP financial measures are useful in evaluating the Company, 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 9.01 Financial Statements and Exhibits.
      (c) Exhibits.
         
Exhibit    
Number   Description
  99.1    
Press Release, dated October 26, 2006, issued by Newell Rubbermaid Inc., and Additional Financial Information

 


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SIGNATURES
     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: October 26, 2006  By:   /s/ Dale L. Matschullat  
    Dale L. Matschullat    
    Vice President, General Counsel
and Corporate Secretary 
 
 

 


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EXHIBIT INDEX
         
Exhibit    
No.   Description
  99.1    
Press Release, dated October 26, 2006, issued by Newell Rubbermaid Inc., and Additional Financial Information

 

exv99w1
 

     
(NEWELL RUBBERMAID LOGO)
  News Release
  October 26, 2006
  Page 1 of 4
   
   

NEWELL RUBBERMAID REPORTS THIRD QUARTER 2006 RESULTS
Strong Third Quarter Internal Sales Growth and Continued Gross Margin Expansion
Progress Continues on Portfolio Optimization
ATLANTA, October 26, 2006 – Newell Rubbermaid Inc. (NYSE: NWL) today reported third quarter 2006 results, reflecting strong sales growth and gross margin improvement.
Net sales for the third quarter ended September 30, 2006 rose 10.4 percent to $1.59 billion, compared to $1.44 billion in the prior year. Internal sales, which excludes the effect of the DYMO acquisition, increased 6.3 percent in the third quarter 2006 as all reporting segments delivered positive internal sales growth, led by strength in Home & Family, Cleaning & Organization and Office Products. All reported sales figures exclude the results of the company’s Little Tikes business, which was classified as discontinued operations during the third quarter 2006. Consistent with the company’s second quarter 2006 earnings announcement, the results of Home Décor Europe are also included in discontinued operations.
“Our employees and brands again delivered strong internal sales growth and gross margin expansion in the third quarter,” said Mark Ketchum, chief executive officer of Newell Rubbermaid. “In addition, we continued the company’s transformation through execution of key supply chain, marketing and other strategic initiatives. We also made significant progress toward optimizing the portfolio by entering into an agreement to sell the Little Tikes business.”
Gross margin for the third quarter 2006 improved to 33.7 percent, a 150 basis point improvement over the prior year. The expansion was driven by productivity, pricing and favorable mix, which more than offset raw material inflation.
Excluding Project Acceleration restructuring costs of $22.1 million in the third quarter 2006 and reversal of impairment in the third quarter 2005, income from continuing operations was $128.4 million, or $0.46 per share, for the third quarter 2006, exceeding company guidance and the prior year’s result of $116.5 million, or $0.42 per share. The third quarter results for each of 2006 and 2005 include one-time tax benefits of approximately $15 million.
Income from continuing operations, as reported, was $112.7 million, or $0.41 per share, compared to $136.6 million, or $0.49 per share, in the prior year. A reconciliation of the results “as reported” to results “excluding charges” is attached to this press release.
Net cash provided by operating activities was $312.2 million in the third quarter 2006, compared to net cash provided by operating activities of $359.4 million in the prior year. Capital expenditures were $36.9 million in the third quarter 2006, versus $23.9 million in the prior year. Dividends paid were $58.2 million, or $0.21 per share, in the third quarter 2006, versus $57.9 million in the prior year.
Nine Month Results
Net sales for the nine months ended September 30, 2006 grew 10.4 percent to $4.56 billion, compared to $4.13 billion in the prior year. Internal sales increased 6.1 percent due primarily to strong core sales growth. The Calphalon, Rubbermaid Home and Goody businesses posted double digit sales growth, while the Rubbermaid Commercial, Graco, and Irwin and Lenox branded businesses delivered high single digit growth.
Gross margin was 33.5 percent, a 260 basis point improvement over the prior year. The expansion reflects strong productivity, mix and pricing, which more than offset raw material inflation.
Newell Rubbermaid Inc.
Atlanta, GA
Securities Listed
NYSE
Common Stock
(Symbol: NWL)
www.newellrubbermaid.com
Ron Hardnock
Vice President, Investor Relations
Esther Lippman
Senior Manager, Public Relations
10B Glenlake Parkway
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983


(IMAGES)

 


 

