The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's consolidated results of operations and financial condition. The discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto.

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 2008 annual sales of approximately $6.5 billion, the Company's products are marketed under a strong portfolio of brands, including Graco®, Aprica®, Levolor®, Calphalon®, Goody®, Rubbermaid®, Technical ConceptsTM, Irwin®, Lenox®, Sharpie®, Paper Mate®, Dymo®, Waterman® and Parker®. The Company's multi-product offering consists of well-known name-brand consumer and commercial products in three business segments: Home & Family; Tools, Hardware & Commercial Products; and Office Products.

Business Strategy

Newell Rubbermaid's vision is to become a global company of Brands That Matter™ and great people, known for best-in-class results. The Company is committed to building consumer-meaningful brands through understanding the needs of consumers and using those insights to create innovative, highly differentiated product solutions that offer performance and value. To support its multi-year transformation into a best-in-class global consumer branding and marketing organization, the Company has adopted a strategy that focuses on optimizing the business portfolio, building consumer-meaningful brands on a global scale, and achieving best cost and efficiency in its operations.

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. During the quarter ended March 31, 2009, the Company's results were impacted by continued weakness in consumer confidence and consumer spending, which has resulted from the deterioration in worldwide economic conditions. The Company's results for the three months ended March 31, 2009 were impacted by the following factors:

• Lower consumer confidence and corresponding lower demand resulted in reduced consumer foot traffic and retail destocking of inventory, negatively impacting sales and contributing to an overall year-over-year core sales decline of approximately 10%. Core sales represent net sales excluding the impacts of acquisitions, currency and product line exits.

• Weakness in economic conditions internationally, which resulted in a year-over-year core sales decline of approximately 14% in the Company's international businesses excluding the impact of currency.

• Weaker economic conditions and lower demand in the commercial and industrial channels, which contributed to a year-over-year core sales decline of approximately 20% in the Company's Tools, Hardware, and Commercial Products segment.

• Continued volatility in the credit markets, which has contributed to the decline in consumer demand and has resulted in reductions in available capital and financing for businesses and increases in costs associated with capital and financing, when available.

In response to these conditions, the Company took the following actions:

• Continued to optimize the cost structure of the business by reducing and streamlining structural selling, general and administrative ("SG&A") costs, including consolidating the segment structure from four to three. The actions implemented in the first quarter of 2009 included selected contingency plans that were developed at the beginning of 2009 in the event the Company's business units experienced lower than expected sales. These plans were implemented selectively to eliminate or delay costs where possible.

• Managed and optimized working capital to minimize the working capital investment generally required in the first quarter due to the seasonality of the business, with a particular focus on reducing the inventory build-up that occurs in the first quarter. During the first quarter of 2009, the Company focused on optimizing its production capacity and sourcing of finished goods to correspond to the expected decreases in consumer demand. In the first quarter of 2009, the Company's

• Accessed the public debt markets to improve its liquidity and reduce its short-term financing needs. The Company completed two debt offerings in the first quarter of 2009 raising approximately $590 million after transaction costs and net costs associated with the convertible note hedge and warrant transactions. The Company also plans to arrange a replacement 364-day receivables financing facility in an initially proposed maximum amount of up to $250 million, coincident with the expiration of the Company's existing $450 million receivables facility in September 2009. In April and May 2009, the Company completed the repurchase of $180.1 million aggregate principal amount of medium-term notes due December 2009 and $144.9 million of medium-term notes due May 2010.

• Outlined and began implementing an initiative with a focus on continuing to reduce structural overhead costs by simplifying work, improving cash flow, and optimizing opportunities to invest in strategic brand building and gain market share despite economic conditions. During the first quarter of 2009, the Company's selective investments in strategic brand-building and consumer demand creation were evident in market share gains realized by the Dymo® and Sharpie® brands and the Rubbermaid Food & Home business in certain geographic regions, expansion of the Culinary Lifestyles product line to include a line of non-stick, dishwasher safe gourmet cookware, and the expansion of the Rubbermaid Food & Home food storage product line to include Lock-ItsTM storage containers with locking lid tabs.

