Three-Year Strategic Growth Plan to Result in
After-Tax Charges of $295 to $340 Million
Expected Annualized Savings to Exceed $120 Million by 2008
Company Remains On-Track for Strong 2005 Earnings Performance
and Provides 2006 Guidance
ATLANTA, Sept. 15 /PRNewswire-FirstCall/ -- To fuel sustainable growth in
sales, earnings and cash flow, Newell Rubbermaid (NYSE: NWL) today announced
Project Acceleration, a three-year global initiative to strengthen and
transform its portfolio.
Through Project Acceleration, Newell Rubbermaid will:
1. Increase investment in new product development, brand building and
marketing
2. Reduce manufacturing overhead to advance plans for achieving the best
cost position
3. Strengthen the company's portfolio of businesses
Joseph Galli, chief executive officer of Newell Rubbermaid, said, "Our
goal has always been to position Newell Rubbermaid for sustainable growth
through powerful brands and innovative new products. Project Acceleration
will help us achieve our goal through increasing investments in our top-tier
brands and reducing manufacturing overhead to improve our cost
competitiveness."
The cost of implementing the three-year program is expected to result in
cumulative restructuring charges totaling between $350 and $400 million ($295
to $340 million after tax), beginning with approximately $220 to $250 million
($185 to $210 million after tax) in 2006. Approximately 60% of the
restructuring costs will be cash charges. Annualized savings are projected to
exceed $120 million upon conclusion of the program in 2008, representing an
average two-year cash payback and an estimated after-tax rate of return of
40%. Approximately $100 million of the savings are expected to benefit gross
margin, with the remaining $20 million benefiting SG&A expense.
The major elements of Project Acceleration are:
1. Increase investment in new product development, brand building and
marketing
- The company intends to fuel its global growth initiatives through
additional investments in its leadership platforms. Specifically, the
company will increase spending on consumer marketing, research &
development and international growth opportunities. Spending is
expected to increase approximately $40 million in 2006 and $150
million by the end of Project Acceleration in 2008. These investments
will enable Newell Rubbermaid to accelerate its "virtuous cycle" by
introducing innovative new products backed by power brands to support
premium pricing in the marketplace, in turn, funding demand creation,
yielding funds to fuel the entire cycle again.
- The company will accelerate the deployment of its Newell Marketing
Excellence (NWL MAX) program, a training and development initiative to
enhance its global marketing and new product development competencies.
NWL MAX will enable the company to improve critical marketing and
commercialization processes to drive internal growth.
2. Reduce manufacturing overhead to advance plans for achieving the best
cost position
- Project Acceleration includes the closure of approximately one-third of
the company's current 80 manufacturing facilities. The company
estimates these initiatives will impact more than 5,000 employees.
Upon completion of the plan, the company's geographic footprint will be
optimized.
- The company will continue to focus on its productivity program, Newell
Operational Excellence, to continuously improve quality, service and
cost. The company remains committed to an internal goal to generate 5%
in productivity savings every year.
3. Strengthen the company's portfolio of businesses
- The company continues to invest in and build a focused group of
leadership platforms, referred to as "Invest" platforms, capable of
collectively generating 3% to 5% long-term sustainable sales growth.
These platforms are Office Products, Tools and Hardware, Rubbermaid
Commercial Products, Rubbermaid Foodservice Products, Premium Kitchen,
Personal Care and Juvenile products. The company is also executing
initiatives to improve the performance of its Window Fashions, Little
Tikes and Rubbermaid Home Products platforms.
- The company will continue to evaluate strategic accretive acquisitions
to strengthen its leadership platforms. In July 2005, the company
announced it reached a definitive agreement to acquire DYMO, a global
leader in designing, manufacturing and marketing on-demand labeling
solutions. The acquisition is subject to applicable regulatory
approvals and other customary closing conditions and is expected to
close by year-end. The company expects the acquisition to be neutral to
earnings in 2005 and approximately $0.06 per share accretive in 2006.
