Summary of NEWELL RUBBERMAID INC

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Business Overview
Newell Rubbermaid is a global marketer of consumer and commercial products that touch the lives of people where they work, live and play. With annual sales of over $6 billion, the Company's products are marketed under a strong portfolio of brands, including Rubbermaid®, Sharpie®, Graco®, Calphalon®, Irwin®, Lenox®, Levolor®, Paper Mate®, Dymo®, Waterman®, Parker®, Goody®, BernzOmatic® and Amerock®. The Company's multi-product offering consists of well-known name-brand consumer and commercial products in four business segments: Cleaning, Organization & Décor; Office Products; Tools & Hardware; and Home & Family. The Company's vision is to become a global company of Brands That Matter™ and great people, known for best-in-class results. The Company remains committed to investing in strategic brands and new product development, strengthening its portfolio of businesses and products, reducing its supply chain costs and streamlining non-strategic selling, general and administrative expenses (SG&A). Market Overview
The Company operates in the consumer and commercial products markets, which are generally impacted by overall economic conditions in the regions in which the Company operates. While the Company's strategy is to expand globally, the Company currently derives 75% of its sales in North America. The U.S. economy continues to be challenging, driven largely by the steep decline in the residential housing market, reduced access to credit, rising oil and gas prices, and the resulting decline in consumer confidence. The weakness in the U.S. economy adversely affects the Company's domestic businesses, most notably the Tools & Hardware and Office Products segments; however, the Company continues to realize strong growth in these segments internationally.
The operating results of sourcers and manufacturers of consumer and commercial products are generally impacted by changes in the prices of raw materials (including commodity prices), labor costs, and foreign exchange rates. During the first half of 2008, the Company experienced a significantly higher than expected rate of inflation for raw materials, primarily resin and metals, and sourced finished goods. The primary driver for the increase was record-high energy prices, including the price of oil and natural gas, which are inputs to the cost of resin, which represents a little over 10% of the Company's cost of products sold. The Company now expects the impact of inflation to adversely impact gross margins by $275 million to $325 million in 2008 compared to 2007. Although Project Acceleration and ongoing productivity initiatives have offset some of the inflation, the Company also plans to implement a pricing initiative effective October 1 across a number of product lines, particularly those where resin is the primary component of the cost of products sold. Additionally, effective January 1, 2009, the Company is initiating a new quarterly price adjustment mechanism within its resin-intensive businesses. This adjustment will reflect independent industry indices as well as actual changes in raw material, processing and transportation costs.
The Company's sales and operating income in the first quarter are generally lower than any other quarter during the year, driven principally by reduced volume and the mix of products sold in the quarter. Consequently, the Company's sales and operating income are generally lower in the first half of the year compared to the back half of the year.
Business Strategy
The key tenets of the Company's strategy are as follows: Create Consumer-Meaningful Brands, Leverage One Newell Rubbermaid, Achieve Best Total Cost and Nurture 360º Innovation. The Company's results depend on the ability of its individual business units to succeed in their respective categories, each of which has some unique consumers, customers and competitors.
The following section details the Company's performance in each of its strategic initiatives:
Create Consumer-Meaningful Brands
The Company is continuing to move from its historical focus on push marketing and excellence in manufacturing and distributing products, to a new focus on consumer pull marketing and creating competitive advantage through better understanding its

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consumers, innovating to deliver great performance, investing in advertising and promotion to create demand and leveraging its brands in adjacent categories around the world. The Company's progress in implementing this brand building and marketing initiative is exhibited by the following:
• The Company's Home & Family segment sales for the six months ended June 30, 2008 benefited partly due to new demand creation activities and recent product launches within its Baby & Parenting Essentials business, including the Graco® Sweetpeace Newborn Soothing Center and the Nautilus 3-in-1 car seat.

• Also in the Home & Family segment, the Company's Culinary Lifestyles business is planning to launch a new premium line of Calphalon heating electrics this fall. Leveraging the well-known Calphalon® brand, this new line expands the business into a natural near-neighbor category.

• The Company remains committed to increasing selective television, print, direct mail and online advertising, and using sampling and product demonstrations where appropriate, to increase brand awareness and trials among end-users of its brands. For example, during the second quarter of 2008, the Company launched a global television advertising campaign as part of its two-year global partnership with David Beckham, one of the world's most popular soccer players. The partnership includes a fully integrated Sharpie® marketing campaign that also features promotions, in-store displays and online advertising.