• Continued implementing its strategy to exit low-margin product categories where demand is not responsive to innovation and input costs are subject to volatile commodities markets. The Company expects to have substantially completed the exit of these product categories by the end of 2009.

• Reduced the dividend payable on its common stock from $0.84 per year to $0.20 per year. The new dividend policy better positions the Company to protect its investment grade credit rating and allows the Company to retain approximately $180 million of cash flows annually for the repayment of debt.

Ongoing Initiatives

Project Acceleration

Through the Project Acceleration restructuring program and other initiatives, the Company has made significant progress in improving capacity utilization rates to deliver productivity savings and increasing the use of strategic sourcing partners. In the first quarter of 2009, the Company began implementing two restructuring programs as part of Project Acceleration to reduce its manufacturing footprint, including one program in its Home & Family segment in North America and one program in its Tools, Hardware & Commercial Products segment in the Asia Pacific region. Since the inception of Project Acceleration, the Company has reduced its manufacturing footprint by more than 40%, including the closure of 17 manufacturing facilities associated with Project Acceleration programs and the transfer of 19 manufacturing facilities to purchasers in connection with divestitures of businesses.

The Company continues to evaluate its supply chain to identify opportunities to realize efficiencies in purchasing, distribution and transportation. In the first quarter of 2009, the Company began consolidating its southeast U.S. distribution operations into a southeast U.S. distribution center, which includes the closures of multiple distribution facilities throughout that region of the U.S. The Company also continues to focus on rationalizing its use of multiple third party distribution and logistics service providers, consolidating such operations into Company-owned facilities where possible.

In an effort to align the business with the global business unit structure and achieve best total cost, the Company continues to evaluate and optimize its overall organizational structure and consolidate activities. In this regard, the Company has reduced its worldwide headcount by 10%, or 2,200 employees, over the last twelve months, including a 1,100 employee reduction during the first quarter of 2009 from 20,400 employees at December 31, 2008 to 19,300 employees at March 31, 2009.

The Company expects to incur restructuring costs between $100 and $150 million ($80 and $120 million after-tax) in 2009. The Company expects to have completed implementation of its Project Acceleration restructuring initiative by the end of 2010, and the total costs expected to be incurred over the life of the initiative are expected to be between $475 and $500 million. As of March 31, 2009, the remaining costs expected to be incurred to complete Project Acceleration are between $125 and $150 million. Cumulative annualized savings expected to be realized from the implementation of Project Acceleration are between $175 and $200 million once completed, with more than $100 million in annualized savings realized to date.

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. Through this initiative, the Company has established regional shared service centers to leverage non-market facing functional capabilities to reduce costs. The Company has also begun migrating multiple legacy systems and users to a common SAP global information platform in a phased, multi-year rollout. SAP is expected to enable the Company to integrate and manage its worldwide business and reporting processes more efficiently. To date, certain North American operations of its Home & Family and Office Products segments have successfully gone live with their SAP implementation efforts.

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 months ended March 31, (in millions, except
percentages):



                                                        2009                       2008

Net sales                                        $ 1,203.9     100.0 %     $ 1,433.7       100.0%
Cost of products sold                                781.1      64.9           943.2       65.8

Gross margin                                         422.8      35.1           490.5       34.2
Selling, general and administrative
expenses                                             311.5      25.9           361.0       25.2
Restructuring costs                                   30.5       2.5            18.4        1.3

Operating income                                      80.8       6.7           111.1        7.7
Nonoperating expenses:
Interest expense, net                                 30.6       2.5            25.8        1.7
Other expense (income), net                            0.7       0.1            (0.2 )        -

Net nonoperating expenses                             31.3       2.6            25.6        1.7

