Strong Annual Gross Margin Improvement of 130 basis points
Raises Full Year 2006 Earnings Guidance
ATLANTA, Jan. 26 /PRNewswire-FirstCall/ -- Newell Rubbermaid Inc.
(NYSE: NWL) today reported its fourth quarter and full year 2005 results,
delivering continuing earnings per share for the year that exceeded its
guidance.
"The company generated strong momentum in 2005 and delivered results ahead
of our commitments," said Mark Ketchum, chief executive officer of Newell
Rubbermaid. "This momentum is critical as we begin 2006 and execute Project
Acceleration. Our team is fully engaged in driving strategic investment to
build brands, achieving a best-cost position and further strengthening the
portfolio."
Fourth Quarter Results
Income from continuing operations for the quarter ended December 31, 2005,
was $84.8 million, or $0.31 per share, compared to $120.8 million, or $0.44
per share, in the prior year. Excluding restructuring charges related to
Project Acceleration and impairment, income from continuing operations was
$113.4 million, or $0.41 per share, for the quarter ended December 31, 2005,
compared to income from continuing operations, excluding restructuring
charges, of $124.5 million, or $0.45 per share, in the prior year. A
reconciliation of the results "as reported" to results "excluding charges" is
attached to this press release.
Net sales in the fourth quarter 2005 were $1.75 billion, compared to $1.73
billion in the prior year, an increase of 1.0 percent. Internal sales, which
exclude the impact of material acquisitions and divestitures, declined 0.4
percent. Favorable pricing increased sales by 2.1 percent, offset by the
planned exit of certain low-margin product lines that reduced net sales by 2.3
percent and unfavorable foreign currency.
Gross margin for the fourth quarter 2005 improved to 29.4 percent,
compared to 29.2 percent for the prior year. The company's productivity
savings and favorable pricing offset raw material inflation.
"I am proud of the team for delivering results ahead of the commitments in
a very challenging environment," said Ketchum. "We demonstrated growth in the
'Invest' businesses and improvements to gross margin that have us encouraged
about the prospects in 2006 and beyond."
Related to Project Acceleration, the company recorded non-cash
restructuring charges of $51.3 million in the fourth quarter of 2005.
Additionally, consistent with previous guidance, the company recorded a non-
cash charge to stockholders' equity of $59.8 million in the fourth quarter
2005 to record the under-funded status of the company's pension plans, which
did not impact earnings or cash flow in 2005.
Net cash from operating activities was $190.3 million in the fourth
quarter 2005, compared to $238.2 million in the prior year. The decline was
primarily driven by a voluntary contribution of approximately $25 million to
fund one of the company's pension plans in the fourth quarter 2005. Capital
expenditures in the fourth quarter 2005 were $22.3 million compared to $26.8
million in the fourth quarter 2004. The company continued to pay a strong
dividend in the quarter of $57.8 million, or $0.21 per share.
Strengthening the Portfolio
The company continues to make progress in its initiative to strengthen its
portfolio of businesses, leveraging brand strength and product innovation in
its core portfolio and divesting non-strategic businesses. During the fourth
quarter 2005, the company completed its acquisition of DYMO, a global leader
in designing, manufacturing and marketing on-demand labeling solutions. This
transaction strengthens the company's global leadership position in the office
products market and was neutral to earnings in 2005.
In addition, during the fourth quarter 2005, the company announced its
agreement to sell its Newell Cookware Europe business, which sale closed
shortly following the quarter end, on January 3, 2006. The company recorded
a $7.8 million net loss related to this business in the fourth quarter 2005 as
part of discontinued operations.
In the second quarter of 2005, the company committed to the divestiture of
a business in the Cleaning & Organization segment. After winning several line
reviews with key retailers and identifying significant productivity
opportunities, the company decided in the fourth quarter 2005 to retain this
business, which is now reflected in continuing operations. The impact to
continuing earnings per share of this restatement was a $0.02 improvement to
the September year-to-date results, offset by a $0.01 decline in the fourth
quarter 2005, making the results of this business accretive to earnings per
share by $0.01 for the full year 2005.
Full Year Results
Income from continuing operations for the full year 2005 was $356.4
million, or $1.30 per share, compared to $70.6 million, or $0.26 per share, in
the prior year. Excluding impairment charges and restructuring charges
related to Project Acceleration, income from continuing operations for the
full year 2005 was $423.4 million, or $1.54 per share, compared to income from
continuing operations, excluding impairment and restructuring charges, of
$383.6 million, or $1.40 per share, in the prior year. A reconciliation of
the results "as reported" to results "excluding charges" is attached to this
press release.
