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Article by DailyStocks_admin    (08-25-08 07:11 AM)

The Daily Magic Formula Stock for 08/25/2008 is Newell Rubbermaid Inc. According to the Magic Formula Investing Web Site, the ebit yield is 12% and the EBIT ROIC is 25-50%.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


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BUSINESS OVERVIEW

BUSINESS
“Newell Rubbermaid” or the “Company” refers to Newell Rubbermaid Inc. alone or with its wholly owned subsidiaries, as the context requires. When this report uses the words “we” or “our,” it refers to the Company and its subsidiaries unless the context otherwise requires.
WEBSITE ACCESS TO SECURITIES AND EXCHANGE COMMISSION REPORTS
The Company’s Internet website can be found at www.newellrubbermaid.com . The Company makes available free of charge on or through its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the Securities and Exchange Commission.
GENERAL
Newell Rubbermaid is a global marketer of consumer and commercial products that touch the lives of people where they work, live and play. The Company’s strong portfolio of brands includes Sharpie ® , Paper Mate ® , Dymo ® , Expo ® , Waterman ® , Parker ® , Rolodex ® , Irwin ® , Lenox ® , BernzOmatic ® , Rubbermaid ® , Levolor ® , Graco ® , Calphalon ® and Goody ® . The Company’s multi-product offering consists of well known name-brand consumer and commercial products in four business segments: Cleaning, Organization & Décor; Office Products; Tools & Hardware; and Home & Family.
The Company’s vision is to become a global company of consumer-meaningful brands (“Brands That Matter™”) and great people, known for best-in-class results. The Company’s four transformational strategic initiatives are as follows: Create Consumer-Meaningful Brands, Leverage One Newell Rubbermaid, Achieve Best Total Cost and Nurture 360º Innovation.
Create Consumer-Meaningful Brands is the initiative to move from a historical focus on customer push marketing and excelling in manufacturing and distributing products, to a new focus on consumer pull marketing and creating competitive advantage through understanding the Company’s consumers, innovating to deliver great performance and value, investing in advertising and promotion to create demand and leveraging its brands in adjacent categories around the world. Leverage One Newell Rubbermaid is the initiative to lower costs and drive speed to market by leveraging common business activities and best practices of its business units. This will be supported by building a common culture of shared values, with a focus on collaboration and teamwork. Achieve Best Total Cost is the initiative to achieve an optimal balance between manufacturing and sourcing and between high-cost and low-cost manufacturing and to leverage the Company’s size and scale to drive productivity and achieve a best cost position. Nurture 360º Innovation represents the broadened definition of innovation to include consumer driven product invention and the successful commercialization of invention.
The Company’s results depend on the ability of its individual business units to succeed in their respective categories, each of which has some unique consumers, customers and competitors. The Company’s strategic initiatives are designed to enable these business units to generate differentiated products, operate within a best-in-class cost structure and employ superior branding in order to realize premium margins on their products. Premium margins, in turn, fund incremental demand creation by the business units, driving incremental sales and profits for the Company.
Refer to the forward-looking statements section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Company’s forward-looking statements included in this report.
BUSINESS SEGMENTS
The Company’s four business segments reflect the Company’s focus on building large consumer and commercial brands, promoting organizational integration, achieving operating efficiencies in sourcing and distribution, and leveraging its understanding of similar consumer segments and distribution channels.

During the fourth quarter of 2007, the Company moved to one, common global organizational structure that established the Global Business Unit (“GBU”) as the core organizing concept of the business. The move to a GBU structure allows the Company to better leverage its brands, technology, supply chain and other resources on a global basis. The establishment of a GBU structure did not impact the Company’s operating business segments.
During 2006 and early 2007, the Company divested its European Cookware, Little Tikes and Home Décor Europe businesses. The results of these businesses are included in discontinued operations. Refer to Footnote 3 of the Notes to Consolidated Financial Statements for additional information.
CLEANING, ORGANIZATION & DÉCOR
The Company’s Cleaning, Organization & Décor segment is comprised of the following GBUs: Home Products, Foodservice Products, Commercial Products and Décor. These businesses design, manufacture or source, package and distribute semi-durable products primarily for use in the home and commercial settings. The products include indoor and outdoor organization, home storage, food storage, cleaning, refuse, material handling, drapery hardware, custom and stock horizontal and vertical blinds, as well as pleated, cellular and roller shades.
Home Products, Foodservice Products and Commercial Products primarily sell their products under the trademarks Rubbermaid ® , Brute ® , Roughneck ® and TakeAlongs ® . Décor sells its products primarily under the trademarks Levolor ® and Kirsch ® .
Home Products and Foodservice Products market their products directly and through distributors to mass merchants, home centers, warehouse clubs, grocery/drug stores and hardware distributors. Commercial Products markets its products directly and through distributors to commercial channels and home centers. Décor markets its products directly and through distributors to mass merchants, home centers, department/specialty stores, hardware distributors, industrial/construction outlets, custom shops, select contract customers and other professional customers.
OFFICE PRODUCTS
The Company’s Office Products segment is comprised of the following GBUs: Markers, Highlighters & Art Products, Everyday Writing & Coloring, Technology, Fine Writing & Luxury Accessories and Office Organization. The GBUs primarily design, manufacture or source, package and distribute fine/luxury, technical and everyday writing instruments, technology-based products and organization products, including permanent/waterbase markers, dry erase markers, overhead projector pens, highlighters, wood-cased pencils, ballpoint pens and inks, correction fluids, office products, art supplies, on-demand labeling products, card scanning solutions and on-line postage. Office Products also distributes other writing instruments, including roller ball pens and mechanical pencils, for the retail marketplace.
Office Products primarily sells its products under the trademarks Sharpie ® , Paper Mate ® , Parker ® , Waterman ® , Eberhard Faber ® , Berol ® , Reynolds ® , Rotring ® , Uni-Ball ® (used under exclusive license from Mitsubishi Pencil Co. Ltd. and its subsidiaries in North America), Expo ® , Sharpie ® Accent ® , Vis-à-Vis ® , Expresso ® , Liquid Paper ® , Mongol ® , Foohy ® , Prismacolor ® , Eldon ® , Dymo ® , Mimio ® , CardScan ® and Endicia™.

Office Products markets its products directly and through distributors to mass merchants, warehouse clubs, grocery/drug stores, office superstores, office supply stores, contract stationers, hardware distributors and other retailers.
TOOLS & HARDWARE
The Company’s Tools & Hardware segment is comprised of the following GBUs: Industrial Products & Services, Construction Accessories, Construction Tools and Cabinet, Window & Door. The GBUs within the Tools & Hardware segment design, manufacture or source, package and distribute hand tools and power tool accessories, propane torches, soldering tools and accessories, manual paint applicator products, cabinet hardware and window and door hardware.
Tools & Hardware sells its products under the trademarks Irwin ® , Vise-Grip ® , Marathon ® , Twill ® , Speedbor ® , Jack ® , Quick-Grip ® , Unibit ® , Strait-Line ® , BernzOmatic ® , Shur-Line ® , Rubbermaid ® , Lenox ® , Sterling ® , Amerock ® , Allison ® , Ashland ® and Bulldog ® .
Tools & Hardware markets its products directly and through distributors to mass merchants, home centers, department/specialty stores, hardware distributors, industrial/construction outlets, custom shops, select contract customers and other professional customers.
HOME & FAMILY
The Company’s Home & Family segment is comprised of the following GBUs: Culinary Lifestyle, Baby & Parenting Essentials and Beauty & Style. Culinary Lifestyle primarily designs, manufactures or sources, packages and distributes aluminum and stainless steel cookware, bakeware, cutlery and kitchen gadgets and utensils. Baby & Parenting Essentials designs, manufactures or sources, packages and distributes infant and juvenile products such as swings, high chairs, car seats, strollers and play yards. Beauty & Style designs, manufactures or sources, packages and distributes hair care accessories and grooming products.
Culinary Lifestyle primarily sells its products under the trademarks Calphalon ® , Kitchen Essentials ® , Cooking with Calphalon™, Calphalon ® One™ and Katana™. Baby & Parenting Essentials primarily sells its products under the Graco ® trademark. Beauty & Style markets its products primarily under the trademarks Goody ® , Ace ® , i|m™, Stayput™, Ouchless ® , StylingSolutions™, Styling Therapy™ and ColourCollection™.
Culinary Lifestyle markets and sells its products directly to department and specialty stores and through its branded retail outlets. Baby & Parenting Essentials and Beauty & Style market their products directly and through distributors to mass merchants, warehouse clubs and grocery/drug stores.
NET SALES BY BUSINESS SEGMENT
The following table sets forth the amounts and percentages of the Company’s net sales for the years ended December 31, 2007, 2006 and 2005 (in millions, except percentages) (including sales of acquired businesses from the time of acquisition and excluding sales of businesses that have been divested), for the Company’s four business segments.

Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to approximately 13%, 12%, and 13% of consolidated net sales for the years ended December 31, 2007, 2006 and 2005, respectively, substantially across all segments. Sales to no other customer exceeded 10% of consolidated net sales. For more detailed segment information, including operating income and identifiable assets by segment, refer to Footnote 18 of the Notes to Consolidated Financial Statements.
STRATEGIC INITIATIVES
Create Consumer-Meaningful Brands
The Company is continuing to move from its historical focus on customer push marketing and excelling in manufacturing and distributing products, to a new focus on consumer pull marketing and creating competitive advantage through better understanding its consumers, innovating to deliver great performance and value, investing in advertising and promotion to create demand and leveraging its brands in adjacent categories around the world. Consumer-meaningful brands create more value than products alone, and big brands provide the Company with the economies of scale that can be leveraged in today’s marketplace.
In 2007, the Company made incremental investments in strategic brand building for several brands including Sharpie ® , Paper Mate ® , Rubbermaid ® , Graco ® , Calphalon ® and Goody ® . In just two years, the Company has increased its investment in strategic brand building almost 60% to 6.2% of sales. The Company is committed to increasing selective television, print, direct mail and online advertising, and using sampling and product demonstrations where appropriate, to increase brand awareness and trials among end-users of its brands. During 2007, the Company sponsored the #26 Irwin ® car in the NASCAR NEXTEL Cup Series, the Sharpie ® 500 NASCAR race in Bristol, Tennessee and the Lenox ® Industrial Tools 300 NASCAR race in Loudon, New Hampshire. In 2008, the Company anticipates focusing its advertising and sponsorships in similar areas.
The Company continues to employ resources to create best-in-class branding capabilities across the Company. As part of the Company’s Marketing Build and Transform initiative, it has created a detailed blueprint and roadmap for achieving brand building excellence over time, complete with annual targets and measures. The Company has added top executive talent from some of the world’s leading consumer products companies to its management ranks as well as developed and launched a comprehensive series of Marketing Excellence training programs, covering both basic and advanced curriculums to expand and develop consumer marketing capabilities and further enhance consumer understanding. The Company’s brand building initiatives and the increased investments in research, training, and consumer-noticeable spending activities have contributed to the Company realizing market share gains in certain key brands, notably in the Calphalon, Goody, Dymo and Rubbermaid Commercial Products businesses, and global growth in the Irwin and Lenox branded tools businesses.
Leverage One Newell Rubbermaid
The Company is committed to leveraging the common business activities and best practices of its business units, and to build one common culture of shared values, with a focus on collaboration and teamwork. Through this initiative, the Company strives to benefit from the reduction of costs achieved through horizontal integration and economies of scale. For example, the Company continues to explore ways to leverage its common functional capabilities such as Human Resources, Information Technology, Customer Service, Supply Chain Management and Finance to improve efficiency and reduce costs. The Company is also taking significant steps toward achieving low cost logistical excellence, including the centralization and consolidation of the Company’s distribution and transportation activities. The centralization of these functions will increase buying power across the Company.
Additionally, certain administrative functions are centralized at the corporate level including cash management, accounting systems, capital expenditure approvals, restructuring approvals, order processing, billing, credit, accounts receivable collections, data processing operations and legal functions. Centralization concentrates technical expertise in one location, making it easier to communicate, observe overall business trends and manage the Company’s businesses.
The Company previously accelerated the process of creating shared services for the European businesses and is expanding the scope of shared services in the U.S and Latin America. The transition of services to the Shared Service Center in Europe is approximately 90% complete. In addition, in its move to a consistent GBU structure, the Company has recently created and expanded leadership positions to identify and drive synergies across business units.
On October 1, 2007, the Company’s Office Products segment successfully went live with the SAP implementation for its North American operations. This SAP go-live marks the completion of the first major milestone in a multi-year rollout aimed at migrating multiple legacy systems and users to a common SAP global information platform.

This will enable the Company to integrate and manage its worldwide business and reporting processes more efficiently.
Achieve Best Total Cost
The Company’s objective is to reduce the cost of manufacturing, sourcing and supplying product on an ongoing basis, and to leverage the Company’s size and scale, in order to achieve a best total cost position in relevant product categories. Achieving best cost positions in its categories allows the Company to increase investment in strategic brand building initiatives. To improve productivity, the Company focuses on reducing procurement, material handling and distribution and transportation costs; driving manufacturing efficiencies; and removing excess overhead costs to reduce the overall cost of manufacturing and delivering products. The Company has also shifted a portion of its research and development efforts to focus on ways to design future products that can be manufactured more cost effectively.
A key component of this strategy is the Company’s sourcing transformation — restructuring the manufacturing and sourcing footprint to reduce total delivered cost, including increasing capacity utilization and the percentage of manufacturing located in lower-cost countries as well as achieving a balance of company-owned manufacturing and third party sourcing partners. Project Acceleration remains on track to deliver its commitments in cost, savings and timing over the life of the project, and the Company has realized savings in its operating results. Project Acceleration is projected to result in cumulative restructuring costs of approximately $375 million to $400 million ($315 million to $340 million after tax). Approximately 67% of the costs are expected to be cash. Annualized savings from Project Acceleration are expected to exceed $150 million upon conclusion of the project in 2009, with $60 million in annual savings recognized in 2007 and additional benefits of $60 million and $30 million projected for 2008 and 2009, respectively. To date, the Company has announced approximately two-thirds of its anticipated closings and consolidations and has announced the expansion of the program to include certain scale leveraging initiatives with respect to distribution, transportation and shared services.
The Company is also committed to reducing non-strategic selling, general and administrative (“SG&A”) costs throughout the organization. The Company is vigilant in creating a leaner organization that is more flexible in its response time, both internally and externally. The Company’s efforts to Leverage One Newell Rubbermaid through horizontal integration will help the Company to achieve this goal.
Nurture 360º Innovation
The Company has broadened its definition of innovation beyond product invention. The Company defines innovation as the successful commercialization of invention. It is a rigorous, consumer-centric process that permeates the entire development cycle. It begins with a deep understanding of how consumers interact with the Company’s brands and categories, and all the factors that drive their purchase decisions and in-use experience. That understanding must then be translated into innovative products that deliver unique features and benefits, at a best-cost position, providing the consumer with great value. Lastly, innovating how and where to create awareness and trial use, and measuring the effectiveness of advertising and promotion spending, completes the process. The Company has pockets of excellence using this expanded definition of innovation and continues to build on this competency in its effort to create consumer-meaningful brands. Since the beginning of 2007, the Company launched a number of innovative new products including the Sharpie ® Chisel Tip, Levolor ® Roman Shades, Lenox ® Diamond™ saw blades, Graco ® iMonitor™, and the Rubbermaid ® Premier line of premium food storage containers. Additionally, the Company’s Baby and Parenting Essentials business launched the Graco Sweetpeace-Newborn Soothing Center in early 2008. This product reinvents the swing category by offering babies a multi-sensory experience that mimics the actual movements mothers use to soothe their infants and comes programmed with comforting prenatal sounds, such as a heartbeat, that research has proven to be especially comforting to babies. The Company is investing in a targeted multimedia print and web marketing campaign to support the launch of this innovative new product.