2005 Outlook
The company expects diluted earnings per share from continuing operations
for the full year 2005 to be in the range of $1.43 to $1.48. This range
excludes a non-cash impairment charge of approximately $35 million ($0.13 per
share), related to the United Kingdom business in the company's Home Fashions
segment. This outlook also does not include total net losses reported as
discontinued operations, expected to be approximately $90 million. The
company continues to expect internal sales to decline in the range of 1% to 3%
for the full year 2005, primarily reflecting the company's strategic decision
to exit $200 million in annual revenue of low-margin product lines and the
volume impact related to its pricing strategy.
For the third quarter 2005, the company expects diluted earnings per share
from continuing operations to be in the range of $0.33 to $0.37. This range
excludes a non-cash impairment charge of approximately $35 million ($0.13 per
share), related to the United Kingdom business in the company's Home Fashions
segment. The company continues to expect internal sales to decline 0% to 2%.
A reconciliation of the 2005 earnings outlook is as follows:
Full Year Third Quarter
Diluted earnings per share from
continuing operations (as reported) $1.30 - $1.35 $0.20 - $0.24
Impairment charges $0.13 $0.13
Diluted earnings per share from
continuing operations
(excluding charges): $1.43 - $1.48 $0.33 - $0.37
For the full year 2005, the company continues to expect net cash from
operating activities to be in the range of $625 to $675 million. 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 $230 million for
the full year 2005.
2006 Outlook
The company will provide earnings per share guidance on a GAAP basis and a
proforma basis, which excludes the charges associated with Project
Acceleration. For the full year 2006, the company expects diluted earnings
per share from continuing operations to be in the range of $1.50 to $1.60.
This outlook includes the impact of the DYMO acquisition and does not include
approximately $220 to $250 million ($185 to $210 million after tax) of
restructuring charges expected to be incurred in 2006. For the full year
2006, the company expects diluted earnings per share from continuing
operations, on a GAAP basis, to be in the range of $0.77 to $0.87.
A reconciliation of the 2006 earnings outlook is as follows:
Full Year
Diluted earnings per share from
continuing operations (as reported): $0.77 - $0.87
Restructuring charges $0.68 - $0.77
Diluted earnings per share from continuing
operations (excluding charges): $1.50 - $1.60
For the full year 2006, the company expects internal sales growth of -1 %
to 1%, highlighted by internal sales growth from its leadership platforms of
2% to 4%. The company expects 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 $230 million for the full year
2006.
Analyst Day
The company will host its Analyst Day September 22, 2005, at the Equitable
Center, located at 787 Seventh Ave., New York, N.Y. Those interested in
attending should contact Newell Rubbermaid's Investor Relations Department at
(770) 407-3994 or via email at investor.relations@newellco.com to obtain
registration instructions. The event will also be web cast and the link will
be located on the investor relations section of the company's website at
http://www.newellrubbermaid.com.
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, internal 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
(including DYMO); our ability to integrate previously acquired businesses; the
risks inherent in our foreign operations and those factors listed in the
company's 2005 second quarter Form 10-Q, including Exhibit 99.1 thereto, filed
with the Securities and Exchange Commission.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. Included
in this release is a reconciliation of these non-GAAP financial measures to
the most directly comparable financial measures calculated in accordance with
GAAP.
About the Company
Newell Rubbermaid Inc. is a global marketer of consumer and commercial
products with 2004 sales of $6.5 billion and a powerful brand family including
Sharpie(R), Paper Mate(R), Waterman(R), EXPO(R), Rubbermaid(R), Calphalon(R),
Graco(R), Goody(R), BernzOmatic(R), IRWIN(R) and LENOX(R). The company is
headquartered in Atlanta, Ga., and has over 31,000 employees worldwide.
This press release and additional financial information about the company
are available on the company's website at http://www.newellrubbermaid.com.
SOURCE Newell Rubbermaid Inc.
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Related links:
http://www.newellrubbermaid.com
http://www.newellco.com
Company News On-Call:
http://www.prnewswire.com/comp/138728.html
CONTACT:
Jesse Herron, Vice President, Investor
Relations, +1-770-407-3994, or fax, +1-770-407-3983, or Nancy de
Jonge Davis, Vice President, Corporate Communications,
+1-770-407-3994, or fax, +1-770-407-3983, or Cari Davidson,
Manager, Public Relations, +1-770-407-3994, or fax,
+1-770-407-3983, all of Newell Rubbermaid Inc.
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