Net sales for the full year 2005 were $6.34 billion, a decrease of 2.1
percent from $6.48 billion for the full year 2004. Internal sales declined
2.5 percent in 2005, impacted by positive pricing of 2.0 percent and favorable
foreign currency translation of 0.7 percent. These were offset by the planned
exit of certain low-margin product lines of 3.1 percent and additional
declines primarily driven by weakness in the European Window Fashions and
Little Tikes businesses.
Gross margin for the full year improved to 29.9 percent, compared to gross
margin, excluding charges, of 28.6 percent for the full year 2004. This 130
basis point improvement reflects results from the company's price increases,
productivity initiatives and improved mix of higher margin products that more
than offset record raw material inflation.
Net cash from operating activities was $641.6 million for the full year
2005, compared to $660.0 million in the prior year. Capital expenditures for
the full year 2005 were $92.2 million compared to $121.9 million in the prior
year, reflecting the company's continued decapitalization efforts. Dividends
were $231.5 million for the full year 2005.
For the full year 2005, the company recorded a net loss of $105.1 million
related to the divestitures of non-core businesses, which is reported as
discontinued operations.
Outlook
Full Year 2006
The company has revised its guidance upward and now expects diluted
earnings per share from continuing operations for the full year 2006 in the
range of $1.55 to $1.65. This outlook includes expense of approximately $0.05
per share related to the adoption of Accounting Standards No. 123 (revised)
("SFAS 123(R)"), "Share-Based Payment." SFAS 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair value. This
outlook does not include approximately $170 to $200 million ($145 to $170
million after tax) of Project Acceleration restructuring charges expected to
be incurred in 2006.
For the full year 2006, the company continues to expect internal sales
growth in the range of -1 percent to +1 percent, highlighted by internal sales
growth from its "Invest" businesses of 2 percent to 4 percent. The company
continues to expect cash from operations to be in the range of $550 to $600
million, reflecting a use of approximately $100 million of cash related to
Project Acceleration. Expenditures for property, plant and equipment are
expected to be in the range of $125 to $150 million, and dividends are
expected to be approximately $232 million for the full year 2006.
First Quarter 2006
For the first quarter 2006, the company expects diluted earnings per share
from continuing operations in the range of $0.08 to $0.13. This outlook does
not include approximately $25 to $35 million ($20 to $30 million after tax) of
Project Acceleration restructuring charges expected to be incurred in the
first quarter 2006.
The company expects internal sales growth in the range of -1 percent to 0
percent in the first quarter 2006. The company expects cash from operations
in the range of -$25 to $25 million. Expenditures for property, plant and
equipment are expected to be in the range of $30 to $40 million and dividends
are expected to be approximately $58 million for the first quarter 2006.
A reconciliation of the 2006 earnings per share outlook is as follows:
Full Year Q1 2006
Diluted earning per share from
continuing operations
(as reported): $0.98 - $1.08 ($0.01) - $0.04
Restructuring charges $0.52 - $0.62 $0.07 - $0.11
Diluted earnings per share from
continuing operations
(excluding charges): $1.55 - $1.65 $0.08 - $0.13
Conference Call
The company's fourth quarter and full year 2005 earnings conference call
is scheduled for today, January 26, 2006, at 8:30 a.m. ET. To listen to the
web cast, use the link provided under Events & Presentations in the Investor
Relations section on Newell Rubbermaid's website at
http://www.newellrubbermaid.com . Those interested in participating should
call (800) 869-2139 or internationally at (719) 867-0347 and provide
conference code 7295044.
A replay will be available approximately two hours after the call for two
weeks concluding on February 10, 2006, and may be accessed domestically at
(888) 203-1112 or internationally at (719) 457-0820. Conference call
confirmation code 7295044 is required to access the replay.
Caution Concerning Forward-Looking Statements
The statements in this press release that are not historical in nature
constitute forward-looking statements. These forward-looking statements
relate to information or assumptions about the effects of Project
Acceleration, sales, income/(loss), earnings per share, operating income or
gross margin improvements, capital and other expenditures, cash flow,
dividends, restructuring, impairment and other charges, potential losses on
divestiture, costs and cost savings and the value thereof, debt ratings, and
management's plans, projections and objectives for future operations and
performance. These statements are accompanied by words such as "expect,"
"project," "will," "enable," "estimate," and similar expressions. Actual
results could differ materially from those expressed or implied in the
forward-looking statements. Important factors that could cause actual results
to differ materially from those suggested by the forward-looking statements
include, but are not limited to, our dependence on the strength of retail
economies in various parts of the world; competition with numerous other
manufacturers and distributors of consumer products; major retailers' strong
bargaining power; changes in the prices of raw materials used by the company;
our ability to develop innovative new products and to develop, maintain and
strengthen our end-user brands; our ability to expeditiously close facilities
and move operations in the face of foreign regulations and other impediments;
our ability to implement successfully information technology solutions
throughout our organization; our ability to improve productivity and
streamline operations; our ability to complete strategic acquisitions; our
ability to integrate previously acquired businesses; the risks inherent in our
foreign operations and those factors listed in the company's most recent Form
10-Q or 10-K, including Exhibit 99.1 thereto, filed with the Securities and
Exchange Commission.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. Included
in this release is a reconciliation of these non-GAAP financial measures to
the most directly comparable financial measures calculated in accordance with
GAAP.