GROWTH STRATEGY
The Company’s growth strategy includes internal growth and acquisitions. The Company is also increasingly focused on globalization and the significant opportunities to further expand internationally.
Internal Growth
The Company focuses on internal growth principally by understanding consumers, demand creation through marketing, commercializing innovative 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 generally defined by the Company as growth from continuing businesses owned more than one year.
Acquisition Strategy
The Company supplements internal growth by selectively acquiring businesses with prominent end-user focused brands and improving the profitability of such businesses through the implementation of the Company’s strategic initiatives. Strategic criteria for an acquisition include: the existence of consumer-meaningful brands that reflect differentiation and innovation, global categories, favorable customer and channel dynamics, strong margin and growth potential, focus on non-cyclical, semi-durable products, and synergies with our core categories and competencies.
Globalization
The Company is expanding from a U.S.-centric business model to one that includes international growth as an increasing focus. The growth of consumer goods economies and retail structures in several regions outside the U.S., particularly Central and Eastern Europe, Asia, 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. As a result, the Company pursues selective international opportunities to further its internal growth and acquisition objectives. The Company’s sales outside the U.S. approximated 28%, 26% and 24% of total sales in 2007, 2006 and 2005, respectively.
The Company has made significant strides in structuring itself for successful globalization. In 2007, the Company realigned its businesses under a GBU structure. This realignment positions the businesses to leverage research and development, branding, marketing and innovation on a global basis. The Company has also implemented the process of creating shared services for the European businesses, which is approximately 90% complete. Finally, the Company is in the early stages of migrating multiple legacy systems and users to a common SAP global information platform, which will enable the Company to integrate and manage its worldwide business and reporting processes more efficiently.
DIVESTITURE AND PRODUCT LINE RATIONALIZATION
The Company consistently reviews its businesses and product offerings, assesses their strategic fit and seeks opportunities to divest non-strategic businesses. The criteria used by the Company in assessing the strategic fit include: the existence of consumer-meaningful brands that respond to differentiation and innovation, global categories, favorable customer and channel dynamics, strong margin and growth potential, focus on non-cyclical, semi-durable products, synergies with our core categories and competencies, and the business’ actual and potential impact on the operating performance of the Company. While the Company believes that the business units remaining in our portfolio constitute core businesses, the Company will continue to review its businesses and product offerings and assess their strategic fit.
During 2006 and early 2007, the Company divested its European Cookware, Little Tikes and Home Décor Europe businesses. During 2005, the Company divested its Curver business. See Footnote 3 of the Notes to Consolidated Financial Statements for a description of discontinued operations.

In the normal course of business, the Company rationalizes low margin products. The Company’s decision to exit these low margin product lines is consistent with its strategy to focus on high margin, high potential opportunities that support the Company’s financial objectives.
OTHER INFORMATION
Multi-Product Offering
The Company’s broad product coverage in multiple categories permits it to more effectively meet the needs of its customers. With families of leading brand names and profitable and innovative new products, the Company can also assist 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.
Customer Marketing and Service
The Company strives to develop long-term, mutually beneficial partnerships with its customers and become their supplier and brand 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 strives to enhance its relationships with customers through exceptional customer service. The Company’s ability to provide superior customer service is a result of its information technology, marketing and merchandising programs that are designed to enhance the sales and profitability of its customers and provide consistent on-time delivery of its products.
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, best-cost products to their customers. Retailers now frequently purchase on a “just-in-time” basis in order to reduce inventory carrying 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 more responsive sourcing, manufacturing and distribution capabilities and electronic communications.
Foreign Operations
Information regarding the Company’s 2007, 2006 and 2005 foreign operations and financial information by geographic area is included in Footnote 18 of the Notes to Consolidated Financial Statements and is incorporated by reference herein. Information regarding risks relating to the Company’s foreign operations is set forth in Part I, Item 1A of this report 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. The Company’s product offerings require the purchase of resin, glass, corrugate and metals, including steel, stainless steel, zinc, aluminum and gold. The Company has experienced inflation in raw material prices and expects such inflation pressures to continue in 2008. The Company continues to attempt to reduce the volume of its resin purchases through product line rationalization and strategic divestitures. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.
Backlog
The dollar value of unshipped factory orders is not material.
Seasonal Variations
The Company’s sales and operating income in the first quarter are generally lower than any other quarter during the year, driven principally by reduced demand and volume for the products in the Company’s Office Products and Cleaning, Organization & D é cor segments in the quarter.

Patents and Trademarks
The Company has many patents, trademarks, brand names and trade names that are, in the aggregate, important to its business. The Company’s most significant registered trademarks are “Rubbermaid ® ,” “Sharpie ® ,” “Paper Mate ® ,” “Lenox ® ,” “Irwin ® ,” “Graco ® ,” “Calphalon ® ”, “Levolor ® ” and “Dymo ® .”
Customers / Competition
The Company’s principal customers are large mass merchandisers, such as discount stores, home centers, warehouse clubs and office superstores, and commercial distributors. 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 that have strong negotiating power with suppliers. This environment limits the Company’s ability to recover cost increases through selling prices.
Current trends among retailers include fostering high levels of competition among suppliers, demanding innovative new products and requiring suppliers to maintain or reduce product prices and deliver products with shorter lead times. Other trends, in the absence of a strong new product development effort or strong end-user brands, are for the retailer to import generic products directly from foreign sources and to source and sell products, under their own private label brands, that compete with products of the Company. 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 category management and customer service. The Company competes with numerous manufacturers and distributors of consumer products, many of which are large and well established.
The Company’s principal methods of meeting its competitive challenges are creating and maintaining consumer-meaningful brands and differentiated products, delivering superior customer service (including innovative “good-better-best” marketing and merchandising programs), consistent on-time delivery, outsourcing certain production to low cost suppliers and lower cost countries where appropriate and experienced management.
The Company has also positioned itself to respond to the competitive challenges in the 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 (which includes Sam’s Club), accounted for approximately 13% of net sales in 2007, across substantially all business units. The Company’s top ten customers included ( in alphabetical order ): Boise Office, Lowe’s, Office Depot, Staples, Target, The Home Depot, Toys ‘R’ Us, United Stationers, W. W. Grainger and Wal*Mart.
Environmental Matters
Information regarding the Company’s environmental matters is included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this report and in Footnote 19 of the Notes to Consolidated Financial Statements and is incorporated by reference herein.
Research and Development
Information regarding the Company’s research and development costs for each of the past three fiscal years is included in Footnote 1 of the Notes to Consolidated Financial Statements and is incorporated by reference herein.
Employees
As of December 31, 2007, the Company had approximately 22,000 employees worldwide, of whom approximately 3,500 are covered by collective bargaining agreements or are located in certain countries which have collective arrangements decreed by statute.

CEO BACKGROUND

Michael T. Cowhig, age 61, retired in December 2006 as President, Global Technical and Manufacturing of The Procter & Gamble Company—Gillette Global Business Unit (a manufacturer and marketer of consumer products), a post he held since October 1, 2005. Prior thereto, he held the position of President, Global Technical and Manufacturing of The Gillette Company from January 2004 to October 2005. Mr. Cowhig joined Gillette in 1968, and thereafter served in a variety of roles, including Senior Vice President, Global Manufacturing and Technical Operations—Stationery Products from 1996 to 1997, Senior Vice President, Manufacturing and Technical Operations—Grooming from 1997 to 2000, Senior Vice President, Global Supply Chain and Business Development from 2000 to 2002, and Senior Vice President, Global Manufacturing and Technical Operations from 2002 to 2004. Mr. Cowhig is also a director of CCL Industries, a global manufacturer of specialty packaging and labeling solutions for the consumer products and healthcare industries

Mark D. Ketchum, age 58, has been President & Chief Executive Officer of the Company since October 16, 2005. From 1999 to 2004, Mr. Ketchum was President, Global Baby and Family Care of The Procter & Gamble Company. Mr. Ketchum joined Procter & Gamble in 1971, and thereafter served in a variety of roles, including Vice President and General Manager—Tissue/Towel from 1990 to 1996 and President—North American Paper Sector from 1996 to 1999. Mr. Ketchum is also a director of Kraft Foods, Inc. (a global manufacturer and marketer of packaged foods and beverages)

William D. Marohn, age 68, has been Chairman of the Board of the Company since May 2004. He retired in December 1998 as Vice Chairman of the Board of Whirlpool Corporation (a manufacturer and marketer of major home appliances), a post he held since February 1997. From 1992 to 1997, Mr. Marohn served as the President and Chief Operating Officer of Whirlpool Corporation. From January to October 1992, he was President of Whirlpool Europe, B.V. From 1989 to 1991, Mr. Marohn served as Executive Vice President of Whirlpool’s North American Operations, and from 1987 to March 1989 he was President of Whirlpool’s Kenmore Appliance Group. Prior to retirement, Mr. Marohn had been associated with Whirlpool since 1964

Raymond G. Viault, age 63, retired in January 2005 as Vice Chairman of General Mills, Inc. (a manufacturer and marketer of consumer food products), a post he held since 1996. From 1990 to 1996, Mr. Viault was President of Kraft Jacobs Suchard in Zurich, Switzerland. Mr. Viault was with Kraft General Foods for a total of 20 years, serving in a variety of major marketing and general management positions. Mr. Viault is also a director of VF Corp. (an apparel company), Safeway Inc. (a food and drug retailer), and Cadbury Schweppes plc (a manufacturer and marketer of foods and beverages)

