Newell Rubbermaid Announces Strategic Initiatives to Reduce Commodity Exposure

Reaffirms Second Quarter Guidance and Updates Full Year 2008 Outlook

ATLANTA, July 15, 2008 /PRNewswire-FirstCall/ -- Newell Rubbermaid today announced it is implementing a number of strategic initiatives designed to reduce the company's exposure to volatile commodity markets, including a restructuring of the company's product portfolio and aggressive pricing mechanisms.

"In recent weeks, input cost inflation has accelerated dramatically, especially in resin, which is the largest single component of our cost of goods," stated Mark Ketchum, president and chief executive officer of Newell Rubbermaid. "Unfortunately we don't see this situation reversing course. In categories where resin is a high percentage of cost of goods sold and the consumer's willingness to pay for innovation is low, the economics are no longer viable. In the face of these radically changed market conditions, we are taking a number of proactive steps to reduce our exposure to volatile commodity markets, protect our margins and profitability, and strengthen our portfolio."

The company expects to rationalize its portfolio by divesting, downsizing or exiting approximately $500 million in sales of selected consumer product categories. While details of the plans will be made available when finalized, a significant percentage of the rationalization will be focused on the company's most resin-intensive product categories.

Additionally, in the areas of its business most impacted by cost inflation, the company plans to implement more aggressive pricing in the back half of 2008, with increases in some product categories as high as 22 percent. It is also initiating a new quarterly price adjustment mechanism within the company's resin-intensive businesses in North America, effective January 1, 2009. This quarterly adjustment will be based on independent industry raw material indices as well as actual changes in raw material, processing and transportation costs.

Once these initiatives are completed, the company expects the following annual benefits:

  -- a gross margin increase in excess of 200 basis points; and
  -- an EPS increase of $.05 - $.10.

Ketchum commented, "We have made considerable progress over the past several years in reducing the portion of our portfolio that is commodity-like. However, in light of the raw material hyperinflation we are experiencing, it is imperative we move rapidly to address additional product categories that cannot be differentiated sufficiently through strategic brand building to fit our business model. Our objective is to make resin inflation an ordinary issue to manage rather than the extraordinary issue it has been at various times in our history, especially recently. Put simply, the forecast for dramatically higher ongoing energy costs means that the world has changed, and we must change with it in order to maintain a healthy portfolio."

The company's ongoing Project Acceleration will be significantly expanded to include a number of actions related to the new initiatives. Restructuring costs associated with these actions, including asset impairments, are expected to fall within a range of between $80 million and $100 million ($68 million to $85 million net of tax). Approximately 45 percent of the restructuring costs are expected to be cash charges. The actions are expected to be completed within twelve months. The cumulative costs of the expanded Project Acceleration are now expected to fall within a range between $475 million and $500 million ($405 million to $425 million net of tax), with cash costs representing approximately 67 percent of the charges. Annual savings from Project Acceleration are now projected at between $175 million and $200 million once fully implemented by 2010.

"The initiatives announced today represent very difficult decisions, particularly since we expect many of the affected product categories to be associated with our iconic Rubbermaid brand," concluded Ketchum. "We are committed to taking a thoughtful, deliberate approach in executing our plans, one that is sensitive to the transition needs of affected employees, customers and suppliers. However, we strongly believe that these steps are critical to Newell Rubbermaid's long-term health and prosperity. Our shareholders have sent us a clear signal that additional change is needed. Today, we are responding with actions that, when completed, will position us as a less volatile and more profitable company, and enable us to focus on the continuing transformation of Newell Rubbermaid into a best-in-class global company of Brands That Matter."

Reaffirmation of Second Quarter Guidance and Update of Full Year Outlook

Newell Rubbermaid stated that preliminary estimates indicate net sales will be approximately $1.8 billion, up seven to eight percent compared to the previously provided guidance of six to seven percent, and internal sales are estimated to increase slightly above the high end of the previously provided guidance of two to three percent. Normalized earnings per share are expected to be in line with the previously provided guidance of $0.47 to $0.50.