Income from continuing operations before
income taxes                                          49.5       4.1            85.5        6.0
Income taxes                                          15.8       1.3            27.7        2.0

Income from continuing operations                     33.7       2.8            57.8        4.0
Loss from discontinued operations, net of
tax                                                      -         -            (0.5 )        -

Net income                                            33.7       2.8            57.3        4.0
Net income noncontrolling interests                      -         -             0.4          -

Net income controlling interests                 $    33.7       2.8 %     $    56.9         4.0%

Three Months Ended March 31, 2009 vs. Three Months Ended March 31, 2008

Consolidated Operating Results:

Net sales for the three months ended March 31, 2009 were $1,203.9 million, representing a decrease of $229.8 million, or 16.0%, from $1,433.7 million for the three months ended March 31, 2008. Core sales declined 10.3% compared to the prior year resulting from lower consumer foot traffic and corresponding lower product demand as well as inventory destocking at the retail level. Planned product line exits and foreign currency contributed an additional 4.5% and 4.8% to the year-over-year sales decline, respectively. The Technical Concepts and Aprica acquisitions increased sales by $52.0 million, or 3.6%, over the prior year. Excluding acquisitions and foreign currency, sales of the Company's domestic and international businesses declined approximately 15% and 14%, respectively, versus the prior year.

Gross margin, as a percentage of net sales, for the three months ended March 31, 2009 was 35.1%, or $422.8 million, versus 34.2%, or $490.5 million, for the three months ended March 31, 2008. The primary driver of the 90 basis point gross margin improvement was product line exits, which contributed a 150 basis point year-over-year improvement. The improvement from the product line exits was offset by the negative impact resulting from lower production volumes in the Company's manufacturing facilities caused by the sales decline and the Company's management of inventory levels in response to lower demand.

SG&A expenses for the three months ended March 31, 2009 were 25.9% of net sales, or $311.5 million, versus 25.2% of net sales, or $361.0 million, for the three months ended March 31, 2008. The $49.5 million decrease was primarily driven by the Company's management of structural and strategic SG&A spending resulting from the implementation of selected contingency plans to mitigate the negative impact of the decline in sales. The beneficial impact of foreign currency translation offset incremental SG&A costs related to the Technical Concepts and Aprica acquisitions of $21.2 million during the quarter.

The Company recorded restructuring costs of $30.5 million and $18.4 million for the three months ended March 31, 2009 and 2008, respectively. The 2009 restructuring costs included $4.6 million of facility and other exit costs, $20.9 million of employee severance, termination benefits and employee relocation costs, and $5.0 million of exited contractual commitments and other restructuring costs. The first quarter 2008 restructuring costs included $(3.8) million of facility and other exit costs, $18.0 million of employee severance, termination benefits and employee relocation costs and $4.2 million of exited contractual commitments and other restructuring costs, of which $1.4 million relates to the Company's 2001 Plan. The year-over-year increase in restructuring costs was largely attributable to restructuring programs focused on streamlining the organizational structure to reduce structural SG&A costs. See Footnote 3 of the Notes to Condensed Consolidated Financial Statements for further information.

Operating income for the three months ended March 31, 2009 was $80.8 million, or 6.7% of net sales, versus $111.1 million, or 7.7% of net sales, for the three months ended March 31, 2008. The $30.3 million decline in operating income is primarily attributable to lower sales, the adverse impact of lower production volumes on gross margin, and an increase in restructuring costs, partially offset by savings realized from reducing SG&A spending during the first quarter of 2009.

Net nonoperating expenses for the three months ended March 31, 2009 were $31.3 million versus $25.6 million for the three months ended March 31, 2008. The increase in net nonoperating expenses is attributable to increased interest expense during 2009 as a result of additional borrowings used to fund the Technical Concepts and Aprica acquisitions completed in the second quarter of 2008.