(NEWELL RUBBERMAID LOGO)
News Release
October 26, 2006   Page 2 of 4
     
Excluding Project Acceleration restructuring costs of $50.3 million in the first nine months 2006 and impairment charges in the first nine months 2005, operating income improved to $540.0 million, a 21.0 percent increase over the prior year. Excluding charges, income from continuing operations was $414.7 million, or $1.50 per share, a 27.4 percent increase over the prior year’s result of $325.4 million, or $1.18 per share. Income from continuing operations included one-time tax benefits of $115.8 million, or $0.41 per share, versus one-time tax benefits of $73.9 million, or $0.27 per share, in the prior year.
Income from continuing operations, as reported, was $378.4 million, or $1.37 per share, compared to $321.0 million, or $1.17 per share, in the prior year.
Net cash provided by operating activities was $404.3 million, compared to $451.3 million for the prior year. Capital expenditures were $94.1 million, compared to $69.9 million for the prior year. Dividends were $174.6 million, compared to $173.7 million for the prior year.
The company recorded a net loss from discontinued operations of $95.6 million, related primarily to the company’s Home Décor Europe and Little Tikes businesses. The net loss from discontinued operations includes a $50.9 million impairment charge recorded in the first quarter to write off the goodwill for certain businesses in the company’s Home Décor Europe business unit.
2006 Outlook
Fourth Quarter
The company expects diluted earnings per share from continuing operations for the fourth quarter 2006 to be in the range of $0.35 to $0.37, excluding approximately $40 to $60 million ($34 to $51 million after tax) of Project Acceleration restructuring costs. Upon completion, Project Acceleration is projected to deliver annualized savings in excess of $120 million.
Gross margin is projected to expand 200 to 250 basis points over the prior year period driven by productivity, pricing and favorable mix.
The company believes internal sales will be flat, reflecting the effect of two unusual year ago comparisons. Electronic tools delivered most of its 2005 sales in the fourth quarter. These sales will not be repeated in the fourth quarter 2006 as this product nears the end of its life cycle. Similarly, Rubbermaid Home Products supported strong promotional volumes in the fourth quarter 2005 which will not be repeated in 2006. Excluding these two items, internal sales growth is estimated at mid single digits, consistent with the first three quarters of 2006. Net cash provided by operating activities is forecast in the range of $200 to $250 million and capital expenditures in the range of $30 to $40 million. Dividends are expected to be approximately $58 million.
Full Year 2006
For the full year 2006, the company now believes internal sales growth will be in the range of 4.0 to 4.5 percent. This performance would be the result of mid single digit growth in the company’s Invest businesses and low to mid single digit growth in its Fix businesses. The company continues to project full year gross margin expansion of 225 to 275 basis points.
Excluding Project Acceleration restructuring costs of approximately $90 to $110 million, the company now believes earnings per share from continuing operations will range from $1.85 to $1.87 for the full year. Net cash provided by operating activities is now forecast between $600 and $650 million, net of approximately $50 million in cash.
 
Newell Rubbermaid Inc.
Atlanta, GA
Securities Listed
NYSE
Common Stock
(Symbol: NWL)
www.newellrubbermaid.com
Ron Hardnock
Vice President, Investor Relations
Esther Lippman
Senior Manager, Public Relations
10B Glenlake Parkway
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983
(IMAGES)

 


 

(NEWELL RUBBERMAID LOGO)
News Release
October 26, 2006   Page 3 of 4

restructuring costs in connection with Project Acceleration. The company now expects capital expenditures of $125 to $135 million, while dividends continue to be forecast at approximately $232 million.
A reconciliation of the third quarter and 2006 earnings outlook is as follows:
                         
    Q3 2006     Q4 2006     FY 2006  
Diluted earnings per share from continuing operations (as reported):
  $ 0.41     $ 0.20 - $0.22     $ 1.57 -$1.59  
 
                       
Project Acceleration restructuring costs
  $ 0.05     $ 0.12 -$0.18     $ 0.25 - $0.31  
 
                 
 
                       
Diluted earnings per share from continuing operations (excluding charges):
  $ 0.46     $ 0.35 - $0.37     $ 1.85 -$1.87  
Conference Call
The company’s third quarter 2006 earnings conference call is scheduled for today, October 26, 2006, at 9:00 a.m. 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.
Caution Concerning Forward-Looking Statements
The 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 Project Acceleration, sales, income/(loss), earnings per share, operating income or gross margin improvements, capital and other expenditures, cash flow, dividends, restructuring charges, costs and cost savings, debt ratings, and management’s plans, projections and objectives for future operations and performance. These statements are accompanied by words such as “expect,” “project,” “will,” “enable,” “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 economies; competition with other manufacturers and distributors of consumer products; major retailers’ strong bargaining power; changes in the prices of raw materials; 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; the risks inherent in our foreign operations and those factors listed in the company’s most recent quarterly report on Form 10-Q, including Exhibit 99.1 thereto, filed with the Securities and Exchange Commission.
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.
Newell Rubbermaid Inc.
Atlanta, GA
Securities Listed
NYSE
Common Stock
(Symbol: NWL)
www.newellrubbermaid.com
Ron Hardnock
Vice President, Investor Relations
Esther Lippman
Senior Manager, Public Relations
10B Glenlake Parkway
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983