• Throughout 2008, the Company continues to sponsor the Lenox®, Irwin® and Sharpie® cars in select NASCAR races to increase awareness for these brands. Also, as an addition to the Company-sponsored June 2008 Lenox Industrial Tools 301 race, the Company added the EXTRA MILE HERO program which recognizes customers, users and suppliers of industrial tools who perform physically demanding jobs while still giving back to the community in a meaningful way.

Leverage One Newell Rubbermaid
The Company strives to leverage the common business activities and best practices of its business units, and to build one common culture of shared values, with a focus on collaboration and teamwork. The Company continuously explores ways to leverage common functional capabilities, such as Human Resources, Information Technology, Customer Service, Supply Chain Management and Finance, to improve efficiency and reduce costs. This broad reaching initiative already includes projects such as the corporate consolidation of the distribution and transportation function and consolidating company-wide purchasing efforts.
To leverage information and best practices across the Company's business units, the Company is implementing SAP globally to enable the Company to integrate and manage its worldwide business and reporting processes more efficiently. In that effort, the Company's North American operations of its Home & Family segment successfully went live with its SAP implementation on April 1, 2008. This SAP go-live marks the completion of the second phase in a multi-year rollout aimed at migrating multiple legacy systems and users to a common SAP global information platform. The Company's Office Products segment previously went live on October 1, 2007 for its North American operations. Achieve Best Total Cost
The Company's objective is to reduce the cost of manufacturing, sourcing and supplying product on an ongoing basis, and to leverage the Company's size and scale, in order to achieve a best total cost position. Achieving best cost positions in its categories allows the Company to increase investment in strategic brand building initiatives as well as offset some of the cost inflation resulting from the current economic environment.
Through Project Acceleration and other initiatives, the Company has made significant progress in reducing its supply chain costs and delivering productivity savings. In July 2008, the Company committed to an expansion of Project Acceleration to provide for divesting, downsizing or exiting certain product categories where resin is a high percentage of the cost of products sold. The product categories the Company expects to divest or otherwise exit in connection with the expansion of Project Acceleration generate annual sales of approximately $500 million in selected consumer product categories. Project Acceleration, as expanded, includes the anticipated closures of certain of the Company's manufacturing and distribution facilities to optimize the Company's geographic footprint and the exiting of certain product categories to limit the Company's exposure to volatile commodity markets, particularly resin.

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Project Acceleration is expected to result in cumulative restructuring costs over the life of the initiative totaling between $475 and $500 million, and the Company has recognized $290.1 million of restructuring charges associated with Project Acceleration to date. Approximately 67% of the restructuring costs in connection with Project Acceleration are expected to be cash charges. Annual savings from Project Acceleration are projected to be between $175 and $200 million once fully implemented in 2010.
Additionally, in its efforts to achieve logistical excellence and optimize its geographic footprint, the Company continues to evaluate its supply chain efforts to identify opportunities to realize efficiencies in purchasing, distribution and transportation. For example, the Company recently announced plans to consolidate four smaller warehouses into a new Southeast distribution center as part of its efforts to achieve a best cost structure. The Southeast distribution center will be located in Atlanta, Georgia and is expected to open in the third quarter of 2008.
Nurture 360º Innovation
The Company defines innovation as both consumer driven product invention and the successful commercialization of invention. It is a rigorous, consumer-centric process that permeates the entire development cycle. It begins with a deep understanding of how consumers interact with the Company's brands and categories, and all the factors that drive their purchase decisions and in-use experience. That understanding must then be translated into innovative products that deliver unique features and benefits, at a best-cost position, providing the consumer with great value. Lastly, formulating how and where to create awareness and trial use and measuring the effectiveness of advertising and promotion spending complete the process. The Company has pockets of excellence using this expanded definition of innovation and continues to build on this competency in its effort to create consumer meaningful brands. During the second quarter of 2008, the Company's Office Products segment introduced an innovative extension of its Sharpie product line. The new line of Sharpie products addresses consumer needs by delivering the bold, smooth, high-quality writing experience associated with Sharpie markers but with the performance of a pen that does not bleed through paper. The new Sharpie product line extends the brand's presence beyond markers and highlighters into everyday writing so that the Sharpie brand can now be found in three key writing segments of the office products category.
Also during the second quarter of 2008, the Company's Baby & Parenting Essentials global business unit launched the Graco® Nautilus 3-in-1 car seat. The Nautilus 3-in-1 offers parents a complete car seat solution, converting from a five point safety harness for infants, to a high back seat belt option for toddlers, to a backless booster seat for kids up to 100 pounds, making it the only forward-facing car seat a child will ever need.
The Company's continued success of its Rubbermaid Produce Saver™, Easy Find Lids™ and Premier™ product lines have driven significant growth in the Rubbermaid Food business. The useful features of these lines, such as longer food storage life, easy organization and storage, and stain and odor resistance, demonstrate the Company's ability to bring consumer-meaningful innovation to the plastic food storage category.
In July, the Company's Beauty & Style global business unit launched Goody Luxe™ which unites style and technology to solve common consumer frustrations. This premier line of hair accessories addresses global hair trends while offering functional benefits. The Goody Luxe product line uses StayPut Hold™ technology which allows the accessories to provide a secure hold yet are gentle enough to remove without snagging.
Acquisitions
In April 2008, the Company closed on two acquisitions, Aprica and Technical Concepts, which expand its product categories and geographic footprint as well as provide the Company an opportunity to leverage innovation and branding capabilities. Aprica is a Japanese brand of premium strollers, car seats and other related juvenile products. This acquisition provides the Company's Baby & Parenting Essentials business the opportunity to broaden its presence worldwide, including expanding the scope of Aprica's sales outside of Asia. The Aprica acquisition also provides the critical mass needed for more shared resources in Japan, which will help accelerate investment in the Asia-Pacific region by other business units. The Technical Concepts acquisition gives the

