Graco 2010 Annual Report Download - page 58

Newell Rubbermaid Inc. 2010 Annual Report
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54 NEWELL RUBBERMAID 2010 Annual Report
value of the shares issued in connection with the Exchange Offer, $638.0 million, increased stockholders’ equity, and the value
of the equity component of the Convertible Notes received and extinguished in the Exchange Offer, $334.4 million, reduced
stockholders’ equity during 2010. See Footnote 9 of the Notes to Consolidated Financial Statements for further information. The
Company settled the convertible note hedge and warrant transactions with the counterparties and received $369.5 million from
the counterparties for the value of the convertible note hedge and paid the counterparties $298.4 million for the warrants. See
Footnote 10 of the Notes to Consolidated Financial Statements for further information.
FOOTNOTE 4
RESTRUCTURING COSTS
European Transformation Plan
In June 2010, the Company announced a program to simplify and centralize its European business (the “European Transformation
Plan”). The European Transformation Plan includes initiatives designed to transform the European organizational structure and
processes to centralize certain operating activities, improve performance, leverage the benefits of scale and to contribute to a
more efficient and cost-effective implementation of an enterprise resource planning system in Europe, all with the aim of
increasing operating margin in the European region to at least ten percent.
The European Transformation Plan is expected to be completed in 2012 and is expected to result in cumulative restructuring
charges totaling between $40 and $45 million, substantially all of which are employee-related cash costs, including severance,
retirement, and other termination benefits and relocation costs. The Company also expects to incur an additional $70 to $75 million
of selling, general and administrative expenses to implement the European Transformation Plan. During 2010, restructuring-
related charges incurred in connection with the European Transformation Plan were $15.2 million, and these charges are included
in selling, general and administrative expenses in the Consolidated Statements of Operations and are reflected in the Europe,
Middle East and Africa operating income (loss) for 2010 in Footnote 19 of the Notes to Consolidated Financial Statements. Restructuring
charges incurred during 2010 were not material. The Company expects all restructuring and restructuring-related costs under
the European Transformation Plan to be substantially incurred by the end of the year ending December 31, 2011.
Project Acceleration
In 2005, the Company announced a global initiative referred to as Project Acceleration aimed at strengthening and transforming
the Company’s portfolio. Project Acceleration is designed to reduce manufacturing overhead, better align the Company’s distribution
and transportation processes to achieve logistical excellence, and reorganize the Company’s overall business structure to align
with the Company’s core organizing concept, the global business unit, to achieve best total cost. In July 2008, the Company
expanded Project Acceleration to include initiatives to exit certain product categories to create a more focused and more
profitable platform for growth by eliminating selected low-margin, commodity-like, mostly resin-intensive product categories
and reduce the Company’s exposure to volatile commodity markets, particularly resin. The implementation of Project Acceleration
was complete as of December 31, 2010, with cumulative restructuring costs over the life of the initiative totaling $498.4 million.
The table below summarizes the restructuring costs recognized for Project Acceleration restructuring activities for continuing
operations for the years ended December 31, (in millions):
Since Inception
Through
December 31,
2010 2009 2008 2010
Facility and other exit costs $ 6.0 $ 32.4 $ 46.1 $178.4
Employee severance, termination benefits and relocation costs 53.6 48.8 57.5 241.0
Exited contractual commitments and other 17.9 18.8 13.6 79.0
$77.5 $100.0 $117.2* $498.4
* During 2008, the Company recorded $3.1 million of restructuring charges relating to its 2001 Restructuring Plan, which is not included in the table above but is
included in total restructuring costs for the year ended December 31, 2008.
Restructuring provisions were determined based on estimates prepared at the time the restructuring actions were approved
by management, are periodically updated for changes and also include amounts recognized as incurred. Costs incurred include
cash payments and the impairment of assets associated with vacated facilities. Impairments included in restructuring charges
totaled $6.0 million, $32.4 million and $46.1 million for the years ended December 31, 2010, 2009 and 2008, respectively. The
impaired assets include vacated land and buildings, land and buildings for which a plan exists to vacate and dispose of the facility,
and machinery and equipment to be sold or otherwise disposed of prior to the end of its original estimated useful life. The
impairments primarily result from the consolidation of manufacturing activities as well as the increased use of sourcing partners.