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 Rubbermaid®, Graco ®, Aprica®, Levolor®, Calphalon ®, Goody®, Sharpie®, Paper Mate ®, Dymo®, Parker®, Irwin ®, Lenox® and Technical ConceptsTM. The Company's multi-product offering consists of well-known name-brand consumer and commercial products in three business segments: Home & Family; Office Products; and Tools, Hardware & Commercial 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. The Company's results-to-date in 2009 have been adversely impacted by weakness in consumer confidence and consumer spending due to the deterioration in worldwide economic conditions. The Company's results for the first nine months of 2009 have been impacted by the following factors:

• Lower consumer confidence and corresponding lower demand, which has resulted in reduced consumer foot traffic and destocking of customer inventory, negatively impacting sales and contributing to an overall year-over-year core sales decline of approximately 9%. Core sales represent net sales excluding the impacts of acquisitions, currency and product line exits. The primary drivers of the core sales decline were continued weakness in economic conditions internationally, which resulted in a year-over-year core sales decline of approximately 12% in the Company's international businesses and weaker economic conditions and lower demand in the commercial and industrial channels, which contributed to a year-over-year core sales decline of approximately 19% in the Company's Tools, Hardware & Commercial Products segment.

• Less volatile commodities markets, which have resulted in lower input costs relative to last year, as the Company's input costs last year were higher due to dramatic raw material inflation.

• 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:

• Managed working capital to improve operating cash flows, with a particular focus on reducing inventory levels. During the first nine months of 2009, the Company focused on optimizing its production capacity and sourcing of finished goods to correspond to anticipated reductions in demand. The Company reduced inventory levels and realized cash flows from such reductions of $154 million in the first nine months of 2009, compared to approximately $85 million invested in inventory in the first nine months of 2008. The reduction in inventory levels contributed to operating cash flows of $416 million in the first nine months of 2009 compared to $243 million in the first nine months of 2008.

• 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 continues to make significant progress on these exits, and to date, the product line exits have resulted in an approximate 6% year-over-year sales decline.

• Continued to improve 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 Company also outlined and implemented an initiative with a focus on continuing to reduce structural overhead costs by simplifying work and improving cash flow, and implemented selected contingency plans to eliminate or delay costs where possible due to lower than expected sales.

• Increased investment in strategic SG&A activities as the Company's year-over-year core sales declines moderated and gross margins expanded. The Company increased investment in strategic SG&A in the third quarter of 2009 in selective areas to drive sales and enhance its new product pipeline and develop growth platforms for 2010 and beyond. The Company has targeted such investments in areas with the highest near-term sales growth potential, including the Home & Family businesses and certain Office Products categories. During the first nine months of 2009, the Company's selective investments in strategic brand-building and consumer demand creation included investments in the following:

• the "Uncap What's InsideTM" campaign for the Company's Sharpie® products;

• the expansion of the Calphalon product family to include the UnisonTM line of non-stick, dishwasher safe gourmet cookware;

• the expansion of Rubbermaid Food & Home's food storage product line to include Lock-ItsTM storage containers with locking lid tabs;

• the introduction of Graco products such as the BlossomTM 4-in-1 feeding chair and the Pack 'n Play® Playard with its Newborn NapperTM feature; and

• sales and new product development activities in selected areas to improve public health, including Technical ConceptsTM offering of hand sanitizer and hand cleanser dispensers, and education, such as mimio's interactive whiteboard technology and student response systems.

The Company expects to continue to make incremental investments in strategic SG&A activities through the remainder of 2009.

• Raised approximately $590 million in the public debt markets (after transaction costs and net costs associated with the convertible note hedge transactions) and completed a new receivables facility that provides for maximum borrowings of up to $200 million. The Company also repaid $448 million of amounts outstanding under its previous receivables facility and completed tender offers for the repayment of $325 million principal amount of medium-term notes. These actions were taken to improve liquidity, reduce short-term financing needs and improve the overall capital structure, and as a result of these and other actions, the Company reduced its total indebtedness by $212 million in the first nine months 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 enhance its liquidity.