Scott S. Cowen, age 61, has been the President of Tulane University and Seymour S. Goodman Memorial Professor of Business since 1998. From 1984 to 1998, Dr. Cowen served as Dean and Albert J. Weatherhead, III Professor of Management, Weatherhead School of Management, Case Western Reserve University. Prior to his departure in 1998, Dr. Cowen had been associated with Case Western Reserve University in various capacities since 1976. Dr. Cowen is also a director of American Greetings Corp. (a manufacturer of greeting cards and related merchandise), Forest City Enterprises (a real estate developer) and Jo-Ann Stores (an operator of retail fabric shops)

Cynthia A. Montgomery, age 55, is the Timken Professor of Business Administration and Chair of the Strategy Unit at the Harvard University Graduate School of Business, where she has served on the faculty since 1989. Prior thereto, Dr. Montgomery was a Professor at the Kellogg School of Management at Northwestern University from 1985 to 1989. Dr. Montgomery also serves on the Board of Directors of Black Rock Mutual Funds, Harvard Business School Publishing, and McLean Hospital

Michael A. Todman, age 50, has been President, Whirlpool North America since June 2007 and a member of the Board of Directors of Whirlpool Corporation (a manufacturer and marketer of major home appliances) since January 1, 2006. He served as President, Whirlpool International from January 2006 to June 2007 and served as Executive Vice President and President of Whirlpool Europe from October 2001 to January 2006. From March 2001 to October 2001, he served as Executive Vice President, North America of Whirlpool Corporation. From 1993 to 1999, Mr. Todman served in a number of roles at Whirlpool, including Senior Vice President, Sales and Marketing, North America; Vice President, Sears Sales and Marketing; Vice President, Product Management; Controller of North America; Vice President, Consumer Services, Whirlpool Europe; General Manager, Northern Europe; and Director, Finance, United Kingdom. Prior to joining Whirlpool, Mr. Todman held a variety of leadership positions at Wang Laboratories, Inc. and Price Waterhouse and Co.

Thomas E. Clarke, age 57, has been President of New Business Ventures of Nike, Inc. (a designer, developer and marketer of footwear, apparel, equipment and accessory products) since 2001. Dr. Clarke joined Nike, Inc. in 1980. He was appointed divisional Vice President in charge of marketing in 1987, corporate Vice President in 1989, General Manager in 1990, and served as President and Chief Operating Officer from 1994 to 2000. Dr. Clarke previously held various positions with Nike, Inc., primarily in research, design, development and marketing

Domenico De Sole, age 64, has been the Chairman of Tom Ford International since 2005. Prior thereto he was President and Chief Executive Officer of Gucci Group NV, and Chairman of the Group’s Management Board, a post he held from 1995 to 2004. From 1984 to 1994, Mr. De Sole served as Chief Executive Officer of Gucci America. Prior thereto, Mr. De Sole was a partner with Patton Boggs & Blow (a law firm) from 1970 to 1984. Mr. De Sole also serves on the Board of Directors of Telecom Italia S.p.A., GAP, Inc., Ermenegildo Zegna, and is a Member of the Advisory Board of Harvard Law School

Elizabeth Cuthbert-Millett, age 51, has been a private investor for more than five years

Steven J. Strobel, age 50, was Senior Vice President—Treasurer of Motorola, Inc. (a wireless and broadband communications company) from June 2007 to March 2008. He served as Motorola’s Senior Vice President—Corporate Controller from 2003 to June 2007. From 2000 to 2003, Mr. Strobel was Vice President—Finance and Treasurer for Owens Corning (a manufacturer and marketer of building material and composites systems). From 1996 to 1999, Mr. Strobel served as Owens Corning’s Vice President—Corporate Controller. From 1986 to 1996, Mr. Strobel served in a number of roles with Kraft Foods, a former division of Philip Morris Companies, Inc. (a manufacturer and marketer of consumer products). While at Kraft, he held various financial positions, including Vice President, Finance, Kraft Grocery Products Division; Vice President and Controller, Kraft USA Operations; and Chief Financial Officer, Kraft Foods Canada

MANAGEMENT DISCUSSION FROM LATEST 10K

The Company’s vision is to become a global company of Brands That Matter TM and great people, known for best-in-class results. The Company remains committed to investing in strategic brands and new product development, strengthening its portfolio of businesses, reducing its supply chain costs and streamlining non-strategic selling, general and administrative expenses (SG&A).
The key tenets of the Company’s strategy include building large, consumer-meaningful brands (“Brands That Matter TM ”), leveraging one Newell Rubbermaid, achieving a best total cost position and commercializing innovation across the enterprise. The Company’s results depend on the ability of its individual business units to succeed in their respective categories, each of which has some unique consumers, customers and competitors. The Company’s strategic initiatives are designed to help enable these business units generate differentiated products, operate within a best-in-class cost structure and employ superior branding in order to realize premium margins on their products. The business units use the premium margins to fund incremental demand creation initiatives, driving incremental sales and profits for the Company.
The following section details the Company’s performance in each of its transformational initiatives:
Create Consumer-Meaningful Brands
The Company is continuing to move from its historical focus on push marketing and excellence in manufacturing and distributing products, to a new focus on consumer pull marketing and creating competitive advantage through better understanding its consumers, innovating to deliver great performance, investing in advertising and promotion to create demand and leveraging its brands in adjacent categories around the world. This effort is creating and expanding core competencies and processes centered on consumer understanding, innovation and demand creation, to drive sustainable top line growth. The Company’s progress in implementing this brand building and marketing initiative is exhibited by the following:

The Company’s Tools & Hardware segment achieved low single digit sales growth in 2007, due largely to continued strength in its international Irwin and Lenox businesses. One of the primary drivers of the growth in the Lenox business is its marketing efforts and the expansion of its team of trained professionals who work with end users to educate them on the benefits, use, installation, and servicing of its band saws.


In the Company’s Beauty and Style business, Goody has introduced a major marketing campaign to support the introduction of its innovative Styling Therapy line of brushes that are infused with special substances that help control dandruff, add shine, and protect hair color. Sales of Styling Therapy products have doubled since the launch of the consumer driven advertising and promotion campaign.


In the Company’s Office Products segment, the Dymo labeling technology business’ sales have increased in 2007 due largely to aggressive television marketing campaigns in Europe. Additionally, the Office Products segment is launching the Sharpie Ultra Fine Retractable Marker in early 2008. This distinct product, developed based on consumer understanding and demand, allows for precise permanent marking and writing with an easy one-handed operation.
Leverage One Newell Rubbermaid
The Company strives to leverage the common business activities and best practices of its business units, and to build one common culture of shared values, with a focus on collaboration and teamwork. The Company continuously explores ways to leverage common functional capabilities, such as Human Resources, Information Technology, Customer Service, Supply Chain Management and Finance, to improve efficiency and reduce costs. This broad reaching initiative already includes projects such as the corporate consolidation of the distribution and transportation function and consolidating Company-wide purchasing efforts. Additionally, during 2007, the Company streamlined its organizational structure in its move to a consistent GBU structure throughout the Company. As part of the transition to the new GBU structure, the Company recently created and expanded leadership positions to identify and drive synergies across business units.
The Company also accelerated the process of creating shared services for the European businesses and is expanding the scope of shared services in the U.S and Latin America. The transition of services to the Shared Service Center in Europe is approximately 90% complete.
On October 1, 2007, the Company’s Office Products segment successfully went live with the SAP implementation for its North American operations. This SAP go-live marks the completion of the first major milestone in a multi-year rollout aimed at migrating multiple legacy systems and users to a common SAP global information platform. This will enable the Company to integrate and manage its worldwide business and reporting processes more efficiently.

