WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 2000 1-9608
NEWELL RUBBERMAID INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3514169
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
Newell Center
29 East Stephenson Street
Freeport, Illinois 61032-0943
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:(815) 235-4171
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ----------------------
Common Stock, $1 par value New York Stock Exchange
per share, and associated Chicago Stock Exchange
Common Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
There were 282.2 million shares of the Registrant's Common Stock
outstanding as of December 31, 2000. The aggregate market value of
the shares of Common Stock (based upon the closing price on the New
York Stock Exchange on that date) beneficially owned by non-affiliates
of the Registrant was approximately $6,420 million. For purposes of
the foregoing calculation only, which is required by Form 10-K, the
Registrant has included in the shares owned by affiliates those shares
owned by directors and officers of the Registrant, and such inclusion
shall not be construed as an admission that any such person is an
affiliate for any purpose.
DOCUMENTS INCORPORATED BY REFERENCE
PART III
Portions of the Registrant's Definitive Proxy Statement for its Annual
Meeting of Stockholders to be held May 9, 2001.
2
ITEM 1. BUSINESS
"Newell" or the "Company" refers to Newell Rubbermaid Inc. alone
or with its wholly-owned subsidiaries, as the context requires.
GENERAL
-------
The Company is a global manufacturer and full-service marketer of
name-brand consumer products serving the needs of volume purchasers,
including discount stores and warehouse clubs, home centers and
hardware stores, and office superstores and contract stationers. The
Company's basic business strategy is to merchandise a multi-product
offering of everyday consumer products, backed by an obsession with
customer service excellence and new product development, in order to
achieve maximum results for its stockholders. The Company's multi-
product offering consists of name-brand consumer products in six
business segments: Storage, Organization & Cleaning; Home Decor;
Office Products; Infant/Juvenile Care & Play; Food Preparation,
Cooking & Serving and Hardware & Tools. The Company's financial
objectives are to achieve above-average sales and earnings per share
growth, maintain a superior return on investment, increase its
dividend consistent with earnings growth and maintain a conservative
level of debt.
Forward-looking statements in this Report are made in reliance
upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may relate to,
but are not limited to, information or assumptions about sales,
income, earnings per share, return on equity, return on invested
capital, capital expenditures, working capital, dividends, capital
structure, free cash flow, debt to capitalization ratios, interest
rates, internal growth rates, Euro conversion plans and related risks,
pending legal proceedings and claims (including environmental
matters), future economic performance, operating income improvements,
synergies, management's plans, goals and objectives for future
operations and growth or the assumptions relating to any of the
forward-looking statements. The Company cautions that forward-looking
statements are not guarantees since there are inherent difficulties in
predicting future results; and that actual results could differ
materially from those expressed or implied in the forward-looking
statements. Factors that could cause actual results to differ
include, but are not limited to, those matters set forth in this
Report, the documents incorporated by reference herein and Exhibit 99
to this Report.
3
BUSINESS SEGMENTS
-----------------
STORAGE, ORGANIZATION & CLEANING
--------------------------------
The Company's Storage, Organization & Cleaning business is
conducted by the Rubbermaid Home Products, Rubbermaid Commercial
Products, Curver (Europe) and Goody divisions. Rubbermaid Home
Products and Curver design, manufacture or source, package and
distribute indoor and outdoor organization, storage, and cleaning
products. Rubbermaid Commercial Products designs, manufactures or
sources, packages and distributes industrial and commercial waste and
recycling containers, cleaning equipment, food storage, serving and
transport containers, outdoor play systems and home health care
products. Goody designs, sources, manufactures, packages and
distributes hair care accessories.
Rubbermaid Home Products, Rubbermaid Commercial Products, Curver
and Goody primarily sell their products under the Rubbermaid{R},
Curver{R}, Carex{R}, Ace{R}, Wilhold{R} and Goody{R} trademarks.
Rubbermaid Home Products, Curver and Goody market their products
directly and through distributors to mass merchants, warehouse clubs,
grocery/drug stores and hardware distributors, using a network of
manufacturers' representatives, as well as regional direct sales
representatives and market-specific sales managers. Rubbermaid
Commercial Products markets its products directly and through
distributors to commercial channels and home centers using a direct
sales force.
HOME DECOR
----------
The Company's Home Decor business is conducted by the Levolor
Home Fashions, Newell Window Furnishings, Newell Window Fashions
Europe, Intercraft/Burnes and Newell Photo Fashion Europe divisions.
Levolor Home Fashions and Newell Window Furnishings primarily design,
manufacture or source, package and distribute drapery hardware,
made-to-order and stock horizontal and vertical blinds, as well as
pleated, cellular and roller shades for the retail marketplace.
Levolor Home Fashions also produces window treatment components for
custom window treatment fabricators. Newell Window Fashions Europe
primarily designs, manufactures, packages and distributes drapery
hardware and made-to-order window treatments for the European retail
marketplace. Intercraft/Burnes and Newell Photo Fashion Europe
primarily design, manufacture or source, package and distribute wood,
wood composite and metal ready-made picture frames and photo albums.
Levolor Home Fashions, Newell Window Furnishings and Newell
Window Fashions Europe primarily sell their products under the
trademarks Levolor{R}, Newell{R}, LouverDrape{R}, Del Mar{R},
Kirsch{R}, Acrimo{R}, Swish{R}, Gardinia{R}, Harrison Drape{R},
4
Spectrim{R}, MagicFit{R}, Riviera{R}, Levolor Cordless{TM} and
Connoisseur{R}. Intercraft/Burnes primarily sells its ready-made
picture frames under the trademarks Intercraft{R}, Decorel{R}, Burnes
of Boston{R}, Carr{R}, Rare Woods{R} and Terragrafics{R}, while photo
albums are sold primarily under the Holson{R} trademark. Newell Photo
Fashion Europe primarily sells its products under the trademarks
Albadecor{R} and Panodia{R}.
Levolor Home Fashions, Newell Window Furnishings and Intercraft/
Burnes market their products directly and through distributors to mass
merchants, home centers, department/specialty stores, hardware
distributors, custom shops and select contract customers, using a
network of manufacturers' representatives, as well as regional account
and market-specific sales managers. Newell Window Fashions Europe and
Newell Photo Fashion Europe market their products to mass merchants
and buying groups using a direct sales force.
Intercraft/Burnes markets its products directly to mass
merchants, warehouse clubs, grocery/drug stores and
department/specialty stores, using a network of manufacturers'
representatives, as well as regional zone and market-specific sales
managers. Intercraft{R}, Decorel{R} and Holson{R} products are sold
primarily to mass merchants, while the remaining U.S. brands are sold
primarily to department/specialty stores. Newell Photo Fashion Europe
markets its products to mass merchants, buying groups and the do-it-
yourself market using a direct sales force.
OFFICE PRODUCTS
---------------
The Company's Office Products business is conducted by the
Sanford North America, Sanford International, Newell Office Products
and Cosmolab divisions. Sanford North America primarily designs,
manufactures or sources, packages and distributes permanent/waterbase
markers, dry erase markers, overhead projector pens, highlighters,
wood-cased pencils, ballpoint pens and inks, and other art supplies.
It also distributes other writing instruments including roller ball
pens and mechanical pencils for the retail marketplace. Sanford
International primarily designs and manufactures, packages and
distributes ball point pens, wood-cased pencils, roller ball pens and
other art supplies for the retail and distributor markets. Newell
Office Products primarily designs, manufactures or sources, packages
and distributes desktop accessories, computer accessories, storage
products, card files and chair mats. Cosmolab primarily designs and
manufactures, packages and distributes private label cosmetic pencils
for commercial customers.
Sanford primarily sells its products under the trademarks
Sanford{R}, Sharpie{R}, Paper Mate{R}, Parker{R}, Waterman{R},
Eberhard Faber{R}, Berol{R}, Grumbacher{R}, Reynolds{R}, Rotring{R},
Uni-Ball{R} (used under exclusive license from Mitsubishi Pencil Co.
Ltd. and its subsidiaries in North America), Expo{R}, Accent{R},
5
Vis-a-Vis{R}, Expresso{R}, Liquid Paper{R}, and Mongol{R}. Newell
Office Products markets its products under the Rolodex{R}, Eldon{R},
Rogers{R} and Rubbermaid{R} trademarks.
Sanford North America markets its products directly and through
distributors to mass merchants, warehouse clubs, grocery/drug stores,
office superstores, office supply stores, contract stationers, and
hardware distributors, using a network of company sales
representatives, regional sales managers, key account managers and
selected manufacturers' representatives. Sanford International markets
its products directly to retailers and distributors using a direct
sales force. Newell Office Products markets its products directly and
through distributors to mass merchants, warehouse clubs, grocery/drug
stores, office superstores, office supply stores and contract
stationers, using a network of manufacturers' representatives, as well
as regional zone and market-specific key account representatives and
sales managers.
INFANT/JUVENILE CARE & PLAY
---------------------------
The Company's Infant/Juvenile Care & Play business is conducted
by the Little Tikes and Graco/Century divisions. These businesses
design, manufacture or source, package and distribute infant and
juvenile products such as toys, high chairs, infant seats, strollers,
play yards, ride-ons and outdoor activity play equipment.
Little Tikes and Graco/Century primarily sell their products
under the Little Tikes{R}, Graco{R} and Century{R} trademarks.
Little Tikes and Graco/Century market their products directly and
through distributors to mass merchants, warehouse clubs, grocery/drug
stores and hardware distributors, using a network of manufacturers'
representatives, as well as regional direct sales representatives and
market-specific sales managers.
FOOD PREPARATION, COOKING & SERVING
-------------------------------------
The Company's Food Preparation, Cooking & Serving business is
conducted by the Mirro, Panex and Calphalon cookware and bakeware
divisions and the Anchor Hocking and Newell Europe glassware
divisions. Mirro and Panex primarily design, manufacture, package and
distribute aluminum and steel cookware and bakeware for the U.S. and
Central and South America retail marketplace. In addition, Mirro
designs, manufactures, packages and distributes various specialized
aluminum cookware and bakeware items for the food service industry.
It also produces aluminum contract stampings and components for other
manufacturers and makes aluminum and plastic kitchen tools and
utensils. Mirro's manufacturing operations are highly integrated,
rolling sheet stock from aluminum ingot, and producing phenolic
handles and knobs at its own plastics molding facility. Calphalon
6
primarily designs, manufactures or sources, packages and distributes
hard anodized aluminum and stainless steel cookware and bakeware for
the department/specialty store marketplace. Anchor Hocking and Newell
Europe primarily design, manufacture, package and distribute glass
products. These products include glass ovenware, servingware,
cookware and dinnerware products. Anchor Hocking also produces
foodservice products, glass lamp parts, lighting components, meter
covers and appliance covers for the foodservice and specialty markets.
Newell Europe also produces glass components for appliance
manufacturers, and its products are marketed primarily in Europe, the
Middle East and Africa.
Mirro and Calphalon primarily sell their products under the
trademarks Mirro{R}, WearEver{R}, Calphalon{R}, Regal{R}, Panex{R},
Penedo{TM}, Rochedo{TM}, Clock{TM}, AirBake{R}, Cushionaire{R},
Concentric Air{R}, Channelon{R}, WearEver Air{R}, Club{R}, Royal
Diamond{R} and Kitchen Essentials{R}. Anchor Hocking primarily sells
its products under the trademarks Anchor{TM}, Anchor Hocking{R} and
Oven Basics{R}. Newell Europe primarily sells its products under the
trademarks of Pyrex{R}, Vision{TM} and Visions{R} (each used under
exclusive license from Corning Incorporated and its subsidiaries in
Europe, the Middle East and Africa only), Pyroflam{R} and Vitri{R}.
Mirro markets its products directly to mass merchants, warehouse
clubs, grocery/drug stores, department/specialty stores, hardware
distributors, cable TV networks and select contract customers, using a
network of manufacturers' representatives, as well as regional zone
and market-specific sales managers. Calphalon primarily markets its
products directly to department/specialty stores. Anchor Hocking
markets its products directly to mass merchants, warehouse clubs,
grocery/drug stores, department/specialty stores, hardware
distributors and select contract customers, using a network of
manufacturers' representatives, as well as regional zone and
market-specific sales managers. Anchor Hocking also markets its
products to manufacturers which supply the mass merchant and home
party channels of trade. Newell Europe markets its products to mass
merchants, industrial manufacturers and buying groups using a direct
sales force and manufacturers' representatives in some markets.
HARDWARE & TOOLS
----------------
The Company's Hardware & Tools business is conducted by the
Amerock Cabinet and Window Hardware Systems, EZ Paintr, Bernz O matic,
Lee Rowan and Newell Hardware Europe divisions. Amerock Cabinet and
Window Hardware Systems manufacture or source, package and distribute
cabinet hardware for the retail and O.E.M. marketplace and window
hardware for window manufacturers. EZ Paintr manufactures and
distributes manual paint applicator products. Bernz O matic
manufactures and distributes propane/oxygen hand torches. Lee Rowan
primarily designs, manufactures or sources, packages and distributes
wire storage and laminate products and ready-to-assemble closet
7
organization and work shop cabinets and distributes hardware, which
includes bolts, screws and mechanical fasteners. Newell Hardware
Europe is a manufacturer and marketer of shelving and storage
products, cabinet hardware and functional trims.
Amerock, EZ Paintr, Bernz O matic, Lee Rowan and Newell Hardware
Europe primarily sell their products under the trademarks Amerock{R},
Allison{R}, EZ Paintr{R}, Bernz O matic{R}, Dorfile{R}, Lee/Rowan{R},
System Works{R}, Douglas Kane{R}, Spur{R}, Nenplas{R}, Homelux{R}and
Ashland{R}.
Amerock, EZ Paintr, Bernz O matic and Lee Rowan market their
products directly and through distributors to mass merchants, home
centers, hardware distributors, cabinet shops and window
manufacturers, using a network of manufacturers' representatives, as
well as regional zone and market-specific sales managers.
NET SALES BY BUSINESS SEGMENT
-----------------------------
The following table sets forth the amounts and percentages of the
Company's net sales for the three years ended December 31 (including
sales of acquired businesses from the time of acquisition and sales of
divested businesses through date of sale), for the Company's six
business segments. Sales to Wal-Mart Stores, Inc. and subsidiaries
amounted to approximately 15% of consolidated net sales in 2000 and
1999, and 14% in 1998. Sales to no other customer exceeded 10% of
consolidated net sales.
[CAPTION]
% of % of % of
2000 total 1999 total 1998 total
---- ----- ---- ----- ---- -----
(In millions, except percentages)
Storage, Organization &
Cleaning $1,833.0 26% $1,899.5 28% $2,047.0 32%
Home Decor 1392.4 20 1370.4 21 1242.9 19
Office Products 1288.0 19 1218.0 18 1078.6 17
Infant/Juvenile Care &
Play 921.0 13 834.7 12 751.3 11
Food Prep., Cooking &
Serving 774.4 11 782.2 12 790.0 12
Hardware & Tools 725.9 11 607.0 9 583.4 9
-------- ----- ------- ----- ----- ---
Total Company $6,934.7 100% $6,711.8 100% $6,493.2 100%
======== ==== ======= ==== ======== ====
8
Certain 1999 and 1998 amounts have been reclassified to conform with
the 2000 presentation.
EXPORT SALES
------------
The Company's export sales business, defined as sales of products
made in the U.S. and sold abroad, is conducted primarily through its
Newell International division. For purposes of the table immediately
above, sales attributable to the Newell International division are
allocated to the business segment that manufactured the products.
GROWTH STRATEGY
---------------
The Company's growth strategy emphasizes internal growth and
acquisitions. The Company has grown internally principally by
introducing new products, entering new domestic and international
markets, adding new customers, cross-selling existing product lines to
current customers and supporting its U.S.-based customers'
international expansion. The Company has supplemented internal
growth, both domestically and internationally, by acquiring businesses
with brand name product lines and improving the profitability of such
businesses through an integration process referred to as
"Newellization." Since 1990, the Company has completed more than 20
major acquisitions (excluding Rubbermaid) representing more than $3
billion in additional sales.
Internal Growth
---------------
An important element of the Company's growth strategy is internal
growth. Internal growth is accomplished through introducing new
products, entering new domestic and international markets, adding new
customers, cross-selling existing product lines to current customers
and supporting its U.S.-based customers' international expansion.
Internal growth is defined by the Company as growth from its "core
businesses," which include continuing businesses owned more than two
years and minor acquisitions. The Company's goal is to achieve above-
average internal growth.
ACQUISITIONS AND INTEGRATION
----------------------------
ACQUISITION STRATEGY
--------------------
The Company supplements internal growth by acquiring businesses
and product lines with a strategic fit with the Company's existing
businesses. It also seeks to acquire product lines with a number one
or two position in the markets in which they compete, [USER BRANDS], a
low technology level, a long product life cycle and the potential to
9
reach the Company's standard of profitability. In addition to adding
entirely new product lines, the Company uses acquisitions to round out
existing businesses and fill gaps in its product offering, add new
customers and distribution channels, expand shelf space for the
Company's products with existing customers, and improve operational
efficiency through shared resources. The Company intends to continue
to pursue acquisition opportunities to complement internal growth.
NEWELLIZATION
-------------
"Newellization" is the Company's well-established profit
improvement and productivity enhancement process that is applied to
integrate newly acquired product lines. The Newellization process
includes establishing a more focused business strategy, improving
customer service, reducing corporate overhead through centralization
of administrative functions and tightening financial controls. In
integrating acquired businesses, the Company typically centralizes
accounting systems, capital expenditure approval, cash management,
order processing, billing, credit, accounts receivable and data
processing operations. To enhance efficiency, Newellization also
focuses on improving manufacturing processes, eliminating
non-productive lines, reducing inventories, increasing accounts
receivable turnover, extending accounts payable terms and trimming
excess costs. The Newellization process usually takes approximately
two to three years to complete.