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Company's Commercial Products business an entry into the $2.5 billion away-from-home washroom market. Technical Concepts is a global provider of innovative touch-free and automated restroom hygiene systems. This acquisition fits within the Company's strategy of leveraging its existing sales and marketing capabilities across additional product categories where performance matters and customers will pay a premium for innovation. In addition, with approximately 40% of its sales outside the U.S., Technical Concepts significantly increases the global footprint of the Commercial Products business.
Conclusion
The Company is facing immediate pressures resulting from the volatile commodity markets and challenging economic environment, particularly with respect to significant inflation for raw materials and sourced products and a weak U.S. economy and housing market. The Company is committed to driving its key strategic initiatives of creating consumer-meaningful brands, leveraging the advantages of working as one company, achieving best total cost and nurturing innovation. The Company continues to focus its efforts on investing in strategic brand building to strengthen its brands and drive sales growth, improving productivity and the mix of products sold to improve gross margins, and achieving operating income and earnings per share growth over the long term. During 2008, the Company will continue to collaborate and share best practices company-wide to promote its strategy of building brands that really matter to its consumers.
Results of Operations
The following table sets forth for the periods indicated items from the Condensed Consolidated Statements of Income as reported and as a percentage of net sales for the three and six months ended June 30, (in millions, except percentages):

                                     Three Months Ended June 30,                                      Six Months Ended June 30,
                                 2008                            2007                            2008                            2007

Net sales             $ 1,825.1          100.0 %      $ 1,693.1          100.0 %      $ 3,258.8          100.0 %      $ 3,077.5          100.0 %
Cost of products
sold                    1,201.9           65.9          1,087.5           64.2          2,145.1           65.8          1,997.2           64.9

Gross margin              623.2           34.1            605.6           35.8          1,113.7           34.2          1,080.3           35.1
Selling, general
and
administrative
expenses                  392.9           21.5            357.3           21.1            753.9           23.1            695.7           22.6
Restructuring
costs                      69.4            3.8             15.5            0.9             87.8            2.7             31.0            1.0

Operating income          160.9            8.8            232.8           13.7            272.0            8.3            353.6           11.5
Nonoperating
expenses:
Interest expense,
net                        38.7            2.1             27.5            1.6             64.5            2.0             54.9            1.8
Other expense,
net                         0.8              -              1.5            0.1              1.0              -              2.3            0.1

Net nonoperating
expenses                   39.5            2.2             29.0            1.7             65.5            2.0             57.2            1.9

