Graco 2007 Annual Report Download - page 55

Newell Rubbermaid Inc. 2007 Annual Report
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Little Tikes
In September 2006, the Company entered into an agreement for the intended sale of its Little Tikes business unit to a global family and children’s entertainment
company. Little Tikes is a global marketer and manufacturer of children’s toys and furniture for consumers. The transaction closed in the fourth quarter of
2006, resulting in a gain of $16.0 million, net of tax, in 2006. This business was previously included in the Company’s Other (Home & Family) segment. The
operations of the business for 2006 and 2005 are included in loss from operations of discontinued operations in the table above. In 2005, Little Tikes had
net sales of approximately $250 million.
European Cookware
In October 2005, the Company entered into an agreement for the intended sale of its European Cookware business. The Company completed this divestiture
on January 1, 2006. This business included the brands Pyrex® (used under exclusive license from Corning Incorporated and its subsidiaries in Europe,
the Middle East and Africa only) and Vitri® and was previously included in the Company’s Other (Home & Family) segment. In connection with this
transaction, the Company recorded a loss related to the sale of $33.9 million in 2005 and an additional loss of $1.6 million upon completion of the sale in
2006. The losses are reported in the table above as loss on disposal of discontinued operations. In 2005, the European Cookware business had net sales
of approximately $115 million.
Curver
In January 2005, the Company entered into an agreement for the intended sale of the Company’s Curver business. In June 2005, the Company completed
the sale of its Curver business. The Curver business included the Company’s European indoor organization and home storage division and was previously
reported in the former Cleaning & Organization segment. The sales price, which was subject to reduction for working capital adjustments, was $5 million,
paid at closing, plus a note receivable for $5 million, payable within 12 years from closing. The Company may also receive contingent payments, up to an
aggregate maximum of $25 million, based on the adjusted earnings before interest and taxes of the Curver business for the five years ending December 31,
2009. Due to anticipated shortfalls in working capital, the Company does not expect to collect any of the $5 million note receivable. In addition, the Company
has not included the contingent payments in the calculation of the loss on disposal of discontinued operations. In connection with this transaction, the
Company recorded a loss related to the sale of $62.0 million, net of tax, in 2005. This loss is included in the gain (loss) on disposal of discontinued
operations in the table above.
FOOTNOTE 4
Restructuring Costs
Project Acceleration Restructuring Activities
In the third quarter of 2005, the Company announced a global initiative referred to as Project Acceleration aimed at strengthening and transforming the
Company’s portfolio. In connection with Project Acceleration, the Board of Directors of the Company approved a restructuring plan (the “Plan”) that
commenced in the fourth quarter of 2005. The Plan is designed to reduce manufacturing overhead to achieve best cost positions and to allow the Company
to increase investment in new product development, brand building and marketing. Project Acceleration includes the anticipated closures of approximately
one-third of the Company’s 64 manufacturing facilities, thereby optimizing the Company’s geographic manufacturing footprint. Since the Plan’s inception,
the Company has announced the closure of 16 manufacturing facilities and approximately eight additional facilities remain to be closed. In total through
December 31, 2007, the Company has recorded $203.7 million of costs related to Project Acceleration, which excludes restructuring costs associated with
discontinued operations. The Company recorded restructuring costs of $86.0 million and $66.4 million related to Project Acceleration in 2007 and 2006,
respectively. In 2005, the Company recorded restructuring costs of $72.6 million, of which $51.3 million related to Project Acceleration and $21.3 million
related to restructuring actions approved prior to the commencement of Project Acceleration (see below for details). The Plan is expected to result in
cumulative restructuring costs over the life of the initiative of approximately $375 million to $400 million ($315 million to $340 million after tax), with
between $150 million and $160 million ($120 million to $130 million after tax) expected to be incurred in 2008 (unaudited). Approximately 67% of the
cumulative costs are expected to be cash costs.