Newell Rubbermaid today announced solid third quarter 2012 results and reaffirmed full-year core sales, normalized operating margin, normalized earnings per share and operating cash flow guidance. The company also announced a 50 percent increase in its quarterly dividend to$0.15 per share and plans to expand its Project Renewal restructuring program. Five new work streams will generate between $180 and $225 million in incremental annualized savings by the end of the second quarter of 2015 for an incremental cash cost of $225 to $250 million.

"Our solid third quarter results represent another step toward establishing a more consistent cadence of delivery. I am encouraged by the progress we have made over the last 15 months and excited by the significant potential that lies ahead," said Michael Polk, President and Chief Executive Officer. "We have built the organization's capacity to drive delivery and drive change. We are on track to deliver the savings we committed to in the first phase of Project Renewal on time and in full. Today's announced expansion of Project Renewal will accelerate our transformation."

The company expects the expansion of Project Renewal to enable four outcomes:

• a flatter and simplified organization built around the first two pillars of the Growth Game Plan — Brand & Category Development and Best in Class Execution & Delivery,
• an accelerated release of costs, the majority of which will be invested in faster growth and the geographic expansion of our leading brands,
• a greater line of sight to earnings and operating cash flow growth while the company invests to accelerate performance, and
• a strengthened leadership team that can drive faster implementation of the Growth Game Plan.

"The actions taken today reflect an exciting set of changes and an important moment for our company. I am confident they will accelerate achievement of our Growth Game Plan ambition of creating a bigger, faster growing, more global, more profitable Newell Rubbermaid," said Polk.

Third Quarter Executive Summary

• Third quarter 2012 net sales were $1.54 billion, a decrease of 0.9 percent versus prior year results.
• Core sales, which exclude the impact of changes in foreign currency translation, grew 1.5 percent.

• Normalized diluted earnings per share were $0.47 compared with $0.45 in the prior year period; reported diluted earnings per share were $0.37 compared with a loss of $0.61 in the year-ago period.

• Operating cash flow in the quarter was $301.5 million, an improvement of $6.2 million compared with the year-ago period.
• The company announced a 50 percent quarterly dividend increase from $0.10 to $0.15, effective in the fourth quarter of 2012, bringing the payout ratio to the high end of the targeted range of 30 to 35 percent.
• The company repurchased 1.5 million shares at a cost of $25.9 million.
• The company reaffirmed its 2012 guidance for core sales growth in a range from 2 to 3 percent, normalized operating margin improvement of up to 20 basis points, normalized earnings per share of $1.63 to $1.69 and operating cash flow of $550 to $600 million.
• The company announced an expansion of its Project Renewal restructuring program. The expansion is expected to generate incremental annualized cost savings of approximately $180 to $225 million when fully implemented by the end of the second quarter of 2015. The majority of these savings will be reinvested in the business to strengthen brand building and selling capabilities in priority markets around the world. The company expects to incur incremental cash costs of $225 to $250 million and record pretax restructuring charges in the range of $250 to $275 million over the same period.

Third Quarter 2012 Operating Results

Net sales in the third quarter were $1.54 billion, a decline of 0.9 percent compared with the prior year. Core sales, which exclude 240 basis points of adverse foreign currency translation, grew 1.5 percent, driven by the Baby & Parenting and Newell Professional segments and continued growth in emerging markets.

Gross margin increased 50 basis points versus prior year to 37.9 percent as pricing and productivity more than offset the negative impact of input cost inflation.

Normalized operating margin for the quarter was 13.7 percent, flat to the prior year. Gross margin expansion was offset by an increase in SG&A expense as lower structural costs realized through Project Renewal initiatives were offset by higher strategic SG&A spending on a local currency basis and the absence of certain compensation-related benefits recognized in the prior year quarter. On a reported basis, operating margin for the quarter was 12.3 percent, compared with negative 12.4 percent last year. The prior year period included $382.6 million in asset impairment charges.

Third quarter normalized operating income was $210.7 million compared with $211.8 million in the prior year period, and reported operating income was $188.4 millioncompared with a loss of $192.2 million in the prior year period. Third quarter normalized operating income excludes $22.3 million of restructuring and restructuring-related costs incurred primarily in connection with Project Renewal and the European Transformation Plan. In 2011, normalized operating income excluded $382.6 million of impairment charges primarily related to goodwill write-downs associated with the Baby & Parenting and Hardware global business units; $17.0 million of restructuring and restructuring-related costs incurred in connection with the European Transformation Plan; and $4.4 million in incremental costs associated with the company's CEO transition.