The Company recognized income tax expense of $15.8 million for the three months ended March 31, 2009, compared to $27.7 million for the three months ended March 31, 2008. The decrease in tax expense was primarily a result of a decrease in income from continuing operations before income taxes, as well as the effect of higher tax rates applied to the discrete period expenses in 2009, including restructuring charges. Based on the accounting required for the income tax impacts associated with stock-based compensation, the Company's effective tax rate in future periods may be adversely impacted as a result of cancellations and exercises of employee stock options and vestings of restricted stock awards and restricted stock units. See Footnote 9 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 March 31, (in
millions, except percentages):



                                                2009        2008          % Change

    Home & Family                             $   557.7   $   608.2          (8.3)%
    Tools, Hardware & Commercial Products         328.0       407.2        (19.4)
    Office Products                               318.2       418.3        (23.9)

    Total Net Sales                           $ 1,203.9   $ 1,433.7         (16.0)%

Operating income (loss) by segment was as follows for the three months ended March 31, (in millions, except percentages):

                                                2009         2008         % Change

     Home & Family                             $  60.3     $  53.4           12.9%
     Tools, Hardware & Commercial Products        38.0        61.0         (37.7)
     Office Products                              31.1        33.9          (8.3)
     Corporate                                   (18.1 )     (18.8)          3.7
     Restructuring costs                         (30.5 )     (18.4)

     Total Operating Income                    $  80.8     $ 111.1          (27.3)%

Home & Family

Net sales for the three months ended March 31, 2009 were $557.7 million, a decrease of $50.5 million, or 8.3%, from $608.2 million for the three months ended March 31, 2008. Core sales declined 3.4%, which was primarily attributable to declines in the Baby & Parenting Essentials business, as the Company worked with retailers to bring their existing inventories into compliance with child safety protection laws enacted during the second half of 2008, and the Décor business, which has been impacted by the slowdown in residential construction. Net sales declined an additional 6.0% due to decreased sales in certain Rubbermaid Food & Home Products categories that the Company plans to exit before the end of 2009 and 3.1% due to unfavorable foreign currency impacts. The Aprica acquisition increased sales $25.8 million, or 4.2%, versus the prior year.

Operating income for the three months ended March 31, 2009 was $60.3 million, or 10.8% of sales, an increase of $6.9 million, or 12.9%, from $53.4 million, or 8.8% of sales, for the three months ended March 31, 2008. Management of SG&A spending, which contributed approximately $14.0 million to the year-over-year improvement in operating income, was the primary driver of the increase. The remainder of the change in operating income was driven by favorable input costs offset by the impact of lower production volumes and unfavorable product mix.

Tools, Hardware & Commercial Products

Net sales for the three months ended March 31, 2009 were $328.0 million, a decrease of $79.2 million, or 19.4%, from $407.2 million for the three months ended March 31, 2008. Core sales declines accounted for approximately 20% of the overall deterioration in year-over-year sales as the impact of retailer inventory management, continued softness in the U.S. residential construction market, and increased weakness in industrial and commercial channels negatively impacted sales volumes. Unfavorable foreign currency caused an additional 4.6% decline, and the Technical Concepts acquisition increased sales $26.2 million, or 6.4%, versus the prior year.

Operating income for the three months ended March 31, 2009 was $38.0 million, or 11.6% of sales, a decrease of $23.0 million, or 37.7%, from $61.0 million, or 15.0% of sales, for the three months ended March 31, 2008. Core sales declines and lower production volumes resulted in an approximate $34 million decline in operating income, which was partially offset by reduced SG&A costs resulting from management of SG&A spending.

Office Products

Net sales for the three months ended March 31, 2009 were $318.2 million, a decrease of $100.1 million, or 23.9%, from $418.3 million for the three months ended March 31, 2008. Core sales declined 9.6%, which was primarily attributable to weak consumer demand and inventory destocking at the retail level, both domestically and internationally. Reduced sales relating to product line exits and unfavorable foreign currency contributed an additional 6.9% and 7.4%, respectively, to the year-over-year decline. In local currency, the North American business declined 21% to last year, while the international business declined 12%.

