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
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
Atlanta, GA
Securities Listed
NYSE
Common Stock
(Symbol: NWL)
NYSE
Common Stock
(Symbol: NWL)
www.newellrubbermaid.com
Ron Hardnock
Vice President, Investor Relations
Vice President, Investor Relations
Esther Lippman
Senior Manager, Public Relations
Senior Manager, Public Relations
10B Glenlake Parkway
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983
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 |
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 atwww.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
Atlanta, GA
Securities Listed
NYSE
Common Stock
(Symbol: NWL)
NYSE
Common Stock
(Symbol: NWL)
www.newellrubbermaid.com
Ron Hardnock
Vice President, Investor Relations
Vice President, Investor Relations
Esther Lippman
Senior Manager, Public Relations
Senior Manager, Public Relations
10B Glenlake Parkway
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983
Suite 300
Atlanta, GA 30328
Phone: +1 (770) 407-3994
Fax: +1 (770) 407-3983
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 sitewww.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 |
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
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)
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)
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)
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)
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
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
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
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 |