Thursday August 1, 6:50 am Eastern Time
Press Release
SOURCE: Newell Rubbermaid Inc.
Newell Rubbermaid's Q2 Internal Sales Growth Exceeds 5%
-- EPS Less Charges is $0.39, Up 34.5%; Reported EPS of $0.33 Up 22.2% Versus Prior Year -- Net Sales of $1.9 Billion Sets Record, Up Nearly 10% Over Q2 2001
FREEPORT, Ill., Aug. 1 /PRNewswire-FirstCall/ -- Newell Rubbermaid Inc. (NYSE: NWL - News) today announced its earnings and sales results for the second quarter.
The company's second quarter and six-month results reflect its adoption of SFAS Rule No. 142 effective January 1, 2002, which eliminates the amortization of goodwill. Amortization expense for the first six months of 2001 was $31.0 million.
Net sales in the second quarter of 2002 were a record $1.9 billion, up 9.9%, and included $78.7 million from American Tool, which was acquired in April 2002. Internal growth, which excludes the impact of material acquisitions and divestitures, was 5.3%.
"Q2 represents a breakthrough quarter for the company. Our internal growth of 5.3% is ahead of plan and a strong validation of our strategy. What is most encouraging is that internal growth encompasses all of our business groups. I am confident that our new product development and marketing efforts are generating the momentum we need to continue this trend," said Joseph Galli, Newell Rubbermaid's chief executive officer.
Mr. Galli added: "This quarter's achievement of internal sales growth is noteworthy and a milestone in our turnaround effort to transform Newell Rubbermaid into a new product and marketing driven growth company."
The company delivered internal sales growth in all business groups:
-- 3.4% at its Rubbermaid Group, led by double digit increases at
Rubbermaid Home Products as a result of successful new product rollouts
including the Slim Cooler(TM), TakeAlongs(TM) and Big Max(TM) storage
shed;
-- 7.3% at its Parker/Eldon Group, with sales of Sharpie(R) products up
34% and double digit growth at Goody;
-- 5.5% at its Levolor/Hardware Group, spurred by the rollout of a new
size-in-store window treatment program at Lowe's and;
-- 5.8% at its Calphalon/WearEver Group, fueled by a dramatic 35% growth
in sales of the Calphalon(R) product line.
The company added that its continued focus on productivity measures contributed to the improvement of gross margin of 1.2 points, excluding charges, to 27.5% in the quarter from 26.3% in the second quarter of 2001.
In April 2002, the company completed the acquisition of American Tool adding the powerful Irwin®, Vise-Grip®, Quick-Grip®, Strait-Line®, and Marathon® brands. In the second quarter, this business added $78.7 million of revenues to the company. The integration of American Tool is on plan and is expected to be earnings neutral for the year.
"Overall, we are very encouraged with the company's performance across all of our financial targets. Our productivity gains give us the opportunity to further invest in building our strong portfolio of brands. In particular, we are excited about the upcoming advertising campaigns supporting Rubbermaid®, Little Tikes®, Graco®, Colorific®, Sharpie®, and Paper Mate®.
"The launch of Rubbermaid's Stain Shield(TM) food storage containers will be the company's most impactful product offering in the second half of the year. Consumer research has been very positive and Stain Shield(TM) is supported by retailers and backed by the most significant advertising campaign behind a single product in the company's history.
"At the center of our growth strategy is our continued investment in grass roots marketing. Our in-store merchandising efforts continue to be driven by our highly successful Phoenix program. In Q3, we will add an additional 279 recruits. Our NASCAR commitment continues to be an effective part of our marketing strategy and is delivering results as seen through our internal growth performance. Additionally, in Q2 the company announced its sponsorship of the annual SkillsUSA-VICA championships, which represents an exciting opportunity to gain exposure to more than 250,000 students who represent future consumers of the company's products.
"We are reaping the benefits of the initiatives we've been aggressively pursuing over the past year and believe we are very well positioned for a strong second half," said Mr. Galli.
Excluding charges and other non-recurring items, net income in the second quarter of 2002 was $104.0 million versus $77.1 million in the second quarter 2001, a 34.9% increase. Diluted earnings per share, calculated on the same basis, were $0.39 in the second quarter of 2002 versus $0.29 in the second quarter of 2001, a 34.5% increase.
