Graco 2009 Annual Report Download - page 29

Newell Rubbermaid Inc. 2009 Annual Report
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6.11% medium-term notes due July 2028. The remaining payments made on debt during 2008 mainly represent the payoff of commercial paper. In 2007, the
Company retired a five-year, $250 million, 6% fixed-rate note, at maturity, and made payments on commercial paper.
The Company did not invest in significant acquisitions in 2009. Cash used for acquisitions was $655.7 million and $106.0 million in 2008 and 2007,
respectively. The cash used in 2008 relates primarily to the acquisitions of Technical Concepts and Aprica, while cash used in 2007 included the acquisition
of Endicia. See Footnote 2 of the Notes to Consolidated Financial Statements for further information.
Aggregate dividends paid were $71.4 million, $234.5 million and $234.7 million in 2009, 2008 and 2007, respectively.
Capital expenditures were $153.3 million, $157.8 million and $157.3 million in 2009, 2008 and 2007, respectively. The largest single capital project in
each of 2009, 2008 and 2007 was the implementation of SAP.
The Company purchased noncontrolling interests in consolidated subsidiaries for $29.2 million during 2009.
Cash used for restructuring activities and cash used to settle foreign exchange contracts and cross-currency interest rate swaps are included in changes
in accrued liabilities and other in the Consolidated Statements of Cash Flows. Cash used for restructuring activities was $84.0 million, $60.9 million and
$53.1 million in 2009, 2008 and 2007, respectively, which primarily relates to employee termination benefits. The Company paid approximately $126.6 million
to settle foreign 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’s overall capitalization.
• Cash and cash equivalents at December 31, 2009 were $278.3 million, and the Company had $690.0 million and $188.8 million of borrowing capacity
under its Revolver and new receivables facility, respectively.
• Working capital at December 31, 2009 was $422.6 million compared to $159.7 million at December 31, 2008, and the current ratio at December 31,
2009 was 1.24:1 compared to 1.07:1 at December 31, 2008. The increase in working capital and the current ratio is primarily due to net cash realized
from the Company’s financing activities and the repayment of current maturities of debt as well as cash flows generated from operating activities.
• The Company monitors its overall capitalization by evaluating total debt to total capitalization. Total debt to total capital 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 .56:1 at December 31, 2009 and .62:1 at December 31, 2008.
The Company reduced the quarterly dividend payable on its common stock from $0.21 per share to $0.05 per share during 2009 to enhance its liquidity
and to maintain its investment-grade credit rating.
Over the long-term, the Company plans 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 debt maturities. 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
During 2009, the Company enhanced its liquidity and financial position by completing the issuance of $300.0 million of unsecured and unsubordinated
notes and $345.0 million of convertible senior notes. Proceeds from these offerings were used to complete the convertible note hedge transactions and to
complete the Tender Offers and for general corporate purposes. In addition, in September 2009 the Company completed a new 364-day receivables facility
that provides for borrowings of up to $200.0 million. As of December 31, 2009, $188.8 million was available for borrowing under the new receivables
facility, and there were no amounts outstanding. In connection with the completion of the new receivables facility, the Company repaid the $448.0 million
floating-rate note outstanding under the previous receivables facility.
The Company’s Revolver expires in November 2012. As of December 31, 2009, there were no borrowings outstanding under the Revolver, and the Company
had $690.0 million of borrowing capacity (in November 2010, the borrowing capacity is reduced to $665.0 million). 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 only be issued up to the amount available for borrowing under the Revolver. However, the Company’s current short-term debt credit ratings,
coupled with continued uncertainty in the credit markets, may preclude it from accessing the commercial paper market. 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, 2009,
no commercial paper was outstanding, and there were no borrowings or standby letters of credit outstanding under the Revolver.
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 of December 31, 2009, 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 new receivables facility and utilize the $878.8 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 new receivables facility
and may result in the acceleration of the repayment of certain indebtedness.