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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): April 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 April 30, 2010, Newell Rubbermaid Inc. (the “Company”) reported its results for the fiscal quarter ended March 31, 2010. The Company’s press release, dated April 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
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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 9.01. | Financial Statements and Exhibits. |
(c) Exhibits.
| Exhibit |
Description | |
| 99.1 | Press Release, dated April 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: April 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 April 30, 2010, issued by Newell Rubbermaid Inc., and Additional Financial Information | |
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Exhibit 99.1
|
> News Release |
Newell Rubbermaid Reports First Quarter 2010 Results
Net Sales Growth of 8.5%
Normalized EPS of $0.25, Gross Margin Expansion of 100 Basis Points
Raises Full Year Outlook
ATLANTA, April 30, 2010 – Newell Rubbermaid (NYSE: NWL) today announced first quarter 2010 financial results, including net sales growth of 8.5 percent and normalized earnings per share of $0.25, a significant improvement over prior year quarter results. The company also reported 100 basis points in gross margin expansion and over $40 million in improved operating cash flow compared to the prior year quarter.
“We are pleased to report a return to net sales growth across all our geographic regions, a significant inflection point from the sales trends of the last four quarters,” said Mark Ketchum, Newell Rubbermaid’s President and Chief Executive Officer. “Our solid first quarter results demonstrate the strength of our business model, as we delivered impressive improvement in gross margin from product mix and productivity, and leveraged increased revenue to achieve significant EPS growth as well. We continue to invest strategically in our brands and in innovative new products to support ongoing sales growth. Looking forward, we are encouraged by early signs of improvement in the global economy and increased confidence on the part of our retail and industrial customers.”
Net sales increased 8.5 percent to $1.3 billion in the first quarter, compared to $1.2 billion in the prior year. Core sales improved 7.2 percent. The company estimates that 2 to 3 percent of the core sales increase reflects increased consumer demand while the remainder is attributable to selective customer inventory restocking and 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. Foreign currency translation contributed 2.5 percent to the company’s net sales improvement, while the year over year impact of last year’s product line exits reduced net sales by 1.2 percent.
Gross margin for the quarter was 36.1 percent, up 100 basis points from last year as productivity gains and improved product mix more than offset the impact of inflation during the quarter.
Excluding Project Acceleration restructuring costs of $16.0 million in 2010 and $30.5 million in 2009, operating income was $146.1 million, or 11.2 percent of sales, in the first quarter compared to $111.3 million, or 9.2 percent of sales, in the prior year.
Normalized earnings were $0.25 per diluted share, compared to prior year results of $0.20 per diluted share. For the first quarter 2010, normalized diluted earnings per share exclude $0.04 for Project Acceleration restructuring costs, net of tax, and $0.02 of dilution related to the conversion feature of the convertible notes issued in March 2009 and the impact of associated hedge transactions. For the first quarter 2009, normalized earnings per share exclude $0.08 for Project
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
|
|
> News Release |
Acceleration restructuring costs, net of tax. (A reconciliation of the “as reported” results to “normalized” results is included below.)
Net income, as reported, was $58.4 million, or $0.19 per diluted share. This compares to $33.7 million, or $0.12 per diluted share, in the first quarter 2009.
The company generated operating cash flow of $29.4 million during the first quarter, driven by increased earnings and working capital management. This compares to a use of $11.2 million in the prior year. Capital expenditures were $31.5 million in the first quarter, compared to $32.4 million last year.
A reconciliation of the first quarter 2010 and last year’s results is as follows:
| Q1 2010 | Q1 2009 | |||||
| Diluted earnings per share (as reported) |
$ | 0.19 | $ | 0.12 | ||
| Project Acceleration restructuring costs, net of tax |
$ | 0.04 | $ | 0.08 | ||
| Convertible notes dilution |
$ | 0.02 | $ | 0.00 | ||
| “Normalized” EPS |
$ | 0.25 | $ | 0.20 | ||
2010 Full Year Outlook
The company raised its guidance for 2010 net sales growth to a range of low to mid single digits versus earlier expectations of low single digit growth. Core sales are projected to increase in the low to mid single digits, offset by a one to two percent decline from the impact of 2009 product exits and a slightly negative impact from foreign currency. Gross margin is anticipated to improve 75 to 100 basis points.
The company increased its expectations for 2010 normalized earnings to $1.38 to $1.48 per diluted share, compared with previous expectations of $1.35 to $1.45 per diluted share.