Operating income for the three months ended March 31, 2009 was $31.1 million, or 9.8% of sales, a decrease of $2.8 million, or 8.3%, from $33.9 million, or 8.1% of sales, for the three months ended March 31, 2008. The impact of core sales declines and reduced production volumes in response to weaker consumer demand were substantially offset by the impact of reduced SG&A spending, which contributed year-over-year operating income improvements of approximately $29 million in constant currency.

Liquidity and Capital Resources

Cash and cash equivalents increased as follows for the three months ended
March 31, (in millions):



                                                         2009         2008

       Cash used in operating activities                $ (11.2 )   $ (123.2)
       Cash used in investing activities                  (33.5 )      (68.4)
       Cash provided by financing activities              527.6        607.9
       Currency effect on cash and cash equivalents        (2.4 )        6.6

       Increase in cash and cash equivalents            $ 480.5     $  422.9

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 sheet.

Sources

Historically, the Company's primary sources of liquidity and capital resources have included cash provided by operations, proceeds from divestitures, issuance of debt, and use of available borrowing facilities.

Cash used by operating activities for the three months ended March 31, 2009 was $11.2 million compared to $123.2 million for the three months ended March 31, 2008. This improvement is primarily attributable to working capital improvements driven by a reduction in the inventory build-up in 2009 compared to 2008 and the timing of cash payments for taxes and accrued liabilities during the 2008 quarter.

In the three months ended March 31, 2009, the Company received proceeds of $758.0 million from the issuance of debt compared to $747.3 million in the three months ended March 31, 2008. 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. Proceeds from these note issuances were used to complete the convertible note hedge transactions and will be used to repay debt maturing in 2009 and 2010 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 Footnotes 5 and 6 of the Notes to Condensed Consolidated Financial Statements for additional information on these transactions. In the first quarter of 2009, the Company also borrowed $125.0 million under its syndicated revolving credit facility (the "Revolver") and repaid the amount during the first quarter of 2009. In March 2008, the Company completed the issuance of $500.0 million of senior notes due 2013 and $250.0 million of senior notes due 2018.

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 payments on notes payable, long-term debt, and the Revolver of $132.5 million and $79.6 million during the three months ended March 31, 2009 and 2008, respectively. The $132.5 million of repayments in the three months ended March 31, 2009 primarily relates to repayments of borrowings under the Revolver. Also, as part of the convertible note hedge transaction entered into in March 2009, the Company purchased call options from third parties for $69.0 million. See Footnotes 5 and 6 of the Notes to Condensed Consolidated Financial Statements for additional information on the call option transaction.

Aggregate dividends paid were $29.4 million and $58.8 million for the three months ended March 31, 2009 and 2008, respectively.

Capital expenditures were $32.4 million and $40.0 million for the three months ended March 31, 2009 and 2008, respectively. The largest single capital project in both 2009 and 2008 was the implementation of SAP.

The Company purchased the remaining noncontrolling interests in a consolidated subsidiary for $28.2 million during the three months ended March 31, 2009.

Cash used for restructuring activities was $20.0 million and $17.9 million for the three months ended March 31, 2009 and 2008, respectively, and is included in the cash flows from operating activities. These payments relate primarily to employee termination benefits.

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 March 31, 2009 were $755.9 million, and the Company had $690.0 million of borrowing capacity under its Revolver.

• Working capital at March 31, 2009 was $807.9 million compared to $159.7 million at December 31, 2008, and the current ratio at March 31, 2009 was 1.40:1 compared to 1.07:1 at December 31, 2008. The increase in working capital and the current ratio is primarily due to available cash resulting from the Company's financing activities during the first quarter of 2009. See Footnotes 5 and 6 of the Notes to Condensed Consolidated Financial Statements for further information.

• The Company monitors its overall capitalization by evaluating total debt to . . .