Edgar Filing: NEWELL RUBBERMAID INC

NWL-12.31.2013-10K

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013		COMMISSION FILE NUMBER 1-9608

NEWELL RUBBERMAID INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




DELAWARE		36-3514169
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Three Glenlake Parkway		30328
Atlanta, Georgia		(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (770) 418-7000

Securities registered pursuant to Section 12(b) of the Act:



TITLE OF EACH CLASS Common Stock, $1 par value per share			NAME OF EACH EXCHANGE ON WHICH REGISTERED New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer þ		Accelerated Filer o
Non-Accelerated Filer o		Smaller Reporting Company o
(Do not check if a smaller reporting company)

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

There were 278.9 million shares of the Registrant’s Common Stock outstanding (net of treasury shares) as of January 31, 2014. The aggregate market value of the shares of Common Stock (based upon the closing price on the New York Stock Exchange on June 28, 2013) beneficially owned by non-affiliates of the Registrant was approximately $7.5 billion. For purposes of the foregoing calculation only, which is required by Form 10-K, the Registrant has included in the shares owned by affiliates those shares owned by directors and officers of the Registrant, and such inclusion shall not be construed as an admission that any such person is an affiliate for any purpose.

* * *

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Proxy Statement for its Annual Meeting of Stockholders to be held May 13, 2014.

Table of Contents

TABLE OF CONTENTS



PART I
	ITEM 1. BUSINESS	3
	ITEM 1A. RISK FACTORS	9
	ITEM 1B. UNRESOLVED STAFF COMMENTS	15
	ITEM 2. PROPERTIES	15
	ITEM 3. LEGAL PROCEEDINGS	17
	ITEM 4. MINE SAFETY DISCLOSURES	17
	SUPPLEMENTARY ITEM — EXECUTIVE OFFICERS OF THE REGISTRANT	18
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	19
	ITEM 6. SELECTED FINANCIAL DATA	20
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	49
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	52
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	98
	ITEM 9A. CONTROLS AND PROCEDURES	98
	ITEM 9B. OTHER INFORMATION	100
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	100
	ITEM 11. EXECUTIVE COMPENSATION	100
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	100
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	100
	ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	101
PART IV
	ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	101
SIGNATURES		107
Statement of Computation of Earnings to Fixed Charges
Significant Subsidiaries
Consent of Independent Registered Public Accounting Firm
302 Certification of Chief Executive Officer
302 Certification of Chief Financial Officer
906 Certification of Chief Executive Officer
906 Certification of Chief Financial Officer

Table of Contents

PART I

ITEM 1. BUSINESS

“Newell Rubbermaid” or the “Company” refers to Newell Rubbermaid Inc. alone or with its wholly owned subsidiaries, as the context requires. When this report uses the words “we” or “our,” it refers to the Company and its subsidiaries unless the context otherwise requires.

Website Access to Securities and Exchange Commission Reports

The Company makes available free of charge on or through its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the Securities and Exchange Commission. The Company’s Internet website can be found at www.newellrubbermaid.com. The information on the Company’s website is not incorporated by reference into this annual report on Form 10-K.

GENERAL

Newell Rubbermaid is a global marketer of consumer and commercial products that help people get more out of life every day, where they live, learn, work and play. The Company’s products are marketed under a strong portfolio of leading brands, including Sharpie^®,Paper Mate^®, Parker^®, Waterman^®, Dymo^®, Rubbermaid^®, Levolor^®, Goody^®, Calphalon^®, Irwin^®, Lenox^®, Rubbermaid Commercial Products^®, Graco^® and Aprica^®.

The Company is driving its strategy, the Growth Game Plan, into action and simplifying its structure through the execution of Project Renewal, making sharper portfolio choices and investing in new marketing and innovation to accelerate performance. In the Growth Game Plan operating model, the Company has reorganized around two core activity systems, Development and Delivery, supported by three business partnering functions, Human Resources, Finance/IT and Legal, and four winning capabilities in Design, Marketing & Insight, Supply Chain and Customer Development, all in service to drive accelerated performance in the Company’s five segments. The Company’s five business segments and the key brands included in each segment are as follows:


•	Writing: Sharpie^®, Paper Mate^®, Expo^®, Prismacolor^®, Parker^®, Waterman^®, Dymo^® Office and Endicia^®


•	Home Solutions: Rubbermaid^®, Calphalon^®, Levolor^® and Goody^®


•	Tools: Irwin^®, Lenox^®, hilmor^TM and Dymo^® Industrial


•	Commercial Products: Rubbermaid Commercial Products^® and Rubbermaid^® Healthcare


•	Baby & Parenting: Graco^®, Aprica^®and Teutonia^®

During 2013, the Company divested its Hardware and Teach businesses, which were primarily included in the former Specialty segment. Accordingly, the results of operations of these businesses have been classified as discontinued operations for all periods presented. The remaining businesses in the former Specialty segment, specifically Dymo Office and Endicia, were combined with the Writing segment given the significant channel and operating synergies.

Refer to the forward-looking statements section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Company’s forward-looking statements included in this report.

STRATEGIC INITIATIVES

Newell Rubbermaid 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 superior performance and value. The Company intends to continue to leverage its portfolio of leading brands to create a margin structure that allows for brand investment.

The Company is executing its Growth Game Plan, which is its strategy to simplify the organization and free up resources to invest in growth initiatives and strengthened capabilities in support of the Company’s brands. The changes being implemented in the execution of the Growth Game Plan are considered key enablers to building a bigger, faster-growing, more global and more profitable company.

Table of Contents

The Growth Game Plan encompasses the following aspects:

Business Model


•	A growing brand-led business with a strong home in the United States and global ambition.


•	Consumer brands that win at the point of decision through excellence in performance, design and innovation.


•	Professional brands that win the loyalty of the chooser by improving the productivity and performance of the user.


•	Collaboration with our partners across the total enterprise in a shared commitment to growth and creating value.


•	Delivering competitive returns to shareholders through consistent, sustainable and profitable growth.

Where To Play


•	Win Bigger — Deploying resources to businesses and regions with higher growth opportunities through investments in innovation and geographic expansion.


•	Win Where We Are — Optimizing the performance of businesses and brands in existing markets by investing in innovation to increase market share and reducing structural spend within the existing geographic footprint.


•	Incubate For Growth — Investing in businesses that have unique opportunities for growth, with a primary focus on businesses that are in the early stages of the business cycle.

5 Ways To Win


•	Make Our Brands Really Matter — Sharpening brand strategies on the highest impact growth levers and partnering to win with customers and suppliers.


•	Build An Execution Powerhouse — Realigning the customer development organization and developing joint business plans for new channel penetration and broader distribution.


•	Unlock Trapped Capacity For Growth — Delivering savings from ongoing restructuring projects, working capital reductions and simplification of business processes.


•	Develop The Team For Growth — Driving a performance culture aligned to the business strategy and building a more global perspective and talent base.


•	Extend Beyond Our Borders — Accelerating investments and growth in emerging markets.

The Company’s transformation efforts in driving the Growth Game Plan into action began in late 2011 and are being implemented over a multi-year period in three phases, which are outlined below.


•	Delivery Phase — Execution during this phase includes implementing structural changes in the organization while ensuring consistent execution and delivery.


•	Strategic Phase — Continued consistent execution and delivery while simultaneously shaping the future through increased brand investment and bringing capabilities to speed in order to propel the Growth Game Plan into action.


•	Acceleration Phase — Expanded investments behind Win Bigger businesses to drive increased sales and margin expansion which creates additional resources for further brand investment, while also remaining focused on consistent execution and delivery.

During 2013, the Company transitioned from the Delivery Phase to the Strategic Phase, continuing the cadence of consistent execution and delivery while simultaneously implementing its change agenda. During 2014, the Company expects to remain focused on the Strategic Phase of the Growth Game Plan.

Table of Contents

The Company will continue implementing changes to drive its strategy, the Growth Game Plan, into action. These changes are the foundation of Project Renewal and are organized into the following five workstreams:


•	Organizational Simplification: The Company has de-layered its top structure and further consolidated its businesses from nine global business units (“GBUs”) to five business segments.


•	EMEA Simplification: The Company will focus its resources on fewer products and countries, while simplifying go-to-market, delivery and back office support structures.


•	Best Cost Finance: The Company will deliver a simplified approach to decision support, transaction processing and information management by leveraging SAP and the streamlined business segments to align resources with the Growth Game Plan.


•	Best Cost Back Office: The Company will drive “One Newell Rubbermaid” efficiencies in customer and consumer services and sourcing functions.


•	Supply Chain Footprint: The Company will further optimize manufacturing and distribution facilities across its global supply chain.

In implementing its strategy and its change agenda, the Company is focused on Every Day Great Execution, or EDGE, to capitalize on and maximize the benefits of investment and growth opportunities and to optimize the cost structure of the business.

BUSINESS SEGMENTS

The Company’s five segments and the key brands included in each of the five business segments are as follows:



Segment	Key Brands	Description of Primary Products
Writing	Sharpie^®, Paper Mate^®, Expo^®, Parker^®, Waterman^®, Dymo^® Office, Endicia^®	Writing instruments, including markers and highlighters, pens and pencils; art products; fine writing instruments; office technology solutions, including labeling and on-line postage solutions
Home Solutions	Rubbermaid^®, Calphalon^®, Levolor^®, Goody^®	Indoor/outdoor organization, food storage and home storage products; gourmet cookware, bakeware and cutlery; drapery hardware and window treatments; hair care accessories
Tools	Irwin^®, Lenox^®, hilmor^TM, Dymo^® Industrial	Hand tools and power tool accessories; industrial bandsaw blades; tools for pipes and HVAC systems; label makers and printers for industrial use
Commercial Products	Rubbermaid Commercial Products^®, Rubbermaid^® Healthcare	Cleaning and refuse products, hygiene systems, material handling solutions; medical and computer carts and wall-mounted workstations
Baby & Parenting	Graco^®, Aprica^®, Teutonia^®	Infant and juvenile products such as car seats, strollers, highchairs and playards

Writing

The Company’s Writing segment is comprised primarily of Win Bigger businesses within the framework of the Growth Game Plan. The Writing segment designs, manufactures or sources and distributes writing instruments and office technology solutions, primarily for use in business and the home. The segment’s product offerings include markers, highlighters, and everyday and fine writing instruments and accessories. Permanent/waterbase markers, dry erase markers, highlighters and art supplies are primarily sold under the Sharpie^®, Expo^®, Sharpie^® Accent^® and Prismacolor^® trademarks. Ballpoint pens and inks, roller ball pens, mechanical pencils and correction supplies are primarily sold under the Paper Mate^®, InkJoy^®, Uni-Ball^® (used under exclusive license from Mitsubishi Pencil Co. Ltd. and its subsidiaries in North America and certain areas in Latin America), Sharpie^®, Mongol^® and Liquid Paper^®trademarks. Fine writing instruments are primarily sold under the Parker^®, Waterman^® and Rotring^® trademarks. The Writing segment’s technology products include on-demand labeling products and online postage solutions and are primarily sold under the trademarks Dymo^®Office and Endicia^®.

The Writing segment generally markets its products directly to mass merchants, warehouse clubs, grocery/drug stores, office superstores, office supply stores, contract stationers, travel retail and other retailers.

Table of Contents

Home Solutions

The Company’s Home Solutions segment is a Win Where We Are business within the framework of the Growth Game Plan. The Home Solutions segment designs, manufactures or sources and distributes a wide range of consumer products under multiple brand names. Indoor/outdoor organization products and food and home storage products are primarily sold under the Rubbermaid^®, Roughneck^® and TakeAlongs^® trademarks. Aluminum and stainless steel cookware, bakeware, cutlery, and kitchen gadgets and utensils are primarily sold under the Calphalon^®, Kitchen Essentials^®, Cooking with Calphalon™ and Calphalon^®Unison™ trademarks. Window treatments and drapery hardware are primarily sold under the Levolor^® trademark. Hair care accessories and grooming products are marketed primarily under the Goody^®trademark.

The Home Solutions segment primarily markets its products directly to mass merchants and specialty, grocery/drug and department stores.

Tools

The Company’s Tools segment is a Win Bigger business within the framework of the Growth Game Plan. The Tools segment designs, manufactures or sources and distributes hand tools and power tool accessories, industrial bandsaw blades, tools and industrial labeling solutions. Hand tools and power tool accessories are primarily sold under the Irwin^®, Vise-Grip^® and Marathon^®trademarks, while industrial bandsaw blades and cutting and drilling accessories are sold under the Lenox^® trademark. Heating, ventilation and air conditioning (HVAC) tools are sold under the hilmor^TM trademark, and industrial label makers are sold under the Dymo^® trademark.