Operating cash flow is projected 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.
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
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> News Release |
A reconciliation of the 2010 earnings outlook is as follows:
| FY 2010 | ||||
| Diluted earnings per share |
$ | 1.18 to $1.28 | ||
| Project Acceleration restructuring costs, net of tax |
$ | 0.15 to $0.25 | ||
| Convertible notes dilution |
(A | ) | ||
| “Normalized” EPS |
$ | 1.38 to $1.48 | ||
| (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 $0.02 per diluted share in the first quarter of 2010 and $0.06 per diluted share for the full year 2009. |
Conference Call
The company’s first quarter 2010 earnings conference call is scheduled for today, April 30, 2010, at 10:00 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®.
This press release and additional information about Newell Rubbermaid are available on the company’s Web site, www.newellrubbermaid.com.
3 Glenlake Parkway | Atlanta, GA 30328 | Phone +1 (770) 418-7000 | www.newellrubbermaid.com | NYSE: NWL
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> News Release |
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, 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 Annual Report on Form 10-K for 2009 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.
NWL-EA
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 March 31, | |||||||||||||||||||||||||||
| 2010 | 2009 | YOY % Change |
|||||||||||||||||||||||||
| As Reported | Excluded Items (1) |
Normalized | As Reported | Excluded Items (2) |
Normalized | ||||||||||||||||||||||
| Net sales |
$ | 1,306.4 | $ | — | $ | 1,306.4 | $ | 1,203.9 | $ | — | $ | 1,203.9 | 8.5 | % | |||||||||||||
| Cost of products sold |
834.7 | — | 834.7 | 781.1 | — | 781.1 | |||||||||||||||||||||
| GROSS MARGIN |
471.7 | — | 471.7 | 422.8 | — | 422.8 | 11.6 | % | |||||||||||||||||||
| % of sales |
36.1 | % | 36.1 | % | 35.1 | % | 35.1 | % | |||||||||||||||||||
| Selling, general & administrative expenses |
325.6 | — | 325.6 | 311.5 | — | 311.5 | 4.5 | % | |||||||||||||||||||
| % of sales |
24.9 | % | 24.9 | % | 25.9 | % | 25.9 | % | |||||||||||||||||||
| Restructuring costs |
16.0 | (16.0 | ) | — | 30.5 | (30.5 | ) | — | |||||||||||||||||||
| OPERATING INCOME |
130.1 | 16.0 | 146.1 | 80.8 | 30.5 | 111.3 | 31.3 | % | |||||||||||||||||||
| % of sales |
10.0 | % | 11.2 | % | 6.7 | % | 9.2 | % | |||||||||||||||||||
| Nonoperating expenses: |
|||||||||||||||||||||||||||
| Interest expense, net |
32.0 | — | 32.0 | 30.6 | — | 30.6 | |||||||||||||||||||||
| Other (income) expense, net |
(0.3 | ) | — | (0.3 | ) | 0.7 | — | 0.7 | |||||||||||||||||||
| 31.7 | — | 31.7 | 31.3 | — | 31.3 | 1.3 | % | ||||||||||||||||||||
| INCOME BEFORE INCOME TAXES |
98.4 | 16.0 | 114.4 | 49.5 | 30.5 | 80.0 | 43.0 | % | |||||||||||||||||||
| % of sales |
7.5 | % | 8.8 | % | 4.1 | % | 6.6 | % | |||||||||||||||||||
| Income taxes |
40.0 | 2.5 | 42.5 | 15.8 | 8.7 | 24.5 | 73.5 | % | |||||||||||||||||||
| Effective rate |
40.7 | % | 37.2 | % | 31.9 | % | 30.6 | % | |||||||||||||||||||
| NET INCOME (3) |
$ | 58.4 | $ | 13.5 | $ | 71.9 | $ | 33.7 | $ | 21.8 | $ | 55.5 | 29.5 | % | |||||||||||||
| % of sales |
4.5 | % | 5.5 | % | 2.8 | % | 4.6 | % | |||||||||||||||||||
| EARNINGS PER SHARE: |
|||||||||||||||||||||||||||
| Basic |
$ | 0.21 | $ | 0.05 | $ | 0.26 | $ | 0.12 | $ | 0.08 | $ | 0.20 | |||||||||||||||
| Diluted |
$ | 0.19 | $ | 0.06 | $ | 0.25 | $ | 0.12 | $ | 0.08 | $ | 0.20 | |||||||||||||||
| AVERAGE SHARES OUTSTANDING: |
|||||||||||||||||||||||||||
| Basic |
281.1 | 281.1 | 280.7 | 280.7 | |||||||||||||||||||||||
| Diluted |
307.8 | 282.9 | 280.7 | 280.7 | |||||||||||||||||||||||
| (1) | Items excluded from "normalized" results for 2010 consist of $16.0 million of restructuring costs, including asset impairment charges and employee termination and other costs, and the associated 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. |