(IMAGES)

 


 

(NEWELL RUBBERMAID LOGO)
News Release
October 26, 2006   Page 4 of 4
     
About the Company
Newell Rubbermaid Inc. is a global marketer of consumer and commercial products with sales of approximately $6 billion and a strong portfolio of brands, including Sharpie®, Paper Mate®, DYMO®, EXPO®, Waterman®, Parker®, Rolodex®, IRWIN®, LENOX®, BernzOmatic®, Rubbermaid®, Graco®, Calphalon® and Goody®. The company is headquartered in Atlanta, Ga., and has approximately 26,500 employees worldwide. prior year.
This press release and additional information about the company are available on the company’s Web site www.newellrubbermaid.com.
 
Newell Rubbermaid Inc.
Atlanta, GA
Securities Listed
NYSE
Common Stock
(Symbol: NWL)
www.newellrubbermaid.com
Ron Hardnock
Vice President, Investor Relations
Esther Lippman
Senior Manager, Public Relations
10B Glenlake Parkway
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983
(IMAGES)

 


 

Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of Results “As Reported” to Results “Excluding Charges”
                                                         
    Three Months Ended September 30,  
    2006     2005     YOY  
    As Reported     Charges (1)     Excl. Charges     As Reported     Charges (2)     Excl. Charges     % Change  
Net sales
  $ 1,586.1             $ 1,586.1     $ 1,436.6             $ 1,436.6       10.4 %
Cost of products sold
    1,050.9             1,050.9       974.2             974.2          
 
                                           
 
                                                       
GROSS MARGIN
    535.2             535.2       462.4             462.4       15.7 %
% of sales
    33.7 %             33.7 %     32.2 %             32.2 %        
 
                                                       
Selling, general & administrative expenses
    334.9             334.9       273.0               273.0       22.7 %
% of sales
    21.1 %             21.1 %     19.0 %             19.0 %        
 
                                                       
Impairment charges
                      (25.2 )     25.2                
Restructuring costs
    22.1       (22.1 )           14.6             14.6          
 
                                           
 
                                                       
OPERATING INCOME
    178.2       22.1       200.3       200.0       (25.2 )     174.8       14.6 %
% of sales
    11.2 %             12.6 %     13.9 %             12.2 %        
 
                                                       
Nonoperating expenses:
                                                       
Interest expense, net
    32.9             32.9       34.3             34.3          
Other expense/(income)
    3.4             3.4       (1.1 )           (1.1 )        
 
                                           
 
    36.3             36.3       33.2             33.2       9.3 %
 
                                           
 
                                                       
INCOME BEFORE INCOME TAXES
    141.9       22.1       164.0       166.8       (25.2 )     141.6       15.8 %
% of sales
    8.9 %             10.3 %     11.6 %             9.9 %        
 
                                                       
Income taxes
    29.2       6.4       35.6       30.2       (5.1 )     25.1       41.8 %
Effective rate
    20.6 %             21.7 %     18.1 %             17.7 %        
 
                                           
 
                                                       
INCOME FROM CONTINUING OPERATIONS
    112.7       15.7       128.4       136.6       (20.1 )     116.5       10.2 %
% of sales
    7.1 %             8.1 %     9.5 %             8.1 %        
 
                                                       
Discontinued operations, net of tax:
                                                       
Net loss
    (4.2 )     4.2             (65.1 )     65.1                
 
                                           
 
                                                       
NET INCOME
  $ 108.5     $ 19.9     $ 128.4     $ 71.5     $ 45.0     $ 116.5       10.2 %
 
                                           
% of sales
    6.8 %             8.1 %     5.0 %             8.1 %        
 
                                                       
EARNINGS PER SHARE FROM CONTINUING OPERATIONS:
                                                       
Basic
  $ 0.41     $ 0.06     $ 0.47     $ 0.50     $ (0.07 )   $ 0.42          
Diluted
  $ 0.41     $ 0.06     $ 0.46     $ 0.49     $ (0.07 )   $ 0.42          
 
                                                       
LOSS PER SHARE FROM DISCONTINUED OPERATIONS:
                                                       
Basic
  $ (0.02 )   $ 0.02     $     $ (0.24 )   $ 0.24     $          
Diluted
  $ (0.02 )   $ 0.02     $     $ (0.23 )   $ 0.23     $          
 
                                                       
EARNINGS PER SHARE:
                                                       
Basic
  $ 0.39     $ 0.07     $ 0.47     $ 0.26     $ 0.16     $ 0.42          
Diluted
  $ 0.39     $ 0.07     $ 0.46     $ 0.27     $ 0.16     $ 0.42          
 
                                                       
Average shares outstanding:
                                                       
Basic
    274.6               274.6       274.4               274.4          
Diluted
    275.6               283.9       283.3               275.0          
 
(1)   Charges excluded from “as reported” results for 2006 consist of $22.1 million of Project Acceleration restructuring costs and a $4.2 million net loss related to discontinued operations.
 