Selective Globalization
-----------------------
The Company is pursuing selective international opportunities to
further its internal growth and acquisition objectives. The rapid
growth of consumer goods economies and retail structures in several
regions outside the U.S., particularly Europe, Mexico and South
America, makes them attractive to the Company by providing selective
opportunities to acquire businesses, develop partnerships with new
foreign customers and extend relationships with the Company's domestic
customers whose businesses are growing internationally. The Company's
recent acquisitions, combined with existing sales to foreign
customers, increased its sales outside the U.S. to approximately 25%
of total sales in 2000 from 23% in 1999 and 22% in 1998.
Additional information regarding acquisitions of businesses is
included in Item 6 and Note 2 to the consolidated financial
statements.
10
MARKETING AND DISTRIBUTION
--------------------------
CUSTOMER SERVICE
----------------
The Company believes that one of the primary ways it
distinguishes itself from its competitors is through customer service.
The Company's ability to provide superior customer service is a result
of its information technology, marketing and merchandising programs
designed to enhance the sales and profitability of its customers and
consistent on-time delivery of its products.
Information Technology
----------------------
The Company is an industry leader in the application of
Electronic Data Interchange ("EDI") technology, an electronic link
between the Company and many of its retail customers and invests in
advanced computer systems. The Company uses EDI to receive and
transmit purchase orders, invoices and payments. With the replacement
of paper-based processing with computer-to-computer business
transactions, EDI has cut days off the order/shipping cycle.
Building upon its EDI expertise, the Company has established
"Quick Response" programs with several major customers. These
programs allow the Company to implement customized features such as
vendor-managed inventories in which the Company manages certain or all
aspects of inventory of several product categories at customer
locations. The Company's experience is that its customers benefit
from such programs by increased inventory turnover and reduced
customer waiting periods for out-of-stock product.
On-Time Delivery
----------------
A critical element of the Company's customer service is
consistent on-time delivery of products to its customers. Retailers
are pursuing a number of strategies to deliver the highest-quality,
lowest-cost products to their customers. A growing trend among
retailers is to purchase on a "just-in-time" basis in order to reduce
inventory costs and increase returns on investment. As retailers
shorten their lead times for orders, manufacturers need to more
closely anticipate consumer buying patterns. The Company supports its
retail customers' "just-in-time" inventory strategies through
investments in improved forecasting systems, more responsive
manufacturing and distribution capabilities and electronic
communications. The Company manufactures the vast majority of its
products and has extensive experience in high-volume, cost-effective
manufacturing. The high-volume nature of its manufacturing processes
and the relatively consistent demand for its products enables the
Company to ship most products directly from its factories without the
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need for independent warehousing and distribution centers. For 2000,
approximately 98% of the items ordered by customers were shipped on
time, typically within two to three days of the customer's order.
Marketing
---------
The Company's objective is to develop long-term, mutually
beneficial partnerships with its customers and become their supplier
of choice. To achieve this goal, the Company has a value-added
marketing program that offers a family of leading brand name staple
products, tailored sales programs, innovative merchandising support,
in-store services and responsive top management.
The Company's marketing skills help customers stimulate store
traffic and sales through timely advertising and innovative
promotions. The Company also assists customers in differentiating
their offerings by customizing products and packaging. Through
self-selling packaging and displays that emphasize good-better-best
value relationships, retail customers are encouraged to trade up to
higher-value, best quality products.
Customer service also involves customer contact with top-level
decision makers at the Company's divisions. As part of its
decentralized structure, the Company's division presidents are the
chief marketing officers of their product lines and communicate
directly with customers. This structure permits early recognition of
market trends and timely response to customer problems.
Multi-Product Offering
----------------------
The Company's increasingly broad product coverage in multiple
product lines permits it to more effectively meet the needs of its
customers. With families of leading, brand name products and
profitable new products, the Company also can help volume purchasers
sell a more profitable product mix. As a potential single source for
an entire product line, the Company can use program merchandising to
improve product presentation, optimize display space for both sales
and income and encourage impulse buying by retail customers.
Corporate Structure
-------------------
By decentralizing its manufacturing and marketing efforts while
centralizing key administrative functions, the Company seeks to foster
a responsive entrepreneurial culture. The Company's divisions
concentrate on designing, manufacturing, marketing, selling their
products and servicing their customers, which facilitates product
development and responsiveness to customers. Administrative functions
that are centralized at the corporate level include cash management,
accounting systems, capital expenditure approvals, order processing,
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billing, credit, accounts receivable, data processing operations and
legal functions. Centralization concentrates technical expertise in
one location, making it easier to observe overall business trends and
manage the Company's businesses.
Backlog
-------
The dollar value of unshipped factory orders is not material.
Seasonal Variations
-------------------
The Company's product groups are only moderately affected by
seasonal trends. The Storage, Organization & Cleaning,
Infant/Juvenile Care & Play and Food Preparation, Cooking & Serving
business segments typically have higher sales in the second half of
the year due to retail stocking related to the holiday season; the
Home Decor and Hardware & Tools business segments have higher sales in
the second and third quarters due to an increased level of
do-it-yourself projects completed in the summer months; and the Office
Product business segment has higher sales in the second and third
quarters due to the back-to-school season. Because these seasonal
trends are moderate, the Company's consolidated quarterly sales do not
fluctuate significantly, unless a significant acquisition is made.
Foreign Operations
------------------
Information regarding the Company's 2000, 1999 and 1998 foreign
operations is included in Note 14 to the consolidated financial
statements and is incorporated by reference herein.
Raw Materials
-------------
The Company has multiple foreign and domestic sources of supply
for substantially all of its material requirements. The raw materials
and various purchased components required for its products have
generally been available in sufficient quantities.
Patents and Trademarks
----------------------
The Company has many patents, trademarks, brand names and trade
names, none of which is considered material to the consolidated
operations.
Competition
-----------
The Company competes with numerous other manufacturers and
distributors of consumer products, many of which are large and
13
well-established. The Company's principal customers are large mass
merchandisers, such as discount stores, home centers, warehouse clubs
and office superstores. The rapid growth of these large mass
merchandisers, together with changes in consumer shopping patterns,
have contributed to a significant consolidation of the consumer
products retail industry and the formation of dominant multi-category
retailers, many of which have strong bargaining power with suppliers.
This environment significantly limits the Company's ability to recover
cost increases through selling prices. Other trends among retailers
are to foster high levels of competition among suppliers, to demand
that manufacturers supply innovative new products and to require
suppliers to maintain or reduce product prices and deliver products
with shorter lead times. Another trend, in the absence of a strong
new product development effort or strong end-user brands, is for the
retailer to import generic products directly from foreign sources.
The combination of these market influences has created an intensely
competitive environment in which the Company's principal customers
continuously evaluate which product suppliers to use, resulting in
pricing pressures and the need for strong end-user brands, the ongoing
introduction of innovative new products and continuing improvements in
customer service.
For more than 30 years, the Company has positioned itself to
respond to the challenges of this retail environment by developing
strong relationships with large, high-volume purchasers. The Company
markets its strong multi-product offering through virtually every
category of high-volume retailer, including discount, drug, grocery
and variety chains, warehouse clubs, department, hardware and
specialty stores, home centers, office superstores, contract
stationers and military exchanges. The Company's largest customer,
Wal-Mart (including Sam's Club), accounted for approximately 15% of
net sales in 2000. Other top ten customers included Toys 'R Us, The
Home Depot, Kmart, Target, Lowe's, The Office Depot, JCPenney, United
Stationers, and Sears.
The Company's other principal methods of meeting its competitive
challenges are high brand name recognition, superior customer service
(including industry leading information technology, innovative
"good-better-best" marketing and merchandising programs), consistent
on-time delivery, decentralized manufacturing and marketing,
centralized administration, and experienced management.
ENVIRONMENT
-----------
Information regarding the Company's environmental matters is
included in the Management's Discussion and Analysis section of this
report and in Note 15 to the consolidated financial statements and is
incorporated by reference herein.
14
EMPLOYEES
---------
The Company has approximately 48,800 employees worldwide, of whom
5,884 are covered by collective bargaining agreements or, in certain
countries, other collective arrangements decreed by statute.
ITEM 2. PROPERTIES
------------------
The following table shows the location and general character of
the principal operating facilities owned or leased by the Company.
The properties are listed within their designated business segment:
Storage, Organization & Cleaning; Home Decor; Office Products;
Infant/Juvenile Care & Play; Food Preparation, Cooking & Serving; and
Hardware & Tools. These are the primary manufacturing locations and
in many instances also contain administrative offices and warehouses
used for distribution of our products. The Company also maintains
sales offices throughout the United States and the world. The
executive offices are located in Beloit, Wisconsin, which is an owned
facility occupying approximately 9,000 square feet. The corporate
offices are located in Illinois in owned facilities at Freeport
(approximately 91,000 square feet) and in owned and leased space in
Rockford (approximately 8,700 square feet). Most of the idle
facilities, which are excluded from the following list, are subleased
while being held pending sale or lease expiration. The Company's
properties are generally in good condition, well-maintained, and are
suitable and adequate to carry on the Company's business.
OWNED OR
BUSINESS LEASED
SEGMENT LOCATION CITY GENERAL CHARACTER
Storage, Organization & Cleaning
AZ Phoenix L Commercial Products
Mexico Cadereyta O Commercial Products
TN Cleveland O Commercial Products -- 2 facilities
Mexico Monterrey L Commercial Products
VA Winchester O/L Commercial Products -- 2 facilities
AZ Phoenix O Home Products
France Amiens O Home Products
France Grossiat O Home Products
France Lomme L Home Products
Germany Dreieich O Home Products
Hungary Debrecen L Home Products
IA Centerville O/L Home Products -- 2 facilities
Mexico Cartagena O Home Products
Mexico Tultitlan O Home Products
NC Greenville O Home Products
Netherlands Brunssum O Home Products
OH Mogadore O Home Products
15
OWNED OR
BUSINESS LEASED
SEGMENT LOCATION CITY GENERAL CHARACTER
OH Wooster O Home Products
Canada Mississauga O Home Products
Poland Seupsk O Home Products
Spain Zaragoza O Home Products
TX Cleburne O Home Products
TX Greenville O Home Products
TX Wills Point L Home Products
UK Corby O Home Products
Netherlands Goirle O Home Products
KS Winfield O Home Products -- 2 facilities
MO Farmington O Outdoor Play Systems
Canada Paris L Outdoor Play Systems
GA Manchester O Hair Accessories
GA Columbus O/L Hair Accessories -- 2 facilities
HOME DECOR
Canada Toronto O Picture Frames
France La Ferte Milon O Picture Frames
France Neunge Sur Beuvron O Picture Frames
France St. Laurent Sur Gorre O Picture Frames
Mexico Durango O Picture Frames
Mexico Tijuana L Picture Frames
NC Statesville O/L Picture Frames
TX Laredo L Picture Frames
TX Taylor O Picture Frames
NH Claremont O/L Picture Frames & Photo Albums
Mexico Ciudad Juarez L Window Treatments
AZ Bisbee L Window Treatments
Canada Calgary L Window Treatments
Canada Toronto L Window Treatments
Denmark Hornum O Window Treatments
France Feuquieres-en-Vimeu O Window Treatments
France Tremblay-les-Villages O Window Treatments
GA Athens O Window Treatments
Germany Borken L Window Treatments
Germany Isny O Window Treatments
IL Freeport O/L Window Treatments
IL South Holland L Window Treatments
Italy Como O Window Treatments
Italy Frosinone O Window Treatments
MI Sturgis O Window Treatments
NC High Point O Window Treatments
NJ Rockaway L Window Treatments
PA Shamokin O Window Treatments
Spain Vitoria O Window Treatments
Sweden Anderstorp O Window Treatments
Sweden Malmo O Window Treatments
TX Waco O Window Treatments
UK Ashbourne O Window Treatments
16
OWNED OR
BUSINESS LEASED
SEGMENT LOCATION CITY GENERAL CHARACTER
UK Birmingham O/L Window Treatments
UK Tamworth O Window Treatments
UK Watford Herts L Window Treatments
UT Ogden O Window Treatments
UT Salt Lake City L Window Treatments
CA Westminster L Window Treatments -- 3 facilities
OFFICE PRODUCTS
TN Lewisburg O Cosmetic Pencils
TN Maryville O Office & Storage Organizers
WI Madison O/L Office & Storage 4 facilities
Puerto Rico Moca O Office & Storage Organizers
CA Santa Monica L Writing Instruments
IL Bellwood O Writing Instruments 3 facilities
IL Bolingbrook L Writing Instruments
TN Lewisburg O Writing Instruments
TN Shelbyville O Writing Instruments -- 2 facilities
WI Janesville L Writing Instruments
Canada Oakville L Writing Instruments
Colombia Bogota O Writing Instruments
France St. Herblain O Writing Instruments
France Valence O Writing Instruments
Germany Hamburg O Writing Instruments
Germany Baden-Baden L Writing Instruments
Mexico Pasteje L Writing Instruments
Mexico Tijuana L Writing Instruments
Mexico Tlalnepantla O Writing Instruments
UK Newhaven O Writing Instruments
UK Kings Lynn O Writing Instruments
Venezuela Maracay O Writing Instruments
INFANT/JUVENILE CARE & PLAY
CA San Bernadino O Infant Products
OH Canton O Infant Products
OH Macedonia O Infant Products
PA Elverson O Infant Products
SC Greer L Infant Products
CA City of Industry L Juvenile Products
OH Hudson O Juvenile Products
OH Sebring O Juvenile Products
Luxembourg Niedercorn O Juvenile Products
FOOD PREPARATION, COOKING & SERVING
OH Perrysburg O Cookware
WI Manitowoc O Cookware & Bakeware -- 5 facilities
WI Chilton O Cookware Components
Brazil Sao Paulo L Cookware
Germany Muhltal O Plastic Storage Ware
UK Sunderland O Glassware & Bakeware
17
OWNED OR
BUSINESS LEASED
SEGMENT LOCATION CITY GENERAL CHARACTER
France Chateauroux O Glassware & Bakeware
OH Lancaster O Glassware & Bakeware
PA Monaca O Glassware & Food Service
HARDWARE & TOOLS
Canada Woodbridge L Cabinet & Window Hardware
IL Rockford O Cabinet & Window Hardware
SD Bismarck L Cabinet & Window Hardware
CA Vista O Home Storage Systems
MO Jackson O Home Storage Systems
Canada Watford O Home Storage Systems
NY Buffalo O Paint Applicators
TN Johnson City O Paint Applicators
WI Milwaukee O Paint Applicators
NY Medina O Propane/Oxygen Hand Torches
AZ Phoenix L Small Hardware
NY Ogdensburg O Small Hardware
IN Lowell O Window Hardware
ITEM 3. LEGAL PROCEEDINGS
-----------------
Information regarding legal proceedings is included in Note 15 to
the consolidated financial statements and is incorporated by reference
herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to a vote of the Company's
shareholders during the fourth quarter of fiscal year 2000.
SUPPLEMENTARY ITEM - EXECUTIVE OFFICERS OF THE REGISTRANT.
NAME AGE PRESENT POSITION WITH THE COMPANY
---- --- ---------------------------------
Joseph Galli, Jr. 42 President and Chief Executive Officer
William T. Alldredge 61 President-Corporate Development and
Chief Financial Officer
Jeffery E. Cooley 48 Group President
Peter J. Martin 45 Group President
Robert S. Parker 55 Group President
18
Joseph M. Ramos 59 Group President
Brian T. Schnabel 48 Group President
Jeffrey J. Burbach 43 Vice President-Controller
Tim Jahnke 41 Vice President-Human Resources
Dale L. Matschullat 55 Vice President-General Counsel
Joseph Galli, Jr. has been Vice Chairman and Chief Executive Officer
of the Company since January 8, 2001. Prior thereto, he was President
and Chief Executive Officer of VerticalNet, Inc. from May 2000 until
January 2001. From June 1999 until May 2000, he was President and
Chief Operating Officer of Amazon.com. From 1980 until June 1999, he
held a variety of positions with The Black and Decker Corporation,
culminating as President of Black and Decker's Worldwide Power Tools
and Accessories.
William T. Alldredge has been President - Corporate Development and
Chief Financial Officer since January 2001. Prior thereto, he was
President - International Business Development from December 1999
until January 2001. From August 1983 until December 1999, he was Vice
President - Finance.
Jeffery E. Cooley has been Group President of the Company's Food
Preparation, Cooking & Serving business segment since November 2000.
Prior thereto, he was President of the Company's Calphalon division
from 1990 through October 2000.
Peter J. Martin has been Group President of the Company's Home Decor
business segment from November 2000. Prior thereto, he was President
of Newell Window Fashions Europe from December 1997 through October
2000. From May 1994 until December 1997 he was Vice President - Group
Controller of the Company.
Robert S. Parker has been Group President of the Company's Office
Products business segment since August 1998. Prior thereto, he was
President of Sanford Corporation, both before and after the Company
acquired it in 1992, from October 1990 to August 1998.
Joseph M. Ramos has been Group President of the Company's Storage,
Organization & Cleaning business segment since November 2000. Prior
thereto, he was President of Rubbermaid Commercial Products from 1992
through October 2000.
Brian T. Schnabel has been Group President of the Company's
Infant/Juvenile Care & Play business segment since March 5, 2001.
Prior thereto, he was Chief Operating Officer of TruServ Corporation
(a cooperative for True Value and other retailers) from March 2000
until March 2001. From October 1998 until becoming Chief Operating
19
Officer, he was Executive Vice President, Business Development of
TruServ. From 1995 until 1998, he was President and Chief Operating
Officer of Elmer's Products, Inc. From 1978 until 1995, he progressed
through a series of high-level positions at the Huffy Corporation.
Jeffrey J. Burbach has been Vice President-Controller since June 1999.