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 nine months of 2009, the Company completed or began implementation of a number of restructuring programs as part of Project Acceleration to reduce and realign its manufacturing footprint, including two programs in its Home & Family segment in North America, two programs in its Office Products segment's international operations, and two programs in its Tools, Hardware & Commercial Products segment's international operations. Since the inception of Project Acceleration, the Company has reduced its manufacturing footprint by more than 40%, including the closure or disposition of 18 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 nine months 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 more than 10%, or 2,700 employees, over the last twelve months excluding the impact of acquisitions, including a 2,200 employee reduction during the first nine months of 2009.

The Company incurred $87 million of restructuring costs during the nine months ended September 30, 2009 and expects to incur restructuring costs between $110 and $120 million ($80 and $90 million after-tax) for the year ending December 31, 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 September 30, 2009, the remaining costs expected to be incurred to complete Project Acceleration are between $75 and $100 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 is 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, Office Products, and Tools, Hardware & Commercial 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 and nine months ended September 30, (in millions, except
percentages):



                                          Three Months Ended September 30,                 Nine Months Ended September 30,
                                            2009                    2008                   2009                     2008

Net sales                             $  1,449.0   100.0 %    $ 1,760.3   100.0 %    $ 4,157.2   100.0 %    $ 5,019.1      100.0%
Cost of products sold                      906.4    62.6        1,185.6    67.4        2,633.5    63.3        3,330.7       66.4

Gross margin                               542.6    37.4          574.7    32.6        1,523.7    36.7        1,688.4       33.6
Selling, general and
administrative expenses                    350.3    24.2          394.3    22.4          991.1    23.8        1,148.2       22.9
Restructuring costs                         27.0     1.9           13.5     0.8           87.0     2.1          101.3        2.0

Operating income                           165.3    11.4          166.9     9.5          445.6    10.7          438.9        8.7
Nonoperating expenses:
Interest expense, net                       35.7     2.5           38.8     2.2          106.6     2.6          103.3        2.1
Other expense, net                           0.6       -           54.8     3.1            2.5     0.1           55.0        1.1

Net nonoperating expenses                   36.3     2.5           93.6     5.3          109.1     2.7          158.3        3.2

Income from continuing operations
before income taxes                        129.0     8.9           73.3     4.2          336.5     8.1          280.6        5.6
Income taxes                                43.5     3.0           17.7     1.0          111.6     2.7           74.3        1.5

Income from continuing operations           85.5     5.9           55.6     3.2          224.9     5.4          206.3        4.1
Loss from discontinued
operations, net of tax                         -       -              -       -              -       -           (0.5 )       -

Net income                                  85.5     5.9           55.6     3.2          224.9     5.4          205.8        4.1
Net income noncontrolling
interests                                      -       -            0.6       -              -       -            1.4         -

Net income controlling interests      $     85.5     5.9 %    $    55.0     3.1 %    $   224.9     5.4 %    $   204.4        4.1%

Three Months Ended September 30, 2009 vs. Three Months Ended September 30, 2008

Consolidated Operating Results:

Net sales for the three months ended September 30, 2009 were $1,449.0 million, representing a decrease of $311.3 million, or 17.7%, from $1,760.3 million for the three months ended September 30, 2008. Core sales, which exclude the impact of foreign currency and product line exits, declined 9.6% compared to the prior year resulting from the weaker consumer sales environment and weakness in the industrial and commercial channels. Planned product line exits and foreign currency contributed an additional 6.0% and 2.1% to the year-over-year sales decline, respectively. Core sales of the Company's domestic and international businesses declined approximately 9% and 11%, respectively, versus the prior year.

Gross margin, as a percentage of net sales, for the three months ended September 30, 2009 was 37.4%, or $542.6 million, versus 32.6% of net sales, or $574.7 million, for the three months ended September 30, 2008. The primary drivers of the 480 basis point gross margin expansion included benefits realized from product line exits, moderating input costs compared to the three months ended September 30, 2008, and pricing initiatives in late 2008 and early 2009. These improvements more than offset the impact of reduced production volumes in the Company's manufacturing facilities attributable to the decline in sales and inventory reductions.