(2)   Charges excluded from “as reported” results for 2005 include the reversal of $25.2 million in impairment charges and a $65.1 million net loss related to discontinued operations.

 


 

Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of Results “As Reported” to Results “Excluding Charges”
                                                         
    Nine Months Ended September 30,  
    2006     2005     YOY  
    As Reported     Charges (1)     Excl. Charges     As Reported     Charges (2)     Excl. Charges     % Change  
Net sales
  $ 4,562.8             $ 4,562.8     $ 4,134.2             $ 4,134.2       10.4 %
Cost of products sold
    3,032.5             3,032.5       2,856.3             2,856.3          
 
                                           
 
                                                       
GROSS MARGIN
    1,530.3             1,530.3       1,277.9             1,277.9       19.8 %
% of sales
    33.5 %             33.5 %     30.9 %             30.9 %        
 
                                                       
Selling, general & administrative expenses
    990.3             990.3       810.4             810.4       22.2 %
% of sales
    21.7 %             21.7 %     19.6 %             19.6 %        
 
                                                       
Impairment charges
                      6.2       (6.2 )              
Restructuring costs
    50.3       (50.3 )           21.4             21.4          
 
                                           
 
                                                       
OPERATING INCOME
    489.7       50.3       540.0       439.9       6.2       446.1       21.0 %
% of sales
    10.7 %             11.8 %     10.6 %             10.8 %        
 
                                                       
Nonoperating expenses:
                                                       
Interest expense, net
    102.2             102.2       96.2             96.2          
Other expense/(income)
    7.7             7.7       (0.7 )           (0.7 )        
 
                                           
 
    109.9             109.9       95.5             95.5       15.1 %
 
                                           
 
                                                       
INCOME BEFORE INCOME TAXES
    379.8       50.3       430.1       344.4       6.2       350.6       22.7 %
% of sales
    8.3 %             9.4 %     8.3 %             8.5 %        
 
                                                       
Income taxes
    1.4       14.0       15.4       23.4       1.8       25.2       (38.9 )%
Effective rate
    0.4 %             3.6 %     6.8 %             7.2 %        
 
                                           
 
                                                       
INCOME FROM CONTINUING OPERATIONS
    378.4       36.3       414.7       321.0       4.4       325.4       27.4 %
% of sales
    8.3 %             9.1 %     7.8 %             7.9 %        
 
                                           
 
                                                       
Discontinued operations, net of tax:
                                                       
Net loss
    (95.6 )     95.6             (146.7 )     146.7                
 
                                           
 
                                                       
NET INCOME
  $ 282.8     $ 131.9     $ 414.7     $ 174.3     $ 151.1     $ 325.4       27.4 %
 
                                           
% of sales
    6.2 %             9.1 %     4.2 %             7.9 %        
 
                                                       
EARNINGS PER SHARE FROM CONTINUING OPERATIONS:
                                                       
Basic
  $ 1.38     $ 0.13     $ 1.51     $ 1.17     $ 0.02     $ 1.19          
Diluted
  $ 1.37     $ 0.13     $ 1.50     $ 1.17     $ 0.02     $ 1.18          
 
                                                       
LOSS PER SHARE FROM DISCONTINUED OPERATIONS:
                                                       
Basic
  $ (0.35 )   $ 0.35     $     $ (0.53 )   $ 0.53     $          
Diluted
  $ (0.34 )   $ 0.34     $     $ (0.53 )   $ 0.53     $          
 
                                                       
EARNINGS PER SHARE:
                                                       
Basic
  $ 1.03     $ 0.48     $ 1.51     $ 0.64     $ 0.55     $ 1.19          
Diluted
  $ 1.03     $ 0.47     $ 1.50     $ 0.63     $ 0.55     $ 1.18          
 
                                                       
Average shares outstanding:
                                                       
Basic
    274.6               274.6       274.4               274.4          
Diluted
    283.6               283.6       274.8               274.8          
 
(1)   Charges excluded from “as reported” results for 2006 consist of $50.3 million of Project Acceleration restructuring costs and a $95.6 million net loss related to discontinued operations.
 