Prior thereto, he was President of the Company's EZ Paintr division
from December 1994 to June 1999. From September 1992 to December
1994, he was President of the Company's Bernz O matic division.
Tim Jahnke has been Vice President-Human Resources since February
2001. Prior thereto, he was President of the Anchor Hocking Specialty
Glass division from June 1999 until February 2001. From 1995 until
June 1999, he led the human resources department of the Company's
Sanford division's worldwide operations.
Dale L. Matschullat has been Vice President-General Counsel since
January 2001. Prior thereto, he was Vice President-Finance, Chief
Financial Officer and General Counsel from January 2000 until January
2001. From 1989 until January 2000, he was Vice President-General
Counsel.
20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
-------------------------------------------------
The Company's Common Stock is listed on the New York and Chicago
Stock Exchanges (symbol: NWL). As of December 31, 2000, there were
26,704 stockholders of record. The following table sets forth the
high and low sales prices of the Common Stock on the New York Stock
Exchange Composite Tape (as published in the Wall Street Journal) for
the calendar periods indicated.
2000 1999 1998
---- ---- ----
High Low High Low High Low
---- --- ---- --- ---- ---
Quarters:
First $31.25 $21.50 $50.00 $36.38 $50.19 $40.88
Second 27.56 23.81 52.00 40.13 49.19 45.44
Third 28.50 21.94 47.69 27.19 54.44 43.19
Fourth 22.88 18.69 36.50 26.25 49.06 37.19
The Company has paid regular cash dividends on its Common Stock
since 1947. On February 1, 2000, the quarterly cash dividend was
increased to $0.21 per share from the $0.20 per share that had been
paid since February 8, 1999. Prior to this date, the quarterly cash
dividend paid was $0.18 per share since February 10, 1998.
Information about the 5.25% convertible quarterly income
preferred securities issued by a wholly owned subsidiary trust of the
Company, which are reflected as outstanding in the Company's
consolidated financial statements as Company-Obligated Mandatorily
Redeemable Convertible Preferred Securities of a Subsidiary Trust, is
included in Note 6 to the consolidated financial statements and is
incorporated by reference herein.
21
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The following is a summary of certain consolidated financial
information relating to the Company at December 31. The summary has
been derived in part from, and should be read in conjunction with, the
consolidated financial statements of the Company included elsewhere in
this report and the schedules thereto.
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
Net sales $6,934,747 $6,711,768 $6,493,172 $5,910,717 $5,480,951
Cost of products sold 5,103,152 4,970,569 4,670,358 4,275,234 3,916,580
---------- ---------- ---------- ---------- ----------
Gross Income 1,831,595 1,741,199 1,822,814 1,635,483 1,564,371
Selling, general
and administrative
expenses 899,424 1,104,491 967,916 838,877 798,877
Restructuring costs 48,561 246,381 115,154 37,200 -
Goodwill amortization
and other 51,930 46,722 59,405 119,743 30,487
---------- ---------- ---------- ---------- ----------
Operating Income 831,680 343,605 680,339 639,663 735,007
Nonoperating expenses (income):
Interest Expense 130,033 100,021 100,514 114,357 84,822
Other, net 16,160 12,645 (237,148) (19,284) (23,127)
---------- ---------- ---------- ---------- --------- -
Net 146,193 112,666 (136,634) 95,073 61,695
---------- ---------- ---------- ---------- ----------
Income Before Income Taxes 685,487 230,939 816,973 544,590 673,312
Income taxes 263,912 135,502 335,139 222,973 261,872
---------- ---------- ---------- ---------- ----------
Net Income $421,575 $95,437 $481,834 $321,617 $411,440
========== ========== ========== ========== ==========
Earnings per
share:
Basic $ 1.57 $ 0.34 $ 1.72 $ 1.15 $ 1.46
Diluted $ 1.57 $ 0.34 $ 1.70 $ 1.14 $ 1.46
Weighted average
shares outstanding:
Basic 268,437 281,806 280,731 280,300 280,894
Diluted 278,365 281,806 291,883 281,653 281,482
Dividends per share $ 0.84 $ 0.80 $ 0.76 $ 0.70 $ 0.63
22
BALANCE SHEET DATA
Inventories $1,262,551 $1,034,794 $1,033,488 $ 902,978 $ 801,255
Working capital 1,345,826 1,108,686 1,278,768 1,006,624 953,890
Total assets 7,261,825 6,724,088 6,289,155 5,775,248 5,112,410
Short-term debt 227,206 247,433 101,968 258,201 154,555
Long-term debt, net
of current maturities 2,314,774 1,455,779 1,393,865 989,694 1,197,486
Stockholders' equity 2,448,641 2,697,006 2,843,732 2,661,417 2,513,722
ACQUISITIONS OF BUSINESSES
2000, 1999 and 1998
-------------------
Information regarding businesses acquired in the last three years is
included in Note 2 to the consolidated financial statements.
1997
----
On March 5, 1997, the Company purchased the Rolodex business, a
marketer of office products such as card files, personal organizers
and paper punches, from Insilco Corporation. Rolodex was integrated
into Newell Office Products.
On May 30, 1997, the Company acquired the Kirsch business, a
manufacturer and distributor of drapery hardware and custom window
coverings, from Cooper Industries Incorporated. The Kirsch North
American operations were combined with Newell Window Furnishings and
Levolor Home Fashions; the Kirsch European portion operates as part of
Newell Window Fashions Europe.
1996
----
On January 19, 1996, the Company acquired the Holson Burnes Group,
Inc., a manufacturer and marketer of photo albums and picture frames.
Holson Burnes was combined with Intercraft, creating the Intercraft/
Burnes division.
23
QUARTERLY SUMMARIES
Summarized quarterly data for the last three years is as follows
(unaudited):
Calendar Year 1st 2nd 3rd 4th Year
------------- --- --- --- --- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2000
----
Net sales $1,628,979 $1,787,025 $1,756,372 $1,762,371 $6,934,747
Gross income 408,484 487,476 468,753 466,882 1,831,595
Net income 76,220 128,015 122,999 94,341 421,575
Earnings per
share:
Basic 0.28 0.48 0.46 0.35 1.57
Diluted 0.28 0.48 0.46 0.35 1.57
1999
----
Net sales $1,589,776 $1,671,635 $1,683,344 $1,767,013 $6,711,768
Gross income 423,308 420,806 444,570 452,515 1,741,199
Net (loss) income (78,999) 30,054 72,737 71,645 95,437
(Loss) Earnings
per share:
Basic (0.28) 0.11 0.26 0.25 0.34
Diluted (0.28) 0.11 0.26 0.25 0.34
1998
----
Net sales $1,475,798 $1,636,258 $1,638,694 $1,742,422 $6,493,172
Gross income 396,223 487,028 477,849 461,714 1,822,814
Net income 158,493 141,915 117,502 63,924 481,834
Earnings per
share:
Basic 0.57 0.51 0.42 0.22 1.72
Diluted 0.56 0.50 0.42 0.22 1.70
24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of
the Company's consolidated results of operations and financial
condition. The discussion should be read in conjunction with the
consolidated financial statements and notes thereto.
RESULTS OF OPERATIONS
The following table sets forth for the period indicated items
from the Consolidated Statements of Income as a percentage of net
sales:
Year Ended December 31, 2000 1999 1998
----------------------- ---- ---- ----
Net sales 100.0% 100.0% 100.0%
Cost of products sold 73.6 74.1 71.9
----- ----- -----
GROSS INCOME 26.4 25.9 28.1
Selling, general and
administrative expenses 13.0 16.4 14.9
Restructuring costs 0.7 3.7 1.8
Goodwill amortization
and other 0.7 0.7 0.9
----- ----- -----
OPERATING INCOME 12.0 5.1 10.5
Nonoperating
expenses (income):
Interest expense 1.9 1.5 1.5
Other, net 0.2 0.2 (3.6)
----- ----- -----
NET NONOPERATING
EXPENSES (INCOME) 2.1 1.7 (2.1)
----- ----- -----
INCOME BEFORE
INCOME TAXES 9.9 3.4 12.6
Income taxes 3.8 2.0 5.2
----- ----- -----
NET INCOME 6.1% 1.4% 7.4%
===== ===== =====
2000 vs. 1999
-------------
Net sales for 2000 were $6,934.7 million, representing an
increase of $222.9 million or 3.3% from $6,711.8 million in 1999. Net
sales for each of the Company's segments (and the primary reasons for
the year-to-year changes) were as follows, in millions:
25
YEAR ENDED DECEMBER 31, 2000 1999 % Change
----------------------- ---- ---- --------
Storage, Organization & Cleaning $1,833.0 $1,899.5 (3.5)%
Home Decor 1,392.4 1,370.4 1.6%
Office Products<1> 1,288.0 1,218.0 5.7%
Infant/Juvenile Care & Play<2> 921.0 834.7 10.3%
Food Preparation, Cooking & Serving 774.4 782.2 (0.1)%
Hardware & Tools<3> 725.9 607.0 19.6%
------- -------
$6,934.7 $6,711.8 3.3%
======= =======
PRIMARY REASONS FOR CHANGES:
<1> 4% internal growth* plus sales from the Reynolds acquisition+
(October 1999).
<2> Internal growth.
<3> 6% internal growth plus sales from the McKechnie acquisition
(October 1999).
* Internal growth is defined by the Company as growth from its core
businesses, which include continuing businesses owned more than
two years and minor acquisitions.
+ Acquisitions and divestitures are described in note 2 to the
consolidated financial statements.
Gross income as a percent of net sales in 2000 was 26.4% or
$1,831.6 million versus 25.9% or $1,741.2 million in 1999. Excluding
costs associated with the Rubbermaid merger and certain realignment
and other charges of $2.4 million and $106.2 million in 2000 and 1999,
respectively, gross income as a percent of net sales was 26.4% in 2000
versus 27.5% in 1999. This decrease in gross margins in 2000 was
primarily attributable to lower than anticipated sales volume and
higher than expected material costs.
Selling, general and administrative expenses ("SG&A") in 2000
were 13.0% of net sales or $899.4 million versus 16.4% or $1,104.5 in
1999. Excluding costs associated with the Rubbermaid merger and
certain realignment and other charges of $8.7 million and $178.8
million in 2000 and 1999, respectively, SG&A as a percent of net sales
was 12.8% or $890.7 million in 2000 versus 13.8% or $925.6 million in
1999. The decrease in SG&A expenses is primarily the result of
integration cost savings at Rubbermaid Home Products, Rubbermaid
Europe and Little Tikes and tight spending control throughout the rest
of the Company's core businesses.
26
The Company recorded restructuring charges of $48.6 million in
2000 and $246.4 million in 1999. See note 3 to the consolidated
financial statements for a review of the charges.
Goodwill amortization and other as a percentage of net sales was
0.7% in 2000 and 1999.
Operating income in 2000 was 12.0% of net sales or $831.7 million
versus 5.1% of net sales or $343.6 million in 1999. Excluding
restructuring and other charges of $59.7 million in 2000 and $531.4
million in 1999, operating income was $891.4 or 12.9% of net sales in
2000 versus $875.0 million or 13.0% of net sales in 1999.
Other nonoperating expenses in 2000 were 2.1% of net sales or
$146.2 million versus 1.7% or $112.7 million in 1999. The increased
expenses in 2000 are a result of the Company's increased level of debt
and higher interest rates.
For 2000 and 1999 the effective tax rates were 38.5% and 58.7%,
respectively. The higher rate in 1999 was primarily due to
nondeductible transaction costs associated with the Rubbermaid merger.
See note 12 to the consolidated financial statements for an
explanation of the effective tax rate.
Net income for 2000 was $421.6 million, representing an increase
of $326.2 million from 1999. Basic and diluted earnings per share in
2000 increased to $1.57 versus $0.34 in 1999. Excluding 2000 pre-tax
charges of $59.7 million ($36.7 million after taxes) as discussed
above, net income in 2000 was $458.3 million. Excluding 1999 pre-tax
charges of $531.4 million ($369.6 million after taxes), net income in
1999 was $465.0 million. Diluted earnings per share, calculated on the
same basis, increased 3.6% to $1.71 in 2000 versus $1.65 in 1999. The
decrease in net income for 2000 was primarily due to increased raw
material costs and softer than expected sales volume, offset partially
by Rubbermaid integration cost savings, tight spending control at
other core businesses and internal growth. Diluted earnings per share
increased in 2000 versus 1999 as a result of the lower share base due
to the stock repurchase program.
1999 vs. 1998
-------------
Net sales for 1999 were $6,711.8 million, representing an
increase of $218.6 million or 3.4% from $6,493.2 million in 1998. Net
sales for each of the Company's segments (and the primary reasons for
the year-to-year changes) were as follows, in millions:
27
YEAR ENDED DECEMBER 31, 1999 1998 % Change
----------------------- ---- ---- --------
Storage, Organization & Cleaning<1> $1,899.5 $2,047.0 (7.2)%
Home Decor<2> 1,370.4 1,242.9 10.3%
Office Products<3> 1,218.0 1,078.6 12.9%
Infant/Juvenile Care & Play<4> 834.7 751.3 11.1%
Food Preparation, Cooking & Serving 782.2 790.0 (1.0)%
Hardware & Tools 607.0 583.4 4.0%
-------- --------
$6,711.8 $6,493.2 3.4%
PRIMARY REASONS FOR CHANGES:
<1> 1998 Decora (April 1998) and Newell Plastics (September 1998)
divestitures and weak sales performance at Rubbermaid Home
Products, offset partially by strong sales at Rubbermaid
Commercial Products.
<2> Swish (March 1998), Gardinia (August 1998) and Ateliers (April
1999) acquisitions.
<3> 7% Internal growth and Rotring (September 1998) and Reynolds
(October 1999) acquisitions offset partially by Stuart Hall
(August 1998) divestiture.
<4> Century (May 1998) acquisition.
Gross income as a percent of net sales in 1999 was 25.9% or
$1,741.2 million versus 28.1% or $1,822.8 million in 1998. Excluding
costs associated with the Rubbermaid and Calphalon mergers and certain
realignment and other charges of $106.2 million and $27.9 million in
1999 and 1998, respectively, gross income as a percent of net sales
was 27.5% in 1999 versus 28.5% in 1998. This decrease in gross margins
in 1999 was primarily attributable to promotional commitments made
prior to the Rubbermaid merger, which affected first half 1999 results
at Rubbermaid Home Products, higher than expected resin and other
material costs, which affected second half 1999 results, and operating
inefficiencies at certain glassware and window treatments facilities.
Selling, general and administrative expenses ("SG&A") in 1999
were 16.4% of net sales or $1,104.5 million versus 14.9% or $967.9
million in 1998. Excluding costs associated with the Rubbermaid and
Calphalon mergers and certain realignment and other charges of $178.8
million and $23.6 million in 1999 and 1998, respectively, SG&A as a
percent of net sales was 13.8% or $925.7 million versus 14.5% or
$944.3 million in 1998. This decrease in SG&A expenses is primarily
due to SG&A savings as a result of integrating Rubbermaid into Newell.
The Company recorded restructuring charges of $246.4 million in
1999 and $115.2 million in 1998. See note 3 to the consolidated
financial statements for a review of the charges.
Goodwill amortization and other as a percentage of net sales was
0.7% in 1999 and 0.9% in 1998. Excluding charges of $15.0 million in
28
1998 (which included write-offs of intangible assets), goodwill
amortization and other was 0.7% of net sales.
Operating income in 1999 was 5.1% of net sales or $343.6 million
versus 10.5% or $680.3 million in 1998. Excluding charges as discussed
above of $531.4 million in 1999 and $181.7 million 1998, operating
income was $875.0 million or 13.0% in 1999 versus $862.0 million or
13.3% in 1998.
Other nonoperating expenses in 1999 were 1.7% of net sales or
$112.7 million versus other nonoperating income of 2.1% or $136.6
million in 1998. The $249.3 million difference was due primarily to a
1998 net pre-tax gain of $191.5 million on the sale of the Company's
stake in The Black & Decker Corporation and 1998 net pre-tax gains of
$59.8 million on the divestitures of Stuart Hall, Newell Plastics and
Decora. This was offset partially by $3.7 million of Rubbermaid merger
transaction costs in 1998.
For 1999 and 1998, the effective tax rates were 58.7% and 41.0%,
respectively. The increase in 1999 was primarily due to nondeductible
transaction costs related to the Rubbermaid merger. See note 12 to the
consolidated financial statements for an explanation of the effective
tax rate.
Net income for 1999 was $95.4 million, representing a decrease of
$386.4 million or 80.2% from 1998. Basic earnings per share in 1999
decreased 80.2% to $0.34 versus $1.72 in 1998; diluted earnings per
share in 1999 decreased 80.0% to $0.34 versus $1.70 in 1998. Excluding
1999 pre-tax charges of $531.4 million ($369.6 million after taxes) as
discussed above, net income in 1999 was $465.0 million. Excluding 1998
pre-tax charges of $185.4 million ($119.4 million after taxes), the
net pre-tax gain on the sale of Black & Decker Common Stock of $191.5
million ($116.8 million after taxes) and net pre-tax gains of $59.8
million ($15.1 million after taxes) on the sales of businesses as
discussed above, net income in 1998 was $469.3 million.
LIQUIDITY AND CAPITAL RESOURCES
Sources
-------
The Company's primary sources of liquidity and capital resources
include cash provided from operations and use of available borrowing
facilities.
Cash provided by operating activities in 2000 was $623.5 million,
representing an increase of $69.5 million from $554.0 million for
1999.
The Company has short-term foreign and domestic committed and
uncommitted lines of credit with various banks which are available for
29
short-term financing. Borrowings under the Company's uncommitted lines
of credit are subject to discretion of the lender. The Company's lines
of credit do not have a material impact on the Company's liquidity.