SG&A expenses for the three months ended September 30, 2009 were 24.2% of net sales, or $350.3 million, versus 22.4% of net sales, or $394.3 million, for the three months ended September 30, 2008. The $44.0 million decrease was primarily driven by the Company's continued management of SG&A spending resulting from cost reduction programs initiated during 2008 and the implementation of contingency plans during 2009 to mitigate the negative impact of the decline in sales. Foreign currency translation represented $8.8 million of the $44.0 million decline.

The Company recorded restructuring costs of $27.0 million and $13.5 million for the three months ended September 30, 2009 and 2008, respectively. 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. The restructuring costs for the three months ended September 30, 2009 included $10.9 million of facility and other exit and impairment costs, $9.0 million of employee severance, termination benefits and employee relocation costs, and $7.1 million of exited contractual commitments and other restructuring costs. The restructuring costs for the three months ended September 30, 2008 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. See Footnote 3 of the Notes to Condensed Consolidated Financial Statements for further information.

Operating income for the three months ended September 30, 2009 was 11.4% of net sales, or $165.3 million, versus 9.5% of net sales, or $166.9 million for the three months ended September 30, 2008. The 190 basis point improvement reflects the favorable impact of product line exits and moderating input costs in the three months ended September 30, 2009, partially offset by an increase in SG&A spending as a percentage of sales.

Interest expense, net, for the three months ended September 30, 2009 was $35.7 million versus $38.8 million for the three months ended September 30, 2008. Lower short-term interest rates drove the decrease in interest expense.

Other expense, net, for the three months ended September 30, 2009 was $0.6 million versus $54.8 million for the three months ended September 30, 2008. Other expense, net, in the three months ended September 30, 2008 is primarily attributable to the $52.2 million loss on the redemption of the Company's $250.0 million of medium-term Reset notes during July 2008.

The Company recognized income tax expense of $43.5 million for the three months ended September 30, 2009, compared to $17.7 million for the three months ended September 30, 2008. The Company's effective tax rate was 33.7% for the three months ended September 30, 2009, compared to 24.1% for the three months ended September 30, 2008. The increase in the effective tax rate was primarily a result of changes in the geographic mix of earnings, discrete tax benefits of $3.5 million realized in the three months ended September 30, 2008, as well as the effect of lower tax rates applied to various discrete period expenses in the three months ended September 30, 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 September 30,
(in millions, except percentages):



                                                  2009       2008       % Change

      Home & Family                             $   596.8   $   712.9    (16.3)%
      Office Products                               448.4       536.0   (16.3)
      Tools, Hardware & Commercial Products         403.8       511.4   (21.0)

      Total Net Sales                           $ 1,449.0   $ 1,760.3    (17.7)%

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

                                                2009          2008       % Change

     Home & Family                             $  83.9      $  60.2          39.4%
     Office Products                              53.9         60.3        (10.6)
     Tools, Hardware & Commercial Products        75.3         81.5         (7.6)
     Corporate                                   (20.8 )      (21.6)         3.7
     Restructuring costs                         (27.0 )      (13.5)

     Total Operating Income                    $ 165.3      $ 166.9         (1.0)%

Home & Family

Net sales for the three months ended September 30, 2009 were $596.8 million, a decrease of $116.1 million, or 16.3%, from $712.9 million for the three months ended September 30, 2008. Core sales declined 5.0%, primarily due to core sales declines in the Baby & Parenting Essentials and Décor global business units. Net sales declined an additional 10.3% due to decreased sales in certain Rubbermaid Food & Home Products categories that the Company is exiting and 1.0% due to unfavorable foreign currency translation.

Operating income for the three months ended September 30, 2009 was $83.9 million, or 14.1% of net sales, an increase of $23.7 million, or 39.4%, from $60.2 million, or 8.4% of net sales, for the three months ended September 30, 2008. Operating income improved primarily due to moderation of input costs compared to the prior year, lower SG&A expenses and the impact from product line exits. The favorable impacts more than offset the adverse effects of the core sales decline and unfavorable mix, which combined reduced operating income by approximately $5.3 million.