(2)   Charges excluded from “as reported” results for 2005 consist of a $6.2 million impairment charge and a $146.7 million net loss related to discontinued operations.

 


 

Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
                 
    September 30,     September 30,  
    2006     2005  
Assets:
               
 
               
Cash and cash equivalents
  $ 137.4     $ 485.5  
Accounts receivable, net
    1,079.5       958.0  
Inventories, net
    946.0       876.4  
Deferred income taxes
    117.4       69.7  
Prepaid expenses and other
    136.2       92.3  
Current assets of discontinued operations
    287.7       281.2  
 
           
 
               
Total Current Assets
    2,704.2       2,763.1  
 
               
Property, plant and equipment, net
    763.6       908.3  
Deferred income taxes
          6.0  
Goodwill
    2,412.1       1,725.2  
Other intangible assets, net
    437.9       294.9  
Other assets
    195.3       232.1  
Non-current assets of discontinued operations
          201.3  
 
               
 
           
Total Assets
  $ 6,513.1     $ 6,130.9  
 
           
 
               
Liabilities and Stockholders’ Equity:
               
 
               
Accounts payable
  $ 605.4     $ 484.9  
Accrued compensation
    155.0       116.6  
Other accrued liabilities
    661.0       645.6  
Income taxes payable
    68.9       46.9  
Notes payable
    21.5       6.2  
Current portion of long-term debt
    405.9       25.4  
Current liabilities of discontinued operations
    129.8       167.3  
 
           
 
               
Total Current Liabilities
    2,047.5       1,492.9  
 
               
Long-term debt
    2,028.8       2,377.2  
Deferred income taxes
    31.8        
Other non-current liabilities
    582.9       532.9  
Long-term liabilities of discontinued operations
          8.8  
 
               
Stockholders’ Equity
    1,822.1       1,719.1  
 
               
 
           
Total Liabilities and Stockholders’ Equity
  $ 6,513.1     $ 6,130.9  
 
           

 


 

Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
                 
    For The Nine Months Ended September 30,  
    2006     2005  
Operating Activities:
               
Net income
  $ 282.8     $ 174.3  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    147.1       145.3  
Impairment charges
    50.9       40.2  
Non-cash restructuring costs
    32.5       5.3  
Deferred income taxes
    18.1       17.6  
Gain on sale of assets/debt extinguishment
    (5.1 )     (7.1 )
Stock-based compensation expense
    24.7       4.6  
Loss on disposal of discontinued operations
    11.9       87.5  
Other
    (10.0 )     (10.2 )
Changes in current accounts, excluding the effects of acquisitions:
               
Accounts receivable
    48.7       94.7  
Inventories
    (135.8 )     (74.5 )
Accounts payable
    7.5       (60.9 )
Accrued liabilities and other
    (84.2 )     (1.0 )
Discontinued operations
    15.2       35.5  
 
           
Net cash provided by operating activities
  $ 404.3     $ 451.3  
 
               
Investing Activities:
               
Acquisitions, net of cash acquired
  $ (42.4 )   $ (35.3 )
Capital expenditures
    (94.1 )     (69.9 )
Disposals of non-current assets and sale of businesses
    48.3       29.4  
 
           
Net cash used in investing activities
  $ (88.2 )   $ (75.8 )
 
               
Financing Activities:
               
Proceeds from issuance of debt
  $ 170.3     $ 134.1  
Payments on notes payable and long-term debt
    (300.6 )     (345.0 )
Cash dividends
    (174.6 )     (173.7 )
Proceeds from exercised stock options and other
    8.9       (2.8 )
 
           
Net cash used in financing activities
  $ (296.0 )   $ (387.4 )
 
               
Exchange rate effect on cash and cash equivalents
  $ 1.8     $ (8.2 )
 
           
 
               
Increase (Decrease) in cash and cash equivalents
    21.9       (20.1 )
Cash and cash equivalents at beginning of year
    115.5       505.6  
 
           
Cash and cash equivalents at end of period
  $ 137.4     $ 485.5  
 
           

 


 

Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
                 
    For The Three Months Ended September 30,  
Free Cash Flow (in millions):   2006     2005  
Net cash provided by operating activities
  $ 312.2     $ 359.4  
Capital expenditures
    (36.9 )     (23.9 )
 
           
 
               
Free Cash Flow
  $ 275.3     $ 335.5  
 
           
                 
    For The Nine Months Ended September 30,  
Free Cash Flow (in millions):   2006     2005  
Net cash provided by operating activities
  $ 404.3     $ 451.3  
Capital expenditures
    (94.1 )     (69.9 )
 
           
 
               
Free Cash Flow
  $ 310.2     $ 381.4  
 
           
 
(1)   Free Cash Flow is defined as cash flow provided by operating activities less capital expenditures.