Income from
continuing
operations before
income taxes              121.4            6.7            203.8           12.0            206.5            6.3            296.4            9.6
Income taxes               28.9            1.6             60.6            3.6             56.6            1.7             88.1            2.9

Income from
continuing
operations                 92.5            5.1            143.2            8.5            149.9            4.6            208.3            6.8
Loss from
discontinued
operations, net
of tax                        -              -             (1.0 )         (0.1 )           (0.5 )            -            (16.8 )         (0.5 )

Net income            $    92.5            5.1 %      $   142.2            8.4 %      $   149.4            4.6 %      $   191.5            6.2 %

Three Months Ended June 30, 2008 vs. Three Months Ended June 30, 2007 Consolidated Operating Results:
Net sales for the three months ended June 30, 2008 were $1,825.1 million, representing an increase of $132.0 million, or 7.8%, from $1,693.1 million for the three months ended June 30, 2007. The Technical Concepts and Aprica acquisitions increased sales by $77.1 million, or 4.6%, over the prior year period. The remaining increase of $54.9 million, or 3.2%, was primarily driven by foreign currency. Double digit growth in the Rubbermaid Commercial, Rubbermaid Food and European and Asia Pacific Office Products businesses and high single digit growth in the Baby & Parenting Essentials business were largely offset by declines in the North American Office Products, Tools & Hardware and Décor businesses, which have been impacted by the weakness in the U.S. economy.

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Gross margin, as a percentage of net sales, for the three months ended June 30, 2008 was 34.1%, or $623.2 million, versus 35.8%, or $605.6 million, for the three months ended June 30, 2007. The 1.7% decline in gross margins was due to significant inflation in input cost, most notably in the Company's resin intensive businesses, as well as sourced finished goods, which was partially offset by benefits realized from ongoing productivity initiatives, savings from Project Acceleration, and favorable pricing.
SG&A expenses for the three months ended June 30, 2008 were 21.5% of net sales, or $392.9 million, versus 21.1% of net sales, or $357.3 million, for the three months ended June 30, 2007. The $35.6 million increase in SG&A expenses was driven by continued brand building investments, acquisitions and currency translation.
The Company recorded restructuring costs of $69.4 million and $15.5 million for the three months ended June 30, 2008 and 2007, respectively. The increase in restructuring costs for the three months ended June 30, 2008 compared to the prior year is primarily attributable to $36.0 million of asset impairment charges recorded for the three months ended June 30, 2008 associated with the Company's plan to divest, downsize or exit certain product categories where resin is the primary component of cost of products sold. The second quarter 2008 restructuring costs included $50.2 million of facility and other exit costs, including the $36.0 million of asset impairment charges discussed above, $12.3 million of employee severance, termination benefits and employee relocation costs, and $6.9 million of exited contractual commitments and other restructuring costs. The second quarter 2007 restructuring costs included $6.0 million of facility and other exit costs, $7.5 million of employee severance and termination benefits and $2.0 million of exited contractual commitments and other restructuring costs. See Footnote 4 of the Notes to Condensed Consolidated Financial Statements for further information on these restructuring costs.
Operating income for the three months ended June 30, 2008 was $160.9 million, or 8.8% of net sales, versus $232.8 million, or 13.7% of net sales, for the three months ended June 30, 2007. Improvements from productivity initiatives and favorable pricing during the second quarter of 2008 were more than offset by raw material inflation, increased strategic SG&A spending related to product launches and brand building investments, and Project Acceleration asset impairment charges related to the Company's planned exit of resin-intensive product categories.
Net nonoperating expenses for the three months ended June 30, 2008 were 2.2% of net sales, or $39.5 million, versus 1.7% of net sales, or $29.0 million, for the three months ended June 30, 2007. The $10.5 million increase in net nonoperating expenses is primarily attributable to increased interest expense during the 2008 quarter driven by additional borrowings used to fund the acquisitions of Aprica and Technical Concepts.
The effective tax rate was 23.8% for the three months ended June 30, 2008 versus 29.7% for the three months ended June 30, 2007. The 5.9% decrease in the effective tax rate for the three months ended June 30, 2008 compared to the prior year period is primarily attributable to tax rates applicable to various discrete items recorded during the applicable three month periods, including restructuring charges. The discrete items in each of the three month periods caused the effective tax rate to decline 4.9% from the three months ended June 30, 2007 to the three months ended June 30, 2008. See Footnote 8 of the Notes to Condensed Consolidated Financial Statements for further information. Business Segment Operating Results:
Net sales by segment were as follows for the three months ended June 30, (in millions, except percentages):

