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 almost 70% of its sales from the U.S. market. The U.S. economy continues to be challenging, driven largely by the steep decline in the residential housing market, reduced access to credit, volatile commodity prices, and resulting decline in consumer confidence and spending. 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 growth in these segments internationally, although growth in these segments has slowed as global economic conditions have deteriorated. The Company continues to realize growth in the Home and Family segment and certain other business units, both domestically and 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 nine months ended September 30, 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. Although raw materials costs moderated in the third quarter of 2008, the Company still expects the impact of inflation to adversely impact gross margins by $225 million to $250 million in 2008 compared to 2007. In addition, lower volumes in the Company's manufacturing plants has recently adversely impacted gross margins as the Company reduces production to match revised sales forecasts and reduce inventory. Although Project Acceleration and ongoing productivity initiatives have offset some of the impacts of inflation and reduced production, the Company implemented 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.
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 retail push marketing to a new focus on consumer pull marketing and creating competitive advantage through better understanding its 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:
• In the Company's Home & Family segment, the Baby & Parenting Essentials business launched the Nautilus 3-in-1 car seat under the Graco® brand and expanded its premium platform by introducing the Teutonia® brand into the North American market. The Company recently launched Teutonia branded products into national distribution using a selected specialty dealer network.

• Also in the Home & Family segment, the Company launched a new premium line of Calphalon heating electrics, which leverages the well-known Calphalon® brand and expands the business into a natural near-neighbor category.

• In the Cleaning, Organization and Décor segment, the Company's Rubbermaid Food business experienced continued success with the innovative Rubbermaid Produce Saver, Premier and Easy Find Lids product lines.

• The Office Products segment has expanded the market leading Sharpie franchise with the introduction of the Sharpie Pen, which many consumers are adopting as their every day writing instrument.

• 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.

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. To date, the Company's North American operations of its Home & Family and Office Products segments have successfully gone live with their SAP implementation efforts. 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. 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 $303.6 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 plans to consolidate four smaller warehouses into a new Southeast distribution center as part of its efforts to achieve a best cost structure.
Lastly, the Company continues to optimize its organizational structure, with a focus on the Company's Global Business Unit structure and structural SG&A costs. In that regard, the Company is reorganizing its Global Business Units to gain efficiency and effectiveness, combining several smaller ones into larger ones. The Company plans to reduce structural SG&A costs to maintain margins and to protect investments in brand building SG&A efforts. Nurture 360º Innovation
Successful innovation requires both consumer driven product invention and the successful commercialization of that 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.
In the Company's Office Products segment, consumer response from the recent launch of the Sharpie pen has remained positive. The Sharpie pen is an extension of the Sharpie product line and 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 Company's continued success of its Rubbermaid Produce Saver™, Easy Find Lids™ and Premier™ product lines continue to drive growth within 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 the Goody Luxe™ product line 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 Company's Rubbermaid 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 Rubbermaid Commercial Products business.
Summary
In the midst of the global economic slowdown, the Company remains committed to driving its key strategic initiatives and plans to continue to reshape its portfolio to become increasingly global, faster growing, and more profitable. The Company expects to adapt to the impact of the economic slowdown with a particular focus on cash and liquidity. The Company is focused on managing inventories in the face of rapid consumer demand fluctuations and customer inventory reductions. In addition, the Company continues to execute its portfolio optimization strategy with the resin-dependent product category exits announced in the third quarter of 2008. The Company expects to continue to adapt to the changing circumstances, economic or otherwise, in the future to become a more focused and more profitable company.

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 nine months ended September 30, (in millions, except
percentages):

                                   Three Months Ended September 30,                                Nine Months Ended September 30,
                                 2008                            2007                            2008                            2007

Net sales             $ 1,760.3          100.0 %      $ 1,687.3          100.0 %      $ 5,019.1          100.0 %      $ 4,764.8          100.0 %
Cost of products
sold                    1,185.6           67.4          1,086.3           64.4          3,330.7           66.4          3,083.5           64.7

Gross margin              574.7           32.6            601.0           35.6          1,688.4           33.6          1,681.3           35.3
Selling, general
and
administrative
expenses                  394.3           22.4            364.5           21.6          1,148.2           22.9          1,060.2           22.3
Restructuring
costs                      13.5            0.8             22.7            1.3            101.3            2.0             53.7            1.1

Operating income          166.9            9.5            213.8           12.7            438.9            8.7            567.4           11.9
Nonoperating
expenses:
Interest expense,
net                        38.8            2.2             28.0            1.7            103.3            2.1             82.9            1.7
Other expense,
net                        55.4            3.1              2.1            0.1             56.4            1.1              4.4            0.1

Net nonoperating
expenses                   94.2            5.4             30.1            1.8            159.7            3.2             87.3            1.8