Borrowings under the Company's lines of credit at December 31, 2000
totaled $23.5 million.
The Company has a revolving credit agreement of $1,300.0 million
that will terminate in August 2002. During 2000, the Company entered
into a new 364-day revolving credit agreement in the amount of $700.0
million. This revolving credit agreement will terminate in October
2001. At December 31, 2000, there were no borrowings under these
revolving credit agreements.
In lieu of borrowings under the Company's revolving credit
agreements, the Company may issue up to $2,000.0 million of commercial
paper. The Company's revolving credit agreements provide the committed
backup liquidity required to issue commercial paper. Accordingly,
commercial paper may only be issued up to the amount available for
borrowing under the Company's revolving credit agreements. At December
31, 2000, $1,503.7 million (principal amount) of commercial paper was
outstanding. Of this amount, $1,300.0 million is classified as
long-term debt and the remaining $203.7 million is classified as
current portion of long-term debt.
The revolving credit agreements permit the Company to borrow
funds on a variety of interest rate terms. These agreements require,
among other things, that the Company maintain a certain Total
Indebtedness to Total Capital Ratio, as defined in the agreements. As
of December 31, 2000, the Company was in compliance with these
agreements.
The Company had outstanding at December 31, 2000 a total of
$1,012.5 million (principal amount) of medium-term notes. The
maturities on these notes range from 3 to 30 years at an average
interest rate of 6.34%.
A universal shelf registration statement became effective in July
1999. As of December 31, 2000, $449.5 million of Company debt and
equity securities may be issued under the shelf.
Uses
----
The Company's primary uses of liquidity and capital resources
include acquisitions, dividend payments and capital expenditures.
In 2000, the Company acquired Mersch, Brio and Paper Mate/Parker
and made other minor acquisitions for cash purchase prices totaling
$582.7 million. In 1999, the Company acquired Ateliers, Reynolds,
McKechnie, Ceanothe and made other minor acquisitions for cash
purchase prices totaling $400.1 million. In 1998, the Company acquired
30
Curver, Swish, Century, Panex, Gardinia and Rotring and made other
minor acquisitions for cash purchase prices totaling $615.7 million.
Capital expenditures were $316.6 million, $200.1 million and
$318.7 million in 2000, 1999 and 1998, respectively. Aggregate
dividends paid during 2000, 1999 and 1998 were $225.1 million, $225.8
million and $212.5 million, respectively.
On February 7, 2000, the Company announced a stock repurchase
program of up to $500.0 million of the Company's outstanding Common
Stock. During 2000, the Company repurchased 15.5 million shares of its
Common Stock at an average price of $26 per share, for a total cash
price of $403.0 million under the program. The repurchase program
remained in effect until December 31, 2000 and was financed through
the use of working capital and commercial paper.
Retained earnings increased in 2000 by $196.3 million and
decreased in 1999 by $130.5 million. The difference between 2000 and
1999 was primarily due to restructuring costs and other pre-tax
charges relating to recent acquisitions of $59.7 million ($36.7
million after tax) in 2000 versus $531.4 million ($369.6 million after
tax) in 1999. The dividend payout ratio to common stockholders in
2000, 1999 and 1998 was 54%, 235%, and 45%, respectively (represents
the percentage of diluted earnings per share paid in cash to
stockholders).
Working capital at December 31, 2000 was $1,345.8 million
compared to $1,108.7 million at December 31, 1999 and $1,278.8 million
at December 31, 1998. The current ratio at December 31, 2000 was
1.87:1 compared to 1.68:1 at December 31, 1999 and 2.09:1 at December
31, 1998.
Total debt to total capitalization (total debt is net of cash and
cash equivalents, and total capitalization includes total debt,
company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust and stockholders' equity) was .46:1
at December 31, 2000, .33:1 at December 31, 1999 and .30:1 at December
31, 1998.
The Company believes that cash provided from operations and
available borrowing facilities will continue to provide adequate
support for the cash needs of existing businesses; however, certain
events, such as significant acquisitions, could require additional
external financing.
LEGAL AND ENVIRONMENTAL MATTERS
The Company is subject to certain legal proceedings and claims,
including various environmental matters, that have arisen in the
ordinary conduct of its business or have been assumed by the Company
when it purchased certain businesses. Such matters are more fully
described in note 15 to the Company's consolidated financial
31
statements. Although management of the Company cannot predict the
ultimate outcome of these matters with certainty, it believes that
their ultimate resolution, including any amounts it may have to pay in
excess of amounts reserved, will not have a material effect on the
Company's consolidated financial statements.
INTERNATIONAL OPERATIONS
The Company's non-U.S. business is growing at a faster pace than
its business in the United States. This growth outside the U.S. has
been fueled by recent international acquisitions, primarily in Europe.
For the year ended December 31, 2000, the Company's non-U. S. business
accounted for approximately 25% of net sales (see note 14 to the
consolidated financial statements). Growth of both U.S. and non-U.S.
businesses is shown below:
YEAR ENDED DECEMBER 31, 2000 1999 % Change
----------------------- ---- ---- --------
(In millions)
Net sales:
- U.S. $5,191.5 $5,135.4 1.1%
- Non-U.S. 1,743.2 1,576.4 10.6
------- -------
$6,934.7 $6,711.8 3.3%
======= =======
YEAR ENDED DECEMBER 31, 1999 1998 % Change
---------------------- ---- ---- --------
(In millions)
Net sales:
- U.S. $5,135.4 $5,081.5 1.1%
- Non-U.S. 1,576.4 1,411.7 11.7
------- -------
$6,711.8 $6,493.2 3.4%
======= =======
MARKET RISK
The Company's market risk is impacted by changes in interest
rates, foreign currency exchange rates and certain commodity prices.
Pursuant to the Company's policies, natural hedging techniques and
derivative financial instruments may be utilized to reduce the impact
of adverse changes in market prices. The Company does not hold or
issue derivative instruments for trading purposes.
The Company's primary market risk is interest rate exposure,
primarily in the United States. The Company manages interest rate
exposure through its conservative debt ratio target and its mix of
32
fixed and floating rate debt. Interest rate exposure was reduced
significantly in 1997 from the issuance of $500.0 million 5.25%
Company-Obligated Mandatorily Redeemable Convertible Preferred
Securities of a Subsidiary Trust, the proceeds of which reduced
commercial paper. Interest rate swaps may be used to adjust interest
rate exposures when appropriate based on market conditions, and, for
qualifying hedges, the interest differential of swaps is included in
interest expense.
The Company's foreign exchange risk management policy emphasizes
hedging anticipated intercompany and third-party commercial
transaction exposures of one year duration or less. The Company
focuses on natural hedging techniques of the following form:
* offsetting or netting of like foreign currency cash flows,
* structuring foreign subsidiary balance sheets with
appropriate levels of debt to reduce subsidiary net
investments and subsidiary cash flows subject to conversion
risk,
* converting excess foreign currency deposits into U.S.
dollars or the relevant functional currency and
* avoidance of risk by denominating contracts in the
appropriate functional currency.
In addition, the Company utilizes forward contracts and purchased
options to hedge commercial and intercompany transactions. Gains and
losses related to qualifying hedges of commercial and intercompany
transactions are deferred and included in the basis of the underlying
transactions. Derivatives used to hedge intercompany loans are marked
to market with the corresponding gains or losses included in the
consolidated statements of income.
Due to the diversity of its product lines, the Company does not
have material sensitivity to any one commodity. The Company manages
commodity price exposures primarily through the duration and terms of
its vendor contracts.
The amounts shown below represent the estimated potential
economic loss that the Company could incur from adverse changes in
either interest rates or foreign exchange rates using the
value-at-risk estimation model. The value-at-risk model uses
historical foreign exchange rates and interest rates to estimate the
volatility and correlation of these rates in future periods. It
estimates a loss in fair market value using statistical modeling
techniques and including substantially all market risk exposures
(specifically excluding equity-method investments). The fair value
losses shown in the table below have no impact on results of
operations or financial condition as they represent economic not
financial losses.
33
Time Confidence
Amount Period Level
------ ------ ----------
(In millions)
Interest rates $7.4 1 day 95%
Foreign exchange $1.9 1 day 95%
The 95% confidence interval signifies the Company's degree of
confidence that actual losses would not exceed the estimated losses
shown above. The amounts shown here disregard the possibility that
interest rates and foreign currency exchange rates could move in the
Company's favor. The value-at-risk model assumes that all movements in
these rates will be adverse. Actual experience has shown that gains
and losses tend to offset each other over time, and it is highly
unlikely that the Company could experience losses such as these over
an extended period of time. These amounts should not be considered
projections of future losses, since actual results may differ
significantly depending upon activity in the global financial markets.
EURO CURRENCY CONVERSION
On January 1, 1999, the "Euro" became the common legal currency
for 11 of the 15 member countries of the European Union. On that date,
the participating countries fixed conversion rates between their
existing sovereign currencies ("legacy currencies") and the Euro. On
January 4, 1999, the Euro began trading on currency exchanges and
became available for non-cash transactions, if the parties elected to
use it. The legacy currencies will remain legal tender through
December 31, 2001. Beginning January 1, 2002, participating countries
will introduce Euro-denominated bills and coins, and effective July 1,
2002, legacy currencies will no longer be legal tender.
After the dual currency phase, all businesses in participating
countries must conduct all transactions in the Euro and must convert
their financial records and reports to be Euro-based. The Company has
commenced an internal analysis of the Euro conversion process to
prepare its information technology systems for the conversion and
analyze related risks and issues, such as the benefit of the decreased
exchange rate risk in cross-border transactions involving
participating countries and the impact of increased price transparency
on cross-border competition in these countries.
The Company believes that the Euro conversion process will not
have a material impact on the Company's businesses or financial
condition on a consolidated basis.
34
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this Report are made in reliance
upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may relate to, but
are not limited to, such matters as sales, income, earnings per share,
return on equity, capital expenditures, dividends, capital structure,
free cash flow, debt to capitalization ratios, interest rates,
internal growth rates, the Euro conversion plan and related risks,
legal proceedings and claims (including environmental matters), future
economic performance, management's plans, goals and objectives for
future operations and growth or the assumptions relating to any of the
forward-looking information. The Company cautions that forward-looking
statements are not guarantees since there are inherent difficulties in
predicting future results. Actual results could differ materially from
those expressed or implied in the forward-looking statements. Factors
that could cause actual results to differ include, but are not limited
to, those matters set forth in this Report and Exhibit 99 to this
Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The information required by this item is incorporated herein by
reference to the section entitled "Market Risk" in the Company's
Management's Discussion and Analysis of Results of Operations and
Financial Condition (Part II, Item 7).
ITEM 8. FINANCIAL AND SUPPLEMENTARY DATA
--------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Newell Rubbermaid Inc.:
We have audited the accompanying consolidated balance sheets of
Newell Rubbermaid Inc. (a Delaware corporation) and subsidiaries as of
December 31, 2000, 1999 and 1998 and the related consolidated
statements of income, stockholders' equity and comprehensive income
and cash flows for each of the three years in the period ended
December 31, 2000. We did not audit the financial statements of
Rubbermaid Incorporated for the year and period ended December 31,
1998. Rubbermaid was acquired on March 24, 1999 in a transaction
accounted for as a pooling of interests, as discussed in note 1 to the
consolidated financial statements. Such statements are included in the
consolidated financial statements of Newell Rubbermaid Inc. and
subsidiaries and reflect total assets and total revenues of 34 percent
and 40 percent, respectively, in 1998 of the related consolidated
totals. These statements were audited by other auditors whose report
35
has been furnished to us and our opinion, insofar as it relates to the
amounts included for Rubbermaid Incorporated, is based solely upon the
report of the other auditors. These consolidated financial statements
are the responsibility of Newell Rubbermaid Inc.'s management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the
report of the other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other
auditors, the financial statements referred to above present fairly,
in all material respects, the financial position of Newell Rubbermaid
Inc. and subsidiaries as of December 31, 2000, 1999 and 1998 and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in
Part IV Item 14(a)(2) of this Form 10-K is presented for the purposes
of complying with the Securities and Exchange Commission's rules and
is not a required part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 25, 2001
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Rubbermaid Incorporated:
We have audited the consolidated balance sheets of Rubbermaid
Incorporated and subsidiaries (the Company) as of January 1, 1999, and
the related consolidated statements of earnings, shareholders' equity
36
and comprehensive income, and cash flows for the year then ended (the
consolidated financial statements are not included herein). These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Rubbermaid Incorporated and subsidiaries as of January 1, 1999, and
the results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in
the United States of America.
KPMG LLP
Cleveland, Ohio
February 5, 1999, except as to note 15,
which is as of March 24, 1999
37
NEWELL RUBBERMAID INC.
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2000 1999 1998
---------------------- ---- ---- ----
(In thousands, except per share data)
Net sales $6,934,747 $6,711,768 $6,493,172
Cost of products sold 5,103,152 4,970,569 4,670,358
--------- --------- ---------
Gross Income 1,831,595 1,741,199 1,822,814
Selling, general and administrative expenses 899,424 1,104,491 967,916
Restructuring costs 48,561 246,381 115,154
Goodwill amortization and other 51,930 46,722 59,405
--------- --------- ---------
Operating Income 831,680 343,605 680,339
Nonoperating expenses (income):
Interest expense 130,033 100,021 100,514
Other, net 16,160 12,645 (237,148)
--------- --------- ---------
Net Nonoperating Expenses (Income) 146,193 112,666 (136,634)
--------- --------- ---------
Income Before Income Taxes 685,487 230,939 816,973
Income taxes 263,912 135,502 335,139
--------- --------- ---------
Net Income $421,575 $95,437 $481,834
========= ========= =========
Earnings per share:
Basic $1.57 $0.34 $1.72
Diluted $1.57 $0.34 $1.70
Weighted average shares outstanding:
Basic 268,437 281,806 280,731
Diluted 278,365 281,806 291,883
See notes to consolidated financial statements.
38
NEWELL RUBBERMAID INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In thousands)
OPERATING ACTIVITIES
Net income $421,575 $95,437 $481,834
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 292,576 271,731 263,804
Deferred income taxes 59,800 (9,600) 81,734
Income tax savings from employee stock plans 997 2,269 1,377
Net (gains) losses on:
Marketable equity securities - 700 (116,800)
Sales of businesses - - (24,529)
Non-cash restructuring charges 18,452 100,924 45,800
Write-off of assets - - 4,288
Other 1,947 51,748 24,075
Changes in current accounts, excluding the effects of
acquisitions:
Accounts receivable 36,301 (16,137) 39,619
Inventories (100,495) 52,662 (37,142)
Other current assets 6,598 (41,793) (29,906)
Accounts payable (45,606) 14,617 (72,020)
Accrued liabilities and other (68,658) 31,393 (183,367)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 623,487 553,951 478,767
INVESTING ACTIVITIES
Acquisitions, net (597,847) (345,934) (654,591)
Expenditures for property, plant and equipment (316,564) (200,066) (318,731)
Purchase of marketable equity securities - - (26,056)
Sales of businesses, net of taxes paid - - 224,487
Sales of marketable securities, net of taxes paid - 14,328 303,869
Disposals of non-current assets and other 5,119 720 9,773
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (909,292) (530,952) (461,249)
FINANCING ACTIVITIES
Proceeds from issuance of debt 1,265,051 803,298 676,759
Payments on notes payable and long-term debt (428,211) (608,573) (546,603)
Common stock repurchase (402,962) - -
Cash dividends (225,083) (225,774) (212,486)
Proceeds from exercised stock options and other 1,263 27,411 2,712
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 210,058 (3,638) (79,618)
Exchange rate effect on cash (3,892) (3,751) (1,477)
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (79,639) 15,610 (63,577)
Cash and cash equivalents at beginning of year 102,164 86,554 150,131
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $22,525 $102,164 $86,554
======== ======== ========
Supplemental cash flow disclosures -
Cash paid during the year for:
Income taxes $152,787 $194,351 $272,239
Interest 145,455 98,536 103,831
See notes to consolidated financial statements.
39
NEWELL RUBBERMAID INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $22,525 $102,164 $86,554
Accounts receivable, net 1,183,363 1,178,423 1,078,530
Inventories, net 1,262,551 1,034,794 1,033,488
Deferred income taxes 231,875 250,587 108,192
Prepaid expenses and other 196,338 172,601 143,885
--------- ---------- ----------
TOTAL CURRENT ASSETS 2,896,652 2,738,569 2,450,649
Marketable Equity Securities 9,215 10,799 19,317
Other Long-Term Investments 72,763 65,905 57,967
Other Assets 336,344 335,699 267,073
Property, Plant and Equipment, Net 1,756,903 1,548,191 1,627,090
Trade Names and Goodwill, Net 2,189,948 2,024,925 1,867,059
---------- ---------- ----------
TOTAL ASSETS $7,261,825 $6,724,088 $6,289,155
========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $23,492 $97,291 $94,634
Accounts payable 342,406 376,596 322,080
Accrued compensation 126,970 113,373 110,471
Other accrued liabilities 781,122 892,481 610,618
Income taxes 73,122 - 26,744
Current portion of long-term debt 203,714 150,142 7,334
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 1,550,826 1,629,883 1,171,881
Long-Term Debt 2,314,774 1,455,779 1,393,865
Other Non-Current Liabilities 352,633 354,107 374,293
Deferred Income Taxes 93,165 85,655 4,527
Minority Interest 1,788 1,658 857
Company-Obligated Mandatorily Redeemable
Convertible Preferred Securities of a
Subsidiary Trust 499,998 500,000 500,000
Stockholders' Equity
Common Stock, $1 per share par value, with
authorized shares of 800.0 million in 2000
and 1999; 400.0 million in 1998 282,174 282,026 281,747
Outstanding shares:
2000 - 282.2 million
1999 - 282.0 million
1998 - 281.7 million
40
Treasury Stock, at cost (407,456) (2,760) (21,607)
Shares held:
2000 - 15.6 million
1999 - 0.1 million
1998 - 0.6 million
Additional paid-in capital 215,911 213,112 204,709
Retained earnings 2,530,864 2,334,609 2,465,064
Accumulated other comprehensive loss (172,852) (129,981) (86,181)
---------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY 2,448,641 2,697,006 2,843,732
---------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,261,825 $6,724,088 $6,289,155
========== ========= =========
See notes to consolidated financial statements.