| (2) | Items excluded from "normalized" results for 2009 consist of $30.5 million of restructuring costs, including asset impairment charges and employee termination and other costs, and the associated tax effects. The average price of the Company’s stock during the three months ended March 31, 2009 was less than $8.61 and, as a result, the conversion feature of the convertible notes and associated hedge transactions were not dilutive for the three months ended March 31, 2009. |
| (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)
| March 31, 2010 |
March 31, 2009 | |||||
| Assets: |
||||||
| Cash and cash equivalents |
$ | 253.0 | $ | 755.9 | ||
| Accounts receivable, net |
915.8 | 874.7 | ||||
| Inventories, net |
728.6 | 927.5 | ||||
| Deferred income taxes |
187.9 | 107.8 | ||||
| Prepaid expenses and other |
151.5 | 142.2 | ||||
| Total Current Assets |
2,236.8 | 2,808.1 | ||||
| Property, plant and equipment, net |
550.2 | 606.9 | ||||
| Goodwill |
2,730.1 | 2,672.9 | ||||
| Other intangible assets, net |
642.8 | 637.0 | ||||
| Other assets |
256.2 | 412.5 | ||||
| Total Assets |
$ | 6,416.1 | $ | 7,137.4 | ||
| Liabilities and Stockholders' Equity: |
||||||
| Accounts payable |
$ | 501.3 | $ | 444.4 | ||
| Accrued compensation |
94.8 | 84.0 | ||||
| Other accrued liabilities |
612.7 | 711.4 | ||||
| Short-term debt |
— | 8.1 | ||||
| Current portion of long-term debt |
495.3 | 752.3 | ||||
| Total Current Liabilities |
1,704.1 | 2,000.2 | ||||
| Long-term debt |
2,013.4 | 2,679.0 | ||||
| Deferred income taxes |
18.2 | — | ||||
| Other non-current liabilities |
864.8 | 840.7 | ||||
| Stockholders' Equity—Parent |
1,812.1 | 1,616.8 | ||||
| Stockholders' Equity—Noncontrolling Interests |
3.5 | 0.7 | ||||
| Total Stockholders' Equity |
1,815.6 | 1,617.5 | ||||
| Total Liabilities and Stockholders' Equity |
$ | 6,416.1 | $ | 7,137.4 | ||
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
| Three Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
| Operating Activities: |
||||||||
| Net income |
$ | 58.4 | $ | 33.7 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
44.2 | 41.9 | ||||||
| Deferred income taxes |
21.3 | (1.5 | ) | |||||
| Non-cash restructuring costs |
0.9 | 4.6 | ||||||
| Stock-based compensation expense |
10.5 | 8.8 | ||||||
| Other |
9.0 | 3.2 | ||||||
| Changes in operating assets and liabilities, excluding the effects of acquisitions: |
||||||||
| Accounts receivable |
(29.4 | ) | 77.1 | |||||
| Inventories |
(46.1 | ) | (29.9 | ) | ||||
| Accounts payable |
71.1 | (85.8 | ) | |||||
| Accrued liabilities and other |
(110.5 | ) | (63.3 | ) | ||||
| Net cash provided by (used in) operating activities |
$ | 29.4 | $ | (11.2 | ) | |||
| Investing Activities: |
||||||||
| Acquisitions and acquisition related activity |
$ | (1.5 | ) | $ | (1.4 | ) | ||
| Capital expenditures |
(31.5 | ) | (32.4 | ) | ||||
| Proceeds from sale of non-current assets |
— | 0.3 | ||||||
| Net cash used in investing activities |
$ | (33.0 | ) | $ | (33.5 | ) | ||
| Financing Activities: |
||||||||
| Proceeds from issuance of debt, net of debt issuance costs |
$ | 1.4 | $ | 758.0 | ||||
| Proceeds from issuance of warrants |
— | 32.7 | ||||||
| Purchase of call options |
— | (69.0 | ) | |||||
| Payments on notes payable and debt |
(2.9 | ) | (132.5 | ) | ||||
| Cash dividends |
(13.9 | ) | (29.4 | ) | ||||
| Purchase of noncontrolling interest in consolidated subsidiary |
— | (28.2 | ) | |||||
| Other, net |
(2.9 | ) | (4.0 | ) | ||||
| Net cash (used in) provided by financing activities |
$ | (18.3 | ) | $ | 527.6 | |||
| Currency rate effect on cash and cash equivalents |
$ | (3.4 | ) | $ | (2.4 | ) | ||
| (Decrease) increase in cash and cash equivalents |
$ | (25.3 | ) | $ | 480.5 | |||
| Cash and cash equivalents at beginning of period |
278.3 | 275.4 | ||||||
| Cash and cash equivalents at end of period |
$ | 253.0 | $ | 755.9 | ||||
Newell Rubbermaid Inc.