 


 

Newell Rubbermaid Inc.
Financial Worksheet
In Millions
                                                                                                                 
    2006     2005        
            Excluding Charges Reconciliation (1)                     Excluding Charges Reconciliation (1)             Year-over-year changes  
            Reported     Excluded     Ex Charges     Operating             Reported     Excluded     Ex Charges     Operating     Net Sales     Operating Income  
    Net Sales     OI     Charges     OI     Margin     Net Sales     OI     Charges     OI     Margin     $     %     $     %  
Q1:
                                                                                                               
Cleaning & Organization
  $ 333.1     $ 21.3     $     $ 21.3       6.4 %   $ 300.3     $ 12.5     $     $ 12.5       4.2 %   $ 32.8       10.9 %   $ 8.8       70.4 %
Office Products
    390.8       32.3             32.3       8.3 %     332.8       33.5             33.5       10.1 %     58.0       17.4 %     (1.2 )     (3.6 )%
Tools & Hardware
    276.8       33.1             33.1       12.0 %     276.4       26.7             26.7       9.7 %     0.4       0.1 %     6.4       24.0 %
Home Fashions
    116.6       17.1             17.1       14.7 %     97.7       2.3             2.3       2.4 %     18.9       19.3 %     14.8       643.5 %
Other
    225.3       32.7             32.7       14.5 %     196.5       17.0             17.0       8.7 %     28.8       14.7 %     15.7       92.4 %
 
                                                                                                               
Impairment Charge
                                                                                                   
Restructuring Costs
            (9.1 )     9.1                             (6.5 )           (6.5 )                             6.5          
Corporate
            (17.6 )           (17.6 )                     (9.5 )           (9.5 )                             (8.1 )     85.3 %
 
                                                                                       
Total
  $ 1,342.6     $ 109.8     $ 9.1     $ 118.9       8.9 %   $ 1,203.7     $ 76.0     $     $ 76.0       6.3 %   $ 138.9       11.5 %   $ 42.9       56.4 %
 
                                                                                       
                                                                                                                 
    2006     2005        
    Excluding Charges Reconciliation (1)                     Excluding Charges Reconciliation (1)             Year-over-year changes  
            Reported     Excluded     Ex Charges     Operating             Reported     Excluded     Ex Charges     Operating     Net Sales     Operating Income  
    Net Sales     OI     Charges     OI     Margin     Net Sales     OI     Charges     OI     Margin     $     %     $     %  
Q2:
                                                                                                               
Cleaning & Organization
  $ 403.3     $ 42.9     $     $ 42.9       10.6 %   $ 365.1     $ 23.1     $     $ 23.1       6.3 %   $ 38.2       10.5 %   $ 19.8       85.7 %
Office Products
    579.1       99.9             99.9       17.3 %     495.5       98.9             98.9       20.0 %     83.6       16.9 %     1.0       1.0 %
Tools & Hardware
    328.8       53.8             53.8       16.4 %     315.5       49.3             49.3       15.6 %     13.3       4.2 %     4.5       9.1 %
Home Fashions
    106.6       14.4             14.4       13.5 %     115.0       8.0             8.0       7.0 %     (8.4 )     (7.3 )%     6.4       80.0 %
Other
    216.3       29.8             29.8       13.8 %     202.8       26.0             26.0       12.8 %     13.5       6.7 %     3.8       14.6 %
 
                                                                                                               
Impairment Charge
                                              (31.4 )     31.4                                              
Restructuring Costs
            (19.1 )     19.1                             (0.3 )           (0.3 )                             0.3          
Corporate
            (20.0 )           (20.0 )                     (9.7 )           (9.7 )                             (10.3 )     106.2 %
 
                                                                                       
Total
  $ 1,634.1     $ 201.7     $ 19.1     $ 220.8       13.5 %   $ 1,493.9     $ 163.9     $ 31.4     $ 195.3       13.1 %   $ 140.2       9.4 %   $ 25.5       13.1 %
 
                                                                                       
                                                                                                                 
    2006     2005        
            Excluding Charges Reconciliation (1)                     Excluding Charges Reconciliation (1)             Year-over-year changes  
            Reported     Excluded     Ex Charges     Operating             Reported     Excluded     Ex Charges     Operating     Net Sales     Operating Income  
    Net Sales     OI     Charges     OI     Margin     Net Sales     OI     Charges     OI     Margin     $     %     $     %  
Q3:
                                                                                                               