As part of its previously announced restructuring plan, the company recorded a second quarter pre-tax restructuring charge and other one-time charges of $9.7 million ($6.4 million after taxes) related primarily to severance and facility exit costs in connection with the company's streamlining initiative.
During the second quarter, the company announced that it had withdrawn plans to sell its Anchor Hocking glass business to Libbey Inc. and that it would continue to operate the business as part of its broad housewares portfolio. As a result, the company also recorded a second quarter pre-tax, one-time, non-operating charge of $13.6 million ($9.0 million after taxes) to write-off transaction related costs. The company added that Anchor Hocking achieved 15% revenue growth in the quarter and is now led by a new president and energized senior management team.
Including these restructuring and one-time charges, net income in the second quarter 2002 was $88.6 million versus $72.0 million in the second quarter 2001. Diluted earnings per share, calculated on the same basis, were $0.33 in the second quarter of 2002 versus $0.27 in the second quarter of 2001, a 22.2% increase.
The company continued to generate free cash flow in the second quarter, building on the momentum generated in 2001 and the first quarter of this year. For the quarter, the company recorded free cash flow of $55 million which is on plan. The company defines free cash flow as cash generated from operations, net of capital expenditures and dividends. The company cited improved earnings and better management of accounts payable as major contributors to cash flow.
Six-Month Results
Net sales for the first six months of 2002 were a record $3.5 billion, up 4.7% from $3.3 billion for the first six months of 2001. Internal growth, which excludes the impact of material acquisitions and divestitures, was 2.3%.
Excluding charges and other non-recurring items, net income for the first six months of 2002 was $168.0 million versus $124.5 million in the first six months of 2001. Diluted earnings per share, calculated on the same basis were $0.63 in the first six months of 2002 versus $0.47 in the first six months of 2001.
In the first six months of 2002, as part of its previously announced restructuring plan, the company recorded a pre-tax restructuring charge and other one-time charges of $29.5 million ($19.5 million after taxes) related primarily to severance and facility exit costs in connection with the company's streamlining initiative.
As previously disclosed, during the first quarter the company adopted the new accounting standard for "Goodwill and Other Intangible Assets" (SFAS Rule No. 142). As a result, the company recorded a $514.9 million one-time, after- tax, non-cash charge to write-off impaired goodwill in the first quarter.
Including these charges and the second quarter charge related to the abandoned Anchor Hocking divestiture, the company reported a diluted loss per share of $1.41 for the first six months of 2002. Diluted earnings per share were $0.41 for the first six months of 2001.
2002 Outlook
The company said that for the full year 2002, it now expects diluted earnings per share, excluding charges, to be in the range of $1.53 - $1.58, the top end of its original guidance of $1.48 - $1.58. For the third quarter 2002, the company expects diluted earnings per share, excluding charges, to be in the range of $0.42 - $0.47.
Conference Call
The company's second quarter 2002 conference call is scheduled for today, August 1 at 10:00 a.m. CT. To participate on the call, please RSVP at (402) 220-4356. A dial-in number will be provided at that time. The call also may be accessed live by listening to a webcast. To listen to the webcast, use the link provided under Investor Relations on Newell Rubbermaid's corporate home page at www.newellco.com .
A replay of the call will be available approximately two hours following the conclusion of the call through August 31, 2002 by dialing (402) 220-4356.
Forward-Looking Statements
The statements contained in this press release that are not historical in nature are forward-looking statements. Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results, and actual results could differ materially from those expressed or implied in the forward-looking statements. For a list of major factors that could cause actual results to differ materially from those projected, refer to Newell Rubbermaid's first quarter 2002 Form 10-Q Exhibit 99, filed with the Securities and Exchange Commission.
About the Company
Newell Rubbermaid Inc. is a global marketer of consumer products with 2001 sales of nearly $7 billion and a powerful brand family including Sharpie®, Paper Mate®, Parker®, Waterman®, Colorific®, Rubbermaid®, Blue Ice®, TakeAlongs(TM), Roughneck®, Calphalon®, Little Tikes®, Graco®, Levolor®, Kirsch®, Shur-Line®, BernzOmatic®, Goody®, Vise-Grip®, Quick-Grip® and Irwin®. The company is headquartered in Freeport, Illinois and employs approximately 49,000 people worldwide.
This press release and additional financial information about the company's second quarter results are available on the company's Web site at www.newellco.com .