About the Company
Newell Rubbermaid Inc. is a global marketer of consumer and commercial
products with 2005 sales of $6.3 billion and a powerful brand family including
Sharpie(R), Paper Mate(R), DYMO(R), EXPO(R), Waterman(R), rotring(R),
Reynolds(R), Berol(R), Rolodex(R), IRWIN(R), LENOX(R), BernzOmatic(R),
Rubbermaid(R), Graco(R), Calphalon(R) and Goody(R). The company is
headquartered in Atlanta, Ga., and has approximately 30,000 employees
worldwide.
This press release and additional information about the company are
available on the company's web site at http://www.newellrubbermaid.com.
NWL-EA
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of Results "As Reported" to Results "Excluding Charges"
Three Months Ended December 31, 2005
As Excl.
Reported Charges(1) Charges
Net sales $1,749.0 $1,749.0
Cost of products sold 1,235.6 - 1,235.6
GROSS MARGIN 513.4 - 513.4
% of sales 29.4% 29.4%
Selling, general &
administrative expense 340.5 - 340.5
% of sales 19.5% 19.5%
Impairment charge (5.9) 5.9 -
Restructuring costs 51.0 (51.3) (0.3)
OPERATING INCOME 127.8 45.4 173.2
% of sales 7.3% 9.9%
Nonoperating expenses:
Interest expense, net 31.0 - 31.0
Other (22.1) - (22.1)
8.9 - 8.9
INCOME BEFORE INCOME TAXES 118.9 45.4 164.3
% of sales 6.8% 9.4%
Income taxes 34.1 16.8 50.9
Effective rate 28.7% 31.0%
INCOME FROM CONTINUING
OPERATIONS 84.8 28.6 113.4
% of sales 4.8% 6.5%
Discontinued operations, net of tax:
Net (loss) income (7.8) 7.8 -
NET INCOME $77.0 $36.4 $113.4
% of sales 4.4% 6.5%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.31 $0.10 $0.41
Diluted $0.31 $0.10 $0.41
(LOSS)EARNINGS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.03) $0.03 $ -
Diluted $(0.03) $0.03 $ -
EARNINGS PER SHARE:
Basic $0.28 $0.13 $0.41
Diluted $0.28 $0.13 $0.41
Average shares outstanding:
Basic 274.4 274.4 274.4
Diluted 274.9 274.9 274.9
Three Months Ended December 31, 2004
As Excl. YOY
Reported Charges(2) Charges % Change
Net sales $1,731.6 $1,731.6 1.0%
Cost of products sold 1,226.2 - 1,226.2
GROSS MARGIN 505.4 - 505.4 1.6%
% of sales 29.2% 29.2%
Selling, general &
administrative expense 310.4 - 310.4 9.7%
% of sales 17.9% 17.9%
Impairment charge - - -
Restructuring costs 4.9 (4.9) -
OPERATING INCOME 190.1 4.9 195.0 (11.2)%
% of sales 11.0% 11.3%
Nonoperating expenses:
Interest expense, net 29.3 - 29.3
Other (6.7) - (6.7)
22.6 - 22.6 (60.6)%
INCOME BEFORE INCOME
TAXES 167.5 4.9 172.4 (4.7)%
% of sales 9.7% 10.0%
Income taxes 46.7 1.2 47.9 6.3%
Effective rate 27.9% 27.8%
INCOME FROM CONTINUING
OPERATIONS 120.8 3.7 124.5 (8.9)%
% of sales 7.0% 7.2%
Discontinued operations,
net of tax:
Net (loss) income 3.3 (3.3) -
NET INCOME $124.1 $0.4 $124.5 (8.9)%
% of sales 7.2% 7.2%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.44 $0.01 $0.45
Diluted $0.44 $0.01 $0.45
(LOSS)EARNINGS PER SHARE
FROM DISCONTINUED
OPERATIONS:
Basic $0.01 $(0.01) $ -
Diluted $0.01 $(0.01) $ -
EARNINGS PER SHARE:
Basic $0.45 $0.00 $0.45
Diluted $0.45 $0.00 $0.45
Average shares
outstanding:
Basic 274.4 274.4 274.4
Diluted 283.5 283.5 283.5
(1) Charges excluded from "as reported" results for 2005 consist of a
$5.9 million reversal of impairment, $51.3 million of Project
Acceleration restructuring costs related to exiting certain
facilities, and a $7.8 million net loss related to discontinued
operations.