Achieve Best Total Cost
The Company’s objective is to reduce the cost of manufacturing, sourcing and supplying product on an ongoing basis, and to leverage the Company’s size and scale, in order to achieve a best total cost position. Achieving best cost positions in its categories allows the Company to increase investment in strategic brand building initiatives.
Through Project Acceleration and other initiatives, the Company has made significant progress in reducing its supply chain costs and delivering productivity savings. Project Acceleration includes the closure of approximately one-third of the Company’s 64 manufacturing facilities, optimizing the Company’s geographic manufacturing footprint. Since the inception of Project Acceleration, the Company has announced the closure of 16 manufacturing facilities and expects that approximately eight additional facilities will be closed under this program. Project Acceleration is projected to result in cumulative restructuring costs of approximately $375 million to $400 million ($315 million to $340 million after tax). Approximately 67% of the costs are expected to be cash. Annualized savings are now projected to exceed $150 million upon conclusion of the project in 2009. Additionally, the Company has broadened its supply chain efforts to include the realization of efficiencies in purchasing and distribution and transportation in its move toward logistical excellence. For example, the Company has consolidated the warehousing and logistics for all product groups in the United Kingdom at a single site near Birmingham, England and has also opened a new, 400,000 square foot consolidated Newell Rubbermaid distribution center in Victorville, California.
Nurture 360º Innovation
The Company has broadened its definition of innovation beyond product invention. The Company defines innovation as the successful commercialization of invention. It is a rigorous, consumer centric process that permeates the entire development cycle. It begins with a deep understanding of how consumers interact with the Company’s brands and categories, and all the factors that drive their purchase decisions and in-use experience. That understanding must then be translated into innovative products that deliver unique features and benefits, at a best-cost position, providing the consumer with great value. Lastly, innovating how and where to create awareness and trial use, and measuring the effectiveness of advertising and promotion spending, completes the process. The Company has pockets of excellence using this expanded definition of innovation, and continues to build on this competency in its effort to create consumer meaningful brands. Since the beginning of 2007, the Company has launched a number of innovative new products including the Sharpie ® Chisel Tip, Levolor ® Roman Shades, Lenox ® Diamond™ saw blades, Graco ® iMonitor™, and the Rubbermaid ® Premier line of premium food storage containers. Additionally, the Company’s Baby and Parenting Essentials business launched the Graco Sweetpeace-Newborn Soothing Center in early 2008, which was developed based on comprehensive research, with moms and pediatric professionals, to understand what works best to calm babies.

Results of Operations — 2007 vs. 2006
Net sales for 2007 were $6,407.3 million, representing an increase of $206.3 million, or 3.3%, from $6,201.0 million for 2006. Positive currency translation contributed approximately 2.0% of the 3.3% improvement. Excluding the effects of currency translation, sales increased 1.3%. The increase was primarily related to Home & Family sales growth of 6.0% and Cleaning, Organization & Décor sales growth of 4.1%, partially offset by a decrease in Office Products sales.
Gross margin, as a percentage of net sales, for 2007 was 35.2%, or $2,257.2 million, versus 33.4%, or $2,070.0 million, for 2006. Ongoing productivity initiatives, favorable mix, and savings from Project Acceleration, which contributed approximately $45 million to gross margin, drove the 185 basis point improvement year over year, with pricing offsetting raw material inflation.
SG&A expenses for 2007 were 22.3% of net sales, or $1,430.9 million, versus 21.7% of net sales, or $1,347.0 million, for 2006. Approximately 38% of the increase is attributable to foreign currency, with the remainder due to investments in brand building, product development and other corporate initiatives, including SAP and Shared Services. These investments were partially offset by $15 million in savings from Project Acceleration and other structural overhead reductions.
The Company recorded restructuring costs of $86.0 million and $66.4 million for 2007 and 2006, respectively. The Company expects cumulative pre-tax restructuring costs of $375 to $400 million, approximately 67% of which are expected to be cash costs, over the life of the initiative, which began in 2005 and is expected to conclude in 2009. Annualized savings are projected to exceed $150 million upon completion of the project, with an approximate $60 million of savings realized in 2007, of which an estimated $45 million in savings is included in the improvement in gross margin. The Company projects an additional benefit from Project Acceleration of $60 million in 2008 and $30 million in 2009. The 2007 restructuring costs included $27.7 million of facility and other exit costs, $36.4 million of employee severance and termination benefits and $21.9 million of exited contractual commitments and other restructuring costs. Since the inception of Project Acceleration, the Company has announced the closure of 16 manufacturing facilities and expects that approximately eight additional facilities will be closed under this program. The 2006 restructuring costs included $14.9 million of facility and other exit costs, $44.7 million of employee severance and termination benefits and $6.8 million of exited contractual commitments and other restructuring costs. See Footnote 4 of the Notes to Consolidated Financial Statements for further information.
Operating income for 2007 was $740.3 million, or 11.6% of net sales, versus $656.6 million, or 10.6% of net sales, in 2006. This increase was driven by sales and gross margin expansion, partially offset by the increased investment in brand building and product development initiatives, expansion of shared services and implementation of SAP.
Net nonoperating expenses for 2007 were 1.7% of net sales, or $111.4 million, versus 2.3% of net sales, or $141.7 million, for 2006. The decrease in net nonoperating expenses was mainly attributable to a decrease in interest expense, reflecting a reduction in average debt outstanding year over year and slightly lower average borrowing rates. See Footnote 17 of the Notes to Consolidated Financial Statements for further information.
The effective tax rate was 23.8% for 2007 versus 8.6% for 2006. The change in the effective tax rate is primarily related to the $41.3 million of income tax benefits recorded in 2007 compared to $102.8 million income tax benefits recorded in 2006. The income tax benefits in 2007 and 2006 resulted from the favorable resolution of certain tax positions, the expiration of the statute of limitations on certain deductions, and the reorganization of certain legal entities in Europe. See Footnote 16 of the Notes to Consolidated Financial Statements for further information.
The loss from discontinued operations for 2007 was $12.1 million, compared to $85.7 million for 2006. The loss on the disposal of discontinued operations for 2007 was $11.9 million, net of tax, compared to a gain of $0.7 million, net of tax, for 2006. The 2007 loss related primarily to the disposal of the remaining operations of the Home Décor Europe business. The 2006 gain related primarily to the disposal of the Little Tikes business, partially offset by the loss recognized on the disposal of portions of the Home Décor Europe business. The loss from operations of discontinued operations for 2007 was $0.2 million, net of tax, compared to $86.4 million, net of tax, for 2006. The 2007 loss related only to the results of the remaining operations of the Home Décor Europe business, while the 2006 loss included a $50.9 million impairment charge to write off goodwill of the Home Décor Europe business. See Footnote 3 of the Notes to Consolidated Financial Statements for further information.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Three Months Ended June 30, 2008 vs. Three Months Ended June 30, 2007
Consolidated Operating Results:
Net sales for the three months ended June 30, 2008 were $1,825.1 million, representing an increase of $132.0 million, or 7.8%, from $1,693.1 million for the three months ended June 30, 2007. The Technical Concepts and Aprica acquisitions increased sales by $77.1 million, or 4.6%, over the prior year period. The remaining increase of $54.9 million, or 3.2%, was primarily driven by foreign currency. Double digit growth in the Rubbermaid Commercial, Rubbermaid Food and European and Asia Pacific Office Products businesses and high single digit growth in the Baby & Parenting Essentials business were largely offset by declines in the North American Office Products, Tools & Hardware and Décor businesses, which have been impacted by the weakness in the U.S. economy.

Gross margin, as a percentage of net sales, for the three months ended June 30, 2008 was 34.1%, or $623.2 million, versus 35.8%, or $605.6 million, for the three months ended June 30, 2007. The 1.7% decline in gross margins was due to significant inflation in input cost, most notably in the Company’s resin intensive businesses, as well as sourced finished goods, which was partially offset by benefits realized from ongoing productivity initiatives, savings from Project Acceleration, and favorable pricing.
SG&A expenses for the three months ended June 30, 2008 were 21.5% of net sales, or $392.9 million, versus 21.1% of net sales, or $357.3 million, for the three months ended June 30, 2007. The $35.6 million increase in SG&A expenses was driven by continued brand building investments, acquisitions and currency translation.
The Company recorded restructuring costs of $69.4 million and $15.5 million for the three months ended June 30, 2008 and 2007, respectively. The increase in restructuring costs for the three months ended June 30, 2008 compared to the prior year is primarily attributable to $36.0 million of asset impairment charges recorded for the three months ended June 30, 2008 associated with the Company’s plan to divest, downsize or exit certain product categories where resin is the primary component of cost of products sold. The second quarter 2008 restructuring costs included $50.2 million of facility and other exit costs, including the $36.0 million of asset impairment charges discussed above, $12.3 million of employee severance, termination benefits and employee relocation costs, and $6.9 million of exited contractual commitments and other restructuring costs. The second quarter 2007 restructuring costs included $6.0 million of facility and other exit costs, $7.5 million of employee severance and termination benefits and $2.0 million of exited contractual commitments and other restructuring costs. See Footnote 4 of the Notes to Condensed Consolidated Financial Statements for further information on these restructuring costs.
Operating income for the three months ended June 30, 2008 was $160.9 million, or 8.8% of net sales, versus $232.8 million, or 13.7% of net sales, for the three months ended June 30, 2007. Improvements from productivity initiatives and favorable pricing during the second quarter of 2008 were more than offset by raw material inflation, increased strategic SG&A spending related to product launches and brand building investments, and Project Acceleration asset impairment charges related to the Company’s planned exit of resin-intensive product categories.
Net nonoperating expenses for the three months ended June 30, 2008 were 2.2% of net sales, or $39.5 million, versus 1.7% of net sales, or $29.0 million, for the three months ended June 30, 2007. The $10.5 million increase in net nonoperating expenses is primarily attributable to increased interest expense during the 2008 quarter driven by additional borrowings used to fund the acquisitions of Aprica and Technical Concepts.
The effective tax rate was 23.8% for the three months ended June 30, 2008 versus 29.7% for the three months ended June 30, 2007. The 5.9% decrease in the effective tax rate for the three months ended June 30, 2008 compared to the prior year period is primarily attributable to tax rates applicable to various discrete items recorded during the applicable three month periods, including restructuring charges. The discrete items in each of the three month periods caused the effective tax rate to decline 4.9% from the three months ended June 30, 2007 to the three months ended June 30, 2008. See Footnote 8 of the Notes to Condensed Consolidated Financial Statements for further information.
Business Segment Operating Results:

