Graco 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Graco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 86

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86

Table of contents

  • Page 1

  • Page 2
    ... CLOSETS... ...CALPHALON... ...PAPER MATE... ...RUBBERMAID FOOD STORAGE...LENOX... ...GOODY... ...SHARPIE... ...PARKER... ...GRACO... ...WRITES...LABELS...DELIGHTS...SIZZLES...ORGANIZES... ...SEALS...PROTECTS...GROOMS...COOKS...EDUCATES...PAINTS...BROWNS... ...MEASURES...GRIPS...DRILLS...COVERS...

  • Page 3
    ...... ...RUBBERMAID COMMERCIAL... ...CALPHALON ELECTRIC... ...LEVOLOR... ...IRWIN... ...MIMIO... ...DYMO... ...SHUR-LINE... ...TECHNICAL CONCEPTS... ...PRESERVES...ACCESSORIZES...DECORATES...BRUSHES... ...DRAWS...COLORS...CARVES...CRADLES...STORES...MARKS...SAVES... ...WIPES...MONITORS...SANITIZES...

  • Page 4
    ......LETTER TO SHAREHOLDERS... ...MARK D. KETCHUM...PRESIDENT AND CHIEF EXECUTIVE OFFICER... The year 2009 was extraordinary in many ways: extraordinary for the depth and breadth of its economic challenges, and extraordinary for the way our employees at Newell Rubbermaid responded to it. Despite the...

  • Page 5
    ..., industrial and commercial markets. As a result, this segment reported a mid-teens-percentage decrease in core sales. Serving both retail and commercial consumers, the Office Products segment's core sales fell mid-single digits, in line with the overall Company performance. The good news is that...

  • Page 6
    ... brand-building process to work. Using consumer research, they identified container and lid organization as the number one unmet need with food storage containers. This insight led to a solution in the form of an innovative new product - Easy Find Lidsâ„¢. Rubbermaid Food Storage then commercialized...

  • Page 7
    ...BRAND NWL...BRANDS THAT MATTER...Just as strong brands leverage their attributes to create value, so too do effective companies. Here is how BRAND NWL is creating shareholder value through its portfolio of Brands That Matterâ„¢. 5

  • Page 8
    ...household, for example, is the primary decision-maker for our Home & Family brands. Though the end-user varies greatly across the portfolio, every Newell Rubbermaid brand utilizes proven research techniques to develop proprietary insights into the needs, motivations and value requirements that guide...

  • Page 9
    ...training programs designed to build long-term capabilities in marketing at every level across the organization. At the corporate level, we continue to invest in strategic SG&A initiatives, such as our global enterprise resource planning platform, SAP, which is a key enabler of best-in-class business...

  • Page 10
    ... with a majority of parts that will naturally biodegrade within about a year in soil or in a home compost. COMING SOON...MORE INNOVATIONS ...FROM BRAND NWL...Calphalon's premium line of Unisonâ„¢ gourmet cookware doubles the value by combining two non-stick surfaces in the same set - one for easy...

  • Page 11
    ...evident in market share growth across our brand portfolio. Rubbermaid Lock-its™ extend the Easy Find Lids™ system to feature locking tabs and a built-in gasket to prevent spills and keep food fresh. The Graco® Blossom™ 4-in1 Seating System is designed to adjust to a child's seating needs as...

  • Page 12
    ... to the target end-user. Today, our MARKETS brands are commercializing new products more effectively than ever. From Calphalon's partnership with leading culinary experts to Rubbermaid Food Storage's award-winning television commercials, we are supporting our brands with smart, memorable...

  • Page 13
    ...BRAND NWL... Brands That Matterâ„¢ have the power to create growth opportunities by expanding into new product categories. The acquisition of Technical Concepts (TC) expanded the platform of our Rubbermaid Commercial Products global business unit into the $2.5 billion away-from-home washroom market...

  • Page 14
    ...to parents and their babies through boutique retail outlets across North America. LATIN AMERICA The need for effective food storage and an organized kitchen is universal. With this in mind, Rubbermaid Food Storage began test marketing its line of Easy Find Lidsâ„¢ to consumers in Mexico during 2009...

  • Page 15
    ... pen" - as Product of the Year in 2009. This highly recognized award recognizes product innovation and high value for end-users. It also provides the Paper Mate® brand with value: surveys indicate the award increases visibility among consumers by 84 percent and among retail customers by 94 percent...

  • Page 16
    ... scale in recent years. These initiatives are creating best-in-class cost structures to improve our operating competitiveness and allow our brands to deliver the appropriate level of value for today's consumers. Our Project Acceleration restructuring program, which will be completed this year, is on...