Income from
continuing
operations before
income taxes               72.7            4.1            183.7           10.9            279.2            5.6            480.1           10.1
Income taxes               17.7            1.0             13.8            0.8             74.3            1.5            101.9            2.1

Income from
continuing
operations                 55.0            3.1            169.9           10.1            204.9            4.1            378.2            7.9
Gain (loss) from
discontinued
operations, net
of tax                        -              -              0.3              -             (0.5 )            -            (16.5 )         (0.3 )

Net income            $    55.0            3.1 %      $   170.2           10.1 %      $   204.4            4.1 %      $   361.7            7.6 %

Three Months Ended September 30, 2008 vs. Three Months Ended September 30, 2007 Consolidated Operating Results:
Net sales for the three months ended September 30, 2008 were $1,760.3 million, representing an increase of $73.0 million, or 4.3%, from $1,687.3 million for the three months ended September 30, 2007. The Technical Concepts and Aprica acquisitions increased sales by $65.7 million, or 3.9%, over the prior year period. The remaining increase of $7.3 million, or 0.4%, was attributed to favorable foreign currency benefits, favorable pricing and growth in the Company's international businesses, partially offset by softness in the Company's domestic Office Products, Tools & Hardware and Décor businesses. Double digit growth in the Baby & Parenting Essentials and Culinary Lifestyles businesses and high single-digit growth in the Rubbermaid Food business led the sales improvement for the 2008 quarter.
Gross margin, as a percentage of net sales, for the three months ended September 30, 2008 was 32.6%, or $574.7 million, versus 35.6%, or $601.0 million, for the three months ended September 30, 2007. The 3.0% decline in the gross margin percentage was due to significant inflation in input costs, most notably in the Company's resin intensive businesses, as well as sourced finished goods and unfavorable mix, which were partially offset by benefits realized from savings from Project Acceleration and favorable pricing. SG&A expenses for the three months ended September 30, 2008 were 22.4% of net sales, or $394.3 million, versus 21.6% of net sales, or $364.5 million, for the three months ended September 30, 2007. The $29.8 million increase in SG&A expenses was driven by incremental SG&A associated with the Technical Concepts and Aprica acquisitions as well as currency translation.
The Company recorded restructuring costs of $13.5 million and $22.7 million for the three months ended September 30, 2008 and 2007, respectively. The third quarter 2008 restructuring costs included $11.2 million of employee severance, termination benefits and employee relocation costs, and $3.4 million of exited contractual commitments and other restructuring costs, partially offset by $1.1 million of benefits in facility and other exit costs. The third quarter 2007 restructuring costs included $5.7 million of facility and other exit costs, $4.0 million of employee severance and termination benefits and $13.0 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 September 30, 2008 was $166.9 million, or 9.5% of net sales, versus $213.8 million, or 12.7% of net sales, for the three months ended September 30, 2007. Improvements from favorable pricing and savings from Project Acceleration during the third quarter of 2008 were more than offset by inflation in input costs and sourced finished goods and unfavorable mix.
Interest expense, net, for the three months ended September 30, 2008 was $38.8 million versus $28.0 million for the three months ended September 30, 2007. The increase in interest expense in the 2008 quarter was driven by additional borrowings used to fund the acquisitions of Technical Concepts and Aprica.
Other expense, net, for the three months ended September 30, 2008 was $55.4 million versus $2.1 million for the three months ended September 30, 2007. Other expense, net, in the 2008 quarter is primarily attributable to the $52.2 million loss on debt extinguishment relating to the Company's redemption of its $250.0 million of Reset notes in July 2008.
The effective tax rate was 24.3% for the three months ended September 30, 2008 versus 7.5% for the three months ended September 30, 2007. The change in the effective tax rate was primarily related to a net $3.5 million income tax benefit recorded during the three months ended September 30, 2008, compared to a net $39.4 million income tax benefit recorded for the three months ended September 30, 2007. These income tax benefits primarily relate to favorable outcomes from the IRS's review of specific deductions and accrual reversals for items for which the statute of limitations expired, partially offset by provisions required for tax deductions recorded in prior periods. 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 September 30, (in millions, except percentages):

                                              2008          2007        % Change

          Cleaning, Organization & Décor   $   570.0     $   547.2           4.2 %
          Office Products                      540.2         544.9          (0.9 )
          Tools & Hardware                     331.0         335.9          (1.5 )
          Home & Family                        319.1         259.3          23.1

          Total Net Sales                  $ 1,760.3     $ 1,687.3           4.3 %

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

                                               2008        2007       % Change

            Cleaning, Organization & Décor   $  56.5     $  83.7       (32.5 )%
            Office Products                     61.3        84.2       (27.2 )
            Tools & Hardware                    47.0        51.3        (8.4 )
            Home & Family                       37.2        37.2           -
            Corporate                          (21.6 )     (19.9 )      (8.5 )
            Restructuring costs                (13.5 )     (22.7 )