Cleaning, Organization & Décor
Net sales for the three months ended June 30, 2008 were $609.9 million, an increase of $65.5 million, or 12.0%, from $544.4 million for the three months ended June 30, 2007. The Technical Concepts acquisition increased sales $40.0 million, or 7.3%. The remaining increase of $25.5 million, or 4.7%, was primarily due to strong double digit growth in the Rubbermaid Food and the Rubbermaid Commercial businesses, partially offset by softness in the Décor business.
Operating income for the three months ended June 30, 2008 was $74.5 million, or 12.2% of sales, a decrease of $6.7 million, or 8.3%, from $81.2 million for the three months ended June 30, 2007. Significant inflation in raw material costs, particularly resin, more than offset the contributions from higher sales and acquisitions during the 2008 quarter.
Office Products
Net sales for the three months ended June 30, 2008 were $612.9 million, an increase of $25.4 million, or 4.3%, from $587.5 million for the three months ended June 30, 2007. The sales improvement was driven by favorable foreign currency and low double digit growth in the segment’s European and Asia Pacific businesses in local currency, partially offset by a decline in domestic sales driven by weaker foot traffic at U.S. retailers. The European business benefited in comparison to prior year from a soft second quarter in 2007 driven mainly by service level interruptions that did not repeat this year.
Operating income for the three months ended June 30, 2008 was $102.6 million, or 16.7% of sales, a decrease of $6.4 million, or 5.9%, from $109.0 million for the three months ended June 30, 2007. Operating income declined year-over-year as improvements in sales were more than offset by raw material inflation and increased investment in strategic SG&A spending.
Tools & Hardware
Net sales for the three months ended June 30, 2008 were $322.3 million, a decrease of $2.3 million, or 0.7%, from $324.6 million for the three months ended June 30, 2007. The year-over-year decrease was primarily due to a decline in the sales of the segment’s domestic businesses, which have been affected by the decline in the U.S. residential construction market, partially offset by favorable foreign currency.
Operating income for the three months ended June 30, 2008 was $46.7 million, or 14.5% of sales, a decrease of $1.0 million, or 2.1%, from $47.7 million for the three months ended June 30, 2007, as productivity gains and favorable pricing were more than offset by raw material inflation.
Home & Family
Net sales for the three months ended June 30, 2008 were $280.0 million, an increase of $43.4 million, or 18.3%, from $236.6 million for the three months ended June 30, 2007. The Aprica acquisition increased sales $37.1 million, or 15.6%. The remaining increase of $6.3 million, or 2.7%, was attributable to new product launches and demand creation activities by the Baby & Parenting Essentials business. Year-over-year sales improvement was reduced by a 4% net sales shift from second quarter to first quarter due to the SAP implementation and the timing of certain promotional activities.
Operating income for the three months ended June 30, 2008 was $27.7 million, or 9.9% of sales, a decrease of $3.6 million, or 11.5%, from $31.3 million for the three months ended June 30, 2007, as sales improvements were more than offset by increased strategic SG&A spending for new product launches and brand building investments.

CONF CALL

Nancy O'Donnell - Vice President of Investor Relations

Thank you. Good morning everybody. Welcome to our second quarter 2008 earnings call. Joining me today are our President and Chief Executive Officer, Mark Ketchum and our Chief Financial Officer, Pat Robinson.

As usual Mark will be discussing the highlights and progress for the quarter and pat will follow with details on our financial performance and outlook for both third quarter and full year 2008. Following prepared comments we will be happy to take your questions.

A couple of items before we begin, first, let me remind you that the statements made on today's call that are not historical in nature are forward-looking statements. As such they include risk and uncertainty. Actual results may differ materially from those expressed or implied in the forward-looking-statement s. For discussion of specific risk factors that could cause actual results to differ materially please refer to our most recent quarterly report on Form 10-Q and the related exhibit 99.1 as well as the forward-looking statement information on the earnings call presentation which was posted earlier this morning on our website in the Investor Relations section.

We will also be referring to non-GAAP financial measures on the call. A reconciliation of these non GAAP measures to the most directly comparable financial measures calculated in accordance with GAAP is also available on our website.

With that covered, thank you. I will now hand it over to Mark.

Mark Ketchum - President and Chief Executive Officer

Thank you, Nancy. Good morning everyone and thanks for joining us on our call today. Our 2008 second quarter was certainly eventful, as all of you are aware we are living in some extraordinary economic times. We have soft consumer spending in several US markets exaggerated material cost inflation, insured events and uncertainty in the financial markets.

Despite the challenges, I’m proud with the progress that we are making on a number of fronts. To be clear we are not happy with our 2008 outlook. For 2008, it’s not indicative of our underlying strength or our future potential. We are a much better today than we were three to four years ago and with the actions that we are taking I’m confident we will emerge from today’s difficulties, even better positioned to win in the future.

To begin I am pleased to report Newell Rubbermaid previously announced guidance for the quarter. Total net sales rose 7.8% eclipsing high end of the guidance range we provided on the last call. Internal sales, which exclude the impact of major acquisitions rose 3.2%, slightly above expectations as a result of favorable currency exchange rates.

Growth drivers during the quarter included double-digit internal sales increases in Rubbermaid Commercial products, Rubbermaid Food businesses and our international business as far as high single-digit internal sales growth in our baby and parenting in the EU. These strong results more than offset expected sales decline in our North American writing instruments and tools part of the businesses but weak US economy continues to be a challenge.

Our overall solid top line performances validate our strategic focus on investing in innovation and building brands that matter. In fact, the strategy is even more important in a tough economy. Consumers are shopping for superior value and performance and many of our brands and our products are delivering. Tough quarter normalized earnings per share were $0.49 consistent with guidance. The decline of 12% versus last year was due primarily to lower gross margins partially offset by higher sales and lower structural SG&A.

Operating income was $230 million as compared $248 million in the prior year. Gross margin for the quarter was 34.1%, a decline of 160 basis points. We generated strong productivity savings as planned plus favorable pricing and mix but these positive will more than offset by dramatic input cost inflation particularly in our resin intensive businesses. We now expect to incur input cost inflation between $275 million and $325 million this year compared to our estimate of $170 just three months ago.

We announced two weeks ago that runaway inflation in oil and resin had permanently changed the viability of certain category and product lines. In response to this new reality we took decisive action on couple of fronts namely, strengthening our product portfolio through the exit of certain product categories plus aggressive pricing initiatives.

Let me talk about our portfolio first. Operating in today’s extremely volatile commodity environment we have felt most pressure in a few low margins, low value added product lines particularly where resin is the high percentage of the cost of the goods sold and where the consumers’ interest and paying for innovation is relatively low. In most cases these products contribute only marginally up gross margin line.

We talked to you on numerous occasions about creating a new business model in Newell Rubbermaid based on strong consumer meaningful brands. Over the past several years that strategy has led us to dramatically shrink the portion of our portfolio that falls into commodity like products from over 40% in 2003 to about 12% in 2007.