The Tools segment primarily markets its products through distributors and directly to mass merchants, home centers, industrial/construction outlets and other professional customers.

Commercial Products

The Company’s Commercial Products segment is comprised primarily of Win Bigger businesses within the framework of the Growth Game Plan. The Commercial Products segment designs, manufactures or sources and distributes cleaning and refuse products, hygiene systems, material handling solutions and medical and computer carts. Rubbermaid Commercial Products^® primarily sells its cleaning and refuse products, hygiene systems, material handling solutions and medical and computer carts and wall-mounted workstations under the trademarks Rubbermaid^®, Brute^® and Rubbermaid^®Healthcare.

The Commercial Products segment primarily markets its products through distributors and directly to mass merchants, home centers, commercial products distributors, select contract customers and other professional customers.

Baby & Parenting

The Company’s Baby & Parenting segment is a Win Where We Are business within the framework of the Growth Game Plan. The Baby & Parenting segment designs and distributes infant and juvenile products such as car seats, strollers, swings, highchairs and playards, and primarily sells its products under the trademarks Graco^®, Aprica^®and Teutonia^®. The Baby & Parenting segment sources substantially all of its products.

The Baby & Parenting segment primarily markets its products directly to mass merchants, department stores and on-line retailers.

Table of Contents

NET SALES BY BUSINESS SEGMENT

The following table sets forth the amounts and percentages of the Company’s net sales for continuing operations for 2013, 2012 and 2011 for the Company’s five business segments. During 2013, the Company divested its Hardware and Teach businesses, which were primarily included in the former Specialty segment. The net sales of these businesses have been classified as discontinued operations for all periods presented and are therefore not included in the table below. The net sales of the remaining businesses in the former Specialty segment, specifically Dymo Office and Endicia, have been included in the Writing segment’s net sales (in millions, except percentages).



	2013		% of Total		2012		% of Total		2011		% of Total
Writing	$	1,706.1	30.0	%	$	1,724.2	30.9	%	$	1,708.2	31.0	%
Home Solutions	1,593.3		27.9	%	1,553.8		27.9	%	1,602.0		29.1	%
Tools	817.9		14.4	%	806.1		14.4	%	779.6		14.1	%
Commercial Products	785.9		13.8	%	759.7		13.6	%	741.5		13.5	%
Baby & Parenting	789.3		13.9	%	736.1		13.2	%	680.4		12.3	%
Total Company	$	5,692.5	100.0	%	$	5,579.9	100.0	%	$	5,511.7	100.0	%

Sales to Wal-Mart Stores, Inc. and subsidiaries, which includes Sam’s Club, amounted to approximately 11.0%, 10.2% and 10.6% of consolidated net sales for 2013, 2012 and 2011, respectively, substantially across all segments. For more detailed segment information, including operating income and identifiable assets by segment, refer to Footnote 18 of the Notes to Consolidated Financial Statements.

OTHER INFORMATION

Multi-Product Offering

The Company’s broad product offering in multiple categories permits it to more effectively meet the needs of its customers. With families of leading brand names and profitable and innovative new products, the Company can assist volume purchasers in selling a more profitable product mix. As a potential single source for an entire product line, the Company can use program merchandising to improve product presentation, optimize display space for both sales and income, and encourage impulse buying by retail consumers.

Customer Marketing and Service

The Company strives to develop long-term, mutually beneficial partnerships with its customers and to be their supplier and brand of choice. To achieve this goal, the Company has a value-added marketing program that offers a family of leading brand name consumer products, tailored sales programs, innovative merchandising support, in-store services and responsive top management.

The Company strives to enhance its relationships with customers through exceptional customer service. The Company’s ability to provide superior customer service is a result of its supply chain, information technology, and marketing and merchandising programs that are designed to enhance the sales and profitability of its customers and provide consistent on-time delivery of its products.

A critical element of the Company’s customer service is consistent on-time delivery of products to its customers. Retailers are pursuing a number of strategies to deliver the highest-quality, best-cost products to their customers. Retailers frequently purchase on a “just-in-time” basis in order to reduce inventory carrying costs and increase returns on investment. As retailers shorten their lead times for orders, manufacturers and suppliers need to more closely anticipate consumer buying patterns. The Company supports its retail customers’ “just-in-time” inventory strategies through more responsive manufacturing and distribution capabilities and electronic communications.

Foreign Operations

Information regarding the Company’s 2013, 2012 and 2011 foreign operations and financial information by geographic area is included in Footnote 18 of the Notes to Consolidated Financial Statements and is incorporated by reference herein. Information regarding risks relating to the Company’s foreign operations is set forth in Part I, Item 1A, of this report and is incorporated by reference herein.

Table of Contents

Bolivar Fuertes to U.S. Dollar. Previously, the Company remeasured its operations denominated in Bolivar Fuertes at the rate of exchange used by the Transaction System for Foreign Currency Denominated Securities (SITME) of 5.3 Bolivar Fuertes to U.S. Dollar. As a result, the Company recorded a charge of $11 million in the first quarter of 2013, based on the decline in value of the net monetary assets of its Venezuelan operations that are denominated in Bolivar Fuertes. The Company is unable to predict with certainty whether future devaluations will occur because of economic and political uncertainty in Venezuela; however, such devaluations would adversely affect the Company’s future financial results.

Raw Materials and Sourced Finished Goods

The Company has multiple foreign and domestic sources of supply for substantially all of its material requirements. The raw materials and various purchased components required for its products have generally been available in sufficient quantities. The Company’s product offerings require the purchase of resin, corrugate and metals, including steel, stainless steel, aluminum and gold. The Company’s resin purchases principally comprise polyethylene and polypropylene. Over the long-term, the Company has experienced inflation in raw material prices, and the Company expects continued inflation pressures in 2014. On an annualized basis, commodities consumed as raw materials generally represent approximately 10% to 15% of annual cost of products sold, with no single type of commodity representing more than 10% of cost of products sold.

The Company also relies on third-party manufacturers as a source for finished goods. Historically, the Company has experienced inflation in sourced product costs due to currency fluctuations and increased input and labor costs. In a limited number of cases, a single manufacturer or a limited number of manufacturers may supply substantially all of the finished goods for a product line. In particular, certain businesses within the Baby & Parenting and Home Solutions segments rely on third-party manufacturers for substantially all of their products. Specifically, the Company’s Baby & Parenting segment has a single source of supply for products that comprise a majority of Baby & Parenting’s sales and which owns the intellectual property for many of those products.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

Backlog

The dollar value of unshipped factory orders is not material.

Seasonal Variations

Sales of the Company’s products tend to be seasonal, with sales and operating income in the first quarter generally lower than any other quarter during the year, driven principally by reduced volume and the mix of products sold in the first quarter. Historically, the Company has earned approximately 60% of its annual operating income during the second and third quarters of the year. The seasonality of the Company’s sales volume, combined with the accounting for fixed costs such as depreciation, amortization, rent, personnel costs and interest expense, impacts the Company’s results on a quarterly basis. In addition, the Company has historically generated more than 75% of its operating cash flow in the second half of the year due to seasonal variations in operating results, the timing of annual performance-based compensation payments and customer rebates, and credit terms provided to customers.

Patents and Trademarks

The Company has many patents, trademarks, brand names and trade names that are, in the aggregate, important to its business. The Company’s most significant registered trademarks are “Sharpie^®,” “Paper Mate^®,” “Parker^®,” “Waterman^®,” “Dymo^®,” “Rubbermaid^®,” “Levolor^®,” “Goody^®,” “Calphalon^®,” “Irwin^®,” “Lenox^®,” “Graco^®” and “Aprica^®.”

Customers/Competition

The Company’s principal customers are large mass merchandisers, such as discount stores, home centers, warehouse clubs, office superstores, commercial distributors and e-commerce companies. The dominant share of the market represented by large mass merchandisers, together with consumer shopping patterns, contributes to a market environment in which dominant multi-category retailers and e-commerce companies have strong negotiating power with suppliers. This environment may limit the Company’s ability to recover cost increases through selling prices.

Current trends among retailers and e-commerce companies include fostering high levels of competition among suppliers, demanding innovative new products and requiring suppliers to maintain or reduce product prices and deliver products with shorter lead times. Other trends, in the absence of a strong new product development effort or strong end-user brands, are for retailers and e-commerce companies to import generic products directly from foreign sources and to source and sell products, under their own private label brands, which compete with products of the Company. The combination of these market influences has created an intensely competitive environment in which the Company’s principal customers continuously evaluate which product suppliers to use, resulting in downward pricing pressures and the need for big, consumer-meaningful brands, the ongoing introduction and

Table of Contents

commercialization of innovative new products, continuing improvements in category management and customer service, and the maintenance of strong relationships with large, high-volume purchasers. The Company competes with numerous manufacturers and distributors of consumer products, many of which are large and well-established.

During 2013, two of the Company’s primary customers, Office Depot and OfficeMax, merged. While the Company is unable to predict the financial impact and timing of such impact, the merger could adversely impact the Company’s net sales in the short term, particularly in the Writing segment, to the extent there are store closures and retail inventory reductions as a result of the merger.

The Company’s principal methods of meeting its competitive challenges are creating and maintaining consumer-meaningful brands and differentiated products that deliver superior value and performance; delivering superior customer service and consistent on-time delivery; producing and procuring products at a competitive cost; and experienced management. In addition, the Company focuses on building consumer loyalty and increased consumer demand through increased investment in consumer insights and using those insights to develop innovative products and product features that meet consumers’ needs.

The Company has also positioned itself to respond to the competitive challenges in the retail environment by developing strong relationships with large, high-volume purchasers. The Company markets its strong multi-product offering through virtually every category of high-volume retailer, including discount, drug, grocery and variety chains; warehouse clubs; department, hardware and specialty stores; home centers; office superstores; contract stationers; and e-commerce companies. The Company’s largest customer, Wal-Mart (which includes Sam’s Club), accounted for approximately 11.0% of net sales in 2013, across substantially all segments. The Company’s top-ten customers in 2013 included (in alphabetical order): Amazon, Bed Bath & Beyond, Lowe’s, Office Depot, Staples, Target, The Home Depot, Toys ‘R’ Us, United Stationers and Wal-Mart.

Environmental Matters

Information regarding the Company’s environmental matters is included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this report and in Footnote 19 of the Notes to Consolidated Financial Statements and is incorporated by reference herein.

Research and Development

The Company’s research and development efforts focus on developing new, differentiated and innovative products to meet consumers’ needs. The Company’s product development efforts begin with consumer insights. The Company is consolidating its consumer marketing and insight capabilities into a global center of excellence and is investing to strengthen these capabilities. The Company also continues to invest to strengthen its product design and research and development capabilities, which includes the consolidation and relocation of its design and innovation capabilities into a new center of excellence. The Company’s enhanced marketing and insight and research and development capabilities have been leveraged to implement a new ideation process throughout the business, resulting in idea fragments that feed the development of product concepts.

Information regarding the Company’s research and development costs for each of the past three years is included in Footnote 1 of the Notes to Consolidated Financial Statements and is incorporated by reference herein.

Employees

As of December 31, 2013, the Company had approximately 18,300 employees worldwide, including approximately 1,500 employees at a facility in Shenzen, China, whose employment was transferred from a third-party processor to a subsidiary of the Company during 2013. Approximately 2,500 of the Company’s employees are covered by collective bargaining agreements or are located in countries that have collective arrangements decreed by statute.

ITEM 1A. RISK FACTORS

The factors that are discussed below, as well as the matters that are generally set forth in this report on Form 10-K and the documents incorporated by reference herein, could materially and adversely affect the Company’s business, results of operations and financial condition.

The Company is subject to risks related to its dependence on the strength of retail, commercial and industrial sectors of the economy in various parts of the world.

The Company’s business depends on the strength of the retail, commercial and industrial sectors of the economy in various parts of the world, primarily in North America, and to a lesser extent Europe, Central and South America, and Asia. These sectors of the economy are affected primarily by factors such as consumer demand and the condition of the retail industry, which, in turn,

Table of Contents

are affected by general economic conditions. With continuing challenging economic conditions in the U.S., Western Europe and elsewhere, there has been considerable pressure on consumer demand, and the resulting impact on consumer spending has had and may continue to have an adverse effect on demand for the Company’s products, as well as its financial condition and results of operations. The Company could also be negatively impacted by economic crises in specific countries or regions, including the deterioration in the creditworthiness of, or a default by, the issuers of sovereign debt. Such events could negatively impact the Company’s overall liquidity and/or create significant credit risks relative to its local customers and depository institutions. Consumer demand and the condition of these sectors of the economy may also be impacted by other external factors such as war, terrorism, geopolitical uncertainties, public health issues, natural disasters and other business interruptions. The impact of these external factors is difficult to predict, and one or more of these factors could adversely impact the Company’s business.