Financial Worksheet
(In Millions)
| 2010 | 2009 | Year-over-year changes | ||||||||||||||||||||||||||||||||||||||||||||||
| Net Sales | Reconciliation (1) | Operating Margin |
Net Sales | Reconciliation (1) | Operating Margin |
Net Sales | Normalized OI | |||||||||||||||||||||||||||||||||||||||||
| Reported OI |
Excluded Items |
Normalized OI |
Reported OI |
Excluded Items |
Normalized OI |
$ | % | $ | % | |||||||||||||||||||||||||||||||||||||||
| 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 | % | ||||||||||||||||||||
| (1) | Excluded items are related to restructuring charges. |
Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
| Three Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
| Free Cash Flow (in millions): |
||||||||
| Net cash provided by (used in) operating activities |
$ | 29.4 | $ | (11.2 | ) | |||
| Capital expenditures |
(31.5 | ) | (32.4 | ) | ||||
| Free Cash Flow |
$ | (2.1 | ) | $ | (43.6 | ) | ||
| (1) | Free Cash Flow is defined as cash flow provided by (used in) operating activities less capital expenditures. |
Newell Rubbermaid Inc.
Three Months Ended March 31, 2010
In Millions
Currency Analysis
| 2010 | 2009 | Year-Over-Year (Decrease) Increase | Currency Impact |
|||||||||||||||||||
| Sales as Reported |
Currency Impact |
Adjusted Sales |
Sales as Reported |
Excluding Currency |
Including Currency |
|||||||||||||||||
| By Segment |
||||||||||||||||||||||
| Home & Family |
$ | 556.9 | $ | (10.8 | ) | $ | 546.1 | $ | 557.7 | (2.0 | )% | (0.1 | )% | 1.9 | % | |||||||
| Office Products |
351.6 | (3.6 | ) | 348.0 | 318.2 | 9.4 | % | 10.5 | % | 1.1 | % | |||||||||||
| Tools, Hardware & Commercial Products |
397.9 | (15.2 | ) | 382.7 | 328.0 | 16.7 | % | 21.3 | % | 4.6 | % | |||||||||||
| Total Company |
$ | 1,306.4 | $ | (29.6 | ) | $ | 1,276.8 | $ | 1,203.9 | 6.0 | % | 8.5 | % | 2.5 | % | |||||||
| By Geography |
||||||||||||||||||||||
| United States |
$ | 904.6 | $ | — | $ | 904.6 | $ | 861.3 | 5.0 | % | 5.0 | % | — | |||||||||
| Canada |
78.0 | (12.0 | ) | 66.0 | 61.5 | 7.3 | % | 26.8 | % | 19.5 | % | |||||||||||
| 982.6 | (12.0 | ) | 970.6 | 922.8 | 5.2 | % | 6.5 | % | 1.3 | % | ||||||||||||
| Europe, Middle East and Africa |
188.8 | (13.1 | ) | 175.7 | 159.6 | 10.1 | % | 18.3 | % | 8.2 | % | |||||||||||
| Latin America |
55.7 | 4.0 | 59.7 | 53.7 | 11.2 | % | 3.7 | % | (7.4 | )% | ||||||||||||
| Asia Pacific |
79.3 | (8.5 | ) | 70.8 | 67.8 | 4.4 | % | 17.0 | % | 12.5 | % | |||||||||||
| Total Company |
$ | 1,306.4 | $ | (29.6 | ) | $ | 1,276.8 | $ | 1,203.9 | 6.0 | % | 8.5 | % | 2.5 | % | |||||||
 Q1 2010 Earnings Call Presentation
April 30, 2010 |
 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, 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
Annual
Report
on
Form
10-K
for
2009
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. Forward-Looking Statement
|
 3
»
“Normalized”
EPS of $0.25; significant improvement versus prior year
quarter’s $0.20 and driven primarily by increases in core sales and
expansion of gross margin
»
Net Sales increase of 8.5% included an increase in core sales of
7.2% and