  • Page 17
    ...2009 and delivered a nearly 400-basis-point increase in gross margin, as well as year-over-year increases in earnings and cash flow. Continued investments in innovation and branding, improved product mix, ongoing productivity savings and cost discipline will help drive further gross margin expansion...

  • Page 18
    ...BRANDS THAT MATTER...HOME & FAMILY... ...OFFICE PRODUCTS ...TOOLS...HARDWARE & COMMERCIAL PRODUCTS... ...BRAND NWL...16

  • Page 19
    newell Rubbermaid inc. 2009 annual Report 2009 Financial StatementS and Related inFoRmation table oF contentS Selected Financial data acquisitions of businesses Quarterly Summaries management's discussion and analysis of Financial condition and Results of operations Quantitative and Qualitative ...

  • Page 20
    newell Rubbermaid inc. 2009 annual Report Selected Financial data the following is a summary of certain consolidated financial information relating to the company as of and for the year ended december 31, (in millions, except per share data). the summary has been derived in part from, and should be...

  • Page 21
    ... the company's position in the office Products segment by expanding and enhancing the company's product lines and customer base. QuaRteRly SummaRieS Summarized quarterly data for the last two years is as follows (in millions, except per share data) (unaudited): calendar year 2009 net sales Gross...

  • Page 22
    ... product solutions that offer performance and value. to support its multi-year transformation into a best-in-class global consumer branding and marketing organization, the company has adopted a strategy that focuses on optimizing the business portfolio, building consumer-meaningful brands...

  • Page 23
    ... progress in improving capacity utilization rates to deliver productivity savings and in increasing the use of strategic sourcing partners. during the year ended december 31, 2009, the company completed or implemented a number of restructuring programs as part of Project acceleration to reduce...

  • Page 24
    ...lower product demand as well as inventory destocking at the retail level and in the commercial and industrial channels. Geographically, core sales of the company's domestic and international businesses declined approximately 6% and 11%, respectively, versus the prior year. Planned product line exits...

  • Page 25
    ...to consolidated Financial Statements for further information. the company recorded a non-cash impairment charge of $299.4 million during the fourth quarter of 2008 principally related to goodwill of certain reporting units in the tools, Hardware & commercial Products and office Products segments. no...

  • Page 26
    ... Rubbermaid inc. 2009 annual Report BUSINESS SEGMENT OPERATING RESULTS 2009 vs. 2008 Business Segment Operating Results net sales by segment were as follows for the year ended december 31, (in millions, except percentages) : 2009 Home & Family office Products tools, Hardware & commercial Products...

  • Page 27
    newell Rubbermaid inc. 2009 annual Report 2008 vs. 2007 Business Segment Operating Results net sales by segment were as follows for the year ended december 31, (in millions, except percentages) : 2008 Home & Family office Products tools, Hardware & commercial Products total net Sales $ 2,654.8 1,...

  • Page 28
    newell Rubbermaid inc. 2009 annual Report LIQUIDITY AND CAPITAL RESOURCES Cash Flows cash and cash equivalents increased (decreased) as follows for the year ended december 31, (in millions) : 2009 cash provided by operating activities cash used in investing activities cash (used in) provided by ...

  • Page 29
    ... exchange contracts on intercompany borrowings and cross-currency interest rate swaps during 2009. 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...

  • Page 30
    ...2009 annual Report Debt the company has varying needs for short-term working capital financing as a result of the seasonal nature of its business. the volume and timing of production impacts the company's cash flows and has historically involved increased production in the first quarter of the year...

  • Page 31
    ... value of each of the plan's assets and the investment returns realized on plan assets. in 2009, the company made a $75.0 million voluntary cash contribution to its primary u.S. defined benefit pension plan in order to improve the overall funded status of the plan. the company expects to contribute...

  • Page 32
    ... on interest rates and actual returns on plan assets, among other factors. as of december 31, 2009, the company had liabilities related to its unfunded and underfunded pension and postretirement benefit plans of $594.7 million. See Footnote 13 of the notes to consolidated Financial Statements for...

  • Page 33
    ...70% of the company's total goodwill. these five reporting units were as follows: baby & Parenting essentials; Rubbermaid commercial Products; industrial Products & Services; markers, Highlighters, art & office organization; and office technology. the company conducts its annual test of impairment of...

  • Page 34
    newell Rubbermaid inc. 2009 annual Report and discount rates ranging from 11% to 12%. the company concluded these three reporting units passed step one of the goodwill impairment test based on the values determined using the discounted cash flow approach. if the estimated fair value of a reporting ...