The Company is subject to intense competition in a marketplace dominated by large retailers and e-commerce companies.

The Company competes with numerous other manufacturers and distributors of consumer and commercial products, many of which are large and well-established. The Company’s principal customers are large mass merchandisers, such as discount stores, home centers, warehouse clubs, office superstores, commercial distributors and e-commerce companies. The dominant share of the market represented by these large mass merchandisers, together with changes in consumer shopping patterns, has contributed to the formation of dominant multi-category retailers and e-commerce companies that have strong negotiating power with suppliers. Current trends among retailers and e-commerce companies include fostering high levels of competition among suppliers, demanding innovative new products, requiring suppliers to maintain or reduce product prices, and requiring product delivery with shorter lead times. Other trends are for retailers and e-commerce companies to import products directly from foreign sources and to source and sell products under their own private label brands, typically at lower prices, that compete with the Company’s products.

The combination of these market influences and retailer consolidation has created an intensely competitive environment in which the Company’s principal customers continuously evaluate which product suppliers to use, resulting in downward pricing pressures and the need for big, consumer-meaningful brands, the ongoing introduction and commercialization of innovative new products, continuing improvements in category management and customer service, and the maintenance of strong relationships with large, high-volume purchasers. The Company also faces the risk of changes in the strategy or structure of its major customers, such as overall store and inventory reductions and consolidation with other customers. The intense competition in the retail and e-commerce sectors, combined with the overall economic environment, may result in a number of customers experiencing financial difficulty, or failing in the future. In particular, a loss of, or a failure by, one of the Company’s large customers would adversely impact the Company’s sales and operating cash flows. To address these challenges, the Company must be able to respond to competitive factors, and the failure to respond effectively could result in a loss of sales, reduced profitability and a limited ability to recover cost increases through price increases.

The Company’s plans to continue to improve productivity and reduce complexity and costs may not be successful, which would adversely affect its ability to compete.

The Company’s success depends on its ability to continuously improve its manufacturing operations to gain efficiencies, reduce supply chain costs and streamline or redeploy nonstrategic selling, general and administrative expenses in order to produce products at a best-cost position and allow the Company to invest in innovation and brand building. The Company is currently in the process of implementing Project Renewal, a global initiative designed to reduce the complexity of the organization, increase investment in the Company’s most significant growth platforms and align the business around two key activities - Brand & Category Development and Market Execution & Delivery. Project Renewal may not be completed substantially as planned, may be more costly to implement than expected, or may not result in, in full or in part, the positive effects anticipated. In addition, such initiatives require the Company to implement a significant amount of organizational change, which could have a negative impact on employee engagement, divert management’s attention from other concerns, and if not properly managed, impact the Company’s ability to retain key employees, cause disruptions in the Company’s day-to-day operations and have a negative impact on the Company’s financial results. It is also possible that other major productivity and streamlining programs may be required in the future.

If the Company is unable to commercialize a continuing stream of new products that create demand, the Company’s ability to compete in the marketplace may be adversely impacted.

The Company’s strategy includes investment in new product development and a focus on innovation. Its long-term success in the competitive retail environment and the industrial and commercial markets depends on its ability to develop and commercialize a continuing stream of innovative new products and line extensions that create demand. New product development and commercialization efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, have inherent risks. These risks include the considerable costs involved, such as development and commercialization, product development or launch delays, and the failure of new products and line extensions to achieve anticipated levels of market acceptance or growth in sales or operating income. The Company also faces the risk that its competitors will introduce innovative

Table of Contents

new products that compete with the Company’s products. In addition, sales generated by new products or line extensions could cause a decline in sales of the Company’s existing products. If new product development and commercialization efforts are not successful, the Company’s financial results could be adversely affected.

If the Company does not continue to develop and maintain consumer-meaningful brands, its operating results may suffer.

The Company’s ability to compete successfully also depends increasingly on its ability to develop and maintain consumer-meaningful brands so that the Company’s retailer and other customers will need the Company’s products to meet consumer demand. Consumer-meaningful brands allow the Company to realize economies of scale in its operations. The development and maintenance of such brands require significant investment in brand-building and marketing initiatives. While the Company plans to continue to increase its expenditures for advertising and other brand-building and marketing initiatives over the long term, the initiatives may not deliver the anticipated results and the results of such initiatives may not cover the costs of the increased investment.

Price increases in raw materials and sourced products could harm the Company’s financial results.

The Company purchases raw materials, including resin, principally polyethylene and polypropylene, corrugate, steel, gold, zinc, brass and aluminum, which are subject to price volatility and inflationary pressures. The Company’s success is dependent, in part, on its continued ability to reduce its exposure to increases in those costs through a variety of programs, including periodic purchases, future delivery purchases, long-term contracts, sales price adjustments and certain derivative instruments, while maintaining and improving margins and market share. Also, the Company relies on third-party manufacturers as a source for its products. These manufacturers are also subject to price volatility and labor cost and other inflationary pressures, which may, in turn, result in an increase in the amount the Company pays for sourced products. Raw material and sourced product price increases may more than offset the Company’s productivity gains and price increases and adversely impact the Company’s financial results.

If the Company is unable to make strategic acquisitions and to integrate its acquired businesses, the Company’s future growth and profitability could be adversely impacted.

The Company’s ability to continue to make strategic acquisitions and to integrate the acquired businesses successfully remain important factors in the Company’s future growth. The Company’s ability to successfully integrate any acquired business is dependent upon its ability to identify suitable acquisition candidates, integrate and manage product lines that have been acquired, obtain anticipated cost savings and operating income improvements within a reasonable period of time, assume unknown liabilities, known contingent liabilities that become realized or known liabilities that prove greater than anticipated, and manage unanticipated demands on the Company’s management, operational resources and financial and internal control systems. Furthermore, the Company’s ability to finance major acquisitions may be adversely affected by the Company’s financial position and access to credit markets. In addition, significant additional borrowings would increase the Company’s borrowing costs and could adversely affect its credit rating and could constrain the Company’s future access to capital. The Company may not successfully manage these or other risks it may encounter in acquiring a business or product line, which could have a material adverse effect on its business.

Circumstances associated with divestitures and product line exits could adversely affect the Company’s results of operations and financial condition.

The Company continues to evaluate the performance and strategic fit of its businesses and products and may decide to sell or discontinue a business or product based on such an evaluation. A decision to divest or discontinue a business or product may result in asset impairments, including those related to goodwill and other intangible assets, and losses upon disposition, both of which could have an adverse effect on the Company’s results of operations and financial condition. In addition, the Company may encounter difficulty in finding buyers or executing alternative exit strategies at acceptable prices and terms and in a timely manner. In addition, prospective buyers may have difficulty obtaining financing. Divestitures and business discontinuations could involve additional risks, including the following:


•	difficulties in the separation of operations, services, products and personnel;


•	the diversion of management's attention from other business concerns;


•	the retention of certain current or future liabilities in order to induce a buyer to complete a divestiture;


•	the disruption of the Company’s business; and


•	the potential loss of key employees.

The Company may not be successful in managing these or any other significant risks that it may encounter in divesting or discontinuing a business or exiting product lines, which could have a material adverse effect on its business.

Table of Contents

The Company is subject to risks related to its international operations and sourcing model.

International operations are important to the Company’s business, and the Company’s strategy emphasizes international growth. In addition, as the Company sources products in low-cost countries, particularly in Asia, it is exposed to additional risks and uncertainties. Foreign operations can be affected by factors such as currency devaluation; other currency fluctuations; tariffs; nationalization; exchange controls; labor inflation; interest rates; limitations on foreign investment in local business; compliance with U.S. laws affecting operations outside the United States, such as the Foreign Corrupt Practices Act; and other political, economic and regulatory risks and difficulties. The Company also faces risks due to the transportation and logistical complexities inherent in reliance on foreign sourcing.

Venezuela was designated as a highly inflationary economy effective January 1, 2010, and, accordingly, gains and losses resulting from the translation of the net assets (excluding nonmonetary assets) of operations in Venezuela into U.S. Dollars are recorded in earnings. In February 2013, the exchange rate for the Venezuelan currency, Bolivar Fuerte, declined approximately 15%, which adversely impacted the Company’s financial results. The Company is unable to predict with certainty whether future devaluations will occur because of the economic uncertainty in Venezuela. The future results of the Company’s Venezuelan operations will be affected by many factors, including actions by the Venezuelan government such as further currency devaluations, profit margin or price controls or changes in import controls, economic conditions in Venezuela such as inflation and consumer spending, labor relations, and the availability of raw materials, utilities and energy. The Company’s Venezuelan operations contribute a significant portion of the sales and operating income of the Company’s Latin America region. As a result, any disruption of the Company’s Venezuelan operations or of the Company’s ability to pay suppliers or repatriate funds from Venezuela could have a material adverse impact on the future performance of the Company’s Latin America region and could adversely affect the Company’s results of operations, financial condition and liquidity.

See Footnote 1 of the Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information.

The inability to obtain raw materials and finished goods in a timely manner from suppliers would adversely affect the Company’s ability to manufacture and market its products.

The Company purchases raw materials to be used in manufacturing its products. In addition, the Company relies on third-party manufacturers as a source for finished goods. The Company typically does not enter into long-term contracts with its suppliers or sourcing partners. Most raw materials and sourced goods are obtained on a “purchase order” basis; however, in limited cases where the Company has supply contracts with fixed prices, the Company may be required to purchase raw materials at above-market prices, which could adversely impact gross margins. In addition, in some instances the Company maintains single-source or limited-source sourcing relationships, either because multiple sources are not available or the relationship is advantageous due to performance, quality, support, delivery, capacity or price considerations. In particular, the Company’s Baby & Parenting business has a single source of supply for products that comprise a majority of Baby & Parenting’s sales and which owns the intellectual property for many of those products. Financial, operating or other difficulties encountered by the Company’s suppliers and/or sourcing partners or changes in the Company’s relationships with them could result in manufacturing or sourcing interruptions, delays and inefficiencies, and prevent the Company from manufacturing or obtaining the finished goods necessary to manufacture and market its products, which could have a material adverse effect on its business.

Table of Contents

A failure of one or more key information technology systems, networks, processes, associated sites or service providers could have a material adverse impact on the Company’s business or reputation.

The Company relies extensively on information technology (IT) systems, networks and services, including Internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third parties or their vendors, to assist in conducting business. The various uses of these IT systems, networks and services include, but are not limited to:


•	ordering and managing materials from suppliers;


•	converting materials to finished products;


•	shipping products to customers;


•	marketing and selling products to consumers;


•	collecting and storing customer, consumer, employee, investor and other stakeholder information and personal data;


•	processing transactions;


•	summarizing and reporting results of operations;


•	hosting, processing and sharing confidential and proprietary research, business plans and financial information;


•	complying with regulatory, legal or tax requirements;


•	providing data security; and


•	handling other processes necessary to manage the Company’s business.

Increased IT security threats and more sophisticated computer crime, including advanced persistent threats, pose a potential risk to the security of the Company’s IT systems, networks and services, as well as the confidentiality, availability and integrity of the Company’s data. If the IT systems, networks or service providers relied upon fail to function properly, or if the Company suffers a loss or disclosure of business or stakeholder information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and business continuity plans do not effectively address these failures on a timely basis, the Company may suffer interruptions in its ability to manage operations and reputational, competitive and/or business harm, which may adversely impact the Company’s results of operations and/or financial condition.

Impairment charges could have a material adverse effect on the Company’s financial results.

Future events may occur that would adversely affect the reported value of the Company’s assets and require impairment charges. Such events may include, but are not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment on the Company’s sales and customer base, the unfavorable resolution of litigation, a material adverse change in the Company’s relationship with significant customers or business partners, or a sustained decline in the Company’s stock price. The Company continues to evaluate the impact of economic and other developments on the Company and its business units to assess whether impairment indicators are present. Accordingly, the Company may be required to perform impairment tests based on changes in the economic environment and other factors, and these tests could result in impairment charges in the future.

The Company’s businesses are subject to regulation in the U.S. and abroad.