The extraordinary market conditions that we now face compel us to be even less patient in turning around or down sizing the remaining commoditized categories. Therefore, we announced we are taking definitive step to strengthen our overall portfolio, reduce our resin exposure and protect margins on our profitability. We expect to divest downsize or exit approximately $500 million in sales of selected low margin mostly resin and consumer product categories. This is not a new strategy this is an acceleration of a strategy that has already been in place.

Now the details and the exact timing of the plans have not yet been finalized, I can tell you that a significant percentage of the affected categories will be within the home products and office organization businesses. These are difficult choices because many of these products have long been associated with the iconic Rubbermaid brand. But at today’s prices, plastic is no longer the economical solutions that once was for many basic products. These steps are necessary to ensure long term growth and prosperity of Newell Rubbermaid.

The goal of these portfolio investments is to eliminate the significant swings in our performance caused by classic resin. Once our plans are completed resin input cost will be manageable in ordinary course of business like any other raw material. We will still manufacture products containing classic resin but they will be in categories where resin represents a much smaller part of the cost structure and where our brands and our innovation can support price increases whenever necessary such as Rubbermaid food storage products, Rubbermaid Commercial products and Graco. In recent years we have worked hard to create a more focused and profitable portfolio that can serve as a growth platform. We downsized the business by about 20% and we improved gross margins over 500 basis points between 2003 and 2007 through the strategy. Once we complete the new portfolio rationalization we expect gross margins to improve incrementally by over 200 basis points and EPS to increase by 5% to 10%. So, you can see that these moves are both on strategy and significant.

The other action that we are undertaking to help combat inflationary pressure is aggressive pricing, this initiative will affect a number of our product lines beginning October 1. These price increases will be substantial over 20% in some case. In addition we will initiate a new quarterly price adjustment mechanism within the resin intensive businesses. These price increases will go one way towards regaining a more reasonable margin structure in the affected categories in 2009.

As we look through the remainder of the year we have adjusted our full year 2008 normalized EPS expectations to range $1.40 to $1.60. In today’s highly volatile commodity market, it’s very difficult to predict where oil, natural gas and resin cost will be over the next six months. However, we believe we have taken an appropriately conservative approach in forecasting the range for possible outcomes.

With the low end of our guidance reflecting an even weaker consumer spending environment and a rise in the price of oil is high as $200 per barrel by the end of the year. Although we have taken our EPS target down for the year, we are holding our projected sales growth guidance to 6% to 8% and our internal sales growth forecast to 2% to 4%. Currency will account for a large part of the growth. The remaining poor sales growth is due largely to the strength of new products, market share gains and July 1st, pricing initiatives already incorporated in previous guidance.

As I mentioned earlier our ongoing focus and consumer driven innovation and strategic brand building is an important factor helping to drive top line results. For example our home and family segment sales are up high single digits year-to-date excluding acquisitions. In addition to Sweetpeace, the baby and parenting business is being propelled by the launch of the Graco Nautilus three in one car seat, which went into full distribution this month.

The Nautilus offers parents a complete car seat solution as the child grows. It converts from a five-point safety harness for small children, to a high back seat belt option for toddlers, to a backless booster seat for kids up to 100 pounds. This makes it the only forward base in car seat that child will ever need. The early sales results are very encouraging.

We have started shipping a brand new premium line of Calphalon heating electrics including products like a countertop oven, a slow cooker (inaudible) and a contact grill. This new line expands the well known Calphalon brand into a natural near-neighbor category. Consistent with the brand's heritage, we combined sleep and stylish design with intuitive controls and best-in-class heating performance. Retailer selling has been very good and we have high hopes for this launch. You can look for the new Calphalon Electrics in stores this fall.

The continued success of our food storage innovations, Produce Saver, Easy-Find Lids and Premier have helped drive double-digit year-to-date sales growth in our Rubbermaid Food Service business unit. By offering important features such as longer produced storage life, easier organization storage when not in use and stain and odor resistant, we have demonstrated our ability to bring consumers meaningful innovation to the durable food storage category and these are just a few examples.

One other news, we are pleased to report that early integration of Aprica and technical concept acquisitions is going well. The two transactions closed on April 1, and together added 4.6 point of top line growth in the second quarter. Now, we still expect dilution in 2008, we are going even more optimistic about the long term potential of these acquisitions.

Our international business continues to be a growth driver for us fueled largely by stronger results in our European office products business. Weak dollars working in our favor here but even excluding currency effect international sales rose 6% during the quarter. And lastly, we continue to make bit progress on our efforts to leverage the scale of the company and achieve best total cost.

SAP implementation and home & family has progressed smoothly and we are in the planning stages for the next go live in our organization and decor and tools and hardware segments in the fall of 2009. Our project acceleration restructuring program is still delivering as expected. With recently announced portfolio rationalizations will expand the scope and deliver increased savings now estimated at $175 million to $200 million annually and conclude the program in 2010.

So, even as I reflect in our 2008 results, I’m optimistic. The challenges we face in the volatile commodity markets and depressed macro economy are significant. But I’m encouraged by the many positives is working to drive our transformation into a best in class consumer brand in the marketing company.

Our corporate strategy of creating consumer meaningful brands, leveraging the advantage as working as one company, achieving best total cost and fostering a culture of excellence is making us a better company. The success of this strategy even in today’s challenging environment gives us the confidence to continue making the necessary investments in our brand building and other corporate initiatives to drive sustainable profitable growth.

At this point I’ll turn the call over to Pat, who will walk through the financials and details of our updated guidance before I return to provide summary comments and then take Q&A. Pat?

Pat Robinson - Chief Financial Officer

Thank you, Mark. I’ll start with our second quarter 2008 income statement on a normalized basis. The net sales for the quarter were $1.8 million up 7.8% over the last year and above the high end of our guidance of plus 6% to 7%. Internal sales which exclude the impact from the technical concepts Aprica acquisitions increased 3.2%. Foreign currency balance approximately 3 points continued strong growth in our international business and positive pricing more than offset softness in our domestic tools and hardware, office products, and the core businesses. Our international business increased approximately 17% in total and 6% in local currency. Our domestic business was down about 1% for the quarter.

From our business year perspective, double-digit growth in our Rubbermaid commercial, Rubbermaid food and European and Asia Pacific office products businesses and high single digit growth in our baby and parenting essential business lead the sales improvement for the quarter.

Gross margin for the quarter was $623 million or 34.1% net sales, about 60 basis points lower than prior year. Improvements from ongoing productivity initiatives, savings from project acceleration and favorable pricing are more than offset by significant inflation in our raw materials most notably oil and natural gas based resins as well sourced finished good.

SG&A was $393 million for the quarter up $36 million in the last year. Incremental SG&A from acquisitions, currency transmission and continued brand building investments drew the increase.

Operating income of $230 million or 12.6% of sales was down $18 million or 7% the last year. Interest expense was $11 million higher than the previous year as a result of the additional borrowings used to fund recent acquisitions.

The company’s continuing tax rate was 28.5% compared to 29.5% last year. Normalized EPS of $0.49 for the second quarter is inline with our April guidance. The company reported approximately 69 million or $0.16 per share in restructuring charges including asset impairment related to project acceleration which are not included in the continuing earnings described previously. Consistent with our press release on July 15, the company recognized aspect impairments in connection with its intention to divest, downsize or exit certain consumer product category.

I will now take a few moments to talk about our second quarter 2008 segment information. In our clean organization in the core segment, net sales increase 12% or $65 million in the last year, excluding acquisitions internal sales increased 4.7% in total and 3.4% local currency. A strong double digit growth in Rubbermaid Commercial and Rubbermaid Food was offset by softness in the core business.

Operating income for the segment was $75 million or 12.2% of net sales, a decrease of $7 million or 8%versus a year ago. Higher raw material inflation particularly resins more than offset the contribution from higher sales and acquisitions. Office products and net sales improved by 4.3% for the quarter, driven by a 4 point currency benefit. From a GVU perspective growth in the segment was led by our office technology business, which was up double digits in the quarter. From the regional perspective Europe and Asia Pacific we up below double digits in local currency, while North America was of mid single digits for last year. European comps benefited from the soft second quarter in 2007 driven by service level interruption but did not repeat this year. Operating income was $103 million or 16.7% of sales down $6 million in the last year as the drop through from increased sales was more than offset by raw material inflation and increased investment in strategic SG&A.

In our tools and hardware segment net sales were $322 million down $2 million or 1% the last year. Currency contributed 3 points to the top line. Our domestic business was down mid single-digits for the quarter as we continue to be affected by continued softness in the US residential construction market.