Cleaning & Organization
  $ 401.1     $ 50.2     $     $ 50.2       12.5 %   $ 375.8     $ 51.1     $     $ 51.1       13.6 %   $ 25.3       6.7 %   $ (0.9 )     (1.8 )%
Office Products
    517.5       75.7             75.7       14.6 %     427.8       59.9             59.9       14.0 %     89.7       21.0 %     15.8       26.4 %
Tools & Hardware
    324.4       46.2             46.2       14.2 %     318.9       46.3             46.3       14.5 %     5.5       1.7 %     (0.1 )     (0.2 )%
Home Fashions
    118.2       17.6             17.6       14.9 %     115.1       16.8             16.8       14.6 %     3.1       2.7 %     0.8       4.8 %
Other
    224.9       28.9             28.9       12.9 %     199.0       25.4             25.4       12.8 %     25.9       13.0 %     3.5       13.8 %
 
                                                                                                               
Impairment Charge
                                              25.2       (25.2 )                                            
Restructuring Costs
            (22.1 )     22.1                             (14.6 )           (14.6 )                             14.6          
Corporate
            (18.3 )           (18.3 )                     (10.1 )           (10.1 )                             (8.2 )     81.2 %
 
                                                                                       
Total
  $ 1,586.1     $ 178.2     $ 22.1     $ 200.3       12.6 %   $ 1,436.6     $ 200.0     $ (25.2 )   $ 174.8       12.2 %   $ 149.5       10.4 %   $ 25.5       14.6 %
 
                                                                                       
                                                                                                                 
    2006     2005        
            Excluding Charges Reconciliation (1)                     Excluding Charges Reconciliation (1)             Year-over-year changes  
            Reported     Excluded     Ex Charges     Operating             Reported     Excluded     Ex Charges     Operating     Net Sales     Operating Income  
    Net Sales     OI     Charges     OI     Margin     Net Sales     OI     Charges     OI     Margin     $     %     $     %  
YTD:
                                                                                                               
Cleaning & Organization
  $ 1,137.5     $ 114.4     $     $ 114.4       10.1 %   $ 1,041.2     $ 86.7     $     $ 86.7       8.3 %   $ 96.3       9.2 %   $ 27.7       31.9 %
Office Products
    1,487.4       207.9             207.9       14.0 %     1,256.1       192.3             192.3       15.3 %     231.3       18.4 %     15.6       8.1 %
Tools & Hardware
    930.0       133.1             133.1       14.3 %     910.8       122.3             122.3       13.4 %     19.2       2.1 %     10.8       8.8 %
Home Fashions
    341.4       49.1             49.1       14.4 %     327.8       27.1             27.1       8.3 %     13.6       4.1 %     22.0       81.2 %
Other
    666.5       91.4             91.4       13.7 %     598.3       68.4             68.4       11.4 %     68.2       11.4 %     23.0       33.6 %
 
                                                                                                               
Impairment Charge
                                              (6.2 )     6.2                                              
Restructuring Costs
            (50.3 )     50.3                             (21.4 )           (21.4 )                             21.4          
Corporate
            (55.9 )           (55.9 )                     (29.3 )           (29.3 )                             (26.6 )     90.8 %
 
                                                                                       
Total
  $ 4,562.8     $ 489.7     $ 50.3     $ 540.0       11.8 %   $ 4,134.2     $ 439.9     $ 6.2     $ 446.1       10.8 %   $ 428.6       10.4 %   $ 93.9       21.0 %
 
                                                                                       
 
(1)   Charges are primarily related to restructuring and impairment.

 


 

Newell Rubbermaid Inc.
Three Months Ended September 30, 2006
In Millions
Currency Analysis
                                                         
    2006     2005     Year-over-year Increase (Decrease)        
    Sales as     Currency     Adjusted     Sales as     Excluding     Including     Currency  
    Reported     Impact     Sales     Reported     Currency     Currency     Impact  
By Segment
                                                       
Cleaning & Organization
  $ 401.1     $ (3.5 )   $ 397.6     $ 375.8       5.8 %     6.7 %     0.9 %
Office Products
    517.5       (6.6 )     510.9       427.8       19.4 %     21.0 %     1.5 %
Tools & Hardware
    324.4       (3.7 )     320.7       318.9       0.6 %     1.7 %     1.2 %
Home Fashions
    118.2       (0.9 )     117.3       115.1       1.9 %     2.7 %     0.8 %
Other
    224.9       (1.9 )     223.0       199.0       12.1 %     13.0 %     1.0 %
 
                                                       
 
                                               
Total Company
  $ 1,586.1     $ (16.6 )   $ 1,569.5     $ 1,436.6       9.3 %     10.4 %     1.2 %
 