Changes in laws, regulations and related interpretations may alter the environment in which the Company does business. This includes changes in environmental, competitive and product-related laws, as well as changes in accounting standards, taxation and other regulations. Accordingly, the Company’s ability to manage regulatory, tax and legal matters (including environmental, human resource, product liability, patent and intellectual property matters), and to resolve pending legal matters without significant liability could require the Company to record significant reserves in excess of amounts accrued to date or pay significant fines during a reporting period, which could materially impact the Company’s results. In addition, new regulations may be enacted in the U.S. or abroad that may require the Company to incur additional personnel-related, environmental or other costs on an ongoing basis, significantly restrict the Company’s ability to sell certain products, or incur fines or penalties for noncompliance, any of which could adversely affect the Company’s results of operations. For example, the United States Consumer Product Safety Commission and Health Canada are advocating for more strict design standards for window blinds that if implemented, would require the Company to redesign all window blinds sold in the U.S. and Canada. For certain products, redesign may not be possible or practical, and as a result, the Company would lose revenues from the sales of such products.

As a U.S.-based multinational company, the Company is also subject to tax regulations in the U.S. and multiple foreign jurisdictions, some of which are interdependent. For example, certain income that is earned and taxed in countries outside the U.S. is not taxed in the U.S., provided those earnings are indefinitely reinvested outside the U.S. If these or other tax regulations should change, the Company’s financial results could be impacted.

Table of Contents

The Company may not be able to attract, retain and develop key personnel.

The Company’s success at implementing Project Renewal and the Growth Game Plan and its future performance depends in significant part upon the continued service of its executive officers and other key personnel. The loss of the services of one or more executive officers or other key employees could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations. The Company’s success also depends, in part, on its continuing ability to attract, retain and develop highly qualified personnel. Competition for such personnel is intense, and there can be no assurance that the Company can retain its key employees or attract, assimilate and retain other highly qualified personnel in the future.

The resolution of the Company’s tax contingencies may result in additional tax liabilities, which could adversely impact the Company’s cash flows and results of operations.

The Company is subject to income tax in the U.S. and numerous jurisdictions outside the U.S. Significant estimation and judgment are required in determining the Company’s worldwide provision for income taxes. In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company is regularly under audit by various worldwide tax authorities. Although the Company believes its tax estimates are reasonable, the final outcome of tax audits and related litigation could be materially different than that reflected in its historical income tax provisions and accruals. There can be no assurance that the resolution of any audits or litigation will not have an adverse effect on future operating results.

Product liability claims or regulatory actions could adversely affect the Company’s financial results or harm its reputation or the value of its end-user brands.

Claims for losses or injuries purportedly caused by some of the Company’s products arise in the ordinary course of the Company’s business. In addition to the risk of substantial monetary judgments, product liability claims or regulatory actions could result in negative publicity that could harm the Company’s reputation in the marketplace, adversely impact the value of its end-user brands, or result in an increase in the cost of producing the Company’s products. The Company could also be required to recall possibly defective products, which could result in adverse publicity and significant expenses. For example, in February 2014, the Company initiated a voluntary recall on the harness buckles used on certain Graco-branded convertible and harnessed booster car seats due to the potential that over time, food and dried liquid may make some harness buckles progressively more difficult to open or become stuck in the latched position. The recall involves providing customers with a replacement buckle. The Company does not believe that a recall on similar buckles used in infant car seats is appropriate. However, it is possible that the regulatory agency with authority over the matter, the National Highway Traffic Safety Administration, may ultimately disagree and attempt to force such a recall. If the recall is expanded to include infant car seats, it could have an adverse impact on the results of operations of the Company. Although the Company maintains product liability insurance coverage, potential product liability claims are subject to a self-insured retention, may exceed the amount of insurance coverage or could be excluded under the terms of the policy.

A reduction in the Company’s credit ratings could materially and adversely affect its business, financial condition and results of operations.

The Company’s current senior debt credit ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings are Baa3, BBB- and BBB, respectively. Its current short-term debt credit ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings are P-3, A-3 and F-2, respectively. Moody's has a stable outlook on its ratings, and Fitch and Standard & Poor’s have positive outlooks on their ratings. The Company cannot be sure that any of its current ratings will remain in effect for any given period of time or that a rating will not be lowered by a rating agency if, in its judgment, circumstances in the future so warrant. A downgrade by Moody’s or Standard & Poor’s, which would reduce the Company’s senior debt below investment-grade, could increase the Company’s borrowing costs, which would adversely affect the Company’s financial results. The Company would likely be required to pay a higher interest rate in future financings, and its potential pool of investors and funding sources could decrease. If the Company’s short-term ratings were to be lowered, it would limit, or eliminate entirely, the Company’s access to the commercial paper market. The ratings from credit agencies are not recommendations to buy, sell or hold the Company’s securities, and each rating should be evaluated independently of any other rating.

Table of Contents

The level of returns on pension and postretirement plan assets and the actuarial assumptions used for valuation purposes could affect the Company’s earnings and cash flows in future periods. Changes in government regulations could also affect the Company’s pension and postretirement plan expenses and funding requirements.

The funding obligations for the Company’s pension plans are impacted by the performance of the financial markets, particularly the equity markets, and interest rates. Funding obligations are determined under government regulations and are measured each year based on the value of assets and liabilities on a specific date. If the financial markets do not provide the long-term returns that are expected under the governmental funding calculations, the Company could be required to make larger contributions. The equity markets can be, and recently have been, very volatile, and therefore the Company’s estimate of future contribution requirements can change dramatically in relatively short periods of time. Similarly, changes in interest rates and legislation enacted by governmental authorities can impact the timing and amounts of contribution requirements. An adverse change in the funded status of the plans could significantly increase the Company’s required contributions in the future and adversely impact its liquidity.

Assumptions used in determining projected benefit obligations and the fair value of plan assets for the Company’s pension and other postretirement benefit plans are determined by the Company in consultation with outside actuaries. In the event that the Company determines that changes are warranted in the assumptions used, such as the discount rate, expected long-term rate of return on assets, or expected health care costs, the Company’s future pension and postretirement benefit expenses could increase or decrease. Due to changing market conditions or changes in the participant population, the assumptions that the Company uses may differ from actual results, which could have a significant impact on the Company’s pension and postretirement liabilities and related costs and funding requirements.

Actions by the Company’s counterparty to the accelerated share repurchase plan may affect the market for the Company’s common stock.

In connection with the Company’s accelerated share repurchase plan, the Company expects that its counterparty will purchase shares (or otherwise acquire long positions in shares) of Company common stock in the open market until it has acquired (or otherwise has long positions in) the number of shares the Company has agreed to purchase under the accelerated share repurchase plan. The Company expects that these acquisitions (and other transactions) will include covering purchases to close out stock borrow positions taken on by the counterparty to make its initial deliveries of shares to the Company. In addition, the Company expects that the counterparty may be purchasing or selling, or both purchasing and selling (and possibly taking on other long and/or short positions in Company common stock), in other hedging transactions related to the accelerated share repurchase plan. All of these market transactions in the Company’s shares (or in derivative or other transactions related to Company shares) would be for the counterparty’s own account. Although the magnitude and effect of such activities on the market price of the Company’s common stock cannot be determined at this time, such activities may increase, or prevent a decrease in, the market price of the common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

The following table shows the location and general character of the principal operating facilities owned or leased by the Company. The properties are listed within their designated business segment: Writing, Home Solutions, Tools, Commercial Products and Baby & Parenting. These are the primary manufacturing locations, administrative offices and distribution warehouses of the Company. The Company’s headquarters are in Atlanta, Georgia, and the Company also maintains sales offices throughout the U.S. and the world. Most of the Company’s idle facilities, which are excluded from the following list, are subleased, pending lease expiration, or are for sale. The Company’s properties currently in use are generally in good condition, well-maintained, and are suitable and adequate to carry on the Company’s business.



BUSINESS SEGMENT	LOCATION	CITY	OWNED OR LEASED	GENERAL CHARACTER
WRITING	IL	Oakbrook	L	Writing Instruments
	TN	Shelbyville	O	Writing Instruments
	TN	Maryville	O	Writing Instruments
	TN	Manchester	O	Writing Instruments
	Thailand	Bangkok	O	Writing Instruments

Table of Contents



WRITING (CONT.)	India	Chennai	L	Writing Instruments
	China	Shanghai	L	Writing Instruments
	Colombia	Bogota	O	Writing Instruments
	Germany	Hamburg	O	Writing Instruments
	Mexico	Mexicali	L	Writing Instruments
	France	Nantes	O	Writing Instruments
	Venezuela	Maracay	O	Writing Instruments
	Belgium	Sint Niklaas	O	Labeling Technology
	CA	Palo Alto	L	On-line Postage
HOME SOLUTIONS	OH	Mogadore	L/O	Home Products
	KS	Winfield	L/O	Home Products
	Canada	Calgary	L	Home Products
	MO	Jackson	O	Home Storage Systems
	OH	Perrysburg	O	Cookware
	OH	Bowling Green	L	Cookware
	Mexico	Agua Prieta	L	Window Treatments
	NC	High Point	L	Window Treatments
	UT	Ogden	L	Window Treatments
	Canada	Etobicoke	L	Window Furnishings
TOOLS	MA	East Longmeadow	O	Tools
	China	Shanghai	L	Tools
	China	Shenzhen	L	Tools
	ME	Gorham	O	Tools
	IN	Greenfield	L	Tools
	Brazil	Sao Paulo	L	Tools
	Brazil	Carlos Barbosa	O	Tools
	Germany	Hallbergmoos	L	Tools
COMMERCIAL PRODUCTS	TN	Cleveland	O	Commercial Products
	VA	Winchester	O	Commercial Products
	WV	Martinsburg	L	Commercial Products
	PA	Pottsville	L	Commercial Products
	Brazil	Rio Grande Do Sul	L	Commercial Products
	Brazil	Cachoeirinha	O	Commercial Products
	Netherlands	Bentfield	O	Commercial Products
BABY & PARENTING	PA	Exton	L	Infant Products
	Japan	Nara	O	Infant Products
	Japan	Osaka	O	Infant Products
	Germany	Hiddenhausen	O	Infant Products
	Poland	Wloclawek	O	Infant Products
	China	Zhongshan	L	Infant Products
	China	Beijing	L	Infant Products
CORPORATE	GA	Atlanta	L	Office
	Canada	Oakville	L	Office
	Switzerland	Geneva	L	Office
	France	Paris	L	Office
	China	Hong Kong	L	Office
	Japan	Tokyo	L	Shared
	Australia	Dandenong	L	Office
	Italy	Milan	L	Office

Table of Contents



SHARED FACILITIES	CA	Victorville	L	Shared Services
	GA	Union City	L	Shared Services
	IL	Freeport	L/O	Shared Services
	NC	Huntersville	L	Shared Services
	UK	Lichfield	L	Shared Services
	Netherlands	Goirle	O	Shared Services
	AR	Bentonville	L	Shared Services
	France	Malissard	L/O	Shared Services
	Canada	Bolton	L	Shared Services

ITEM 3. LEGAL PROCEEDINGS

Information regarding legal proceedings is included in Footnote 19 of the Notes to Consolidated Financial Statements and is incorporated by reference herein.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Table of Contents

SUPPLEMENTARY ITEM — EXECUTIVE OFFICERS OF THE REGISTRANT

Name	Age	Present Position with the Company
Michael B. Polk	53	President and Chief Executive Officer
William A. Burke	53	Executive Vice President, Chief Operating Officer
Paula S. Larson	51	Executive Vice President, Chief Human Resources Officer
Douglas L. Martin	51	Executive Vice President, Chief Financial Officer
John K. Stipancich	45	Executive Vice President, General Counsel and Corporate Secretary and EMEA Executive Leader
Mark S. Tarchetti	38	Executive Vice President, Chief Development Officer

Michael B. Polk has been President and Chief Executive Officer of the Company since July 2011. He joined the Company’s Board of Directors in November 2009 and served as a member of the Audit Committee prior to assuming his current role. Prior thereto, he was President, Global Foods, Home & Personal Care, Unilever (a consumer packaged goods manufacturer and marketer) since 2010. He joined Unilever in 2003 as Chief Operating Officer, Unilever Foods USA and subsequently became President, Unilever USA in 2005. From 2007 to 2010, he served as President, Unilever Americas. Prior to joining Unilever, he spent 16 years at Kraft Foods Inc. and three years at The Procter & Gamble Company. At Kraft Foods, he was President, Kraft Foods Asia Pacific, President, Biscuits and Snacks Sector, and was a member of the Kraft Foods Management Committee.

William A. Burke has been Executive Vice President and Chief Operating Officer since October 2012. He served as President, Newell Professional from January 2012 to September 2012, having previously served as President, Tools, Hardware & Commercial Products from January 2009 through 2011, and President, Tools and Hardware from December 2007 to January 2009. Prior thereto, he was President, North American Tools from 2004 through 2006. He served as President of the Company’s Lenox division from 2003 through 2004. From 1982 through 2002, he served in a variety of positions with The Black & Decker Corporation (a manufacturer and marketer of power tools and accessories), culminating as Vice President and General Manager of Product Service.