Operating income for the segment was $47 million or 14.5% of sales down $1 million in last year as productivity gains and favorable pricing were offset by raw material inflation.

In our Home & Family segment net sales were $280 million, an improvement of $43 million or 18.3%. Internal sales, which exclude the impact of the Aprica acquisition, grew $7 million or 2.7%. As you will recall we had approximately 400 basis points of ship from Q2 to Q1 due to our SAP implementation and the timing of certain promotional activities.

The year-to-date internal growth rate up approximately 8% is on track to deliver our full year expectation of high single digit growth in the segment.

Operating income of $28 million or 9.9% of sale was down to $3.5 million in the last year as the drop through of increased sales was more than offset by increased strategic SG&A spending for new product launches, brand building investments and the Aprica acquisition.

Turning now to our year-to-date results, net sales were $3.3 billion up approximately 6% in the last year in total and up about 3.5% on an internal basis, which includes about 3% of currency benefit. Our international business increased approximately 18% in total and 7% local currency while our domestic business was down about 1.5% year-to-date.

From our business year end perspective, double digit growth in our Rubbermaid Commercial and Rubbermaid Food businesses and high single digit growth in our home and family segment led the year-to-date sales improvement.

Gross margin for the first six months was 34.2% down 90 basis points from the prior year as significant raw material and sourced finished goods inflation more than offset positive pricing, savings from project acceleration and gains from ongoing productivity initiatives.

SG&A for the first six months was $753 million or $57 million higher than the last year driven by the technical concepts and Aprica acquisitions the impact upon foreign currency and continued investment in brand building and strategic corporate initiatives. Year-to-date operating income of $360 million or 11% of sales down to $25 million or 6% for last year.

Turning now to cash flow, operating cash flow for the first six months was a use of $121 million compared to a slowest of $173 million last year. About 40% of the decline in the front half is timing, which is expected to reverse in the back half of the year. Specifically this relates to the timing of cash tax payments as well as the timing of cash payments for accrued abilities primarily customer program accruals. About a quarter is due to a decrease in DPO to approximately 50 days this year which relates to the mix in timing of production and sourcing in each year. We expect to end the year with DPO in the high 40’s, which is consistent to where we had finished the last several years. As we reduce production in quarter four to take inventory as the system. The remainder of the first half decline is due to lower net income and higher first half inventory growth than a year ago.

As we look to the back half of the year, we are very confident that the cash flows will return to prior year levels, delivering approximately 500 million of operating cash flow. We plan to reduce the inventory to approximately the same level at December 2007, from the days on hand perspective, which will generate between 100 and 150 million in cash and approximately 50 million incremental last year.

The reversal of the cash tax and accrued liability timings issues, which negatively affected the front half of the year, will generate an incremental $100 million to $125 million compared to a year ago. Combined these will more than offset, the expected year-over-year decline in operating profit and the increase in cash restructuring payments.

In summary, we delivered approximately $500 million of operating cash flow and approximately $400 million of free cash flow after capital spending between $90 million and $100 million. From a full year perspective we now expect cash flow from operations to be between $350 and $400 million net of approximately $80 million of restructuring payments. We continue to expect full year capital expenditures between $160 million to $180 million.

Turning to the third quarter, we expect net sales to be up 6% to 7% including the impact of acquisitions and internal sales to be up between 2% and 4% driven by continued strength in our Home and Family segment, the Rubbermaid Commercial and Rubbermaid Food businesses and our international businesses.

Foreign currency benefit is expected to be about 2.5 points for the quarter. We anticipate normalized EPS for the quarter to range from $0.31 to $0.35 compared to $0.52 a year ago.

We expect raw material and sourced product inflation to increase significantly in the quarter with most of our back half pricing action expected to begin reading through in the fourth quarter. We also expect increases in year-over-year strategic SG&A spending.

As previously announced the company elected to retire and reset securities through July 2028 and cash settled to related marketing option. This election will result in a one time charge of $0.13 per share in the third quarter .It will produce a savings of approximately one and a quarter cents per share over the remaining 20 year life of the original options.

Turning to the full year outlook we continue to expect net sales to increase 6% to 8% which includes the contribution of technical concepts and Aprica, excluding these acquisitions we continue to expect internal sales growth of between 2% and 4%. We now expect foreign currency to contribute approximately 2.5 points of growth for the year.

Our sales outlook by segment has changed only slightly from our last call. We continue to expect approximately 20% total sales growth in high single digit internal growth in our home and family segment and approximately flat sales in our tools and hardware segment. We also continue to expect high single digit growth in our clean organization core segment driven by RTC acquisition as well as continued strength in a Rubbermaid Commercial and Rubbermaid Food businesses.

However, we are low in our internal sales expectation for low single digits as aggressive fourth quarter pricing actions are expected to be more than offset by related volume declines in our Rubbermaid Home products business. We also expect continued softness in our home decor business for the reminder of the year. We are increasing our office product segments internal sales guidance to be up low single digits driven by strength in our international business and favorable foreign currency of approximately 4 points for the year. We continued to experience unprecedented pressure on our gross margin from raw material sourced product inflation. We now expect gross margins to decline 100-175 basis points for the year, while we continue to see benefits as planned from project acceleration combined with ongoing productivity initiatives the reduction to our April guidance is driven by dramatically higher inflation from raw materials, primarily resin and metals.

We now estimate the impact from raw material and sourced product inflation to range from $275 million and $325 million, compared to our previous expectation of $160 million and $180 million on our April call. As you know, oil and natural gas prices increased dramatically during the second quarter with the average price of oil increase approximately 27% and the average price of natural gas increasing 31%. As a result we expect resin cost to continue to inflate to the remainder of the third quarter as we believe the recent oil and natural gas inflation has not yet fully reflected in today resin cost. As previously announce we are initiating aggressive price increases in certain of our categories in the back half of the year including those of resin, the primary cost of goods. These increases, some of which are as high as 22%, will help to offset a portion of the dramatic inflation we have experienced this year.

However, the related volume impact on our fourth quarter business will more than offset the benefit from pricing in that period. The largest impact of these pricing initiatives will come next year. Despite the continued raw material and sourced finished goods inflation we are continuing to invest in strategic SG&A at approximately the same dollar levels as we shared on the April call, while we are also continuing to reduce structural SG&A.

Consistent with our press release on July 15, we expect full year normalized EPS between $1.40 and $1.60 per share. The change in guidance is attributable to the dramatic inflationary pressures and raw material and sourced finished goods and the volume impact as we downsize and exit certain categories and right size our inventory levels accordingly. The lower end of our guidance reflects the assumption that the price of oil approaches $200 per barrel by the end of the year and an even weaker consumer spending environment by year-end.

Based on the strategic initiatives outlined in the July 15 press release we anticipate pre-tax restructuring charges of between $175 million and $225 million of $0.46 to $0.59 per share. The outlook above does not include these charges.

And before we open the call for questions, Mark has some final comments. Mark?

Mark Ketchum - President and Chief Executive Officer

Thank you, Pat. Before providing my summary comments, I’d like to thank all of our employees for their continued hard work and dedication particularly, during in difficult times.

Its also been bumpy ride for our shareholders, 2008 has proved to be a challenging year as tough as any year I have seen in my 37-year career. We have had to take some tough actions to help preserve new Rubbermaid’s ability to grow and prosper in the future.

We will continue making the changes necessary to position our company to long time sustainable shareholder value. We have demonstrated this in the past and we demonstrated again with the actions that we announced two weeks ago. Now we are dealing with some very severe near term economic pressures this year let’s not lose site of considerable progresses we have made over the past several years. Our investment is building strong consumer meaningful brands are paying off, driving top line sales growth in many of our categories to offset temporary market contraction in US tools and hardware and US office products. Our efforts to achieve best total cost are driving strong productivity and improved efficiency, which is helping to offset some of the unprecedented cost inflation.

Our margin structure in 2008 is still much healthier than it was in 2005 even after the hit from resident inflation and we will deliver another step change improvement in gross margin after executing the recently announced actions. We are collaborating more across brands and business units and sharing best practices corporate wide, which is resulting in bid for a more successful product launches. Our culture is becoming more consumer and brand centric and embracing best in class as our key benchmark. Each year we take steps to make our portfolio less commoditized, more differentiated, and more international with higher gross margins. Our strategies are delivering results and are building competitive advantage. I am confident in our ability not only to weather the current economic storm but emerge from these turbulent fines a stronger and more profitable company.

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