Graco 2009 Annual Report Download - page 28

Newell Rubbermaid Inc. 2009 Annual Report
26
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash and cash equivalents increased (decreased) as follows for the year ended December 31, (in millions):
2009 2008 2007
Cash provided by operating activities $ 602.8 $ 454.9 $ 655.3
Cash used in investing activities (149.4) (804.1) (265.6)
Cash (used in) provided by financing activities (427.0) 306.0 (266.8)
Exchange rate effect on cash and cash equivalents (23.5) (10.6) 5.3
Increase (decrease) in cash and cash equivalents $ 2.9 $ (53.8) $ 128.2
In the cash flow statement, the changes in operating assets and liabilities are presented excluding the effects of changes in foreign currency exchange
rates and the effects of acquisitions, as these do not reflect actual cash flows. Accordingly, the amounts in the cash flow statement differ from changes in
the operating assets and liabilities that are presented in the balance sheets.
Sources
Historically, the Company’s primary sources of liquidity and capital resources have included cash provided by operations, issuance of debt and use of
available borrowing facilities.
Cash provided by operating activities for 2009 was $602.8 million compared to $454.9 million for 2008. This improvement is primarily attributable to
working capital improvements, driven mainly by $243.1 million of cash provided by reducing inventories in 2009 compared to $30.9 million in 2008, and an
approximate $75.0 million decrease in payments in 2009 compared to 2008 for annual performance-based compensation, which is generally paid in the first
quarter of the year based on the previous year’s results. Cash provided by operating activities for 2009 includes a $75.0 million voluntary cash contribution
the Company made to its primary U.S. defined benefit pension plan and $126.6 million paid to settle foreign exchange contracts on intercompany financing
arrangements and cross-currency interest rate swaps. Cash provided by operating activities for 2008 reflects a $200.4 million decrease from $655.3 million
for 2007. The decrease is attributable primarily to lower income from continuing operations, a reduction in accounts payable, and the timing of payments of
accrued liabilities, including income taxes, partially offset by working capital reductions driven by improved collection on accounts receivable and tighter
management of inventory levels.
The Company received proceeds of $827.3 million, $1,318.0 million and $420.8 million from the issuance of debt in 2009, 2008 and 2007, respectively.
In March 2009, the Company completed the offering and sale of $300.0 million unsecured and unsubordinated notes and $345.0 million convertible senior
notes. The $624.3 million of net proceeds from these note issuances were used to complete the tender offers to repurchase $325.0 million principal amount
of medium-term notes and convertible note hedge transactions and for general corporate purposes. Also related to the issuance of the convertible senior
notes, the Company entered into warrant transactions in which the Company sold warrants to third parties for approximately $32.7 million. See Footnote 10
of the Notes to Consolidated Financial Statements for additional information on these transactions. During 2009, the Company borrowed and repaid
$70.0 million under a 364-day receivables facility that was completed in September 2009 and borrowed and repaid $125.0 million under its syndicated
revolving credit facility (the “Revolver”). In September 2008, the Company entered into a $400.0 million credit agreement, under which the Company received
an unsecured three-year term loan in the amount of $400.0 million (the “Term Loan”). Net proceeds from the Term Loan were used to repay outstanding
commercial paper and for general corporate purposes. In March 2008, the Company completed the offering and sale of senior unsecured notes, consisting
of $500.0 million in 5.50% senior unsecured notes due April 2013 and $250.0 million in 6.25% senior unsecured notes due April 2018. Net proceeds from
this offering were used to fund acquisitions, repay debt, and for general corporate purposes. Proceeds from the issuance of debt in 2007 include the
issuance of commercial paper to fund acquisitions and the repayment of a five-year, $250.0 million medium-term note that matured in 2007.
Uses
Historically, the Company’s primary uses of liquidity and capital resources have included acquisitions, dividend payments, capital expenditures and
payments on debt.
The Company made aggregate payments on short- and long-term debt of $1,113.0 million, $772.5 million and $478.3 million during 2009, 2008 and 2007,
respectively. The $1,113.0 million of repayments in 2009 includes $329.7 million used to complete tender offers to repurchase $180.1 million principal amount
of the $250.0 million medium-term notes due December 2009 and $144.9 million principal amount of the $250.0 million medium-term notes due May 2010
(the “Tender Offers”), the $448.0 million repayment of the floating-rate note issued under the Company’s 2001 receivables facility, the repayment of $125.0 million
of borrowings under the Revolver, a $50.0 million principal payment on the Term Loan, and the repayment of the remaining $69.9 million principal amount
outstanding of the $250.0 million medium-term notes due December 2009. Also, as part of the convertible note hedge transactions entered into in March 2009,
the Company purchased call options from third parties for $69.0 million. See Footnote 10 of the Notes to Consolidated Financial Statements for additional
information on the call option transaction. In July 2008, the Company redeemed its $250.0 million of Reset notes due July 2028 for $302.2 million, which includes
the Company’s purchase of the remarketing option embedded in the Reset notes from a third party for $52.2 million. In July 2008, the Company also repaid
$65.0 million of its $75.0 million outstanding 6.11% medium-term notes due July 2028 in accordance with the terms of the notes. The Company utilized its
commercial paper program to fund the redemption of the Reset notes, the purchase of the remarketing option, and the repayment of the $65.0 million of