                                               
By Geography
                                                       
 
                                                       
United States
  $ 1,183.4     $     $ 1,183.4     $ 1,093.1       8.3 %     8.3 %     0.0 %
Canada
    104.0       (7.8 )     96.2       96.4       (0.2 )%     7.9 %     8.1 %
 
                                               
North America
    1,287.4       (7.8 )     1,279.6       1,189.5       7.6 %     8.2 %     0.7 %
 
                                                       
Europe
    188.0       (9.1 )     178.9       146.9       21.8 %     28.0 %     6.2 %
Central & South America
    64.1       0.1       64.2       60.6       5.9 %     5.8 %     (0.2 )%
All Other
    46.6       0.2       46.8       39.6       18.2 %     17.7 %     (0.5 )%
 
                                                       
 
                                               
Total Company
  $ 1,586.1     $ (16.6 )   $ 1,569.5     $ 1,436.6       9.3 %     10.4 %     1.2 %
 
                                               

 


 

Newell Rubbermaid Inc.
Nine Months Ended September 30, 2006
In Millions
Currency Analysis
                                                         
    2006     2005     Year-over-year Increase (Decrease)        
    Sales as     Currency     Adjusted     Sales as     Excluding     Including     Currency  
    Reported     Impact     Sales     Reported     Currency     Currency     Impact  
By Segment
                                                       
Cleaning & Organization
  $ 1,137.5     $ (8.8 )   $ 1,128.7     $ 1,041.2       8.4 %     9.2 %     0.8 %
Office Products
    1,487.4       (0.2 )     1,487.2       1,256.1       18.4 %     18.4 %     0.0 %
Tools & Hardware
    930.0       (4.6 )     925.4       910.8       1.6 %     2.1 %     0.5 %
Home Fashions
    341.4       (3.1 )     338.3       327.8       3.2 %     4.1 %     0.9 %
Other
    666.5             666.5       598.3       11.4 %     11.4 %     0.0 %
 
                                                       
 
                                               
Total Company
  $ 4,562.8     $ (16.7 )   $ 4,546.1     $ 4,134.2       10.0 %     10.4 %     0.4 %
 
                                               
By Geography
                                                       
 
                                                       
United States
  $ 3,415.1     $     $ 3,415.1     $ 3,130.2       9.1 %     9.1 %     0.0 %
Canada
    287.4       (23.5 )     263.9       255.2       3.4 %     12.6 %     9.2 %
 
                                               
North America
    3,702.5       (23.5 )     3,679.0       3,385.4       8.7 %     9.4 %     0.7 %
 
                                                       
Europe
    557.6       7.6       565.2       474.1       19.2 %     17.6 %     (1.6 )%
Central & South America
    170.7       (3.4 )     167.3       161.1       3.8 %     6.0 %     2.1 %
All Other
    132.0       2.6       134.6       113.6       18.5 %     16.2 %     (2.3 )%
 
                                                       
 
                                               
Total Company
  $ 4,562.8     $ (16.7 )   $ 4,546.1     $ 4,134.2       10.0 %     10.4 %     0.4 %
 
                                               

 


 

Q3 2006 Earnings Presentation            October 26, 2006
()

 


 

Forward Looking Statements
The statements in this presentation that are not historical in nature constitute forward-looking statements. management’s performance “estimate” or implied in the forward-looking statements. Important factors that could cause actual results to differ limited and technology solutions; our ability to improve productivity and streamline operations; our ability to complete divestitures of non-strategic businesses: the risks inherent in our foreign operations; and those factors listed in the company’s most recent quarterly report on Form 10-Q, including Exhibit 99.1 thereto, filed with the Securities and Exchange Commission.
()

 


 

Q3 Summary
» Good quarter marked by strong internal sales growth of 6.3% and gross margin expansion of 150 bps
Expanding gross margins allow increased investment in strategic SG&A to grow top line and fund other long-term corporate initiatives
» Progress made in optimizing our business portfolio
Signed agreements to sell Little Tikes and portions of Home Décor Europe
» Project Acceleration is on track with approximately 2/3 of the manufacturing closures announced
()

 


 

EPS Walk: Previous Guidance and Prior Year to Q306
()

 


 

EPS Walk: Previous Guidance and Prior Year to FY’06
     ()

 


 

EPS FY’05 and FY’06 “Normalized”
()

 


 

Preliminary Outlook: FY 2007
()

 


 

Appendix
()

 


 

Reconciliation: 2005 and 2006 “Normalized” EPS
()

 


 

Reconciliation: 2005 and 2006 Q3 EPS
()