The normalized tax rate for the quarter was 28.9 percent compared with 28.2 percent in the prior year. The reported tax rate for the quarter was 35.3 percent compared with 24.4 percent in the prior year. The year-over-year change in the reported tax rate was primarily driven by the geographical mix of earnings and discrete items recorded in each of the quarters. In the third quarter of 2012, the company's effective tax rate was increased as a result of recording certain tax contingencies and recognition of tax expense related to expiration of various worldwide statutes of limitation and audits. In the third quarter of 2011, the company recognized a tax benefit due to the reversal of certain tax contingencies due to resolution of tax audits and the expiration of various worldwide statutes of limitation.

Net income, as reported, was $108.3 million, or $0.37 per diluted share, for the third quarter. This compares with a net loss of $177.6 million, or $0.61 per diluted share, in the prior year.

Normalized earnings of $0.47 per diluted share compares with prior year normalized results of $0.45 per diluted share. The improvement was driven by lower interest and other expense and fewer shares outstanding.

For the third quarter 2012, normalized diluted earnings per share exclude $0.06 per diluted share for restructuring and restructuring-related costs associated with Project Renewal and the European Transformation Plan; income tax charges of $0.03 per diluted share attributable to certain tax contingencies, expiration of various statutes of limitation and the resolution of tax examinations; $0.01 per diluted share related to the extinguishment of debt; and a net gain of $0.01 per diluted share from discontinued operations primarily due to the receipt of funds previously in escrow related to the hand torch and solder business divestiture. For the third quarter 2011, normalized diluted earnings per share excluded $1.05 per diluted share for impairment charges primarily related to goodwill write-downs; $0.06 per diluted share for restructuring and restructuring-related costs associated with the European Transformation Plan; $0.01 per diluted share related to the incremental costs associated with the company's CEO transition; and benefits of $0.10 per diluted share resulting from the reversal of certain tax contingencies due to the expiration of various statutes of limitation. In addition, last year the company excluded from normalized income a net loss from discontinued operations of $11.2 million, or $0.04 per share, reflecting the income from discontinued operations and loss on disposal of its hand torch and solder business. (A reconciliation of the "as reported" results to "normalized" results is included below.)

The company generated operating cash flow of $301.5 million during the third quarter of 2012, compared with $295.3 million in the comparable period last year. Capital expenditures were $45.2 million in the third quarter compared with $55.1 million in the prior year.

Third Quarter 2012 Operating Segment Results

The Newell Consumer segment's net sales for the third quarter were $814.6 million, a 2.1 percent decline compared with the prior year quarter. Core sales in the segment decreased 0.4 percent. Year-to-date core sales in this segment declined 1.2 percent. The improved performance versus first half results was driven by a strong performance from the Writing and Creative Expression global business unit during the Back-to-School season. This improvement was offset by a decline in the Décor and Culinary businesses largely related to a change in merchandising strategy at a significant retail customer. Normalized operating income in the Newell Consumer segment was $141.1 million, or 17.3 percent of sales, compared with $128.8 million, or 15.5 percent of sales, in the prior year. The operating margin improvement was driven by gross margin expansion and lower SG&A expense attributable to the deferral of brand building investments from the third quarter to the fourth quarter.

The Newell Professional segment posted third quarter net sales of $535.4 million, a 1.1 percent decline from the prior year. Core sales growth for the segment was 2.5 percent against very strong core sales growth in the year ago period of 7.5 percent. Year-to-date core sales growth in this segment was 4.3 percent. The Commercial Products global business unit contributed to strong Professional core sales in North America and Latin America. Core sales in Europe, Australia and New Zealandcame in below expectations, as order patterns slowed due to macroeconomic pressures. The segment's normalized operating income was $70.6 million, or 13.2 percent of sales, as compared with $84.5 million, or 15.6 percent of sales, in the prior year. The decline in operating margin reflects the sustained investment in selling and marketing resources in our Win Bigger Professional businesses as well as sourced goods inflation.

Third quarter net sales in the Baby & Parenting segment were $185.3 million, a 5.2 percent improvement over the prior year. Core sales increased 7.8 percent, driven by continued strong performance by the Graco^® brand in North America and the Aprica^® brand in Japan. Year-to-date, the Baby & Parenting segment generated 11.2 percent core sales growth. Third quarter normalized operating income was $18.3 million, or 9.9 percent of sales, compared with $17.7 million, or 10.0 percent of sales, in the prior year.

Expansion of Project Renewal

Today, the company announced an expansion of its Project Renewal restructuring program.