Paula S. Larson has been Executive Vice President and Chief Human Resources Officer since December 2013. From November 2011 to March 2013, Ms. Larson was Executive Vice President and Chief Human Resources Officer of The Western Union Company (a financial services and communications company). She was also Chief Human Resources Officer for Invensys Plc (a multinational engineering and information technology company) from April 2005 to April 2011. Prior to that time, Ms. Larson held various senior human resources positions at Eaton Corporation (a provider of power management solutions) and subsidiaries of General Electric Company.

Douglas L. Martin has been Executive Vice President and Chief Financial Officer since September 2012. He has been employed by the Company since 1987, and has served in a variety of senior financial roles, including Deputy Chief Financial Officer from February 2012 to September 2012, Vice President of Finance - Newell Consumer from November 2011 to February 2012, Vice President of Finance - Office Products from December 2007 to November 2011, and Vice President and Treasurer from June 2002 to December 2007.

John K. Stipancich has been Executive Vice President, General Counsel and Corporate Secretary and EMEA Executive Leader since October 2012. Prior thereto, he served as Senior Vice President, General Counsel and Corporate Secretary from January 2010 to October 2012. From November 2004 through December 2009, he served as Vice President and General Counsel to several of the Company’s businesses.

Mark S. Tarchetti has been Executive Vice President and Chief Development Officer since January 2013. From September 2011 to December 2012, Mr. Tarchetti was the Director of Tarchetti & Co. Ltd., a consulting firm he founded where he advised clients, including the Company, on business strategy and change management. From 1997 to 2011, he served in a variety of senior strategic, business and finance roles at Unilever, including as Head of Corporate Strategy from 2009 to 2011, Vice President of Corporate Strategy in 2008, Finance Director of the UK Home & Personal Care business from 2007 to 2008, and Global Head of Financial Planning & Analysis from 2004 to 2007.

Table of Contents

PART II. OTHER INFORMATION

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is listed on the New York Stock Exchange (symbol: NWL). As of January 31, 2014, there were 11,587 stockholders of record. The following table sets forth the high and low sales prices of the common stock on the New York Stock Exchange Composite Tape for the calendar periods indicated:



	2013				2012
Quarters	High		Low		High		Low
First	$	26.11	$	21.72	$	19.49	$	15.93
Second	28.47		24.90		19.12		16.63
Third	27.97		24.32		19.74		16.67
Fourth	32.54		26.29		22.49		18.80

The Company has paid regular cash dividends on its common stock since 1947. For 2013, the Company paid a quarterly cash dividend of $0.15 per share. For 2012, the Company paid a quarterly cash dividend of $0.08 per share in the first quarter, $0.10 per share in each of the second and third quarters, and $0.15 per share in the fourth quarter. The payment of dividends to holders of the Company’s common stock remains at the discretion of the board of directors and will depend upon many factors, including the Company’s financial condition, earnings, legal requirements and other factors the board of directors deems relevant.

ISSUER PURCHASES OF EQUITY SECURITIES

The following table provides information about the Company’s purchases of equity securities during the quarter ended December 31, 2013:



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^{(2), (3)}	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs^{(2), (3)}
October 2013	9,442,339	$	29.69	9,442,085	$	42,902,190
November 2013	36,122	29.25		—	42,902,190
December 2013	10,059	30.23		—	42,902,190
Total	9,488,520	$	29.69	9,442,085

__________________

(1)

During the three months ended December 31, 2013, all share purchases other than those pursuant to the $300.0 million share repurchase program (the “SRP”) and the $350.0 million accelerated stock buyback program discussed in (3) below (the “ASB”) were made to satisfy employees’ tax withholding and payment obligations in connection with the vesting of awards of restricted stock units, which are repurchased by the Company based on their fair market value on the vesting date. In October, November and December, in addition to the shares purchased under the SRP and ASB, the Company purchased 254 shares (average price: $26.01), 36,122 shares (average price: $29.25) and 10,059 shares (average price: $30.23), respectively, in connection with vesting of employees’ stock-based awards.

(2)

Under the SRP, the Company may repurchase its own shares of common stock through a combination of a 10b5-1 automatic trading plan, discretionary market purchases or in privately negotiated transactions. The SRP was authorized through August 2014. In February 2014, the SRP was expanded and extended such that the Company may repurchase up to $300 million of its own shares from February 2014 through the end of 2016. The average per share price of shares purchased in October was $27.44. No shares were purchased under the SRP in November and December.

(3)

On October 28, 2013, the Company entered into a Master Confirmation and a Supplemental Confirmation (collectively, the “ASB Agreement”) with Goldman, Sachs & Co. (“Goldman Sachs”) to effect an accelerated stock buyback of the Company’s common stock. Under the ASB Agreement, on October 31, 2013, the Company paid Goldman Sachs an initial purchase price of $350.0 million, and Goldman Sachs delivered to the Company 9,430,785 shares of the Company’s common stock based on an initial per share amount of $29.69, representing a substantial majority of the shares expected to be delivered under the ASB Agreement. The number of shares that the Company ultimately purchases under the ASB Agreement will be determined based on the average of the daily volume-weighted average share prices of the Company’s common stock over the course of a calculation period, less a discount, and is subject to certain adjustments under the ASB Agreement. Upon settlement following the end of the calculation period, Goldman Sachs will deliver additional shares to the Company so that the aggregate value of the shares initially delivered plus such additional shares, based on the final price, is $350.0 million. Alternatively, if the value of the shares initially delivered, based on the final price, exceeds $350.0 million, the Company will deliver cash or shares of the Company’s common stock (at the Company’s election) to Goldman Sachs for the excess. The calculation period is scheduled to run from October 2013 through April 2014 and may be shortened at the option of Goldman Sachs.

Table of Contents

ITEM 6. SELECTED FINANCIAL DATA

The following is a summary of certain consolidated financial data relating to the Company as of and for the year ended December 31, (in millions, except per share data). The summary has been derived in part from, and should be read in conjunction with, the Consolidated Financial Statements of the Company included elsewhere in this report and the schedules thereto.



	2013⁽¹⁾		2012^{(1), (2)}			2011^{(1), (2)}			2010⁽²⁾			2009⁽²⁾
STATEMENTS OF OPERATIONS DATA
Net sales	$	5,692.5	$	5,579.9		$	5,511.7		$	5,270.5		$	5,113.0
Cost of products sold	3,514.3		3,443.8			3,410.6			3,247.1			3,198.1
Gross margin	2,178.2		2,136.1			2,101.1			2,023.4			1,914.9
Selling, general and administrative expenses	1,446.1		1,443.2			1,422.3			1,359.4			1,281.4
Impairment charges	—		—			317.9			—			—
Restructuring costs⁽³⁾	111.1		52.9			47.9			76.7			107.6
Operating income	621.0		640.0			313.0			587.3			525.9
Nonoperating expenses:
Interest expense, net	60.3		76.1			86.2			118.4			140.0
Losses related to extinguishments of debt	—		10.9			4.8			218.6			4.7
Other expense (income), net	18.5		(1.3		)	13.5			(7.3		)	2.3
Net nonoperating expenses	78.8		85.7			104.5			329.7			147.0
Income before income taxes	542.2		554.3			208.5			257.6			378.9
Income taxes	122.1		162.3			21.3			(6.7		)	125.5
Income from continuing operations	420.1		392.0			187.2			264.3			253.4
Income (loss) from discontinued operations, net of tax	54.5		9.3			(62.0		)	28.5			32.1
Net income	$	474.6	$	401.3		$	125.2		$	292.8		$	285.5
Weighted-average shares outstanding:
Basic	288.6		291.2			293.6			282.4			280.8
Diluted	291.8		293.6			296.2			305.4			294.4
Earnings (loss) per share:
Basic:
Income from continuing operations	$	1.46	$	1.35		$	0.64		$	0.94		$	0.90
Income (loss) from discontinued operations	0.19		0.03			(0.21		)	0.10			0.11
Net income	$	1.64	$	1.38		$	0.43		$	1.04		$	1.02
Diluted:
Income from continuing operations	$	1.44	$	1.34		$	0.63		$	0.87		$	0.86
Income (loss) from discontinued operations	0.19		0.03			(0.21		)	0.09			0.11
Net income	$	1.63	$	1.37		$	0.42		$	0.96		$	0.97
Dividends	$	0.60	$	0.43		$	0.29		$	0.20		$	0.26
BALANCE SHEET DATA
Inventories, net	$	684.4	$	696.4		$	699.9		$	701.6		$	688.2
Working capital⁽⁴⁾	681.1		700.3			487.1			466.1			422.6
Total assets	6,069.7		6,222.0			6,160.9			6,405.3			6,423.9
Short-term debt, including current portion of long-term debt	174.8		211.9			367.5			305.0			493.5
Long-term debt, net of current portion	1,661.6		1,706.5			1,809.3			2,063.9			2,015.3
Total stockholders’ equity	$	2,075.0	$	2,000.2		$	1,852.6		$	1,905.5		$	1,782.2


(1)	Supplemental data regarding 2013, 2012 and 2011 is provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.


(2)	2012, 2011, 2010 and 2009 Statement of Operations data has been adjusted to reclassify the results of operations of the Hardware and Teach businesses to discontinued operations. 2010 and 2009 Statement of Operations data has been adjusted to reclassify the results of operations of the hand torch and solder business to discontinued operations.

Table of Contents


(3)	Restructuring costs include asset impairment charges, employee severance and termination benefits, employee relocation costs, and costs associated with exited contractual commitments and other restructuring costs.


(4)	Working capital is defined as Current Assets less Current Liabilities.

Acquisitions of Businesses

No significant acquisitions occurred during the periods presented.

Quarterly Summaries

Summarized quarterly data for the last two years is as follows (in millions, except per share data) (unaudited):



Calendar Year	1st			2nd			3rd		4th			Year
2013
Net sales	$	1,240.8		$	1,474.7		$	1,487.2	$	1,489.8		$	5,692.5
Gross margin	$	473.6		$	582.7		$	564.9	$	557.0		$	2,178.2
Income from continuing operations	$	63.8		$	116.6		$	122.3	$	117.4		$	420.1
(Loss) income from discontinued operations	$	(9.6	)	$	(6.8	)	$	71.0	$	(0.1	)	$	54.5
Net income	$	54.2		$	109.8		$	193.3	$	117.3		$	474.6
Earnings per share:
Basic
Income from continuing operations	$	0.22		$	0.40		$	0.42	$	0.41		$	1.46
(Loss) income from discontinued operations	(0.03		)	(0.02		)	0.24		—			0.19
Net income	$	0.19		$	0.38		$	0.67	$	0.41		$	1.64
Diluted
Income from continuing operations	$	0.22		$	0.40		$	0.42	$	0.41		$	1.44
(Loss) income from discontinued operations	(0.03		)	(0.02		)	0.24		—			0.19
Net income	$	0.19		$	0.37		$	0.66	$	0.41		$	1.63
2012⁽¹⁾
Net sales	$	1,250.5		$	1,425.3		$	1,456.9	$	1,447.2		$	5,579.9
Gross margin	$	488.0		$	552.7		$	559.0	$	536.4		$	2,136.1
Income from continuing operations	$	78.3		$	106.3		$	106.2	$	101.2		$	392.0
Income from discontinued operations	$	1.0		$	5.5		$	2.1	$	0.7		$	9.3
Net income	$	79.3		$	111.8		$	108.3	$	101.9		$	401.3
Earnings per share:
Basic
Income from continuing operations	$	0.27		$	0.36		$	0.37	$	0.35		$	1.35
Income from discontinued operations	—			0.02			0.01		—			0.03
Net income	$	0.27		$	0.38		$	0.37	$	0.35		$	1.38
Diluted
Income from continuing operations	$	0.27		$	0.36		$	0.36	$	0.35		$	1.34
Income from discontinued operations	—			0.02			0.01		—			0.03
Net income	$	0.27		$	0.38		$	0.37	$	0.35		$	1.37


(1)	The 2012 quarterly data has been adjusted to reclassify the results of operations of the Hardware and Teach businesses to discontinued operations.

Table of Contents

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 Consolidated Financial Statements and Notes thereto.

Business Overview

Newell Rubbermaid is a global marketer of consumer and commercial products that help people get more out of life every day, where they live, learn, work and play. The Company’s products are marketed under a strong portfolio of leading brands, including Sharpie^®, Paper Mate^®, Parker^®, Waterman^®, Dymo^®, Rubbermaid^®, Levolor^®, Goody^®, Calphalon^®, Irwin^®, Lenox^®, Rubbermaid Commercial Products^®, Graco^® and Aprica^®.