  • Page 35
    newell Rubbermaid inc. 2009 annual Report Other Long-Lived Assets the company continuously evaluates if impairment indicators related to its property, plant and equipment and other long-lived assets are present. these impairment indicators may include a significant decrease in the market price of a...

  • Page 36
    newell Rubbermaid inc. 2009 annual Report Pensions and Other Postretirement Benefits Pension and other postretirement benefit costs and liabilities are dependent on assumptions used in calculating such amounts. the primary assumptions include factors such as discount rates, health care cost trend ...

  • Page 37
    ... to transact business is the Venezuelan bolivar. through december 1, 2009, the company used the official exchange rate in Venezuela to translate its Venezuelan operations' financial statements into u.S. dollars, and using the official exchange rate, the Venezuelan operations generated net sales of...

  • Page 38
    ... set forth in this Report generally and item 1a to the company's annual Report on Form 10-K for the year ended december 31, 2009. in addition, there can be no assurance that the company has correctly identified and assessed all of the factors affecting the company or that the publicly available...

  • Page 39
    ... of programs, including periodic raw material purchases, purchases of raw materials for future delivery and customer price adjustments help the company address this risk. Where practical, the company uses derivatives as part of its risk management process. Financial Instruments in managing the...

  • Page 40
    newell Rubbermaid inc. 2009 annual Report Value at Risk the amounts shown below represent the estimated potential economic loss that the company could incur from adverse changes in either interest rates or foreign exchange rates using the value-at-risk estimation model. the value-at-risk model uses...

  • Page 41
    ..., as of december 31, 2009, the company's internal control over financial reporting is effective based on those criteria. the company's independent registered public accounting firm, ernst & young llP, has audited the financial statements prepared by the management of newell Rubbermaid inc. and the...

  • Page 42
    ... years in the period ended december 31, 2009, in conformity with u.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public company accounting oversight board (united States), newell Rubbermaid inc.'s internal control over financial reporting...

  • Page 43
    ... material respects, effective internal control over financial reporting as of december 31, 2009, based on the coSo criteria. We also have audited, in accordance with the standards of the Public company accounting oversight board (united States), the consolidated balance sheets of newell Rubbermaid...

  • Page 44
    newell Rubbermaid inc. 2009 annual Report conSolidated StatementS oF oPeRationS (Amounts in millions, except per share data) year ended december 31, net sales cost of products sold Gross margin Selling, general and administrative expenses impairment charges Restructuring costs operating income ...

  • Page 45
    newell Rubbermaid inc. 2009 annual Report conSolidated balance SHeetS (Amounts in millions, except par values) december 31, Assets current assets: cash and cash equivalents accounts receivable, net of allowances of $42.2 for 2009 and $40.6 for 2008 inventories, net deferred income taxes Prepaid ...

  • Page 46
    newell Rubbermaid inc. 2009 annual Report conSolidated StatementS oF caSH FloWS (Amounts in millions) year ended december 31, Operating Activities: net income (loss) adjustments to reconcile net income (loss) to net cash provided by operating activities: depreciation and amortization non-cash ...

  • Page 47
    ... benefits - loss on derivative instruments, including $46.3 of tax expense - total comprehensive loss cash dividends on common stock - cash dividends for noncontrolling interests - Stock-based compensation and other 0.9 Purchase of call options, net of tax - issuance and sale of warrants - discount...

  • Page 48
    ... and technical conceptsâ„¢. the company's multi-product offering consists of well-known name-brand consumer and commercial products in three business segments: Home & Family; office Products; and tools, Hardware & commercial Products. Principles of Consolidation the consolidated Financial Statements...

  • Page 49
    ... impairment test based on a discounted cash flow model, an earnings multiple or an actual sales offer received from a prospective buyer, if available. estimates critical to the company's fair value estimates using earnings multiples include the projected financial performance of the reporting unit...

  • Page 50
    ... the consolidated balance Sheets depending on the maturity of the company's cross-currency interest rate swaps and forward contracts at december 31, 2009 and 2008. the earnings impact of cash flow hedges relating to forecasted purchases of inventory is generally reported in cost of products sold to...

  • Page 51
    ... is adjusted for estimated forfeitures and is recognized on a straight-line basis over the requisite service period of the award, which is generally three to five years for stock options and three years for restricted stock, restricted stock units and performance share awards. the company estimates...

  • Page 52
    ... hygiene systems in the away-from-home washroom category. the technical concepts acquisition gives the company's Rubbermaid commercial Products business an entry into the away-from-home washroom market and fits within the company's strategy of leveraging its existing sales and marketing capabilities...