            Total Operating Income           $ 166.9     $ 213.8       (21.9 )%

Cleaning, Organization & Décor
Net sales for the three months ended September 30, 2008 were $570.0 million, an increase of $22.8 million, or 4.2%, from $547.2 million for the three months ended September 30, 2007. The Technical Concepts acquisition increased sales $36.8 million, or 6.7%. Excluding the impact of acquisitions, sales decreased $14.0 million, or 2.5%, as high single digit growth in the Rubbermaid Food business and low single digit growth in the Rubbermaid Commercial business were more than offset by softness in the Rubbermaid Home and Décor businesses. Operating income for the three months ended September 30, 2008 was $56.5 million, or 9.9% of sales, a decrease of $27.2 million, or 32.5%, from $83.7 million for the three months ended September 30, 2007. Inflation in raw material costs, particularly resin, lower manufacturing volume and unfavorable mix more than offset the contributions from acquisitions during the 2008 quarter.

Office Products
Net sales for the three months ended September 30, 2008 were $540.2 million, a decrease of $4.7 million, or 0.9%, from $544.9 million for the three months ended September 30, 2007. Softer domestic sales driven by weaker foot traffic at U.S. retailers more than offset benefits recognized from favorable foreign currency. The segment's international sales remained essentially flat in local currency.
Operating income for the three months ended September 30, 2008 was $61.3 million, or 11.3% of sales, a decrease of $22.9 million, or 27.2%, from $84.2 million for the three months ended September 30, 2007. The year-over-year decline in operating income is attributable to core sales decline, raw material inflation, unfavorable mix and increased investment in strategic SG&A spending. Tools & Hardware
Net sales for the three months ended September 30, 2008 were $331.0 million, a decrease of $4.9 million, or 1.5%, from $335.9 million for the three months ended September 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 and a mid-single digit increase in the segment's international business in local currency.
Operating income for the three months ended September 30, 2008 was $47.0 million, or 14.2% of sales, a decrease of $4.3 million, or 8.4%, from $51.3 million for the three months ended September 30, 2007, as productivity improvements and favorable pricing were more than offset by raw material inflation and core sales declines in North America. Home & Family
Net sales for the three months ended September 30, 2008 were $319.1 million, an increase of $59.8 million, or 23.1%, from $259.3 million for the three months ended September 30, 2007. The Aprica acquisition increased sales $28.9 million, or 11.1%. The remaining increase of $30.9 million, or 11.9%, was attributable to double digit growth in the Baby & Parenting Essentials and Culinary Lifestyles businesses.
Operating income for the three months ended September 30, 2008 was $37.2 million, or 11.7% of sales, flat to $37.2 million for the three months ended September 30, 2007, as sales improvements were offset by brand building investments, sourced product inflation and unfavorable mix within the segment's Baby & Parenting Essentials business.
Nine Months Ended September 30, 2008 vs. Nine Months Ended September 30, 2007 Consolidated Operating Results:
Net sales for the nine months ended September 30, 2008 were $5,019.1 million, representing an increase of $254.3 million, or 5.3%, from $4,764.8 million for the nine months ended September 30, 2007. The acquisitions of Technical Concepts and Aprica increased sales $142.8 million, or 3.0%. The remaining increase of $111.5 million, or 2.3%, was primarily attributable to foreign currency benefits. Double digit growth in the Company's Rubbermaid Commercial and Rubbermaid Food businesses, high single digit growth in the Home & Family segment and low single digit growth in the Office Products segment were partially offset by declines in the Tools & Hardware segment and Décor business, which have been impacted by weakness in the U.S. economy. Gross margin, as a percentage of net sales, for the nine months ended September 30, 2008 was 33.6%, or $1,688.4 million, versus 35.3%, or $1,681.3 million, for the nine months ended September 30, 2007. The 1.7% decline in the gross margin percentage was due to significant raw material and sourced finished goods inflation more than offsetting positive pricing and savings from Project Acceleration.
SG&A expenses for the nine months ended September 30, 2008 were 22.9% of net sales, or $1,148.2 million, versus 22.3% of net sales, or $1,060.2 million, for the nine months ended September 30, 2007. The $88.0 million increase in SG&A expenses was driven by SG&A expenses associated with the Technical Concepts and Aprica acquisitions, the impact of foreign currency and continued investment in brand building and strategic corporate initiatives.
The Company recorded restructuring costs of $101.3 million and $53.7 million for the nine months ended September 30, 2008 and 2007, respectively. The increase in restructuring costs for the nine months ended September 30, 2008 compared to the prior year

period is primarily attributable to $36.0 million of asset impairment charges . . .