During 2013, the Company continued the cadence of consistent execution and delivery while simultaneously driving its change agenda to propel the Growth Game Plan into action. During 2013, the Company transitioned from the delivery phase of the Growth Game Plan to the strategic phase. The Company expects to remain focused on the strategic phase in 2014.

The Company is driving the Growth Game Plan into action and simplifying its structure through the execution of Project Renewal. In the Growth Game Plan operating model, the Company has reorganized around two core activity systems, Development and Delivery, supported by three business partnering functions, Human Resources, Finance/IT and Legal, and four winning capabilities in Design, Marketing & Insight, Supply Chain and Customer Development, all in service to drive accelerated performance in the Company’s five segments. The Company’s five segments and the key brands included in each segment are as follows:



Segment	Key Brands	Description of Primary Products
Writing	Sharpie^®, Paper Mate^®, Expo^®, Parker^®, Waterman^®, Dymo^® Office, Endicia^®	Writing instruments, including markers and highlighters, pens and pencils; art products; fine writing instruments; office technology solutions, including labeling and on-line postage solutions
Home Solutions	Rubbermaid^®, Calphalon^®, Levolor^®, Goody^®	Indoor/outdoor organization, food storage and home storage products; gourmet cookware, bakeware and cutlery; drapery hardware and window treatments; hair care accessories
Tools	Irwin^®, Lenox^®, hilmor™, Dymo^® Industrial	Hand tools and power tool accessories; industrial bandsaw blades; tools for HVAC systems; label makers and printers for industrial use
Commercial Products	Rubbermaid Commercial Products^®, Rubbermaid^® Healthcare	Cleaning and refuse products, hygiene systems, material handling solutions; medical and computer carts and wall-mounted workstations
Baby & Parenting	Graco^®, Aprica^®, Teutonia^®	Infant and juvenile products such as car seats, strollers, highchairs and playards

During 2013, the Company divested its Hardware and Teach businesses, which were primarily included in the former Specialty segment at December 31, 2012. Accordingly, the results of operations of these businesses have been classified as discontinued operations for all periods presented. These divested businesses consist of convenience, cabinet and window hardware (Bulldog, Ashland and Amerock, as well as the Levolor^®-branded and private label drapery hardware business), manual paint applicators (Shur-line) and interactive teaching solutions (mimio and Headsprout). The remaining businesses in the former Specialty segment, specifically Dymo Office and Endicia, were combined with the Writing segment given the significant channel and operating synergies.

Table of Contents

Market and Performance 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 following is a summary of the Company’s progress in 2013 in driving the Growth Game Plan into action:

•

Core sales, which exclude foreign currency, increased 3.2% in 2013 compared to 2012, with core sales growth in every segment. Core sales increased 10.2% in the Baby & Parenting segment, with improved sales in North America primarily due to launches of innovative new products and expanded distribution. Core sales grew 3.9% in the Commercial Products segment, driven by volume growth in both North America and Latin America. Core sales in the Tools segment grew 3.4% due in large part to expanded distribution and the success of expanded product offerings in Brazil. Core sales grew 2.9% in the Home Solutions segment, primarily driven by targeted marketing initiatives in Rubbermaid Consumer, new Levolor product launches and increased distribution in Calphalon. Core sales increased 0.1% in the Writing segment, as core sales growth in Latin America and price increases, particularly in Venezuela, was substantially offset by weak Fine Writing results in China and office superstore channel contraction in the U.S. Core sales is determined by applying a fixed exchange rate, calculated as the 12-month average in the prior year, to the current and prior year local currency sales amounts, with the difference equal to changes in core sales, and the difference between the changes in reported sales and the changes in core sales being attributable to currency.

•

Core sales growth in Latin America and North America of 26.6% and 3.0%, respectively, were partially offset by core sales declines in Europe and Asia Pacific. The Latin America core sales growth was driven by volume and price increases in the Writing segment and new product launches and increased distribution in the Tools segment. The North America core sales increase was driven primarily by the Baby & Parenting segment. Continued macroeconomic challenges in Western Europe were the primary driver of a 3.3% core sales decline in the Europe, Middle East, and Africa region, and weak Fine Writing results in China were the primary driver of a 2.4% core sales decline in Asia Pacific.


•	Gross margin was 38.3%. Productivity was offset by inflation and unfavorable mix. The unfavorable mix impact was attributable to core sales growth being driven by segments and regions with gross margins that are lower than the Company’s average.

•

The composition of the Company’s selling, general and administrative (“SG&A”) expenses continued to shift to strategic from structural costs, with increased investment in advertising and promotion and enhanced capabilities to drive sales, enhance the new product pipeline, develop growth platforms and expand geographically. During 2013, the Company’s spend for strategic brand-building and consumer demand creation and commercialization activities included spend for the following:


•	a television advertising campaign in support of Paper Mate^® InkJoy^®;


•	a new line of premium Sharpie^® markers called Sharpie^® Neon;


•	a new line of Paper Mate mechanical pencils, with exceptional design;


•	targeted merchandising and marketing programs in Rubbermaid^® Consumer;


•	the extension of Rubbermaid LunchBlox^TM food containers and a new line of beverage containers;


•	new retail distribution in Calphalon^® and Goody^®;


•	hilmor^TM, a new brand of professional tools that revolutionizes the heating, ventilation and air conditioning/refrigeration (HVAC/R) tool category with 150 tools featuring intuitive functionality and durable designs to make HVAC/R technicians’ jobs easier and more efficient;


•	significant expansion of the hand tool product offering in Brazil;


•	the launch of Irwin^® Dupla^TM, a new double-sided hacksaw blade, in Brazil;


•	marketing programs and television advertising in Irwin in support of National Tradesmen Day;


•	new Rubbermaid Commercial Products^® Executive Series line of cleaning products for luxury hotels around the world;


•	a new Graco^® travel system called Graco Modes^TM in North America, 3 strollers in 1 with ten riding options from infant to toddler; and


•	support for the continued expansion of sales forces in the Tools, Writing and Commercial Products segments to drive greater sales penetration, enhance the availability of products and to support geographic expansion for these Win Bigger businesses.


•	Continued execution of Project Renewal to simplify the business, reduce structural costs and increase investment in the most significant growth platforms within the business resulting in the realization of over $100 million in annualized savings in 2013 related to Project Renewal. In 2013, the Company took significant steps in implementing the

Table of Contents

Organizational Simplification, EMEA Simplification and Best Cost Finance workstreams, requiring $111 million of restructuring costs.


•	Realized an $11 million foreign exchange loss in 2013 due to the devaluation of the Venezuelan Bolivar because of highly inflationary accounting for the Company’s Venezuelan operations, which is included in other expense (income).


•	Reported a 22.5% effective tax rate in 2013 compared to 29.3% in 2012 primarily due to the geographical mix in earnings, net tax benefits that are discrete to 2013, and net tax expenses that are discrete to 2012.

•

Sold the Hardware and Teach businesses, primarily included in the former Specialty segment, during 2013. The Company recorded a net gain of $59 million, net of tax, which included a net gain from the sale of the Hardware business partially offset by a net loss associated with the sale of the Teach business. The results of operations of the Hardware and Teach businesses as well as the net gain on sale are presented in discontinued operations in the statements of operations.


•	Continued the $300.0 million three-year share repurchase plan, pursuant to which the Company repurchased and retired an additional 4.7 million shares of common stock for $119.5 million during 2013.

•

Effected an accelerated stock buyback (“ASB”) of the Company’s common stock, under which the Company paid an initial purchase price of $350.0 million and the Company received 9,430,785 shares of common stock, representing a substantial majority of the shares expected to be delivered under the ASB. The number of shares ultimately purchased under the ASB will be determined by a formula tied to the volume-weighted average share price of the Company’s stock during the term of the program, expected to be completed no later than April 2014.

Key Initiatives

Project Renewal

In October 2011, the Company launched Project Renewal, a program designed to reduce complexity in the organization and increase investment in the most significant growth platforms within the business, funded by a reduction in structural SG&A costs. Project Renewal is designed to simplify and align the business around two key activities - Brand & Category Development and Market Execution & Delivery. Project Renewal encompasses projects centered around five workstreams:


•	Organizational Simplification: The Company has de-layered its top structure and further consolidated its businesses from nine GBUs to five business segments.


•	EMEA Simplification: The Company will focus its resources on fewer products and countries, while simplifying go-to-market, delivery and back office support structures.


•	Best Cost Finance: The Company will deliver a simplified approach to decision support, transaction processing and information management by leveraging SAP and the streamlined business segments to align resources with the Growth Game Plan.


•	Best Cost Back Office: The Company will drive “One Newell Rubbermaid” efficiencies in customer and consumer services and sourcing functions.


•	Supply Chain Footprint: The Company will further optimize manufacturing and distribution facilities across its global supply chain.

The total costs of Project Renewal through 2015 are expected to be $340 million to $375 million, with $300 million to $340 million representing cash costs. Approximately 75% of the cash costs consist of employee-related costs, including severance, retirement and other termination benefits and costs, as approximately 2,250 employees are expected to be impacted as a result of the implementation of the Project Renewal initiatives. Project Renewal is expected to be fully implemented by mid-2015 and generate annualized savings of $270 million to $325 million. The majority of these savings will be reinvested in the business to strengthen brand building and selling capabilities.

Through December 31, 2013, the Company had incurred $182 million and $35 million of restructuring and restructuring-related costs, respectively. Restructuring-related costs represent certain organizational change implementation costs and incremental cost of products sold and SG&A expenses associated with the implementation of Project Renewal. The majority of the restructuring costs represent employee-related cash costs, including severance, retirement and other termination benefits and costs, and through December 31, 2013, the Company’s total headcount has been reduced by approximately 1,800 employees as a result of Project Renewal initiatives. The Company has realized approximately $200 million of annualized savings to date.

Table of Contents

The following table summarizes the estimated costs, savings and employee headcount impacts of Project Renewal, as well as the actual results through 2013 (amounts in millions, except Headcount):



	Total Project	Through December 31, 2013	Remaining through mid-2015
Cost	$340 - $375	$217	$123 - $158
Savings	$270 - $325	$200	$70 - $125
Headcount	2,250	1,800	450

In 2013, the Company initiated the following activities as part of Project Renewal:

•

The restructuring of the Development organization as part of the Organizational Simplification workstream, which includes the consolidation and relocation of its design and innovation capabilities into a new center of excellence - a design center in Kalamazoo, Michigan, which is expected to open by early 2014; the creation of a larger, independent consumer marketing research organization; the consolidation of the marketing function into a global center of excellence; and the staffing of the Company’s global e-commerce initiative.

•

The implementation of the EMEA Simplification workstream, initiating projects aimed at refocusing the region on profitable growth, including the closure, consolidation and/or relocation of certain manufacturing facilities, distribution centers, customer support and sales and administrative offices. The Company has also begun exiting certain markets and product lines to reduce complexity and infrastructure in EMEA and improve margins, including initiating the following actions:


•	Exiting direct sales in over 50 of the 120 countries and territories that the EMEA region serves;


•	Discontinuing the Baby & Parenting business in about 19 countries;


•	Discontinuing several lines of Baby & Parenting products; and


•	Exiting the custom-logo Fine Writing business.


•	The implementation of the Best Cost Finance workstream by consolidating and realigning its shared services and decision support capabilities.


•	The refocusing of its channel marketing team and realignment of its distributor and field sales organizations in the Delivery organization to enable cost savings to be reinvested into new capabilities.


•	The rollout of a new Global Supply Chain organization in the Delivery organization to strengthen capabilities across all five supply chain disciplines of Plan, Source, Make, Deliver and Serve.


•	The initiation of projects to streamline the three business partnering functions, Human Resources, Finance/IT and Legal, and to align these functions with the new operating structure.


•	The closure of its U.S. manufacturing facility in Lowell, Indiana related to its Hardware business (included in discontinued operations).

Over the past two years, the Company reduced structural overhead by eliminating the operating groups, consolidating its 13 GBUs into five business segments and consolidating its sales organization into the newly formed Customer Development Organization. The Company also completed the consolidation of its Greenville, Texas operations into its existing operations in Kansas and Ohio.

One Newell Rubbermaid

The Company strives to leverage common business activities and best practices to build functional capabilities 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 services centers to leverage nonmarket-facing functional capabilities to reduce costs. In addition, the Company is expanding its focus on leveraging common business activities and best practices by reorganizing the business around two of the critical elements of the Growth Game Plan - Brand & Category Development and Market Execution & Delivery, enhancing its newly created Customer Development Organization, creating a new Global Supply Chain organization and creating new centers of excellence for design and innovation capabilities and marketing capabilities.