41
NEWELL RUBBERMAID INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
ACCUMULATED CURRENT
OTHER YEAR
ADDITIONAL COMPRE- COMPRE-
COMMON TREASURY PAID-IN RETAINED HENSIVE HENSIVE
STOCK STOCK CAPITAL EARNINGS INCOME INCOME
------ -------- ---------- -------- ---------- -------
(In thousands, except per share data)
BALANCE AT DECEMBER 31, 1997 $281,338 $(34,667) $199,509 $2,195,716 $19,521
Net income 481,834 $481,834
Other comprehensive income:
Unrealized gain on securities available
for sale, net of $23.5 million tax 33,850 33,850
Reclassification adjustment for gains
realized in net income, net of $74.7
million tax (116,800) (116,800)
Foreign currency translation adjustments (22,752) (22,752)
--------
Total comprehensive income $376,132
========
Cash dividends:
Common Stock $0.76 per share (212,486)
Exercise of stock options 409 13,013 9,877
Other 47 (4,677)
------- ------- ------- --------- -------
BALANCE AT DECEMBER 31, 1998 281,747 (21,607) 204,709 2,465,064 (86,181)
Net income 95,437 $95,437
Other comprehensive income:
Unrealized gain on securities available
for sale, net of $2.3 million tax 3,545 3,545
Reclassification adjustment for losses
realized in net income, net of $0.4
million tax 700 700
Foreign currency translation adjustments (48,045) (48,045)
-------
Total comprehensive income $51,637
=======
Cash dividends:
Common Stock $0.80 per share (225,774)
Exercise of stock options 279 16,316 7,699
Other 2,531 704 (118)
------- ------- ------- --------- -------
BALANCE AT DECEMBER 31, 1999 282,026 (2,760) 213,112 2,334,609 (129,981)
Net income 421,575 $421,575
Other comprehensive income:
Unrealized loss on securities available
for sale, net of $(0.7) million tax (1,201) (1,201)
42
Foreign currency translation adjustments (41,670) (41,670)
-------
Total comprehensive income $378,704
=======
Cash dividends:
Common Stock $0.84 per share (225,083)
Exercise of stock options 148 (190) 1,495
Common Stock repurchase (402,962)
Other (1,544) 1,304 (237)
------- ------- ------- ------- -------
BALANCE AT DECEMBER 31, 2000 $282,174 $(407,456) $215,911 $2,530,864 $(172,852)
======== ======== ======== ========= =========
43
NEWELL RUBBERMAID INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999,
1998
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of Newell Rubbermaid Inc. and its
majority owned subsidiaries (the "Company") after elimination of
intercompany accounts and transactions.
On March 24, 1999, Newell Co. ("Newell") completed a merger with
Rubbermaid Incorporated ("Rubbermaid") in which Rubbermaid became a
wholly owned subsidiary of Newell. Simultaneously with the
consummation of the merger, Newell changed its name to Newell
Rubbermaid Inc. The merger was accounted for as a pooling of interests
and the financial statements have been restated to combine
retroactively Rubbermaid's financial statements with those of Newell
as if the merger had occurred at the beginning of the earliest period
presented.
USE OF ESTIMATES: The preparation of these financial statements
required the use of certain estimates by management in determining the
Company's assets, liabilities, revenue and expenses and related
disclosures. Actual results could differ from those estimates.
RECLASSIFICATIONS: Certain 1999 and 1998 amounts have been
reclassified to conform with the 2000 presentation.
REVENUE RECOGNITION: Sales of merchandise are recognized upon
shipment to customers and when all substantial risks of ownership
change.
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101, which clarified the
existing accounting rules for revenue recognition. SAB No. 101 (as
modified by SAB No. 101 A and B) was adopted by the Company in the
first quarter of 2000. The Company's revenue recognition policy did
not change with the adoption of SAB No. 101.
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS: The
following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
LONG-TERM DEBT: The fair value of the Company's long-term debt
issued under the medium-term note program is estimated based on
quoted market prices which approximate cost. All other
significant long-term debt is pursuant to floating rate
instruments whose carrying amounts approximate fair value.
COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF A SUBSIDIARY TRUST: The fair value of the $500.0
million company-obligated mandatorily redeemable convertible
44
preferred securities of a subsidiary trust was $328.1 million at
December 31, 2000 based on quoted market prices.
CASH AND CASH EQUIVALENTS: Cash and highly liquid short-term
investments having a maturity of three months or less.
ALLOWANCES FOR DOUBTFUL ACCOUNTS: Allowances for doubtful
accounts at December 31 totaled $36.1 million in 2000, $41.9 million
in 1999 and $34.2 million in 1998.
INVENTORIES: Inventories are stated at the lower of cost or
market value. Cost of certain domestic inventories (approximately 64%,
72% and 72% of total inventories at December 31, 2000, 1999 and 1998,
respectively) was determined by the "last-in, first-out" ("LIFO")
method; for the balance, cost was determined using the "first-in,
first-out" ("FIFO") method. If the FIFO inventory valuation method had
been used exclusively, inventories would have increased by $15.9
million, $11.4 million and $14.2 million at December 31, 2000, 1999
and 1998, respectively. Inventory reserves (excluding LIFO reserves)
at December 31 totaled $114.6 million in 2000, $119.4 million in 1999
and $113.8 million in 1998. The components of inventories, net of the
LIFO reserve, were as follows:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Materials and supplies $244.8 $240.0 $223.8
Work in process 165.3 149.5 137.2
Finished products 852.5 645.3 672.5
-------- -------- --------
$1,262.6 $1,034.8 $1,033.5
======== ======== ========
OTHER LONG-TERM INVESTMENTS: The Company has a 49% ownership
interest in American Tool Companies, Inc., a manufacturer of hand
tools and power tool accessory products marketed primarily under the
Vise-Grip{R} and Irwin{R} trademarks. This investment is accounted for
on the equity method with a net investment of $72.8 million at
December 31, 2000.
LONG-TERM MARKETABLE EQUITY SECURITIES: Long-term marketable
equity securities classified as available for sale are carried at fair
value with adjustments to fair value reported separately, net of tax,
as a component of accumulated other comprehensive income (and excluded
from earnings). Gains and losses on the sales of long-term marketable
equity securities are based upon the average cost of securities sold.
On March 8, 1998, the Company sold 7,862,300 shares it held in The
Black & Decker Corporation. The Black & Decker transaction resulted in
net proceeds of approximately $378.3 million and a net pre-tax gain,
after fees and expenses, of approximately $191.5 million. Long-term
marketable equity securities are summarized as follows:
45
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Aggregate market value $9.2 $10.8 $19.3
Aggregate cost 11.0 10.6 26.0
----- ----- -----
Unrealized pre-tax (loss) gain $(1.8) $0.2 $(6.7)
===== ===== =====
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment
consisted of the following:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Land $ 60.7 $ 63.4 $ 62.1
Buildings and improvements 736.1 691.3 721.9
Machinery and equipment 2,421.6 2,200.7 2,166.9
------- ------- -------
3,218.4 2,955.4 2,950.9
Accumulated depreciation (1,461.5) (1,407.2) (1,323.8)
------- ------- -------
$1,756.9 $1,548.2 $1,627.1
======= ======= =======
Replacements and improvements are capitalized. Expenditures for
maintenance and repairs are charged to expense. The components of
depreciation are provided by annual charges to income calculated to
amortize, principally on the straight-line basis, the cost of the
depreciable assets over their depreciable lives. Estimated useful
lives determined by the Company are: buildings and improvements (5-40
years) and machinery and equipment (2-15 years).
TRADE NAMES AND GOODWILL: The cost of trade names and goodwill
represents the excess of cost over identifiable net assets of
businesses acquired. The Company does not allocate such excess cost to
trade names separate from goodwill. In addition, the Company may
allocate excess cost to other identifiable intangible assets and
record such intangible assets in Other Assets (long-term). Trade names
and goodwill are amortized over 40 years and other identifiable
intangible assets are amortized over 5 to 40 years. Trade names and
goodwill and other identifiable intangible assets, respectively,
consisted of the following:
46
NET TRADE NAMES AND GOODWILL
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Cost $2,485.8 $2,270.5 $2,068.7
Accumulated amortization (295.9) (245.6) (201.6)
------- ------- -------
$2,189.9 $2,024.9 $1,867.1
======= ======= =======
NET OTHER IDENTIFIABLE INTANGIBLE ASSETS<1>
December 31 2000 1999 1998
----------- ---- ---- ----
(In millions)
Cost $96.1 $93.0 $131.2
Accumulated amortization (34.7) (34.3) (37.6)
------ ------ ------
$61.4 $58.7 $93.6
====== ====== ======
<1> Recorded in Other Assets
LONG-LIVED ASSETS: Subsequent to an acquisition, the Company
periodically evaluates whether later events and circumstances have
occurred that indicate the remaining estimated useful life of long-
lived assets may warrant revision or that the remaining balance of
long-lived assets may not be recoverable. If factors indicate that
long-lived assets should be evaluated for possible impairment, the
Company would use an estimate of the relevant business' undiscounted
net cash flow over the remaining life of the long-lived assets in
measuring whether the carrying value is recoverable. An impairment
loss would be measured by reducing the carrying value to fair value,
based on a discounted cash flow analysis.
ACCRUED LIABILITIES: Accrued liabilities included the following:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Customer accruals $240.7 $296.6 $190.2
Accrued self-insurance liability 99.9 92.0 80.2
Customer accruals are promotional allowances and rebates given to
customers in exchange for their selling efforts. The self-insurance
accrual is primarily for workers' compensation and product liability
and is estimated based upon historical claim experience.
47
FOREIGN CURRENCY TRANSLATION: Foreign currency balance sheet
accounts are translated into U.S. dollars at the rates of exchange in
effect at fiscal year end. Income and expenses are translated at the
average rates of exchange in effect during the year. The related
translation adjustments are made directly to accumulated other
comprehensive income. International subsidiaries operating in highly
inflationary economies translate non-monetary assets at historical
rates, while net monetary assets are translated at current rates, with
the resulting translation adjustment included in net income as other
nonoperating (income) expenses. Foreign currency transaction gains and
losses were immaterial in 2000, 1999 and 1998.
ADVERTISING COSTS: The company expenses advertising costs as
incurred, including cooperative advertising programs with customers.
Total advertising expense was $289.2 million, $285.3 million and
$281.5 million for 2000, 1999 and 1998, respectively. Cooperative
advertising is recorded in the financial statements as a reduction of
sales because it is viewed as part of the negotiated price of
products. All other advertising costs are charged to selling, general
and administrative expenses.
RESEARCH AND DEVELOPMENT COSTS: Research and development costs
relating to both future and present products are charged to selling,
general and administrative expenses as incurred. These costs
aggregated $49.4 million, $49.9 million and $44.5 million in 2000,
1999 and 1998, respectively.
EARNINGS PER SHARE: The earnings per share amounts are computed
based on the weighted average monthly number of shares outstanding
during the year. "Basic" earnings per share is calculated by dividing
net income by weighted average shares outstanding. "Diluted" earnings
per share is calculated by dividing net income by weighted average
shares outstanding, including the assumption of the exercise and/or
conversion of all potentially dilutive securities ("in the money"
stock options and company-obligated mandatorily redeemable convertible
preferred securities of a subsidiary trust).
A reconciliation of the difference between basic and diluted
earnings per share for the years ended December 31, 2000, 1999 and
1998, respectively, is shown below (in millions, except per share
data):
"IN THE CONVERTIBLE
BASIC MONEY" PREFERRED DILUTED
2000 METHOD STOCK OPTIONS SECURITIES METHOD
---- ------ ------------- ----------- -------
Net income $421.6 - $16.4 $438.0
Weighted average shares outstanding 268.4 0.1 9.9 278.4
Earnings per share $1.57 $1.57
48
"IN THE CONVERTIBLE
BASIC MONEY" PREFERRED DILUTED
1999<1> METHOD STOCK OPTIONS SECURITIES METHOD
---- ------ ------------- ---------- -------
Net income $95.4 - - $95.4
Weighted average shares outstanding 281.8 - - 281.8
Earnings per share $0.34 $0.34
"IN THE CONVERTIBLE
BASIC MONEY" PREFERRED DILUTED
1998 METHOD STOCK OPTIONS SECURITIES METHOD
---- ------ ------------- ---------- -------
Net income $481.8 - $15.7 $497.5
Weighted average shares outstanding 280.7 1.3 9.9 291.9
Earnings per share $1.72 $1.70
<1> Diluted earnings per share for 1999 exclude the impact of "in the
money" stock options and convertible preferred securities because
they are antidilutive.
COMPREHENSIVE INCOME: Comprehensive income and accumulated other
comprehensive income encompass net income, net after-tax unrealized
gains on securities available for sale and foreign currency transla-
tion adjustments in the Consolidated Statements of Stockholders'
Equity and Comprehensive Income.
The following table displays the components of accumulated other
comprehensive income:
AFTER-TAX ACCUMULATED
UNREALIZED FOREIGN OTHER
GAINS/(LOSSES) CURRENCY COMPREHENSIVE
ON SECURITIES TRANSLATION INCOME/(LOSSES)
-------------- ----------- ---------------
(In millions)
Balance at Dec. 31, 1997 $78.8 $(59.3) $19.5
Current year change (82.9) (22.8) (105.7)
----- ----- -----
Balance at Dec. 31, 1998 (4.1) (82.1) (86.2)
Current year change 4.2 (48.0) (43.8)
----- ----- -----
49
Balance at Dec. 31, 1999 0.1 (130.1) (130.0)
Current year change (1.2) (41.7) (42.9)
----- ----- -----
Balance at Dec. 31, 2000 $(1.1) $(171.8) $(172.9)
===== ======= =======
ACCOUNTING PRONOUNCEMENTS: Since June 1998, the Financial
Accounting Standards Board ("FASB") has issued SFAS Nos. 133, 137 and
138 related to "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133, as amended" or "Statements"). These
Statements establish accounting and reporting standards requiring that
every derivative instrument be recorded on the balance sheet as either
an asset or liability measured at its fair value. The Statements
require that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are
met, in which case the gains or losses would offset the related
results of the hedged item. These Statements require that, as of the
date of initial adoption, the impact of adoption be recorded as a
cumulative effect of a change in accounting principle. To the extent
that these amounts are recorded in other comprehensive income, they
will be reversed into earnings in the period in which the hedged
transaction occurs. The impact of adopting these Statements on January
1, 2001 resulted in a cumulative after-tax gain of approximately $13.0
million recorded in accumulated other comprehensive income and had no
material impact on net income. The adoption resulted in an increase in
assets and liabilities of approximately $99.0 million and $86.0
million, respectively.
In May 2000, the Emerging Issues Task Force ("EITF"), a
subcommittee of the FASB, issued EITF No. 00-10 "Accounting for
Shipping and Handling Fees and Costs." EITF No. 00-10 requires that
amounts billed to customers related to shipping and handling costs be
classified as revenue and all expenses related to shipping and
handling be classified as a cost of products sold. Historically, these
revenues and costs have been netted together and deducted from gross
sales to arrive at net sales. The net sales and cost of products sold
have been restated for this change. The impact of this change
increased net sales and costs of products sold by $286.1 million,
$298.7 million and $309.5 million for the years ended December 2000,
1999 and 1998, respectively. There is no impact on gross income
resulting from this change.
Also in May 2000, the EITF issued EITF No. 00-14 "Accounting for
Certain Sales Incentives." The EITF subsequently amended the
transition provisions of this issue in November 2000. EITF No. 00-14
prescribes guidance regarding timing of recognition and income
statement classification of costs incurred for certain sales incentive
programs. This guidance requires certain coupons, rebate offers and
free products offered concurrently with a single exchange transaction
to be recognized when incurred, and reported as a reduction of
revenue.
50
In January 2001, the EITF issued EITF No. 00-22 "Accounting for
'Points' and Certain Other Time-Based or Volume-Based Sales Incentive
Offers, and Offers for Free Products or Services to Be Delivered in
the Future." EITF No. 00-22 prescribes guidance regarding timing of
recognition and income statement classification of costs incurred in
connection with offers of "free" products or services that are
exercisable by an end consumer as a result of a single exchange
transaction with the retailer which will not be delivered by the
vendor until a future date. This guidance requires certain rebate
offers and free products that are delivered subsequent to a single
exchange transaction to be recognized when incurred, and reported as a
reduction of revenue.
The effective dates of EITF No. 00-14 and EITF No. 00-22 are
March 31, 2001 and June 30, 2001, respectively. The Company's adoption
of both EITF No. 00-14 and EITF No. 00-22 on December 31, 2000 did not
impact the results of operations, because the Company's past and
current accounting policy is to report such costs as reductions in
revenue.
2. ACQUISITIONS OF BUSINESSES
2000
----
The Company acquired Mersch SA on January 24, 2000 and Brio on
May 24, 2000. Both are manufacturers and suppliers of picture frames
in Europe, and now operate as part of Newell Photo Fashion Europe.
The Company acquired the stationery products business of The
Gillette Company ("Paper Mate/Parker") on December 29, 2000. The U.S.
and Canadian operations were merged into Sanford North America, while
all other operations were consolidated into Sanford International.