Office Products

Net sales for the three months ended September 30, 2009 were $448.4 million, a decrease of $87.6 million, or 16.3%, from $536.0 million for the three months ended September 30, 2008. Core sales declined 7.1%, which was primarily attributable to continued softness in the office products category, both domestically and internationally. Reduced sales relating to product line exits and unfavorable foreign currency contributed an additional 5.8% and 3.4%, respectively, to the decline.

Operating income for the three months ended September 30, 2009 was $53.9 million, a decrease of $6.4 million, or 10.6%, from $60.3 million for the three months ended September 30, 2008. Operating income as a percentage of net sales improved to 12.0% for the three months ended September 30, 2009, compared to 11.3% for the three months ended September 30, 2008. The improvement in operating income reflects the positive impact from SG&A cost management, which contributed year-over-year operating income improvements of $10.7 million in constant currency, as well as the benefit from product line exits, partially offset by lower core sales and the adverse impact of lower production volumes.

Tools, Hardware & Commercial Products

Net sales for the three months ended September 30, 2009 were $403.8 million, a decrease of $107.6 million, or 21.0%, from $511.4 million for the three months ended September 30, 2008. Core sales declined 18.9% as sustained weakness in residential construction spending and continued softness in industrial and commercial channels negatively impacted sales volumes. Unfavorable foreign currency contributed an additional 2.1% to the sales decline.

Operating income for the three months ended September 30, 2009 was $75.3 million, or 18.6% of sales, a decrease of $6.2 million, or 7.6%, from $81.5 million, or 15.9% of sales, for the three months ended September 30, 2008. The impacts of core sales declines and lower production volumes, which, combined, adversely impacted operating income by approximately $36.8 million, were partially offset by reduced SG&A costs resulting from management of SG&A spending. The lower production volumes were primarily the result of aggressive management of inventory levels by the Company's customers and lower sales.

Nine Months Ended September 30, 2009 vs. Nine Months Ended September 30, 2008

Consolidated Operating Results:

Net sales for the nine months ended September 30, 2009 were $4,157.2 million, representing a decrease of $861.9 million, or 17.2%, from $5,019.1 million for the nine months ended September 30, 2008. Core sales declined 9.2% compared to the prior year resulting from lower consumer foot traffic and lower product demand as well as inventory destocking at the retail level and in the commercial and industrial channels. Planned product line exits and foreign currency contributed an additional 5.5% and 3.5% to the year-over-year sales decline, respectively. The impacts of the Technical Concepts and Aprica acquisitions increased sales 1.0% over the prior year. Core sales of the Company's domestic and international businesses declined approximately 8% and 12%, respectively, versus the prior year.

Gross margin, as a percentage of net sales, for the nine months ended September 30, 2009 was 36.7%, or $1,523.7 million, versus 33.6% of net sales, or $1,688.4 million, for the nine months ended September 30, 2008. The 310 basis point year-over-year improvement was primarily driven by the positive impact from planned product line exits, favorable input costs, and pricing actions initiated late in 2008 and early 2009, which more than offset the negative effect of reduced production volumes in the Company's manufacturing facilities and unfavorable mix.

SG&A expenses for the nine months ended September 30, 2009 were 23.8% of net sales, or $991.1 million, versus 22.9% of net sales, or $1,148.2 million, for the nine months ended September 30, 2008. The decrease in SG&A expenses was primarily driven by the Company's continued management of SG&A spending to mitigate the negative impact of the decline in sales, which resulted in a $129.4 million year-over-year decline in constant currency. Foreign currency represented an additional $48.9 million of the decline, and the impacts of these items were partially offset by $21.2 million of incremental SG&A costs resulting from the Technical Concepts and Aprica acquisitions.

The Company recorded restructuring costs of $87.0 million and $101.3 million for the nine months ended September 30, 2009 and 2008, respectively. The decrease in restructuring costs for the nine months ended September 30, 2009 compared to the prior year is primarily attributable to $36.0 million of asset impairment charges recorded in 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 restructuring costs for the nine months ended September 30, 2009 included $24.2 million of facility and other exit costs, $41.4 million of employee severance, termination benefits and employee relocation costs, and $21.4 million of exited contractual commitments and other restructuring costs. The restructuring costs for the nine months ended . . .