                                              2008          2007        % Change

          Cleaning, Organization & Décor   $   609.9     $   544.4          12.0 %
          Office Products                      612.9         587.5           4.3
          Tools & Hardware                     322.3         324.6          (0.7 )
          Home & Family                        280.0         236.6          18.3

          Total Net Sales                  $ 1,825.1     $ 1,693.1           7.8 %

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Operating income (loss) by segment was as follows for the three months ended June 30, (in millions, except percentages):

                                               2008        2007       % Change

            Cleaning, Organization & Décor   $  74.5     $  81.2        (8.3 )%
            Office Products                    102.6       109.0        (5.9 )
            Tools & Hardware                    46.7        47.7        (2.1 )
            Home & Family                       27.7        31.3       (11.5 )
            Corporate                          (21.2 )     (20.9 )      (1.4 )
            Restructuring Costs                (69.4 )     (15.5 )

            Total Operating Income           $ 160.9     $ 232.8       (30.9 )%

Cleaning, Organization & Décor
Net sales for the three months ended June 30, 2008 were $609.9 million, an increase of $65.5 million, or 12.0%, from $544.4 million for the three months ended June 30, 2007. The Technical Concepts acquisition increased sales $40.0 million, or 7.3%. The remaining increase of $25.5 million, or 4.7%, was primarily due to strong double digit growth in the Rubbermaid Food and the Rubbermaid Commercial businesses, partially offset by softness in the Décor business.
Operating income for the three months ended June 30, 2008 was $74.5 million, or 12.2% of sales, a decrease of $6.7 million, or 8.3%, from $81.2 million for the three months ended June 30, 2007. Significant inflation in raw material costs, particularly resin, more than offset the contributions from higher sales and acquisitions during the 2008 quarter.
Office Products
Net sales for the three months ended June 30, 2008 were $612.9 million, an increase of $25.4 million, or 4.3%, from $587.5 million for the three months ended June 30, 2007. The sales improvement was driven by favorable foreign currency and low double digit growth in the segment's European and Asia Pacific businesses in local currency, partially offset by a decline in domestic sales driven by weaker foot traffic at U.S. retailers. The European business benefited in comparison to prior year from a soft second quarter in 2007 driven mainly by service level interruptions that did not repeat this year.
Operating income for the three months ended June 30, 2008 was $102.6 million, or 16.7% of sales, a decrease of $6.4 million, or 5.9%, from $109.0 million for the three months ended June 30, 2007. Operating income declined year-over-year as improvements in sales were more than offset by raw material inflation and increased investment in strategic SG&A spending. Tools & Hardware
Net sales for the three months ended June 30, 2008 were $322.3 million, a decrease of $2.3 million, or 0.7%, from $324.6 million for the three months ended June 30, 2007. The year-over-year decrease was primarily due to a decline in the sales of the segment's domestic businesses, which have been affected by the decline in the U.S. residential construction market, partially offset by favorable foreign currency.
Operating income for the three months ended June 30, 2008 was $46.7 million, or 14.5% of sales, a decrease of $1.0 million, or 2.1%, from $47.7 million for the three months ended June 30, 2007, as productivity gains and favorable pricing were more than offset by raw material inflation. Home & Family
Net sales for the three months ended June 30, 2008 were $280.0 million, an increase of $43.4 million, or 18.3%, from $236.6 million for the three months ended June 30, 2007. The Aprica acquisition increased sales $37.1 million, or 15.6%. The remaining increase of $6.3 million, or 2.7%, was attributable to new product launches and demand creation activities by the Baby & Parenting Essentials business. Year-over-year sales improvement was reduced by a 4% net sales shift from second quarter to first quarter due to the SAP implementation and the timing of certain promotional activities.
Operating income for the three months ended June 30, 2008 was $27.7 million, or 9.9% of sales, a decrease of $3.6 million, or 11.5%, from $31.3 million for the three months ended June 30, 2007, as sales improvements were more than offset by increased strategic SG&A spending for new product launches and brand building investments.

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Six Months Ended June 30, 2008 vs. Six Months Ended June 30, 2007 Consolidated Operating Results: . . .