For these and for other minor acquisitions, the Company paid
$582.7 million in cash and assumed $15.5 million of debt. The
transactions were accounted for as purchases; therefore, results of
operations are included in the accompanying consolidated financial
statements since their respective acquisition dates. The acquisition
costs were allocated on a preliminary basis to the fair market value
of the assets acquired and liabilities assumed and resulted in trade
names and goodwill of approximately $241.3 million.
The Company's finalized integration plans may include exit costs
for certain plants and product lines and employee terminations
associated with the integration of Mersch and Brio into Newell Photo
Fashion Europe and Paper Mate/Parker into Sanford North America and
Sanford International. The final adjustments to the purchase price
allocations are not expected to be material to the consolidated
financial statements.
51
The unaudited consolidated results of operations for the years
ended December 31, 2000 and 1999 on a pro forma basis, as though the
Mersch, Brio and Paper Mate/Parker businesses (as well as the 1999
acquisitions of Ateliers, Reynolds, McKechnie and Ceanothe) had been
acquired on January 1, 1999, are as follows (unaudited):
YEAR ENDED DECEMBER 31, 2000 1999
----------------------- ---- ----
(In millions, except per share amounts)
Net sales $7,489.7 $7,688.8
Net income 390.2 83.3
Earnings per share (basic) $1.45 $0.30
1999
----
On April 2, 1999, the Company purchased Ateliers 28, a
manufacturer and marketer of decorative and functional drapery
hardware in Europe. Ateliers operates as part of Newell Window
Fashions Europe.
On October 18, 1999, the Company purchased a controlling interest
in Reynolds S.A., a manufacturer and marketer of writing instruments
in Europe. Reynolds operates as part of Sanford International. By
December 31, 1999, the Company owned 100% of Reynolds.
On October 29, 1999, the Company acquired the consumer products
division of McKechnie plc, a manufacturer and marketer of drapery
hardware and window furnishings, shelving and storage products,
cabinet hardware and functional trims. The drapery hardware and window
furnishings portion of McKechnie operates as part of Newell Window
Fashions Europe; the remaining portion of McKechnie operates as Newell
Hardware Europe.
On December 29, 1999, the Company acquired Ceanothe Holding, a
manufacturer of picture frames and photo albums in Europe. Ceanothe
operates as part of Newell Photo Fashion Europe.
For these and for other minor acquisitions, the Company paid
$400.1 million in cash and assumed $45.1 million of debt. The
transactions were accounted for as purchases; therefore, results of
operations are included in the accompanying consolidated financial
statements since their respective dates of acquisition. The
acquisition costs were allocated on a preliminary basis to the fair
market value of the assets acquired and liabilities assumed and
resulted in trade names and goodwill of approximately $296.7 million.
The Company began to formulate integration plans for these
acquisitions as of their respective acquisition dates. The integration
plans for these acquisitions were finalized during 2000 and resulted
52
in total integration liabilities of $37.6 million for exit costs and
employee terminations. As of December 31, 2000, $9.7 million of
reserves remain for the restructuring charges recorded in 1999.
1998
----
On January 21, 1998, the Company acquired Curver Consumer
Products. Curver is a manufacturer and marketer of plastic housewares
products in Europe and operates as part of Rubbermaid Europe.
On March 27, 1998, the Company acquired Swish Track and Pole from
Newmond plc. Swish is a manufacturer and marketer of decorative and
functional window furnishings in Europe and operates as part of Newell
Window Fashions Europe.
On May 19, 1998, the Company acquired certain assets of Century
Products. Century is a manufacturer and marketer of infant products
such as car seats, strollers and infant carriers and operates as part
of the Graco/Century division.
On June 30, 1998, the Company purchased Panex S.A. Industria e
Comercio, a manufacturer and marketer of aluminum cookware products
based in Brazil. Panex operates as part of the Mirro division.
On August 31, 1998, the Company purchased the Gardinia Group, a
manufacturer and supplier of window treatments based in Germany.
Gardinia operates as part of Newell Window Fashions Europe.
On September 30, 1998, the Company purchased the Rotring Group, a
manufacturer and supplier of writing instruments, drawing instruments,
art materials and color cosmetic products based in Germany. The
writing and drawing instruments portion of Rotring operates as part of
Sanford International. The art materials portion of Rotring operates
as part of Sanford North America. The color cosmetic products portion
of Rotring operates as a separate U.S. division, Cosmolab.
For these and for other minor acquisitions, the Company paid
$615.7 million in cash and assumed $99.5 million of debt. The
transactions were accounted for as purchases; therefore, results of
operations are included in the accompanying consolidated financial
statements since their respective dates of acquisition. The
acquisition costs were allocated on a preliminary basis to the fair
market value of the assets acquired and liabilities assumed and
resulted in trade names and goodwill of approximately $387.1 million.
The Company began to formulate integration plans for these and
other minor acquisitions as of their respective acquisition dates. The
integration plans for these acquisitions were finalized during 1999
and resulted in total integration liabilities of $84.7 million for
exit costs and employee terminations. As of December 31, 2000, no
reserves remain for the restructuring charges recorded in 1998.
53
MERGERS
On May 7, 1998, a subsidiary of the Company merged with Calphalon
Corporation, a manufacturer and marketer of gourmet cookware. The
Company issued approximately 3.1 million shares of Common Stock for
all of the Common Stock of Calphalon. This transaction was accounted
for as a pooling of interests; therefore, prior financial statements
were restated to reflect this merger. Calphalon now operates as a
separate division of the Company.
On March 24, 1999, the Company completed the Rubbermaid merger.
The merger qualified as a tax-free exchange and was accounted for as a
pooling of interests. Newell issued .7883 Newell Rubbermaid shares for
each outstanding share of Rubbermaid Common Stock. A total of 119.0
million shares (adjusted for fractional and dissenting shares) of the
Company's Common Stock were issued as a result of the merger, and
Rubbermaid's outstanding stock options were converted into options to
purchase approximately 2.5 million Newell Rubbermaid common shares.
No adjustments were made to the net assets of the combining
companies to adopt conforming accounting practices or fiscal years
other than adjustments to eliminate the accounting effects related to
Newell's purchase of Rubbermaid's office products business ("Eldon")
in 1997. Because the Newell Rubbermaid merger was accounted for as a
pooling of interests, the accounting effects of Newell's purchase of
Eldon have been eliminated as if Newell had always owned it.
The following table presents a reconciliation of net sales and
net income (loss) for Newell, Rubbermaid and Calphalon individually to
those presented in the accompanying consolidated financial statements:
YEAR ENDED DECEMBER 31, 1999 1998
----------------------- ---- ----
(In millions)
Net sales:
Newell $4,022.2 $3,747.5
Rubbermaid 2,565.0 2,637.4
Calphalon 124.6 108.3
-------- --------
$6,711.8 $6,493.2
======== ========
Net income (loss):
Newell $273.1 $405.9
Rubbermaid (189.8) 82.9
Calphalon 12.1 (7.0)
-------- --------
$95.4 $481.8
======== ========
54
DIVESTITURES
On April 29, 1998, the Company sold its Decora decorative
coverings product line. On August 21, 1998, the Company sold its
Stuart Hall school supplies and stationery business. On September 9,
1998, the Company sold its Newell Plastics plastic storage and
serveware business. The pre-tax net gain on the sales of these
businesses was $59.8 million, which was primarily offset by
nondeductible goodwill, resulting in a net after-tax gain of $15.1
million. Sales for these businesses prior to their divestitures were
approximately $136 million in 1998.
3. RESTRUCTURING COSTS
2000
----
During 2000, the Company recorded pre-tax restructuring charges
of $48.6 million ($29.9 million after taxes) related primarily to the
continued Rubbermaid integration and plant closures in the Home Decor
segment. The Company incurred employee severance and termination
benefit costs of $26.8 million related to approximately 700 employees
terminated in 2000. Such costs included $10.2 million of severance and
government mandated settlements for facility closures at Rubbermaid
Europe, $6.7 million of change in control payments made to former
Rubbermaid executives, $6.3 million for employee terminations at the
domestic Rubbermaid divisions and $3.6 million in severance at the
Home Decor segment. The Company incurred merger transaction costs of
$11.2 million related primarily to legal settlements for Rubbermaid's
1998 sale of a former division and other merger related contingencies
resolved in 2000. Additionally, the Company incurred facility and
product line exit costs of $10.6 million related primarily to the
closure of five European Rubbermaid facilities, three window
furnishings facilities and the exit of various Rubbermaid product
lines.
As of December 31, 2000, $21.9 million of reserves remain for
restructuring charges recorded during 2000, 1999 and 1998. These
reserves consist of $11.4 million for facility and product line exit
costs, $4.6 million in contractual future maintenance costs on
abandoned Rubbermaid computer software, $3.3 million for employee
severance and termination benefits, and $2.6 million in other merger
transaction costs.
1999
----
During 1999, the Company recorded pre-tax restructuring charges
of $246.4 million ($195.7 million after tax) related primarily to the
integration of the Rubbermaid businesses into Newell. Merger
transaction costs of $39.9 million related primarily to investment
55
banking, legal and accounting costs for the Newell/Rubbermaid merger.
Employee severance and termination benefits of $101.9 million related
to approximately 750 employees terminated in 1999. Such costs include
$80.9 million of change in control payments made to former Rubbermaid
executives and $21.0 million in severance and termination costs at
Rubbermaid's former headquarters ($5.5 million), Rubbermaid Home
Products division ($6.9 million), Rubbermaid Europe division ($4.0
million), Little Tikes division ($2.7 million), Rubbermaid Commercial
Products division ($0.7 million) and Newell divisions ($1.2 million).
Facility and product line exit costs totaled $104.6 million,
representing $72.0 million of impaired Rubbermaid centralized computer
software (abandoned as a result of converting Rubbermaid onto existing
Newell centralized computer software) and $32.6 million in costs
related to discontinued product lines ($4.8 million), the closure of
seven Rubbermaid facilities ($10.2 million), write-off of assets
associated with abandoned projects ($10.3 million) and impaired assets
($5.7 million) and other exit costs ($1.6 million).
1998
----
During January 1998, Rubbermaid announced a series of
restructuring initiatives to establish a central global procurement
organization and to consolidate, automate and/or relocate its
worldwide manufacturing and distribution operations. During 1998,
Rubbermaid recorded pre-tax charges of $115.2 million ($74.9 million
after tax). The 1998 restructuring charge included $16.0 million
relating to employee severance and termination benefits for
approximately 600 sales and administrative employees, $53.4 million
for costs to exit business activities at five facilities and $45.8
million to write-down impaired long-lived assets to their fair value.
The $53.4 million charge for costs to exit business activities related
to exit plans for the closure of a plastics houseware molding and
warehouse operation in the State of New York, the closure of a
commercial play systems warehouse and manufacturing facility in
Australia, the closure of a cleaning products manufacturing operation
in North Carolina, the elimination of Rubbermaid's Asia Pacific
regional headquarters and the related joint venture in Japan and the
closure of a distribution facility in France. The exiting of the
operations described above necessitated a revaluation of cash flows
related to those operations, resulting in a $45.8 million charge to
write-down $26.0 million of fixed assets and $19.8 million of goodwill
to fair value. Rubbermaid determined that the future cash flows on an
undiscounted basis (before taxes and interest) were not sufficient to
cover the carrying value of the long-lived assets affected by those
decisions. Management determined the fair value of these assets using
discounted cash flows.
56
4. CREDIT ARRANGEMENTS
The Company has short-term foreign and domestic committed and
uncommitted lines of credit with various banks which are available for
short-term financing. Borrowings under the Company's uncommitted lines
of credit are subject to the discretion of the lender. The Company's
lines of credit do not have a material impact on the Company's
liquidity. Borrowings under these lines of credit at December 31, 2000
totaled $23.5 million. The following is a summary of borrowings under
foreign and domestic lines of credit:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ---
(In millions)
Notes payable to banks:
Outstanding at year-end
- borrowing $23.5 $97.3 $94.6
- weighted average interest rate 8.6% 6.8% 5.8%
Average for the year
- borrowing $61.1 $59.1 $144.7
- weighted average interest rate 7.7% 9.9% 6.1%
Maximum outstanding during the year $178.0 $97.3 $205.1
The Company can also issue commercial paper (as described in note
5 to the consolidated financial statements), as summarized below:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Commercial paper:
Outstanding at year-end
- borrowing $1,503.7 $718.5 $500.2
- average interest rate 6.6% 5.9% 5.5%
Average for the year
- borrowing $987.5 $534.9 $620.4
- average interest rate 6.3% 5.2% 5.5%
Maximum outstanding during the year $1,503.7 $807.0 $1,028.8
57
5. LONG-TERM DEBT
The following is a summary of long-term debt:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Medium-term notes $1,012.5 $859.5 $883.5
Commercial paper 1,503.7 718.5 500.2
Other long-term debt 2.3 27.9 17.5
-------- -------- --------
2,518.5 1,605.9 1,401.2
Current portion (203.7) (150.1) (7.3)
-------- -------- --------
$2,314.8 $1,455.8 $1,393.9
======== ======== ========
The Company has a revolving credit agreement of $1,300.0 million
that will terminate in August 2002. During 2000, the Company entered
into a new 364-day revolving credit agreement in the amount of $700.0
million. This revolving credit agreement will terminate in October
2001. At December 31, 2000, there were no borrowings under these
revolving credit agreements.
In lieu of borrowings under the Company's revolving credit
agreements, the Company may issue up to $2,000.0 million of commercial
paper. The Company's revolving credit agreements provide the committed
backup liquidity required to issue commercial paper. Accordingly,
commercial paper may only be issued up to the amount available for
borrowing under the Company's revolving credit agreements. At December
31, 2000, $1,503.7 million (principal amount) of commercial paper was
outstanding. Of this amount, $1,300.0 million is classified as long-
term debt and the remainder of $203.7 million is classified as current
portion of long-term debt.
The revolving credit agreements permit the Company to borrow
funds on a variety of interest rate terms. These agreements require,
among other things, that the Company maintain a certain Total
Indebtedness to Total Capital Ratio, as defined in the agreements. As
of December 31, 2000, the Company was in compliance with these
agreements.
The Company had outstanding at December 31, 2000 a total of
$1,012.5 million (principal amount) of medium-term notes. The
maturities on the Company's medium-term notes range from 3 to 30 years
at an average interest rate of 6.34%.
A universal shelf registration statement became effective in July
1999. As of December 31, 2000, $449.5 million of Company debt and
equity securities may be issued under the shelf.
58
The aggregate maturities of long-term debt outstanding are as
follows:
DECEMBER 31, Aggregate Maturities
------------ --------------------
(In millions)
2001 $203.7
2002 1,400.0
2003 415.5
2004 -
2005 22.0
Thereafter 477.3
--------
$2,518.5
========
6. COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF A SUBSIDIARY TRUST
In 1997, a wholly owned trust of the Company issued 10.0 million
of 5.25% convertible quarterly income preferred securities ("Preferred
Securities") to certain institutional buyers. Each of the Preferred
Securities represents an undivided beneficial interest in the assets
of the trust, is convertible at the option of the holder into shares
of the Company's Common Stock at the rate of 0.9865 shares of Common
Stock (equivalent to the approximate conversion price of $50.685 per
share of Common Stock), subject to adjustment in certain
circumstances, has a $50 liquidation preference and is entitled to a
quarterly cash distribution at the annual rate of $2.625 per share.
The Preferred Securities are guaranteed by the Company and are
callable initially at 103.15% of the liquidation preference beginning
in December 2001 and decreasing over time to 100% in December 2007.
The trust invested the proceeds of the Preferred Securities in
$500.0 million Company 5.25% Junior Convertible Subordinated
Debentures due 2027 ("Debentures"). The Debentures are the sole assets
of the trust, mature on December 1, 2027, bear interest at the annual
rate of 5.25%, payable quarterly, and are redeemable by the Company
beginning in December 2001. The Company may defer interest payments on
the Debentures, but has no current intention to, for a period of up to
20 consecutive quarters during which distribution payments on the
Preferred Securities are also deferred. Under this circumstance, the
Company may not declare or pay any cash distributions with respect to
its capital stock or debt securities that do not rank senior to the
Debentures.
59
7. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has only limited involvement with derivative
financial instruments and does not use them for trading purposes. They
are used to manage certain interest rate and foreign currency risks.
The Company has entered into several interest rate swap
agreements as a means of converting certain floating rate debt
instruments into fixed rate debt. Cash flows related to these interest
rate swap agreements are included in interest expense over the terms
of the agreements, which range from three to seven years in maturity.
At December 31, 2000, the Company had an outstanding notional
principal amount of $912.6 million, with a net accrued interest
receivable of $3.4 million. The termination value of these contracts
is not included in the consolidated financial statements since these
contracts represent the hedging of long-term activities to be
amortized in future reporting periods.
The Company utilizes forward exchange contracts to manage foreign
exchange risk related to both known and anticipated intercompany and
third-party commercial transaction exposures of one year duration or
less.
The Company also utilizes cross-currency swaps to hedge long-term
intercompany transactions. The maturities on these cross-currency
swaps range from three to five years.
The following table summarizes the Company's forward exchange
contracts, foreign currency swaps and long-term cross-currency swaps
in U.S. dollars by major currency and contractual amount. The "buy"
amounts represent the U.S. equivalent of commitments to purchase
foreign currencies, and the "sell" amounts represent the U.S.
equivalent of commitments to sell foreign currencies according to
local needs in foreign subsidiaries. The contractual amounts of
significant forward exchange contracts, foreign currency swaps and
long-term cross-currency swaps and their fair value were as follows:
60
DECEMBER 31, 2000 1999
------------ ---------- ----------
(In millions)
BUY SELL BUY SELL
--- ---- --- ----
Australian dollars $ - $ 8.6 $ - $ -
British pounds 1.6 165.2 1.1 172.8
Canadian dollars 149.4 24.0 71.1 -
Euro 0.2 350.2 4.9 490.8
Japanese yen - - - 4.1
Swedish krona - - - 12.5
Swiss francs - - 8.0 -
------ ------ ------ ------
$151.2 $548.0 $ 85.1 $680.2
====== ====== ====== ======
Fair Value $146.9 $508.4 $ 84.5 $665.7
====== ====== ====== ======
The Company's forward exchange contracts, foreign currency swaps
and long-term cross-currency swaps do not subject the Company to risk
due to foreign exchange rate movement, since gains and losses on these
contracts generally offset losses and gains on the assets, liabilities
and other transactions being hedged. The Company does not obtain
collateral or other security to support derivative financial
instruments subject to credit risk but monitors the credit standing of
the counterparties.