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in millions, except per share data)
Excluding charges
Three Months Ended June 30,
2002 2001 % Change
Net sales $1,895.0 $1,724.7 9.9%
Cost of products sold 1,373.6 1,271.2
GROSS INCOME 521.4 453.5 15.0%
% of sales 27.5% 26.3%
Selling, general & administrative
expense 330.0 277.9 18.7%
% of sales 17.4% 16.1%
Restructuring costs 0.0 0.0
Goodwill amortization and other 0.0 14.2
OPERATING INCOME 191.4 161.4 18.6%
% of sales 10.1% 9.4%
Nonoperating expenses:
Interest expense 29.3 35.6
Interest income (1.1) (1.1)
Other 5.6 4.4
33.8 38.9
INCOME BEFORE TAXES 157.6 122.5 28.7%
% of sales 8.3% 7.1%
Income taxes 53.6 45.4
Effective rate 34.0% 37.0%
NET INCOME $104.0 $77.1 34.9%
% of sales 5.5% 4.5%
EARNINGS PER SHARE:
Basic $0.39 $0.29 34.8%
Diluted $0.39 $0.29 34.5%
Average shares outstanding:
Basic 267.0 266.6 0.2%
Diluted 268.0 266.8 0.4%
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in millions, except per share data)
Excluding charges
Six Months Ended June 30,
2002 2001 % Change
Net sales $3,492.0 $3,335.4 4.7%
Cost of products sold 2,544.8 2,487.0
GROSS INCOME 947.2 848.4 11.6%
% of sales 27.1% 25.4%
Selling, general & administrative
expense 625.8 541.4 15.6%
% of sales 17.9% 16.2%
Restructuring costs 0.0 0.0
Goodwill amortization and other 0.0 28.3
OPERATING INCOME 321.4 278.7 15.3%
% of sales 9.2% 8.4%
Nonoperating expenses:
Interest expense 54.4 74.9
Interest income (1.8) (2.4)
Other 14.2 8.5
66.8 81.0
INCOME BEFORE TAXES 254.6 197.7 28.8%
% of sales 7.3% 5.9%
Income taxes 86.6 73.2
Effective rate 34.0% 37.0%
NET INCOME $168.0 $124.5 34.9%
% of sales 4.8% 3.7%
EARNINGS PER SHARE:
Basic $0.63 $0.47 34.8%
Diluted $0.63 $0.47 34.5%
Average shares outstanding:
Basic 266.9 266.6 0.1%
Diluted 267.8 266.9 0.3%
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in millions, except per share data)
As Reported
Three Months Ended June 30,
2002 2001 % Change
Net sales $1,895.0 $1,724.7 9.9%
Cost of products sold 1,374.4 1,271.2
GROSS INCOME 520.6 453.5 14.8%
% of sales 27.5% 26.3%
Selling, general & administrative
expense 330.1 278.4 18.6%
% of sales 17.4% 16.1%
Restructuring costs 8.8 7.7
Goodwill amortization and other 0.0 14.2 (1.0)
OPERATING INCOME 181.7 153.2 18.6%
% of sales 9.6% 8.9 %
Nonoperating expenses:
Interest expense 29.3 35.6
Interest income (1.1) (1.1)
Other 19.2 4.4
47.4 38.9
INCOME BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 134.3 114.3 17.5%
% of sales 7.1% 6.6 %
Income taxes 45.7 42.3
Effective rate 34.0% 37.0 %
NET INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $88.6 $72.0 23.1%
% of sales 4.7% 4.2 %
Cumulative effect of accounting
change $0.0 $0.0
NET INCOME / (LOSS) $88.6 $72.0 NA
% of sales 4.7% 4.2%
EARNINGS PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE:
Basic $0.33 $0.27 22.9%
Diluted $0.33 $0.27 22.2%
EARNINGS PER SHARE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE:
Basic $- $- NA
Diluted $- $- NA
EARNINGS PER SHARE:
Basic $0.33 $0.27 22.9%
Diluted $0.33 $0.27 22.2%
Average shares outstanding:
Basic 267.0 266.6 0.2%
Diluted 268.0 266.9 0.4%
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in millions, except per share data)
As Reported
Six Months Ended June 30,
2002 2001 % Change
Net sales $3,492.0 $3,335.4 4.7%
Cost of products sold 2,552.3 2,490.1
GROSS INCOME 939.7 845.3 11.2%
% of sales 26.9% 25.3%
Selling, general & administrative
expense 629.2 543.0 15.9%
% of sales 18.0% 16.3%
Restructuring costs 18.6 17.7