(2) Charges excluded from "as reported" results for 2004 consist of $4.9
million of restructuring costs related to exiting certain facilities
and $3.3 million in net income from discontinued operations.
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of Results "As Reported" to Results "Excluding Charges"
Twelve Months Ended December 31, 2005
As Charges(1) Excl.
Reported Charges
Net sales $6,342.5 $6,342.5
Cost of products sold 4,448.1 - 4,448.1
GROSS MARGIN 1,894.4 - 1,894.4
% of sales 29.9% 29.9%
Selling, general &
administrative expense 1,265.6 - 1,265.6
% of sales 20.0% 20.0%
Impairment charge 34.4 (34.4) -
Restructuring costs 72.2 (51.3) 20.9
OPERATING INCOME 522.2 85.7 607.9
% of sales 8.2% 9.6%
Nonoperating expenses:
Interest expense, net 127.1 - 127.1
Other (23.0) - (23.0)
104.1 - 104.1
INCOME BEFORE INCOME TAXES 418.1 85.7 503.8
% of sales 6.6% 7.9%
Income taxes 61.7 18.7 80.4
Effective rate 14.8% 16.0%
INCOME FROM CONTINUING
OPERATIONS 356.4 67.0 423.4
% of sales 5.6% 6.7%
Discontinued operations, net of tax:
Net loss (105.1) 105.1 -
NET INCOME (LOSS) $251.3 $172.1 $423.4
% of sales 4.0% 6.7%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $1.30 $0.24 $1.54
Diluted $1.30 $0.24 $1.54
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.38) $0.38 $ -
Diluted $(0.38) $0.38 $ -
EARNINGS (LOSS) PER SHARE:
Basic $0.92 $0.63 $1.54
Diluted $0.91 $0.63 $1.54
Average shares outstanding:
Basic 274.4 274.4 274.4
Diluted 274.9 274.9 274.9
Twelve Months Ended December 31, 2004
As Charges Excl. YOY
Reported (2) Charges % Change
Net sales $6,479.8 $6,479.8 (2.1)%
Cost of products sold 4,641.0 (15.3) 4,625.7
GROSS MARGIN 1,838.8 15.3 1,854.1 2.2%
% of sales 28.4% 28.6%
Selling, general &
administrative expense 1,208.8 (1.7) 1,207.1 4.8%
% of sales 18.7% 18.6%
Impairment charge 295.1 (295.1) -
Restructuring costs 44.2 (44.2) -
OPERATING INCOME 290.7 356.3 647.0 (6.0)%
% of sales 4.5% 10.0%
Nonoperating expenses:
Interest expense, net 119.3 - 119.3
Other (3.2) - (3.2)
116.1 - 116.1 (10.3)%
INCOME BEFORE INCOME TAXES 174.6 356.3 530.9 (5.1)%
% of sales 2.7% 8.2%
Income taxes 104.0 43.3 147.3 (45.4)%
Effective rate 59.6% 27.7%
INCOME FROM CONTINUING
OPERATIONS 70.6 313.0 383.6 10.4%
% of sales 1.1% 5.9%
Discontinued operations, net of tax:
Net loss (186.7) 186.7 -
NET INCOME (LOSS) $(116.1) $499.7 $383.6 10.4%
% of sales (1.8)% 5.9%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.26 $1.14 $1.40
Diluted $0.26 $1.14 $1.40
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.68) $0.68 $-
Diluted $(0.68) $0.68 $-
EARNINGS (LOSS) PER SHARE:
Basic $(0.42) $1.82 $1.40
Diluted $(0.42) $1.82 $1.40
Average shares outstanding:
Basic 274.4 274.4 274.4
Diluted 274.7 274.7 274.7
(1) Charges excluded from "as reported" results for 2005 consist of a
$34.4 million charge related to asset impairment, $51.3 million of
Project Acceleration restructuring costs related to exiting certain
facilities and a $105.1 million net loss related to discontinued
operations.