  • Page 53
    ... brand of premium strollers, car seats and other related juvenile products. the acquisition provides the opportunity for the company's baby & Parenting essentials business to broaden its presence worldwide, including expanding the scope of aprica's sales outside of asia. the closing of the purchase...

  • Page 54
    ... estimated useful life. the impairments primarily result from the consolidation of manufacturing activities as well as the increased use of sourcing partners. a summary of the company's accrued restructuring reserves for continuing operations as of and for the years ended december 31, 2009 and...

  • Page 55
    ... Rubbermaid inc. 2009 annual Report the table below shows restructuring costs recognized for Project acceleration restructuring activities for the years ended december 31, aggregated by reportable business segment (in millions) : Segment Home & Family office Products tools, Hardware & commercial...

  • Page 56
    ... was $16.9 million, and the income or cost recognized by the company related to the build-up or liquidation of liFo-based inventories in 2008 and 2007 was not material. FOOTNOTE 6 PRoPeRty, Plant & eQuiPment, net Property, plant and equipment, net consisted of the following as of december 31, (in...

  • Page 57
    ... payments paid in 2009 based on endicia's revenues. (2) For Home & Family, represents aprica ($121.5 million) and other individually immaterial acquisitions ($25.5 million); for tools, Hardware & commercial Products, represents technical concepts ($317.8 million). (3) Represents non-cash goodwill...

  • Page 58
    ... reporting units were determined using a discounted cash flow approach. no similar charges were recorded in 2009 or 2007. FOOTNOTE 8 otHeR accRued liabilitieS accrued liabilities included the following as of december 31, (in millions) : 2009 customer accruals accruals for manufacturing, marketing...

  • Page 59
    ... balance Sheet at december 31, 2009 based on their July 2028 maturity date. in July 2008, the company redeemed its $250.0 million of Reset notes due July 2028, and recorded a loss on the extinguishment of the Reset notes of $52.2 million associated with the purchase of the remarketing option...

  • Page 60
    newell Rubbermaid inc. 2009 annual Report Interest Rate Swaps as of december 31, 2009, the company had entered into fixed-for-floating interest rate swaps designated as fair value hedges. the interest rate swaps relate to $1.0 billion of the principal amount of the medium-term notes and result in ...

  • Page 61
    newell Rubbermaid inc. 2009 annual Report Receivables-Related Borrowings under a 2001 receivables facility with a financial institution, the company created a financing entity that is consolidated in the company's financial statements. under this facility, the company regularly entered into ...

  • Page 62
    ..., exposes the company to market risk related to changes in interest rates, foreign currency exchange rates and commodity prices. the company enters into interest rate swaps related to debt obligations with maturity dates ranging from five to ten years. the company uses interest rate swap agreements...

  • Page 63
    ... exchange contracts on intercompany borrowings commodity contracts location of gain (loss) recognized in income cost of products sold interest expense, net cost of products sold the company did not record any ineffectiveness related to cash flow hedges during the year ended december 31, 2009...

  • Page 64
    ... of investments during the year ended december 31, 2009. FOOTNOTE 12 commitmentS Lease Commitments the company leases manufacturing, warehouse and other facilities, real estate, transportation, and data processing and other equipment under leases that expire at various dates through the year 2020...

  • Page 65
    .... 2009 annual Report FOOTNOTE 13 emPloyee beneFit and RetiRement PlanS the company and its subsidiaries have noncontributory pension, profit sharing and contributory 401(k) plans covering substantially all of their international and domestic employees. Plan benefits are generally based on years of...

  • Page 66
    ... december 31, 2007 relating to the adoption of the measurement date provisions of relevant authoritative guidance for plans historically measured at September 30. u.S. 2009 Weighted-average assumptions used to determine benefit obligation: discount rate long-term rate of compensation increase 5.75...

  • Page 67
    ... earnings and after-tax benefit to aoci of $0.7 million recorded as of January 1, 2008. u.S. 2009 Weighted-average assumptions used to determine net periodic benefit cost: discount rate long-term rate of return on plan assets long-term rate of compensation increase 2008 2007 2009 international...

  • Page 68
    ...contracts discounted to the present using a discount rate that approximates the discount rate used to measure the associated pension plan liabilities. (4) Venture capital and partnerships are valued at net asset value, which is generally calculated using the most recent partnership financial reports...

  • Page 69
    newell Rubbermaid inc. 2009 annual Report a reconciliation of the change in the fair value measurement of the defined benefit plans' consolidated assets using significant unobservable inputs (level 3) for the year ended december 31, 2009 is as follows (in millions) : Venture capital and ...