Gains and losses related to qualifying hedges of commercial and
intercompany transactions are deferred and included in the basis of
the underlying transactions. Derivatives used to hedge intercompany
loans are marked to market with the corresponding gains or losses
included in the consolidated statements of income.
8. LEASES
The Company leases manufacturing and warehouse facilities, real
estate, transportation, data processing and other equipment under
leases which expire at various dates through the year 2018. Rent
expense was $102.9 million, $91.9 million and $79.7 million in 2000,
1999 and 1998, respectively. Future minimum rental payments for
operating leases with initial or remaining terms in excess of one year
are as follows:
61
YEAR ENDING DECEMBER 31, Minimum Payments
------------------------ ----------------
(In millions)
2001 $51.9
2002 35.6
2003 25.0
2004 14.4
2005 10.0
Thereafter 12.0
-----
$148.9
======
9. EMPLOYEE BENEFIT RETIREMENT PLANS
The Company and its subsidiaries have noncontributory pension and
profit sharing plans covering substantially all of their foreign and
domestic employees. Pension plan benefits are generally based on years
of service and/or compensation. The Company's funding policy is to
contribute not less than the minimum amounts required by the Employee
Retirement Income Security Act of 1974 or local statutes to assure
that plan assets will be adequate to provide retirement benefits. The
Company's Common Stock comprised $46.7 million, $48.7 million and
$69.3 million of pension plan assets at December 31, 2000, 1999 and
1998, respectively.
Total expense under all profit sharing plans was $14.5 million,
$12.3 million and $25.0 million for the years ended December 31, 2000,
1999 and 1998, respectively.
^G63
In addition to the Company's pension and profit sharing plans,
several of the Company's subsidiaries currently provide retiree health
care benefits for certain employee groups.
The following provides a reconciliation of benefit obligations,
plan assets and funded status of the plans within the guidelines of
SFAS No. 132:
62
Pension Benefits Other Postretirement Benefits
-------------------------------- --------------------------------
DECEMBER 31, 2000 1999 1998 2000 1999 1998
------------ ---- ---- ---- ---- ---- ----
(In millions)
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1 $709.1 $691.1 $578.0 $196.3 $184.0 $175.2
Service cost 29.0 25.4 20.2 3.6 3.5 3.2
Interest cost 48.9 50.1 43.9 12.9 12.6 12.8
Amendments 3.8 6.5 2.2 - (0.5) -
Actuarial (gain)/loss (0.7) (59.6) 34.3 (31.4) 11.9 7.8
Acquisitions - 50.4 51.3 - 1.7 -
Currency exchange (2.2) (5.0) (0.3) - - -
Benefits paid from plan assets (47.0) (49.8) (38.5) (14.7) (16.9) (15.0)
------ ------ ------ ------ ------ ------
Benefit obligation at December 31 $740.9 $709.1 $691.1 $166.7 $196.3 $184.0
====== ====== ====== ====== ====== ======
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1 $858.6 $713.8 $738.4 $- $ - $ -
Actual return on plan assets 76.4 119.5 (5.9) - - -
Acquisitions - 62.3 14.1 - - -
Contributions 3.1 11.6 6.5 14.7 16.9 15.0
Currency exchange (2.8) 1.2 (0.8) - - -
Benefits paid from plan assets (47.0) (49.8) (38.5) (14.7) (16.9) (15.0)
------ ------ ------ ------ ------ ------
Fair value of plan assets at December 31 $888.3 $858.6 $713.8 $ - $ - $ -
====== ====== ====== ==== ====== ======
Pension Benefits Other Postretirement Benefits
-------------------------------- -------------------------------
DECEMBER 31, 2000 1999 1998 2000 1999 1998
---- ---- ----- ---- ---- ----
(In millions )
FUNDED STATUS
Funded status at December 31 $147.4 $149.5 $22.7 $(166.7) $(196.3) $(184.0)
Unrecognized net gain (110.7) (118.9) (7.9) (38.6) (8.0) (20.2)
Unrecognized prior service cost 3.4 (0.9) (2.0) - (0.2) 0.2
Unrecognized net asset (2.2) (3.3) (5.0) - - -
------ ------ ------ ------ ------ -------
Net amount recognized $37.9 $26.4 $7.8 $(205.3) $(204.5) $(204.0)
====== ====== ====== ====== ====== ======
63
AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEETS
Prepaid benefit cost <1> $110.0 $102.9 $71.8 $- $- $-
Accrued benefit cost <2> (78.2) (80.9) (67.9) (205.3) (204.5) (204.0)
Intangible asset <1> 6.1 4.4 3.9 - - -
------ ------ ------ ------ ------ ------
Net amount recognized $37.9 $26.4 $7.8 $(205.3) $(204.5) $(204.0)
====== ====== ====== ====== ====== ======
ASSUMPTIONS AS OF DECEMBER 31
Discount rate 7.5% 7.5% 7.0% 7.5% 7.5% 6.8-7.0%
Long-term rate of return on plan assets 10.0% 10.0% 10.0% - - -
Long-term rate of compensation increase 5.0% 5.0% 5.0% - - -
Health care cost trend rate - - - 6.0% 7.0-9.0% 7.0-8.0%
<1> Recorded in Other Non-current Assets
<2> Recorded in Other Non-current Liabilities
Net pension (income) expenses and other postretirement benefit
expenses include the following components:
Pension Benefits Other Postretirement Benefits
----------------------------- -----------------------------
YEAR ENDED DECEMBER 31, 2000 1999 1998 2000 1999 1998
----------------------- ---- ---- ---- ---- ---- ----
(In millions)
Service cost-benefits earned
during the year $29.2 $30.9 $19.3 $3.6 $3.5 $3.3
Interest cost on projected
benefit obligation 49.5 50.9 46.6 12.9 12.6 12.9
Expected return on plan assets (82.8) (76.7) (59.0) - - -
Amortization of:
Transition asset (1.9) (1.2) (1.1) (1.1) (0.2) (0.5)
Prior service cost recognized (0.5) (0.4) (0.3) - - (0.4)
Actuarial (gain)/loss (1.3) 0.8 (1.8) - - -
----- ----- ----- ----- ----- -----
Net pension (income) expense $(7.8) $4.3 $3.7 $15.4 $15.9 $15.3
===== ===== ===== ===== ===== =====
The projected benefit obligation, accumulated benefit obligation
and fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets are as follows:
64
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Projected benefit obligation $103.7 $145.2 $147.1
Accumulated benefit obligation 85.3 131.0 127.5
Fair value of plan assets - 50.8 52.1
The health care cost trend rate significantly affects the reported
postretirement benefit costs and obligations. A one percentage point
change in the assumed rate would have the following effects:
1% Increase 1% Decrease
----------- -----------
(In millions)
Effect on total of service and
interest cost components $1.8 $(1.6)
Effect on postretirement benefit
obligations 11.9 (11.0)
10. STOCKHOLDERS' EQUITY
At December 31, 2000, the Company's Common Stock consists of
800.0 million authorized shares with a par value of $1 per share.
On February 7, 2000, the Company announced a stock repurchase
program of up to $500.0 million of the Company's outstanding Common
Stock. During 2000, the Company repurchased 15.5 million shares of its
Common Stock at an average price of $26 per share, for a total cash
price of $403.0 million under the program. The repurchase program
remained in effect until December 31, 2000 and was financed through
the use of working capital and commercial paper.
Each share of Common Stock includes a stock purchase right (a
"Right"). Each Right will entitle the holder, until the earlier of
October 31, 2008 or the redemption of the Rights, to buy the number of
shares of Common Stock having a market value of two times the exercise
price of $200, subject to adjustment under certain circumstances. The
Rights will be exercisable only if a person or group acquires 15% or
more of voting power of the Company or announces a tender offer after
which it would hold 15% or more of the Company's voting power. The
Rights held by the 15% stockholder would not be exercisable in this
situation.
Furthermore, if, following the acquisition by a person or group
of 15% or more of the Company's voting stock, the Company was acquired
in a merger or other business combination or 50% or more of its assets
were sold, each Right (other than Rights held by the 15% stockholder)
would become exercisable for that number of shares of Common Stock of
the Company (or the surviving company in a business combination)
having a market value of two times the exercise price of the Right.
65
The Company may redeem the Rights at $0.001 per Right prior to
the occurrence of an event that causes the Rights to become
exercisable for Common Stock.
11. STOCK OPTIONS
The Company's stock option plans are accounted for under
Accounting Principles Board Opinion No. 25. As a result, the Company
grants fixed stock options under which no compensation cost is
recognized. Had compensation cost for the plans been determined
consistent with FASB Statement No. 123, the Company's net income and
earnings per share would have been reduced to the following pro forma
amounts:
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions, except per share data)
Net income:
As reported $421.6 $95.4 $481.8
Pro forma 410.5 88.2 477.5
Diluted earnings per share:
As reported $1.57 $0.34 $1.70
Pro forma 1.53 0.31 1.69
Because the FASB Statement No. 123 method of accounting has not
been applied to options granted prior to January 1, 1995, the
resulting pro forma compensation cost may not be representative of
that to be expected in future years.
The Company has authorized 16.3 million shares of Common Stock to
be issued under various stock option plans. Under the Company's
primary plan (1993 Stock Option Plan) the Company may grant options
for up to 14.1 million shares, of which the Company has granted 7.7
million options, and canceled 1.1 million options through December 31,
2000. Under this plan, the option exercise price equals the Common
Stock's closing price on the date of the grant, and options vest over
a five-year period and expire after ten years.
The following summarizes the changes in the number of shares of
Common Stock under option, including options to acquire Common Stock
resulting from the conversion of options under pre-merger Rubbermaid
option plans:
66
Weighted
Average
2000 Shares Exercise Price
---- ------ --------------
Outstanding at beginning of year 5,819,824 $35
Granted 3,485,263 28
Exercised (97,005) 17
Canceled (1,162,583) 36
----------
Outstanding at end of year 8,045,499 32
Exercisable at end of year 3,215,464 33
==========
Weighted average fair value of
options granted during the year $ 9
==========
OPTIONS OUTSTANDING AT DECEMBER 31, 2000
Weighted
Range of Number Weighted Average
Exercise Outstanding at Average Remaining
Prices December 31, 2000 Exercise Price Contractual Life
-------- ----------------- -------------- ----------------
$13-25 614,579 $20 3
26-35 5,209,505 30 8
36-45 2,062,615 42 8
46-50 158,800 48 8
---------
$13-50 8,045,499 32 8
=========
OPTIONS EXERCISABLE AT DECEMBER 31, 2000
Range of Number Weighted
Exercise Exercisable at Average
Prices December 31, 2000 Exercise Price
-------- ----------------- --------------
$13-25 539,579 $20
26-35 1,708,291 32
36-45 910,074 41
46-50 57,520 48
---------
$13-50 3,215,464 33
=========
67
Weighted
Average
1999 Exercise
---- Shares Price
------ --------
Outstanding at beginning of year 4,353,147 $32
Granted 2,498,980 39
Exercised (842,288) 30
Canceled (190,015) 35
---------
Outstanding at end of year 5,819,824 35
=========
Exercisable at end of year 2,622,352 30
=========
Weighted average fair value of
options granted during the year $ 15
=========
1998
----
Weighted
Average
Exercise
Shares Price
------ ---------
Outstanding at beginning of year 3,720,301 $28
Granted 1,576,467 38
Exercised (753,261) 23
Canceled (190,360) 30
---------
Outstanding at end of year 4,353,147 32
=========
Exercisable at end of year 3,189,309 30
=========
Weighted average fair value of
options granted during the year $ 13
=========
The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions used for grants in 2000, 1999 and 1998, respectively:
risk-free interest rate of 6.5%, 6.6% and 4.1-6.4%; expected dividend
yields of 3.0%, 2.0%, and 1.6-2.0%; expected lives of 9.0, 9.0 and
5.0-9.9 years; and expected volatility of 28%, 25% and 20-34%.
12. INCOME TAXES
The provision for income taxes consists of the following:
68
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
Current:
Federal $154.8 $120.6 $217.1
State 14.9 6.3 26.0
Foreign 34.4 18.2 10.3
----- ----- -----
204.1 145.1 253.4
Deferred 59.8 (9.6) 81.7
----- ----- -----
$263.9 $135.5 $335.1
===== ===== =====
The non-U.S. component of income before income taxes was $84.7
million in 2000, $56.3 million in 1999 and $19.1 million in 1998.
The components of the net deferred tax asset are as follows:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Deferred tax assets:
Accruals not currently deductible
for tax purposes $158.7 $198.0 $132.9
Postretirement liabilities 81.8 80.5 78.5
Inventory reserves 42.2 28.4 25.3
Self-insurance liability 32.1 29.5 44.1
Amortizable intangibles 9.6 27.2 13.6
Other 9.7 8.7 2.9
----- ----- -----
334.1 372.3 297.3
Deferred tax liabilities:
Accelerated depreciation (139.6) (157.5) (152.1)
Prepaid pension asset (38.8) (33.7) (27.1)
Other (17.0) (16.2) (14.4)
----- ----- -----
(195.4) (207.4) (193.6)
----- ----- -----
Net deferred tax asset $138.7 $164.9 $103.7
===== ===== =====
69
The net deferred tax asset is classified in the consolidated
balance sheets as follows:
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Current net deferred income tax asset $231.9 $250.6 $108.2
Non-current deferred income tax
liability (93.2) (85.7) (4.5)
------ ------ ------
$138.7 $164.9 $103.7
====== ====== ======
A reconciliation of the U.S. statutory rate to the effective
income tax rate is as follows:
70
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In percent)
Statutory rate 35.0% 35.0% 35.0%
Add (deduct) effect of:
State income taxes, net of
federal income tax effect 2.2 2.7 3.2
Nondeductible trade names and
goodwill amortization 1.3 4.2 1.3
Nondeductible transaction costs - 19.7 -
Tax basis differential on sales
of businesses - - 2.7
Other - (2.9) (1.2)
---- ---- ----
Effective rate 38.5% 58.7% 41.0%
==== ==== ====
No U.S. deferred taxes have been provided on the undistributed
non-U.S. subsidiary earnings which are considered to be permanently
invested. At December 31, 2000, the estimated amount of total
unremitted non-U.S. subsidiary earnings is $18.9 million.
13. OTHER NONOPERATING EXPENSES (INCOME)
Total other nonoperating expenses (income) consist of the
following:
Year Ended December 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
Equity earnings <1> $(8.0) $(8.1) $(7.1)
Interest income (5.5) (9.9) (14.8)
Dividend income (0.1) (0.3) (0.1)
(Gain)/loss on sale of marketable
equity securities - 1.1 (191.5)
Gain on sales of businesses - - (59.8)
Minority interest in income of
subsidiary trust<2> 26.7 26.8 26.7
Currency translation loss 1.9 1.1 6.0
Other 1.2 1.9 3.5
----- ----- ------
$16.2 $12.6 $(237.1)
===== ===== =======
<1> Primarily relates to the Company's investment in American Tool
Companies, Inc., in which the Company has a 49% interest.
<2> Expense from Convertible Preferred Securities (see note 6).
71
14. OTHER OPERATING INFORMATION
BUSINESS SEGMENT INFORMATION
The Company operates in six reportable business segments:
Storage, Organization & Cleaning; Home Decor; Office Products;
Infant/Juvenile Care & Play; Food Preparation, Cooking & Serving and
Hardware & Tools.
NET SALES <1> <2>
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
Storage, Organization & Cleaning $1,833.0 $1,899.5 $2,047.0
Home Decor 1,392.4 1,370.4 1,242.9
Office Products 1,288.0 1,218.0 1,078.6
Infant/Juvenile Care & Play 921.0 834.7 751.3
Food Preparation, Cooking & Serving 774.4 782.2 790.0
Hardware & Tools 725.9 607.0 583.4
-------- -------- --------
$6,934.7 $6,711.8 $6,493.2
======== ======== ========
<1> Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to
approximately 15% of consolidated net sales in 2000 and 1999, and
14% in 1998. Sales to no other customer exceeded 10% of
consolidated net sales.
<2> All intercompany transactions have been eliminated.
OPERATING INCOME <3>
Year Ended December 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
Storage, Organization & Cleaning $202.9 $63.3 $208.6
Home Decor 168.2 193.7 191.8
Office Products 249.3 218.3 212.3
Infant/Juvenile Care & Play 104.2 16.2 70.2
Food Preparation, Cooking & Serving 112.0 128.3 97.9
Hardware & Tools 120.2 103.7 98.4
Corporate (76.5) (133.5) (83.7)
------ ------ ------
$880.3 $590.0 $795.5
Restructuring Costs (48.6) (246.4) (115.2)
------ ------ ------
$831.7 $343.6 $680.3
====== ====== ======
<3> Operating income is net sales less cost of products sold and SG&A
expenses. Certain headquarters expenses of an operational nature
are allocated to business segments and geographic areas primarily
on a net sales basis. Trade names and goodwill amortization is
72
considered a corporate expense and not allocated to business
segments.