the positive impact of foreign currency of 2.5%, partially offset by the
impact of last year’s product line exits of (1.2%)
»
Gross Margin expansion of 100 basis points to 36.1%
Year-over-year expansion fueled by productivity gains and improved
product mix, which more than offset higher input costs, mainly resin
»
Operating Cash Flow of $29 million, compared to a use of $11 million last
year, driven by increased earnings and working capital management
Q1 2010 Summary |
 4
Q1 Sales: Percent Change by Segment
H&F
OP
TH&C
Total
Core Sales
< 1.5 >
13.0
16.7
7.2
Product Line Exits
< 0.5 >
< 3.6 >
0.0
<1.2>
Currency Translation
1.9
1.1
4.6
2.5
Total
<0.1>
10.5
21.3
8.5 |
 5
Full Year 2010 Outlook
Outlook
[ 1 ]
Net Sales Growth
Low to mid single digit growth
Core Sales
Low to mid single digit growth
Product Line Exits
-1% to -2%
Currency Translation
Slightly negative
Gross Margin Expansion
75 to 100 basis points
"Normalized" EPS
[ 2 ]
$1.38 to $1.48
Cash Flow from Operations
>$500 million
Capital Expenditures
$160 to $170 million
[ 1 ] Reflects
outlook
communicated
in
Q1
2010
Earnings
Release
and
Earnings
Call
[ 2 ] See reconciliation included in the Appendix
|
 Appendix |
 7
Reconciliation: Q1 2010 and Q1 2009 “Normalized”
EPS
Q1 2010
Q1 2009
Diluted earnings per share (as reported):
$0.19
$0.12
Project Acceleration restructuring costs, net of
tax [ 1 ]
$0.04
$0.08
Convertible notes dilution
$0.02
$0.00
"Normalized" EPS:
$0.25
$0.20
Totals may not foot due to rounding.
[ 1 ] Restructuring costs include impairment charges, employee termination benefits and
other costs associated with Project Acceleration, and the related tax effects.
|
 8
NWL Convertible Note Dilution and Warrant
Model Including Reconciliation
Transaction Details
Aggregate Principal Amount ($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 |
 9
Reconciliation: Full Year 2010 Outlook for “Normalized”
EPS
FY 2010
Diluted earnings per share:
$1.18 to $1.28
Project Acceleration restructuring costs, net
of tax [ 1 ]
$0.15 to $0.25
Convertible notes dilution [ 2 ]
TBD
"Normalized" EPS:
$1.38 to $1.48
[ 1 ] Restructuring costs include impairment charges, employee termination
benefits and other costs associated with Project Acceleration, and the related
tax effects.
[2] 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 $0.02 per diluted share in
the first quarter of 2010 and $0.06 per diluted share for the full year 2009.
|
 10
Reconciliation: Q1 2010 and Q1 2009 Operating
Income to Operating Income Excluding Charges
Q1 2010
Q1 2009
Net Sales
$1,306.4
$1,203.9
Operating Income (as reported)
$130.1
$80.8
Project Acceleration Restructuring Costs [ 1 ]
$16.0
$30.5
Operating Income (excluding charges)
$146.1
$111.3
Operating Income (excluding charges), as a
Percent of Net Sales
11.2%
9.2%
[ 1 ] Restructuring costs include impairment charges, employee termination benefits and
other costs associated with Project Acceleration.
$ millions |
 11
Reconciliation: Q1 2010 and Q1 2009 Free Cash Flow
Q1 2010
Q1 2009
Cash Flow From Operations
$29.4
($11.2)
Capital Expenditures
(31.5)
(32.4)
Free Cash Flow
($2.1)
($43.6)
$ millions |