The Company is also 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. During 2013, certain operations within the Company’s Hardware business and the Company’s Brazil operations

Table of Contents

went live on SAP. As of December 31, 2013, substantially all of the North American, European and Brazilian operations of the Company’s five reportable business segments have successfully gone live on SAP.

Foreign Currency - Venezuela

The Company accounts for its Venezuelan operations using highly inflationary accounting, and therefore, the Company remeasures assets, liabilities, sales and expenses denominated in Bolivar Fuertes into U.S. Dollars using the applicable exchange rate, and the resulting translation adjustments are included in earnings. In February 2013, the exchange rate for Bolivar Fuertes declined to 6.3 Bolivar Fuertes to U.S. Dollar. Previously, the Company remeasured its operations denominated in Bolivar Fuertes at the rate of exchange used by the Transaction System for Foreign Currency Denominated Securities (SITME) of 5.3 Bolivar Fuertes to U.S. Dollar. As a result, the Company recorded a charge of $11 million in the first quarter of 2013, based on the decline in value of the net monetary assets of its Venezuelan operations that are denominated in Bolivar Fuertes.

As of December 31, 2013, the Company’s Venezuelan subsidiary had approximately $87.3 million of net monetary assets denominated in Bolivar Fuertes at the rate of 6.3 Bolivar Fuertes to U.S. Dollar, and as a result, a 10% increase (decrease) in the applicable exchange rate would result in an estimated pretax charge (benefit) of $9 million. On an ongoing basis, excluding the impacts of any actions management might otherwise take in response to a change in exchange rates, such as raising or decreasing prices, a 10% increase (decrease) in the exchange rate would unfavorably (favorably) impact annual net sales and operating income by an estimated $8 million and $4 million, respectively.

CONSOLIDATED RESULTS OF OPERATIONS

The Company believes the selected data and the percentage relationship between net sales and major categories in the Consolidated Statements of Operations are important in evaluating the Company’s operations. The following table sets forth items from the Consolidated Statements of Operations as reported and as a percentage of net sales for the years ended December 31, (in millions, except percentages):



	2013				2012					2011
Net sales	$	5,692.5	100.0	%	$	5,579.9		100.0	%	$	5,511.7		100.0	%
Cost of products sold	3,514.3		61.7		3,443.8			61.7		3,410.6			61.9
Gross margin	2,178.2		38.3		2,136.1			38.3		2,101.1			38.1
Selling, general and administrative expenses	1,446.1		25.4		1,443.2			25.9		1,422.3			25.8
Impairment charges	—		—		—			—		317.9			5.8
Restructuring costs	111.1		2.0		52.9			0.9		47.9			0.9
Operating income	621.0		10.9		640.0			11.5		313.0			5.7
Nonoperating expenses:
Interest expense, net	60.3		1.1		76.1			1.4		86.2			1.6
Losses related to extinguishments of debt	—		—		10.9			0.2		4.8			0.1
Other expense (income), net	18.5		0.3		(1.3		)	—		13.5			0.2
Net nonoperating expenses	78.8		1.4		85.7			1.5		104.5			1.9
Income before income taxes	542.2		9.5		554.3			9.9		208.5			3.8
Income tax expense	122.1		2.1		162.3			2.9		21.3			0.4
Income from continuing operations	420.1		7.4		392.0			7.0		187.2			3.4
Income (loss) from discontinued operations	54.5		1.0		9.3			0.2		(62.0		)	(1.1	)
Net income	$	474.6	8.3	%	$	401.3		7.2	%	$	125.2		2.3	%

Table of Contents

Results of Operations — 2013 vs. 2012

Net sales for 2013 were $5,692.5 million, representing an increase of $112.6 million, or 2.0%, from $5,579.9 million for 2012. The following table sets forth an analysis of changes in consolidated net sales for 2013 as compared to 2012 (in millions, except percentages):



Core sales	$	179.0		3.2	%
Foreign currency	(66.4		)	(1.2	)
Total change in net sales	$	112.6		2.0	%

Core sales increased 3.2% compared to the prior year, as core sales increased in every segment. Geographically, the core sales growth was driven by double-digit core sales growth in the Latin America region and single-digit core sales growth in the North America region. The growth in these markets was partially offset by declines in Europe and in the Asia Pacific region. Core sales in the Company’s North American and international businesses increased 3.0% and 3.6%, respectively. In North America, the 3.0% core sales growth was driven by growth in the Baby & Parenting and Home Solutions segments. Core sales in the Company’s Latin America businesses increased 26.6%, including a core sales increase in the Writing segment driven by increased volumes and price increases implemented in response to the devaluation of the Venezuelan Bolivar, as well as a core sales increase in the Tools segment driven by growth in Mexico and Brazil. Core sales in Europe declined 3.3%, reflecting the ongoing macroeconomic challenges in Western Europe. In the Asia Pacific region, core sales declined 2.4% driven by a decline in Fine Writing due to the transitioning of the distribution model in China to better align inventory levels with consumer level point-of-sale and an overall slowdown in the category. Foreign currency had the impact of reducing net sales by 1.2%.

Gross margin, as a percentage of net sales, for 2013 was 38.3%, or $2,178.2 million. Productivity was offset by inflation and unfavorable mix for the year. The unfavorable mix resulted from core sales growth being driven by segments and regions with gross margins that are lower than the Company’s average gross margin.

SG&A expenses for 2013 were 25.4% of net sales, or $1,446.1 million, versus 25.9% of net sales, or $1,443.2 million, for 2012. During 2013, the Company invested an incremental $15.5 million in brand-building activities, including advertising and promotion, to support new products, marketing initiatives, new market entries and global expansion. The increase in SG&A costs associated with brand-building activities was offset by the impacts of structural cost savings initiatives and ongoing restructuring projects, foreign currency and lower restructuring-related costs. In 2013, restructuring-related and organizational change implementation costs associated with Project Renewal were $23.8 million, which compared to restructuring-related costs for Project Renewal and the European Transformation Plan of $31.9 million in 2012.

The Company recorded restructuring costs of $111.1 million and $52.9 million for 2013 and 2012, respectively. The year-over-year increase in restructuring costs is primarily due to the implementation of restructuring plans and initiatives under Project Renewal in Europe in 2013 as part of the EMEA Simplification workstream. The restructuring costs in 2013 primarily relate to Project Renewal and consisted of $4.9 million for facility and other exits, including asset impairment costs; $89.4 million of employee severance, termination benefits and employee relocation costs; and $16.8 million of exited contractual commitments and other restructuring costs. The restructuring costs in 2012 relate to Project Renewal and the European Transformation Plan and consisted of a net benefit of $(0.7) million for facility and other exits, including asset impairment costs; $41.9 million of employee severance, termination benefits and employee relocation costs; and $11.7 million of exited contractual commitments and other restructuring costs. See Footnote 4 of the Notes to Consolidated Financial Statements for further information.

Operating income for 2013 was 10.9% of net sales, or $621.0 million, versus 11.5% of net sales, or $640.0 million for 2012. The decrease in operating margin was primarily due to the increase in restructuring costs.

Net nonoperating expenses for 2013 were $78.8 million versus $85.7 million for 2012. Interest expense for 2013 was $60.3 million, a decrease of $15.8 million from $76.1 million for 2012, due to lower average debt levels and lower average interest rates. In February 2013, the exchange rate for Venezuelan Bolivar Fuertes declined to 6.3 Bolivar Fuertes to U.S. Dollar, and as a result, the Company recorded a foreign currency exchange loss of $11.1 million to reduce the value of the net monetary assets of its Venezuelan operations that are denominated in Bolivar Fuertes. During 2013, the Company recognized foreign exchange transactional losses of $9.9 million, excluding the impact of the devaluation of the Venezuelan Bolivar Fuertes, compared to foreign exchange gains of $2.6 million for 2012, as certain of the Company’s primary currencies generally depreciated against the U.S. Dollar during 2013 compared to appreciating in 2012. Losses related to extinguishments of debt of $10.9 million in 2012 represent the costs associated with the early retirement of the junior convertible subordinated debentures underlying the quarterly income preferred securities and the 5.5% Senior Notes due April 2013 (the “2013 Notes”).

The Company’s effective income tax rate was 22.5% and 29.3% for 2013 and 2012, respectively, resulting in $122.1 million and $162.3 million of expense for 2013 and 2012, respectively. The tax rate for 2013 was impacted by the geographical mix in earnings and $7.9 million of tax benefits related to the resolution of various income tax contingencies and the expiration of various statutes

Table of Contents

of limitation. Additionally, the 2013 tax rate was impacted by $19.5 million of net tax benefits associated with the recognition of incremental deferred tax assets. The tax rate for 2012 was adversely impacted by $23.1 million of income tax expense associated with incremental tax contingencies and the expiration of various statutes of limitation.

The income from discontinued operations was $54.5 million for 2013 compared to $9.3 million for 2012. Income from discontinued operations during 2013 and 2012 primarily relates to the Company’s Hardware and Teach businesses, which were sold during 2013. (Loss) income from discontinued operations was $(5.0) million and $7.6 million for 2013 and 2012, respectively. The sale of the Hardware and Teach businesses resulted in a net gain (including impairment charges) of $59.5 million in 2013, and the settlement of the sale of the hand torch and solder business resulted in a net gain of $1.7 million in 2012. See Footnote 2 of the Notes to Consolidated Financial Statements for further information.

Results of Operations — 2012 vs. 2011

Net sales for 2012 were $5,579.9 million, representing an increase of $68.2 million, or 1.2%, from $5,511.7 million for 2011. The following table sets forth an analysis of changes in consolidated net sales for 2012 as compared to 2011 (in millions, except percentages):



Core sales	$	159.2		2.9	%
Foreign currency	(91.0		)	(1.7	)
Total change in net sales	$	68.2		1.2	%

Core sales increased 2.9% compared to the prior year, driven by growth in the Company’s international businesses, particularly in emerging markets, with double-digit core sales growth in the Latin America and Asia Pacific regions. The growth in emerging markets was partially offset by a decline in the Company’s European business due to a challenging macroeconomic environment. Core sales increased 2.6% and 3.5% at the Company’s North American and international businesses, respectively. All segments except Home Solutions reported core sales growth. Foreign currency had the impact of reducing net sales by 1.7%.

Gross margin, as a percentage of net sales, for 2012 was 38.3%, or $2,136.1 million, versus 38.1% of net sales, or $2,101.1 million, for 2011. Pricing and productivity were partially offset by input cost inflation.

SG&A expenses for 2012 were 25.9% of net sales, or $1,443.2 million, versus 25.8% of net sales, or $1,422.3 million, for 2011. SG&A expenses increased $20.9 million primarily due to $20.3 million of incremental investments in strategic SG&A activities to support new products, marketing initiatives, new market entries and global expansion, and a $12.4 million increase in structural SG&A due to increased annual incentive compensation, offset by savings from structural cost savings initiatives and ongoing restructuring projects. Total restructuring-related costs decreased $5.5 million. Restructuring-related costs associated with the European Transformation Plan decreased $13.1 million to $24.3 million, as the project neared completion toward the end of 2012. In 2012, the Company incurred $7.6 million of restructuring-related costs associated with Project Renewal. Lastly, $6.3 million of incremental costs in 2011 associated with the Company’s Chief Executive Officer transition did not recur in 2012.

The Company recorded non-cash impairment charges of $317.9 million during 2011, principally relating to the impairment of goodwill in the Company’s Baby & Parenting segment. There were no similar charges recorded during 2012.

The Company recorded restructuring costs of $52.9 million and $47.9 million for 2012 and 2011, respectively. The restructuring costs in 2012 and 2011 relate to Project Renewal and the European Transformation Plan. Restructuring costs in 2012 consisted of a net benefit of $(0.7) million for facility and other exit costs, including asset impairment costs; $41.9 million of employee severance, termination benefits and employee relocation costs; and $11.7 million of exited contractual commitments and other restructuring costs. The restructuring costs for 2011 consisted of $7.9 million of facility and other exit costs, including asset impairment costs; $31.6 million of employee severance, termination benefits and employee relocation costs; and $8.4 million of exited contractual commitments and other restructuring costs. See Footnote 4 of the Notes to Consolidated Financial Statements for further information.

Operating income for 2012 was 11.5% of net sales, or $640.0 million, versus 5.7% of net sales, or $313.0 million for 2011. Excluding the impact of the $317.9 million of impairment charges, which were 5.8% of net sales, operating income for 2011 would be $630.9 million, or 11.4% of net sales for 2011.

