Graco 2011 Annual Report Download - page 31

2011 Financial Statements and Related Information
NEWELL RUBBERMAID 2011 Annual Report 29
The Company received proceeds of $634.8 million from the issuance of debt in 2009. In March 2009, the Company completed
the offering and sale of $300.0 million of 10.60% notes due 2019 and $345.0 million 5.5% senior convertible notes due 2014 (the
“Convertible 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 purchase convertible note hedge transactions and for general
corporate purposes. Also related to the issuance of the Convertible Notes, the Company entered into warrant transactions in which the
Company sold warrants to third parties for approximately $32.7 million. During 2009, the Company borrowed and repaid $70.0 million
under a 364-day receivables facility that was implemented in September 2009 and borrowed and repaid $125.0 million under its
syndicated revolving credit facility.
Uses
Historically, the Company’s primary uses of liquidity and capital resources have included dividend payments, share repurchases, capital
expenditures, payments on debt and acquisitions.
During 2011, the Company repaid the remaining $150.0 million outstanding principal amount of the unsecured three-year
$400.0 million term loan (the “Term Loan”). In connection with the extinguishments of $20.2 million principal amount of the Convertible
Notes, the Company paid $3.1 million in cash to the holders of such Convertible Notes during 2011.
In 2010, the Company completed a cash tender offer for $279.3 million of the $300.0 million principal amount of 10.60% notes
due 2019 and paid cash of $402.2 million upon settlement. Pursuant to the Plan, the Company also completed an exchange offer for
$324.7 million of the $345.0 million principal amount of Convertible Notes (the “Exchange Offer”) and issued 37.7 million shares of
common stock and paid cash consideration of $52.0 million to holders accepting the Exchange Offer. The Company made payments
on medium-term notes and other debt of $108.6 million and made payments of $200.0 million on its Term Loan during 2010.
The Company made aggregate payments on short- and long-term debt of $1,113.0 million during 2009. 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 a syndicated revolving credit facility, 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.
Aggregate dividends paid were $84.9 million, $55.4 million and $71.4 million for 2011, 2010 and 2009, respectively. The Company’s
Board of Directors approved a 60% increase in the Company’s quarterly dividend from $0.05 per share to $0.08 per share, effective
with the quarterly dividend paid in June 2011.
In August 2011, the Company announced a $300.0 million share repurchase program (the “SRP”). The SRP is authorized to run
for a period of three years ending in August 2014. During 2011, the Company repurchased and retired 3.4 million shares pursuant to the
SRP for $46.1 million.
Capital expenditures were $222.9 million, $164.7 million and $153.3 million for 2011, 2010 and 2009, respectively. The largest
single capital project in all periods was the implementation of SAP, which represented $65.4 million, $45.3 million and $47.2 million
of capital expenditures for 2011, 2010 and 2009, respectively.
The Company purchased noncontrolling interests in consolidated subsidiaries for $29.2 million during 2009.
During 2011, the Company paid $20.0 million in connection with acquisitions and acquisition-related activity.
Cash used for restructuring activities is included in changes in accrued liabilities and other in the Consolidated Statements of Cash
Flows. Cash used for restructuring activities was $39.5 million, $72.8 million and $84.0 million for 2011, 2010 and 2009, respectively,
and is included in the cash provided by operating activities. These payments relate primarily to employee severance, termination
benefits and relocation costs.
Cash Conversion Cycle
The Company defines its cash conversion cycle as the sum of inventory and accounts receivable days outstanding (based on cost
of products sold and net sales, respectively, for the most recent three-month period, including discontinued operations) minus accounts
payable days outstanding (based on cost of products sold for the most recent three-month period, including discontinued operations)
at the end of the year. The following table depicts the Company’s cash conversion cycle at December 31, (in number of days):
2011 2010 2009
Accounts receivable 61 62 57
Inventory 68 69 70
Accounts payable (46) (47) (44)
Cash conversion cycle 83 84 83
The Company’s cash conversion cycle is impacted by the seasonality of its businesses and generally tends to be longer in the first
and second quarters, based on historical trends, due to inventory build-ups early in the year for seasonal sales activity and credit terms
provided to customers. The Company’s cash conversion cycle at December 31, 2011 approximated its cash conversion cycle at
December 31, 2010 and 2009. The Company has leveraged the implementation of SAP in North America to improve working capital,
with a focus on reducing the number of days of inventory on hand. The improvement in days of inventory on hand over the period from
2009 to 2011 was offset by an inventory build-up in late 2011 in advance of the SAP go-live in the European region planned for the first
half of 2012 and increased safety stocks in North America related to the planned closure of the Greenville, Texas manufacturing facility.