  • Page 70
    newell Rubbermaid inc. 2009 annual Report Other Postretirement Benefit Plans Several of the company's subsidiaries currently provide retiree health care and life insurance benefits for certain employee groups. the following provides a reconciliation of benefit obligations and funded status of the ...

  • Page 71
    newell Rubbermaid inc. 2009 annual Report the weighted-average discount rate for the company's other postretirement benefit plans is developed using a spot interest yield curve based on a broad population of corporate bonds rated aa or higher. the following are the weighted-average assumptions used...

  • Page 72
    newell Rubbermaid inc. 2009 annual Report the impact of the adoption of the authoritative guidance is included in the below calculation and reconciliation of basic and diluted earnings (loss) per share for the years ended december 31, (in millions, except per share data) : 2009 numerator for basic ...

  • Page 73
    newell Rubbermaid inc. 2009 annual Report FOOTNOTE 15 StocK-baSed comPenSation the company offers stock-based compensation to its employees that includes stock options, restricted stock awards, and time-based and performance-based restricted stock units, as follows: Stock Options the company's ...

  • Page 74
    newell Rubbermaid inc. 2009 annual Report the fair value of stock option awards granted during the years ended december 31, was estimated using the black-Scholes option pricing model with the following weighted-average assumptions: 2009 Risk-free interest rate dividend yield expected volatility ...

  • Page 75
    newell Rubbermaid inc. 2009 annual Report during the year ended december 31, 2009, the company awarded approximately 1.2 million performance-based restricted stock units which entitle recipients to shares of the company's common stock at the end of a three-year vesting period if specified market ...

  • Page 76
    newell Rubbermaid inc. 2009 annual Report a reconciliation of the u.S. statutory rate to the effective income tax rate is as follows for the years ended december 31,: 2009 Statutory rate add (deduct) effect of: State income taxes, net of federal income tax effect Foreign tax credit Foreign rate ...

  • Page 77
    newell Rubbermaid inc. 2009 annual Report FOOTNOTE 17 otHeR exPenSe, net other expense, net consists of the following for the years ended december 31, (in millions) : 2009 equity in earnings currency transaction loss losses on debt extinguishment (1) other $(0.6) 2.1 4.7 0.5 $ 6.7 2008 $ (1.3) 7.3...

  • Page 78
    ... and other intangible assets. during the year ended december 31, 2009, the company recorded $32.4 million of impairments associated with plans to dispose of certain property, plant and equipment. the company generally uses projected cash flows, discounted as necessary, to estimate the fair values...

  • Page 79
    newell Rubbermaid inc. 2009 annual Report the reportable segments are as follows: Segment Home & Family description of Products infant and juvenile products such as car seats, strollers, highchairs, and playards; gourmet cookware, bakeware, cutlery and small kitchen electrics; hair care accessories...

  • Page 80
    .... 2009 annual Report Geographic Area Information 2009 net Sales united States canada europe, middle east and africa latin america asia Pacific operating income (loss) (3), (6) united States canada europe, middle east and africa latin america asia Pacific $ Property, Plant and equipment, net united...

  • Page 81
    ... the company's consolidated financial statements. in the normal course of business and as part of its acquisition and divestiture strategy, the company may provide certain representations and indemnifications related to legal, environmental, product liability, tax or other types of issues. based on...

  • Page 82
    newell Rubbermaid inc. 2009 annual Report common StocK PRice PeRFoRmance GRaPH the following common stock price performance graph compares the yearly change in the company's cumulative total stockholder returns on its common stock during the years 2005 through 2009, with the cumulative total return...

  • Page 83
    ... 2009 annual Report maRKet FoR common eQuity and Related StocKHoldeR matteRS the company's common stock is listed on the new york and chicago Stock exchanges (symbol: nWl). as of January 31, 2010, there were 15,383 stockholders of record. the following table sets forth the high and low sales prices...

  • Page 84
    ... boaRd oF diRectoRS Michael T. Cowhig chairman of the board - newell Rubbermaid inc. and Former President, Global technical and manufacturing - the Procter & Gamble company Mark D. Ketchum President and chief executive officer - newell Rubbermaid inc. Thomas E. Clarke President of new business...

  • Page 85
    ... of address should be directed to the Transfer Agent and Registrar: Computershare Investor Services P.O. Box 43036 Providence, RI 02940-3036 (877) 233-3006 www.computershare.com This annual report should be read in conjunction with Newell Rubbermaid's 2010 annual meeting proxy statement and the 2009...

  • Page 86
    Newell Rubbermaid Inc. 3 Glenlake Parkway Atlanta, GA 30328 www.newellrubbermaid.com