IDENTIFIABLE ASSETS
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
Storage, Organization & Cleaning $1,145.4 $1,155.3 $956.7
Home Decor 815.4 818.0 727.3
Office Products 1,050.9 720.8 643.0
Infant/Juvenile Care & Play 497.1 433.9 758.8
Food Preparation, Cooking & Serving 524.4 539.8 550.0
Hardware & Tools 366.9 376.5 268.5
Corporate<4> 2,861.7 2,679.8 2,384.9
------- ------- -------
$7,261.8 $6,724.1 $6,289.2
======= ======= =======
<4> Corporate assets primarily include trade names and goodwill,
equity investments and deferred tax assets.
CAPITAL EXPENDITURES
Year Ended December 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
Storage, Organization & Cleaning $144.4 $90.8 $126.5
Home Decor 17.4 21.1 26.5
Office Products 42.2 24.9 24.9
Infant/Juvenile Care & Play 45.0 9.5 39.3
Food Preparation, Cooking & Serving 36.0 38.0 47.7
Hardware & Tools 9.4 10.9 12.6
Corporate 22.2 4.9 41.2
------ ------ ------
$316.6 $200.1 $318.7
====== ====== ======
DEPRECIATION AND AMORTIZATION
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
Storage, Organization & Cleaning $78.9 $89.8 $81.9
Home Decor 17.8 18.2 18.0
Office Products 33.9 35.7 28.7
Infant/Juvenile Care & Play 27.7 26.5 33.6
Food Preparation, Cooking & Serving 36.5 32.3 35.0
Hardware & Tools 20.0 12.3 13.2
Corporate 77.8 56.9 53.4
------ ------ ------
$292.6 $271.7 $263.8
====== ====== ======
73
GEOGRAPHIC AREA INFORMATION
NET SALES
Year Ended December 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
United States $5,191.5 $5,135.4 $5,081.5
Canada 308.9 275.6 279.7
------- ------- -------
North America 5,500.4 5,411.0 5,361.2
Europe 1,112.5 1,015.3 894.0
Central and South America <5> 289.0 253.8 208.2
All other 32.8 31.7 29.8
------- ------- -------
$6,934.7 $6,711.8 $6,493.2
======= ======= =======
<5> Includes Argentina, Brazil, Colombia, Mexico and Venezuela.
OPERATING INCOME
YEAR ENDED DECEMBER 31, 2000 1999 1998
----------------------- ---- ---- ----
(In millions)
United States $643.4 $276.6 $617.0
Canada 54.5 22.6 16.6
------ ------ ------
North America 697.9 299.2 633.6
Europe 77.2 4.5 24.0
Central and South America 53.2 43.6 41.2
All other 3.4 (3.7) (18.5)
------ ------ ------
$831.7 $343.6 $680.3
====== ====== ======
74
IDENTIFIABLE ASSETS <6>
DECEMBER 31, 2000 1999 1998
------------ ---- ---- ----
(In millions)
United States $5,048.8 $4,813.3 $4,648.2
Canada 139.9 157.1 207.0
------- ------- -------
North America 5,188.7 4,970.4 4,855.2
Europe 1,746.4 1,459.8 1,135.2
Central and South America 290.2 273.2 276.7
All other 36.5 20.7 22.1
------- ------- -------
$7,261.8 $6,724.1 $6,289.2
======= ======= =======
<6> Transfers of finished goods between geographic areas are not
significant.
15. LITIGATION
The Company is subject to certain legal proceedings and claims,
including the environmental matters described below, that have arisen
in the ordinary conduct of its business or have been assumed by the
Company when it purchased certain businesses. Although management of
the Company cannot predict the ultimate outcome of these matters with
certainty, it believes that their ultimate resolution, including any
amounts it may be required to pay in excess of amounts reserved, will
not have a material effect on the Company's consolidated financial
statements.
As of December 31, 2000, the Company was involved in various
matters concerning federal and state environmental laws and
regulations, including matters in which the Company has been
identified by the U.S. Environmental Protection Agency and certain
state environmental agencies as a potentially responsible party
("PRP") at contaminated sites under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") and
equivalent state laws.
In assessing its environmental response costs, the Company has
considered several factors, including: the extent of the Company's
volumetric contribution at each site relative to that of other PRPs;
the kind of waste; the terms of existing cost sharing and other
applicable agreements; the financial ability of other PRPs to share in
the payment of requisite costs; the Company's prior experience with
similar sites; environmental studies and cost estimates available to
the Company; the effects of inflation on cost estimates; and the
extent to which the Company's and other parties' status as PRPs is
disputed.
75
Based on information available to it, the Company's estimate of
environmental response costs associated with these matters as of
December 31, 2000 ranged between $15.7 million and $21.6 million. As
of December 31, 2000, the Company had a reserve equal to $20.0 million
for such environmental response costs in the aggregate. No insurance
recovery was taken into account in determining the Company's cost
estimates or reserve, nor do the Company's cost estimates or reserve
reflect any discounting for present value purposes, except with
respect to two long term (30 years) operation and maintenance CERCLA
matters which are estimated at present value.
Because of the uncertainties associated with environmental
investigations and response activities, the possibility that the
Company could be identified as a PRP at sites identified in the future
that require the incurrence of environmental response costs and the
possibility of additional sites as a result of businesses acquired,
actual costs to be incurred by the Company may vary from the Company's
estimates.
Subject to difficulties in estimating future environmental
response costs, the Company does not expect that any amount it may be
required to pay in connection with environmental matters in excess of
amounts reserved will have a material adverse effect on its
consolidated financial statements.
Eight complaints were filed against the Company and certain of
its officers and directors in the U.S. District Court for the Northern
District of Illinois on behalf of a purported class consisting of
persons who purchased Common Stock of the Company, Newell Co. or
Rubbermaid Incorporated during the period from October 21, 1998
through September 3, 1999 or exchanged shares of Rubbermaid Common
Stock for the Company's Common Stock as part of the Newell Rubbermaid
merger. The complaints alleged that during this time period the
defendants violated federal securities laws by issuing false and
misleading statements concerning the Company's financial condition and
results of operations. After the cases were consolidated before a
single judge, the court appointed lead plaintiffs for the uncertified
class. Plaintiffs then filed a consolidated amended class action
complaint consisting of six counts asserting claims under Sections 11,
12(a)(2) and 15 of the Securities Act and Sections 10(b) and 20(a) of
the Securities Exchange Act. All defendants moved to dismiss that
amended complaint. On October 2, 2000, the court dismissed the amended
complaint for failure to state a claim upon which relief may be
granted and on November 14, 2000 rejected the plaintiffs' motion for
reconsideration of the prior dismissal. The court dismissed the
action, and the time for filing an appeal expired with no appeal
having been filed. The case is therefore terminated in favor of the
Company and the other defendants.
76
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
77
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Information regarding executive officers of the Company is included as
a Supplementary Item at the end of Part I of this Form 10-K.
Information regarding directors of the Company is included in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held May 9, 2001 ("Proxy Statement") under the
caption "Proposal 1 - Election of Directors," which information is
hereby incorporated by reference herein.
Information regarding compliance with Section 16(a) of the Exchange
Act is included in the Proxy Statement under the caption "Section
16(a) Beneficial Ownership Compliance Reporting," which information is
hereby incorporated by reference herein.
Item 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is included in the Proxy
Statement under the caption "Proposal 1 - Election of Directors -
Information Regarding Board of Directors and Committees," under the
captions "Executive Compensation - Summary Compensation Table; -
Option Grants in 2000; - Option Exercises in 2000; - Pension and
Retirement Plans; - Employment Security and Other Agreements," and the
caption "Executive Compensation Committee Interlocks and Insider
Participation," which information is hereby incorporated by reference
herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
---------------------------------------------------
Information regarding security ownership is included in the Proxy
Statement under the caption "Certain Beneficial Owners," which
information is hereby incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Not applicable.
78
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a)(1) The following is a list of the financial statements of Newell
Rubbermaid Inc. included in this report on Form 10-K which are filed
herewith pursuant to Item 8:
Report of Independent Public Accountants
Consolidated Statements of Income - Years Ended December 31,
2000, 1999 and 1998
Consolidated Balance Sheets - December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows - Years Ended December 31,
2000, 1999 and 1998
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements - December 31, 2000,
1999 and 1998
(2) The following consolidated financial statement schedule of the
Company included in this report on Form 10-K is filed herewith
pursuant to Item 14(d) and appears immediately preceding the Exhibit
Index:
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
------------------------------------------------
(3) The exhibits filed herewith are listed on the Exhibit Index
filed as part of this report on Form 10-K. Each management contract
or compensatory plan or arrangement of the Company listed on the
Exhibit Index is separately identified by an asterisk.
(b) Reports on Form 8-K:
None.
79
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEWELL RUBBERMAID INC.
Registrant
By /s/ William T. Alldredge
--------------------------
Date March 26, 2001
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on March 26, 2001 by the following
persons on behalf of the Registrant and in the capacities indicated.
Signature Title
--------- -----
/s/ William P. Sovey Chairman of the Board and
---------------------------- Director
William P. Sovey
/s/ Joseph Galli, Jr. President and Chief
---------------------------- Executive Officer
Joseph Galli, Jr. (Principal Executive
Officer)
/s/ Jeffrey J. Burbach Vice President-Controller
--------------------------- (Principal Accounting
Jeffrey J. Burbach Officer)
/s/ William T. Alldredge Chief Financial Officer
--------------------------- (Principal Financial
William T. Alldredge Officer)
/s/ Alton F. Doody Director
---------------------------
Alton F. Doody
80
/s/ Scott S. Cowen Director
---------------------------
Scott S. Cowen
/s/ Daniel C. Ferguson Director
------------------------------
Daniel C. Ferguson
/s/ Robert L. Katz Director
------------------------------
Robert L. Katz
/s/ Elizabeth Cuthbert Millett Director
------------------------------
Elizabeth Cuthbert Millett
/s/ Cynthia A. Montgomery Director
------------------------------
Cynthia A. Montgomery
/s/ Allan P. Newell Director
------------------------------
Allan P. Newell
/s/ Gordon R. Sullivan Director
------------------------------
Gordon R. Sullivan
/s/ William D. Marohn Director
------------------------------
William D. Marohn
81
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------
Charges to
Balance at Other Balance at
Allowance for Beginning Accounts End of
Doubtful Accounts of Period Provision (A) Write-offs Period
----------------- --------- ---------- ---------- ----------- ----------
(in thousands)
Year ended December 31, 2000 $41,870 $4,821 $4,861 ($15,454) $36,098
Year ended December 31, 1999 34,157 17,928 1,922 (12,137) 41,870
Year ended December 31, 1998 30,075 5,488 14,028 (15,434) 34,157
NOTE A - REPRESENTS RECOVERY OF ACCOUNTS PREVIOUSLY WRITTEN OFF
AND NET RESERVES OF ACQUIRED OR DIVESTED BUSINESSES.
Balance at Balance at
Beginning End of
Inventory Reserves of Period Provision Write-offs Other(B) Period
------------------ ---------- --------- ---------- -------- ----------
(in thousands)
Year ended December 31, 2000 $119,389 $45,319 ($52,294) $2,187 $114,601
Year ended December 31, 1999 113,775 75,660 (72,768) 2,722 119,389
Year ended December 31, 1998 119,179 13,338 (29,293) 10,551 113,775
NOTE B - REPRESENTS NET RESERVES OF ACQUIRED AND DIVESTED
BUSINESSES, INCLUDING PROVISIONS FOR PRODUCT LINE
RATIONALIZATION.
Balance at Balance at
Beginning Charges to End of
Restructuring Reserves of Period Provision Reserves (C) Other Period
---------------------- --------- --------- ------------ ----- ----------
(in thousands)
Year ended December 31, 2000 $17,930 $48,561 ($44,624) - $21,867
Year ended December 31, 1999 1,559 246,381 (230,010) - 17,930
Year ended December 31, 1998 1,529 115,154 (115,124) - 1,559
NOTE C - REPRESENTS COSTS CHARGED TO RESTRUCTURING RESERVES IN
ACCORDANCE WITH THE RESTRUCTURING PLAN.
82
(C) EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------- -----------------------
Item 3. Articles of 3.1 Restated Certificate of Incorporation of Newell Rubbermaid
Incorporation and Inc., as amended as of March 24, 1999 (incorporated by
By-Laws reference to Exhibit 3.1 to the Company's Current Report on
Form 8-K dated March 24, 1999).
3.2 By-Laws of Newell Rubbermaid Inc., as amended through
January 5, 2001.
Item 4. Instruments 4.1 Restated Certificate of Incorporation of Newell Rubbermaid
defining the Inc., as amended as of March 24, 1999, is included in Item
rights of 3.1.
security holders,
including inden-
tures
4.2 By-Laws of Newell Rubbermaid Inc., as amended through
January 5, 2001, are included in Item 3.2.
4.3 Rights Agreement dated as of August 6, 1998, between the
Company and First Chicago Trust Company of New York, as
Rights Agent (incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated August 6, 1998).
4.4 Indenture dated as of April 15, 1992, between the Company
and The Chase Manhattan Bank (National Association), as
Trustee (incorporated by reference to Exhibit 4.4 to the
Company's Report on Form 8 amending the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
1992).
4.5 Indenture dated as of November 1, 1995, between the Company
and The Chase Manhattan Bank (National Association), as
Trustee (incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated May 3, 1996).
4.6 Credit Agreement dated as of June 12, 1995 and amended and
restated as of August 5, 1997, among the Company, certain of
its affiliates, The Chase Manhattan Bank (National
Association), as Agent, and the banks whose names appear on
the signature pages thereto (incorporated by reference to
Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1997).
4.7 Junior Convertible Subordinated Indenture for the 5.25%
Convertible Subordinated Debentures, dated as of December
12, 1997, among the Company and The Chase Manhattan Bank, as
Indenture Trustee (incorporated by reference to Exhibit 4.3
to the Company's Registration Statement on Form S-3, File
No. 333-47261, filed March 3, 1998 (the "1998 Form S-3").
4.8 Specimen Common Stock (incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-4,
File No. 333-71747, filed February 4, 1999).
83
Exhibit
Number Description of Exhibit
------- -----------------------
4.9 $700,000,000 364-Day Credit Agreement dated as of October
23, 2000, among the Company, The Chase Manhattan Bank, as
Agent, and the banks whose names appear on the signature
pages thereto.
Pursuant to item 601(b)(4)(iii)(A) of Regulation S-K, the
Company is not filing certain documents. The Company agrees
to furnish a copy of each such document upon the request of
the Commission.
Item 10. Material *10.1 The Newell Long-Term Savings and Investment Plan, as amended
Contracts and restated effective May 1, 1993 and amended through
December 29, 1995 (incorporated by reference to Exhibit 10.1
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 (the "1998 Form 10-K")).
*10.2 Newell Co. Deferred Compensation Plan, as amended, effective
August 1, 1980, as amended and restated effective January 1,
1997 (incorporated by reference to Exhibit 10.3 to the 1998
Form 10-K).
*10.3 Newell Operating Company's ROA Cash Bonus Plan, effective
January 1, 1977, as amended (incorporated by reference to
Exhibit 10.8 to the Company's Registration Statement on Form
S-14, Reg. No. 002-71121, filed March 4, 1981).
*10.4 Newell Operating Company's ROI Cash Bonus Plan, effective
January 1, 1986 (incorporated by reference to Exhibit 10.5
to the 1998 Form 10-K).
*10.5 Newell Operating Company's Restated Supplemental Retirement
Plan for Key Executives, effective January 1, 1982, as
amended effective January 1, 1999.
*10.6 Form of Employment Security Agreement with 10 executive
officers (incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1990).
10.7 Credit Agreement dated as of June 12, 1995 and amended and
restated as of August 5, 1997, among the Company, certain of
its affiliates, The Chase Manhattan Bank (National
Association), as Agent, and the banks whose names appear on
the signature pages thereto, is included in Item 4.6.
10.8 Shareholder's Agreement and Irrevocable Proxy dated as of
June 21, 1985, among American Tool Companies, Inc., the
Company, Allen D. Petersen, Kenneth L. Cheloha, Robert W.
Brady, William L. Kiburz, Flemming Andresen and Ane C.
Patterson (incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1997).
84
Exhibit
Number Description of Exhibit
------- -----------------------
*10.9 Newell Rubbermaid Inc. Amended 1993 Stock Option Plan,
effective February 9, 1993, as amended May 26, 1999
(incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999).
10.10 Amended and Restated Trust Agreement, dated as of December
12, 1997, among the Company, as Depositor, The Chase
Manhattan Bank, as Property Trustee, Chase Manhattan
Delaware, as Delaware Trustee, and the Administrative
Trustees (incorporated by reference to Exhibit 4.2 to the
1998 Form S-3).
10.11 Junior Convertible Subordinated Indenture for the 5.25%
Convertible Subordinated Debentures, dated as of December
12, 1997, between the Company and The Chase Manhattan Bank,
as Indenture Trustee, is included in Item 4.7.
10.12 $700,000,000 364-Day Credit Agreement dated as of October
23, 2000, between the Company and The Chase Manhattan Bank,
as agent, and certain other financial institutions, is
included in Item 4.9.
*10.13 Newell Rubbermaid Medical Plan for Executives, as amended
and restated effective January 1, 2000.
*10.14 Confidential Separation Agreement and General Release dated
as of October 25, 2000, between Thomas A Ferguson and the
Company.
*10.15 Confidential Separation Agreement and General Release dated
as of November 29, 2000, between John J. McDonough and the
Company.
Item 11. 11 Statement of Computation of Earnings per Share of Common
Stock.
Item 12. 12 Statement of Computation of Earnings to Fixed Charges.
Item 21. Subsidiaries of 21 Significant Subsidiaries of the Company.
the Registrant
Item 23. Consent of 23.1 Consent of Arthur Andersen LLP.
experts and
counsel
23.2 Consent of KPMG LLP
Item 99. Additional 99 Safe Harbor Statement.
Exhibits
* Management contract or compensatory plan or arrangement of the
Company.
85