Goodwill amortization and other 0.0 28.3 (1.0)
OPERATING INCOME 291.9 256.3 13.9%
% of sales 8.4% 7.7 %
Nonoperating expenses:
Interest expense 54.4 74.9
Interest income (1.8) (2.4)
Other 27.8 8.5
80.4 81.0
INCOME BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 211.5 175.3 20.7%
% of sales 6.1% 5.3 %
Income taxes 71.9 64.9
Effective rate 34.0% 37.0 %
NET INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE $139.6 $110.4 26.5%
% of sales 4.0% 3.3 %
Cumulative effect of accounting
change ($514.9) $0.0
NET INCOME / (LOSS) ($375.4) $110.4 NA
% of sales (10.7%) 3.3%
EARNINGS PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE:
Basic $0.52 $0.41 26.3%
Diluted $0.52 $0.41 25.6%
EARNINGS PER SHARE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE:
Basic $(1.93) $- NA
Diluted $(1.93) $- NA
EARNINGS PER SHARE:
Basic $(1.41) $0.41 NA
Diluted $(1.41) $0.41 NA
Average shares outstanding:
Basic 266.9 266.6 0.1%
Diluted 267.8 266.9 0.3%
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
For The Six Months Ended June 30,
2002 2001
Operating Activities:
Net income $(375.4) $110.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 146.4 167.4
Cumulative effect of change in accounting 514.9
Deferred taxes and other 57.5 13.1
Changes in current accounts, excluding the effects
of acquisitions:
Accounts receivable (53.2) (71.3)
Inventories (87.3) (26.7)
Other current assets (13.8) 14.9
Accounts payable 132.8 88.3
Accrued liabilities and other (23.3) 63.7
Net cash provided by (used in)
operating activities $298.6 $359.8
Investing activities:
Acquisitions, net $(228.8) $(16.4)
Expenditures for property, plant and equipment (101.2) (124.3)
Disposals of non-current assets and other 6.9 17.7
Net cash provided by (used in )
investing activities $(323.1) $(123.0)
Financing Activities:
Proceeds from issuance of debt $520.8 $12.7
Payments on notes payable and long-term debt (391.0) (143.5)
Proceeds from exercised stock options and other 9.4 1.0
Stock repurchase -
Cash dividends (112.1) (112.0)
Net cash provided by (used in )
financing activities $27.1 $(241.8)
Exchange rate effect on cash $0.6 $(1.8)
Increase (decrease) in cash and cash equivalents 3.2 (6.8)
Cash and cash equivalents at beginning of year 6.8 22.5
Cash and cash equivalents at end of period $10.0 $15.7
Supplemental cash flow disclosures -
Cash paid during the period for:
Income taxes $25.5 $(27.6)
Interest 41.0 81.5
Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
June 30, June 30,
Assets: 2002 2001
Cash and cash equivalents $10.1 $15.8
Accounts receivable, net 1,429.2 1,246.6
Inventories, net 1,290.7 1,271.7
Other current assets 432.5 401.9
Total Current Assets 3,162.5 2,936.0
Marketable Equity Securities 10.1
Other Long-Term Investments 77.0
Other Assets 308.8 319.9
Property, Plant and Equipment 1,776.5 1,702.0
Trade Names and Goodwill 2,149.7 2,155.7
Total Assets $7,397.5 $7,200.7
Liabilities and Stockholders' Equity:
Notes payable $30.5 $25.6
Accounts payable 655.8 429.1
Accrued liabilities and other 1,183.3 1,036.0
Current portion of long-term debt 300.2 174.0
Total Current Liabilities 2,169.8 1,664.7
Long-Term Debt 2,216.5 2,215.5
Company-Obligated Mandatorily
Redeemable
Convertible Securities of a
Subsidiary Trust 500.0 500.0
Other Long-Term Liabilities 485.4 464.1
Stockholders' Equity 2,025.8 2,356.4
Total Liabilities and
Stockholders' Equity $7,397.5 $7,200.7
SOURCE: Newell Rubbermaid Inc.
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