Graco 2010 Annual Report Download - page 33

Newell Rubbermaid Inc. 2010 Annual Report
NEWELL RUBBERMAID 2010 Annual Report 29
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Capital expenditures were $164.7 million, $153.3 million and $157.8 million in 2010, 2009 and 2008, respectively. The largest
single capital project in all periods was the implementation of SAP, which represented $45.3 million, $47.2 million and $38.1 million
of capital expenditures for 2010, 2009 and 2008, respectively.
The Company purchased noncontrolling interests in consolidated subsidiaries for $29.2 million during 2009.
Cash used for restructuring activities is included in changes in accrued liabilities and other in the Consolidated Statements
of Cash Flows. Cash used for restructuring activities was $72.8 million, $84.0 million and $60.9 million in 2010, 2009 and 2008,
respectively, which primarily relates to employee termination benefits and relocation costs.
Financial Position
The Company is committed to maintaining a strong financial position through maintaining sufficient levels of available liquidity,
managing working capital and monitoring the Company’s overall capitalization.
• Cash and cash equivalents at December 31, 2010 were $139.6 million, and the Company had $631.0 million and $100.0 million
of borrowing capacity under its Revolver and new receivables facility, respectively.
• Working capital at December 31, 2010 was $466.1 million compared to $422.6 million at December 31, 2009, and the current
ratio at December 31, 2010 was 1.28:1 compared to 1.24:1 at December 31, 2009. The increase in working capital is primarily
due to increases in accounts receivable due to higher sales volumes and lower current portion of long-term debt due to
the completion of the Capital Structure Optimization Plan.
• The Company monitors its overall capitalization by evaluating total debt to total capitalization. Total debt to total
capitalization is defined as the sum of short- and long-term debt, less cash, divided by the sum of total debt and
stockholders’ equity, less cash. Total debt to total capitalization was 0.54:1 at December 31, 2010 and 0.56:1 at
December 31, 2009.
Over the long-term, the Company plans to continue to improve its current ratio and total debt to total capitalization by
improving operating results, managing working capital and using cash generated from operations to repay outstanding debt.
The Company has from time to time refinanced, redeemed or repurchased its debt and taken other steps to reduce its debt or
lease obligations or otherwise improve its overall financial position and balance sheet. Going forward, depending on market
conditions, its cash positions and other considerations, the Company may continue to take such actions.
Borrowing Arrangements
The Company’s Revolver expires in November 2012. In lieu of borrowings under the Revolver, the Company may use the borrowing
capacity under the Revolver to provide the committed backup liquidity required to issue commercial paper. Accordingly, commercial
paper may be issued only up to the amount available for borrowing under the Revolver. However, the Company’s current short-term
debt credit ratings and access to the credit markets may limit the Company’s ability to use the full $665.0 million of borrowing
capacity under the Revolver to issue commercial paper. The Revolver also provides for the issuance of up to $100.0 million of standby
letters of credit so long as there is a sufficient amount available for borrowing under the Revolver. As of December 31, 2010, there
were no borrowings or standby letters of credit outstanding under the Revolver, and $631.0 million of borrowing capacity was available
under the Revolver.
The Company’s 364-day receivables financing facility provides for maximum borrowings of up to $200.0 million and matures
in September 2011. As of December 31, 2010, aggregate borrowings of $100.0 million were outstanding under the facility at a
weighted-average interest rate of 1.26%, and the remaining $100.0 million was available for borrowing.
The following table presents the maximum and average daily borrowings outstanding under the Company’s short-term borrowing
arrangements during the years ended December 31, (in millions):
2010 2009
Short-term Borrowing Arrangement Maximum Average Maximum Average
Revolver $ — $ — $ 125.0 $ 6.2
Commercial paper 206.0 24.9 — —
Receivables financing facility 140.0 35.9 70.0 3.1
The indentures governing the Company’s medium-term and convertible senior notes contain usual and customary nonfinancial
covenants. The Company’s borrowing arrangements other than the medium-term and convertible senior notes contain usual and
customary nonfinancial covenants and certain financial covenants, including minimum interest coverage and maximum debt-to-
total-capitalization ratios. As defined by the agreements governing the borrowing arrangements, minimum interest coverage ratio
is computed as adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) divided by adjusted interest
expense for the four most recent quarterly periods. Generally, maximum debt-to-total-capitalization is calculated as the sum of
short-term and long-term debt, excluding the junior convertible subordinated debentures, divided by the sum of (i) total debt,
(ii) total stockholders’ equity and (iii) $550.0 million. As of December 31, 2010, the Company had complied with all covenants
under the indentures and its other borrowing arrangements, and the Company could access the full borrowing capacity available
under the Revolver and the receivables facility and utilize the $731.0 million for general corporate purposes without exceeding
the debt-to-total-capitalization limits in its financial covenants. A failure to maintain the financial covenants would impair the
Company’s ability to borrow under the Revolver and the receivables facility and may result in the acceleration of the repayment
of certain indebtedness.