(2) Charges excluded from "as reported" results for 2004 are
restructuring, restructuring related and impairment charges and the
net loss related to discontinued operations.
These charges consist of $15.3 million in restructuring related
costs associated with product line exits (shown in cost of products
sold), $1.7 million of restructuring costs related to
relocation of property and equipment (shown in selling, general and
administrative expense), $295.1 million in asset impairment, $44.2
million of restructuring costs related to exiting
certain facilities (shown in restructuring costs), and a $186.7
million net loss related to discontinued operations.
Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
December 31, December 31,
Assets: 2005 2004
Cash and cash equivalents $115.5 $505.6
Accounts receivable, net 1,202.7 1,199.4
Inventories, net 875.9 918.0
Deferred income taxes 109.8 73.8
Prepaid expenses and other 113.4 178.4
Current assets of discontinued
operations 55.5 137.2
Total Current Assets 2,472.8 3,012.4
Other assets 185.5 186.0
Property, plant and equipment, net 971.1 1,231.9
Goodwill 2,354.7 1,823.4
Deferred income taxes 37.3 30.5
Other intangible assets, net 418.3 298.7
Non-current assets of discontinued
operations 6.1 83.9
Total Assets $6,445.8 $6,666.8
Liabilities and Stockholders' Equity:
Notes payable $4.0 $21.3
Accounts payable 647.3 637.1
Accrued compensation 155.0 136.2
Other accrued liabilities 719.5 750.9
Income taxes payable 82.5 68.8
Current portion of long-term debt 162.8 185.6
Current liabilities of discontinued
operations 26.4 71.4
Total Current Liabilities 1,797.5 1,871.3
Long-term debt 2,429.7 2,424.3
Other non-current liabilities 573.4 604.1
Long-term liabilities of discontinued
operations 2.0 2.9
Stockholders' Equity 1,643.2 1,764.2
Total Liabilities and
Stockholders' Equity $6,445.8 $6,666.8
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
For The Twelve Months Ended December 31,
2005 2004
Operating Activities:
Net income (loss) $251.3 $(116.1)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization 213.8 231.2
Impairment charges 34.4 374.0
Non-cash restructuring costs 56.2 30.9
Deferred income taxes (66.1) 108.9
Gain on sale of assets/debt
extinguishment (20.0) (9.0)
Loss on disposal of
discontinued operations 96.8 90.5
Other (23.9) (8.4)
Changes in current accounts,
excluding
the effects of acquisitions:
Accounts receivable (29.5) 161.8
Inventories 45.7 (51.9)
Accounts payable (0.7) (27.9)
Accrued liabilities and other 71.1 (105.4)
Discontinued operations 12.5 (18.6)
Net cash provided by operating
activities $641.6 $660.0
Investing Activities:
Acquisitions, net of cash acquired $(740.0) $(6.6)
Expenditures for property, plant
and equipment (92.2) (121.9)
Disposals of non-current assets
and sale of businesses 65.5 318.1
Net cash (used in) provided by
investing activities $(766.7) $189.6
Financing Activities:
Proceeds from issuance of debt $337.0 $33.9
Payments on notes payable and
long-term debt (360.1) (298.4)
Cash dividends (231.5) (231.0)
Proceeds from exercised stock
options and other (2.6) 1.4
Net cash used in financing
activities $(257.2) $(494.1)
Exchange rate effect on cash and
cash equivalents $(7.8) $5.7
(Decrease) Increase in cash and
cash equivalents (390.1) 361.2
Cash and cash equivalents at
beginning of year 505.6 144.4
Cash and cash equivalents at end
of period $115.5 $505.6
Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
For The Three Months Ended December 31,
Free Cash Flow (in millions): 2005 2004
Net cash provided by operating
activities $190.3 $238.2
Expenditures for property, plant and
equipment (22.3) (26.8)
Cash dividends (57.8) (57.7)
Free Cash Flow $110.2 $153.7
For The Twelve Months Ended December 31,
Free Cash Flow (in millions): 2005 2004
Net cash provided by operating
activities $641.6 $660.0
Expenditures for property, plant and
equipment (92.2) (121.9)
Cash dividends (231.5) (231.0)
Free Cash Flow $317.9 $307.1
(1) Free cash flow is defined as cash flow provided by operating
activities less expenditures for property, plant and equipment and
cash dividends.
SOURCE Newell Rubbermaid Inc.
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CONTACT:
Nancy de Jonge Davis, Vice President,
Investor Relations & Corporate Communications, or Cari Davidson,
Manager, Public Relations of Newell Rubbermaid Inc.,
+1-770-407-3994, or fax, +1-770-407-3983
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