The expansion of Project Renewal is expected to generate incremental annualized cost savings of approximately $180 to $225 million when fully implemented by the end of the second quarter of 2015. The majority of these savings will be reinvested in programming to accelerate growth and in strengthening brand building and selling capabilities in priority markets around the world. The company expects to incur incremental cash costs of $225 to $250 million and record pretax restructuring charges of$250 to $275 million over the same period.

Cumulative costs of the expanded Project Renewal are now expected to be $340 to $375 million pretax, with cash costs of $300 to $340 million. Project Renewal in total is expected to generate annualized costs savings of approximately $270 to $325 million by the second quarter of 2015. The company is on track to realize annualized cost savings from the first phase of Project Renewal of approximately $90 to $100 million by the first half of 2013.

The company announced five new work streams in connection with the expansion of Project Renewal. These initiatives will accelerate the release of structural costs that currently constrain the investment capacity in the business for growth. These work streams will result in slightly over a 10 percent reduction in the global workforce over the next two and a half years.

The five new work streams include:

• Organizational Simplification: The company will de-layer its top structure eliminating the two Groups (Consumer and Professional) and further consolidating the global business units from nine GBUs to six business segments — Tools, Commercial Products, Writing, Home Solutions, Baby & Parenting, and Specialty.
• EMEA Transformation: The company will leverage its new SAP-driven insights to significantly reduce complexity and cost to improve profitability in this region.
• Best Cost Finance: The company will deliver a simplified approach to decision support, transaction processing and information management by leveraging SAP and aligning resources with the Growth Game Plan.
• Best Cost Back Office: The company will achieve "One Newell" efficiencies in customer and consumer services and sourcing functions.
• Supply Chain Footprint: The company will further optimize manufacturing and distribution facilities across its global supply chain.

As part of the aforementioned Organizational Simplification, the six new segments will be defined as follows:

• Tools: Irwin® and Lenox® tools and Dymo® industrial
• Commercial Products: Rubbermaid Commercial Products® and Rubbermaid® Healthcare
• Writing: Sharpie®, Paper Mate®, Expo®, Prismacolor®, Parker® and Waterman®
• Baby & Parenting: Graco®, Aprica® and Teutonia®
• Home Solutions: Rubbermaid®, Calphalon®, Levolor®, Kirsch® and Goody®
• Specialty: Bulldog®, Ashland®, Shur-Line®, Dymo®, Endicia®, and Mimio®

The company's financial results will be reported under the new business segments beginning with the fourth quarter of 2012. Updated historical financial information reflecting the new structure will be made available within the next month.

Nine Month Results

Net sales for the nine months ended September 30, 2012 increased 0.3 percent to $4.38 billion, compared with $4.37 billion in the prior year. Core sales increased 2.2 percent for the nine months with foreign currency translation adversely impacting net sales by 1.9 percent.

Gross margin increased 50 basis points compared with prior year to 38.2 percent, as productivity gains and pricing more than offset the effect of input cost inflation.

Normalized operating margin increased 20 basis points versus prior year to 12.9 percent. Reported operating margin improved 840 basis points due to asset impairment charges in last year's results.

Normalized earnings were $1.27 per diluted share compared with $1.19 per diluted share in the prior year. For the nine months ended September 30, 2012, normalized diluted earnings per share exclude $0.18 per diluted share for restructuring and restructuring-related costs associated with Project Renewal and the European Transformation Plan; income tax charges of $0.07 per diluted share attributable to certain tax contingencies, expiration of statutes of limitation and resolution of tax examinations; $0.01 per diluted share related to the extinguishment of debt; and a net gain of $0.01 per diluted share from discontinued operations primarily related to the receipt of the escrow from the disposal of the hand torch and solder business. For the nine months ended September 30, 2011, normalized earnings per diluted share exclude $1.03 per diluted share for impairment charges primarily related to goodwill write-downs; $0.12 per diluted share for restructuring and restructuring-related costs associated with the European Transformation Plan; $0.01 per diluted share related to the incremental costs associated with the company's CEO transition; and benefits of $0.17 per diluted share resulting from the reversal of certain tax contingencies due to the expiration of various statutes of limitation. In addition, last year the company recorded a net loss from discontinued operations of $8.1 million, or $0.03 per share, reflecting the income from discontinued operations and loss on disposal of the hand torch and solder business, which was excluded from normalized earnings. (A reconciliation of the "as reported" results to "normalized" results is included below.)

Net income, as reported, was $299.4 million, or $1.02 per diluted share. This compares with $44.8 million, or $0.15 per diluted share, in the prior year.

The company generated operating cash flow of $357.2 million during the first nine months of 2012 compared with $279.8 million in the prior year. Capital expenditures were $130.2 million, compared with $151.2 million in the prior year.