Net nonoperating expenses for 2012 were $85.7 million versus $104.5 million for 2011. Interest expense for 2012 was $76.1 million, a decrease of $10.1 million from $86.2 million for 2011, due to lower average debt levels in 2012. Losses related to extinguishments of debt were $10.9 million for 2012 compared to $4.8 million in 2011. During 2012, the Company recognized

Table of Contents

foreign exchange transactional gains of $2.6 million compared to foreign exchange losses of $14.5 million for 2011, as currencies generally appreciated against the U.S. Dollar during 2012 compared to depreciating in 2011.

The Company’s effective income tax rate was 29.3% and 10.2% for 2012 and 2011, respectively, resulting in tax expense of $162.3 million and $21.3 million for 2012 and 2011, respectively. The increase in income tax expense is primarily attributable to increased pretax income in 2012 and a change in the geographical mix in earnings, as well as $23.1 million of income tax expense attributable to charges resulting from incremental tax contingencies and the expiration of various statutes of limitation. The income tax expense in 2011 is net of a $72.4 million tax benefit the Company was able to record associated with the $317.9 million of impairment charges. Additionally, the 2011 income tax expense is net of the favorable impact of $49.0 million of benefits due to the reversal of accruals for certain tax contingencies, including interest and penalties, upon the expiration of various worldwide statutes of limitation.

The net income from discontinued operations was $9.3 million for 2012 compared to net loss from discontinued operations of $(62.0) million for 2011. Income (loss) from discontinued operations during 2012 and 2011 relate to the Company’s hand torch and solder business, which was sold on July 1, 2011, and the Hardware and Teach businesses sold in the third quarter of 2013. Income (loss) from discontinued operations was $7.6 million and $(46.8) million for 2012 and 2011, respectively. The loss from discontinued operations for 2011 includes $60.9 million of goodwill impairment, net of tax, associated with the Hardware business. The sale of the hand torch and solder business in 2011 resulted in a loss on sale of $(15.2) million, and the settlement of the sale of the hand torch and solder business resulted in a net gain of $1.7 million in 2012. See Footnote 2 of the Notes to Consolidated Financial Statements for further information.

Business Segment Operating Results:

2013 vs. 2012 Business Segment Operating Results

Net sales by segment were as follows for the years ended December 31, (in millions, except percentages):



	2013		2012		% Change
Writing	$	1,706.1	$	1,724.2	(1.0	)%
Home Solutions	1,593.3		1,553.8		2.5
Tools	817.9		806.1		1.5
Commercial Products	785.9		759.7		3.4
Baby & Parenting	789.3		736.1		7.2
Total net sales	$	5,692.5	$	5,579.9	2.0	%

The following table sets forth an analysis of changes in net sales in each segment for 2013 as compared to 2012:



	Writing		Home Solutions		Tools		Commercial Products		Baby & Parenting
Core sales	0.1	%	2.9	%	3.4	%	3.9	%	10.2	%
Foreign currency	(1.1	)	(0.4	)	(1.9	)	(0.5	)	(3.0	)
Total change in net sales	(1.0	)%	2.5	%	1.5	%	3.4	%	7.2	%

Table of Contents

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



	2013			2012			% Change
Writing^(1),(2)	$	389.9		$	334.9		16.4	%
Home Solutions⁽²⁾	212.1			197.3			7.5
Tools	68.3			109.8			(37.8	)
Commercial Products	82.5			92.9			(11.2	)
Baby & Parenting⁽¹⁾	91.2			72.7			25.4
Restructuring costs	(111.1		)	(52.9		)	(110.0	)
Corporate⁽³⁾	(111.9		)	(114.7		)	2.4
Total operating income	$	621.0		$	640.0		(3.0	)%


(1)	For 2013, includes restructuring-related costs associated with Project Renewal of $0.3 million and $0.8 million for the Writing and Baby & Parenting segments, respectively.


(2)	For 2012, includes restructuring-related costs associated with Project Renewal of $1.2 million and $4.9 million attributable to the Writing and Home Solutions segments, respectively.


(3)	Includes organizational change implementation and restructuring-related costs of $23.8 million and $4.1 million for 2013 and 2012, respectively, associated with Project Renewal. Includes restructuring-related costs of $24.3 million for 2012 associated with the European Transformation Plan.

Writing

Net sales for 2013 were $1,706.1 million, a decrease of $18.1 million, or 1.0%, from $1,724.2 million for 2012. Core sales increased 0.1%, driven by a strong back-to-school season in North America and double-digit core sales growth in Latin America due to the rollout of new products, strong back-to-school sell-in, and price increases implemented in response to the devaluation of the Venezuelan Bolivar, partially offset by a challenging macroeconomic environment in Western Europe, declines in Fine Writing in Asia due to the transitioning of the distribution model in China and an overall slowdown in the category in that region, and declines in the office superstore channel in the U.S. Excluding the impacts of currency, the segment’s North American businesses reported a core sales decline of 2.1% while the segment’s international businesses reported core sales increase of 2.8%. Foreign currency had an unfavorable impact of 1.1% on net sales.

Operating income for 2013 was $389.9 million, or 22.9% of net sales, an increase of $55.0 million, or 16.4%, from $334.9 million, or 19.4% of net sales, for 2012. The 350 basis point increase in operating margin is primarily attributable to gross margin expansion, as net pricing and productivity more than offset input cost inflation. SG&A costs as a percentage of net sales decreased 40 basis points, as the Company invested additional amounts in strategic SG&A in the prior year to support the launches of Paper Mate^® InkJoy^® and the Parker^® Ingenuity Collection.

Home Solutions

Net sales for 2013 were $1,593.3 million, an increase of $39.5 million, or 2.5%, from $1,553.8 million for 2012. Core sales increased 2.9%, led by mid-single-digit growth in the Rubbermaid Consumer business due to focused merchandising activities, successful new product launches from Levolor, and distribution gains from Calphalon. Excluding the impacts of currency, sales at the segment’s North American and international businesses increased 2.9% and 6.2%, respectively. Foreign currency had an unfavorable impact of 0.4% on net sales.

Operating income for 2013 was $212.1 million, or 13.3% of net sales, an increase of $14.8 million, or 7.5%, from $197.3 million, or 12.7% of net sales, for 2012. The 60 basis point operating margin improvement is primarily attributable to a 120 basis point reduction in SG&A costs as a percentage of net sales due to lower strategic spend in 2013, leverage of fixed costs with an increase in net sales, and Project Renewal driven structural SG&A cost reductions. The improvement in SG&A as a percentage of net sales was slightly offset by less favorable mix and inflation.

Tools

Net sales for 2013 were $817.9 million, an increase of $11.8 million, or 1.5%, from $806.1 million for 2012. Core sales increased 3.4% mainly driven by double-digit growth in Latin America attributable to the success of the expanded product offering in Brazil and continued investment in selling capabilities. Excluding the impacts of foreign currency, core sales declines of 1.3% at the segment’s North American businesses were more than offset by a 10.2% core sales increase in the segment’s international businesses. Foreign currency had an unfavorable impact of 1.9% on net sales.

Operating income for 2013 was $68.3 million, or 8.4% of net sales, a decrease of $41.5 million, or 37.8%, from $109.8 million, or 13.6% of net sales, for 2012. The 520 basis point decrease in operating margin is primarily attributable to a 380 basis point

Table of Contents

increase in SG&A costs as a percentage of net sales due to higher brand-building investments, including increased advertising and promotion expenses, and sustained investments in selling and marketing capabilities in certain regions and businesses.

Commercial Products

Net sales for 2013 were $785.9 million, an increase of $26.2 million, or 3.4%, from $759.7 million for 2012. Core sales increased 3.9%, primarily driven by strong volume growth in both North America and Latin America attributable to programming and new product offerings. Excluding the impacts of foreign currency, sales at the segment’s North American and international businesses increased 3.3% and 8.2%, respectively. Foreign currency had an unfavorable impact of 0.5% on net sales.

Operating income for 2013 was $82.5 million, or 10.5% of net sales, a decrease of $10.4 million, or 11.2%, from $92.9 million, or 12.2% of net sales, for 2012. The 170 basis point decrease in operating margin is attributable to higher promotional activity and increased brand investments, as SG&A increased 150 basis points as a percentage of net sales.

Baby & Parenting

Net sales for 2013 were $789.3 million, an increase of $53.2 million, or 7.2%, from $736.1 million for 2012. Core sales increased 10.2%, primarily attributable to market share gains, increased distribution and innovative new products in North America. Excluding the impacts of foreign currency, sales at the segment’s North American businesses increased 19.2%, while sales at the segment’s international businesses decreased 3.7%. Foreign currency had an unfavorable impact of 3.0% on net sales.

Operating income for 2013 was $91.2 million, or 11.6% of net sales, an increase of $18.5 million, or 25.4%, from $72.7 million, or 9.9% of net sales, for 2012. The 170 basis point increase in operating margin is largely attributable to Project Renewal cost savings and increased leverage, as SG&A decreased 410 basis points as a percentage of net sales. The improvement in operating margin was slightly offset by unfavorable mix and transactional foreign currency.

2012 vs. 2011 Business Segment Operating Results

Net sales by segment were as follows for the years ended December 31, (in millions, except percentages):



	2012		2011		% Change
Writing	$	1,724.2	$	1,708.2	0.9	%
Home Solutions	1,553.8		1,602.0		(3.0	)
Tools	806.1		779.6		3.4
Commercial Products	759.7		741.5		2.5
Baby & Parenting	736.1		680.4		8.2
Total net sales	$	5,579.9	$	5,511.7	1.2	%

The following table sets forth an analysis of changes in net sales in each segment for 2012 as compared to 2011:



	Writing		Home Solutions		Tools		Commercial Products		Baby & Parenting
Core sales	3.2	%	(2.7	)%	7.1	%	3.6	%	9.8	%
Foreign currency	(2.3	)	(0.3	)	(3.7	)	(1.1	)	(1.6	)
Total change in net sales	0.9	%	(3.0	)%	3.4	%	2.5	%	8.2	%

Table of Contents

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



	2012			2011			% Change
Writing⁽¹⁾	$	334.9		$	322.4		3.9	%
Home Solutions⁽¹⁾	197.3			202.2			(2.4	)
Tools	109.8			119.1			(7.8	)
Commercial Products	92.9			108.3			(14.2	)
Baby & Parenting	72.7			51.6			40.9
Impairment charges	—			(317.9		)	NMF
Restructuring costs	(52.9		)	(47.9		)	(10.4	)
Corporate⁽²⁾	(114.7		)	(124.8		)	8.1
Total operating income	$	640.0		$	313.0		104.5	%

NMF - Not meaningful figure


(1)	For 2012, includes restructuring-related costs associated with Project Renewal of $1.2 million and $4.9 million attributable to the Writing

and Home Solutions segments, respectively.


(2)	Includes restructuring-related costs of $24.3 million and $37.4 million for 2012 and 2011, respectively, associated with the European Transformation Plan and $4.1 million of restructuring-related costs associated with Project Renewal for 2012. The 2011 operating income also includes $6.3 million of incremental costs associated with the Company’s Chief Executive Officer transition in 2011.

Writing

Net sales for 2012 were $1,724.2 million, an increase of $16.0 million, or 0.9%, from $1,708.2 million for 2011. Core sales increased 3.2%, driven by a strong back-to-school season and double-digit core sales growth in the Latin American markets due to the rollout of new products, partially offset by a challenging macroeconomic environment in Western Europe which adversely impacted the fine writing business. Excluding the impacts of currency, sales at the segment’s North American and international businesses increased 4.0% and 2.2%, respectively. Foreign currency had an unfavorable impact of 2.3% on net sales.

Operating income for 2012 was $334.9 million, or 19.4% of net sales, an increase of $12.5 million, or 3.9%, from $322.4 million or 18.9% of net sales, for 2011. The 50 basis point increase in operating margin is primarily attributable to a 50 basis point decline in SG&A costs as a percentage of net sales. SG&A costs as a percentage of net sales decreased due to cost savings realized from Project Renewal and European Transformation plan initiatives, and the cost savings were partially offset by higher brand building and ongoing strategic SG&A spending to support the continued rollout of Paper Mate^® InkJoy^®.

Home Solutions

Net sales for 2012 were $1,553.8 million, a decrease of $48.2 million, or 3.0%, from $1,602.0 million for 2011. Core sales declined 2.7%, primarily due to continuing challenges in the Décor business and also due to a change in merchandising strategy by a significant retail customer in North America, which impacted the Décor and Culinary businesses. Excluding the impacts of currency, sales at the segment’s North American and international businesses decreased 2.7% and 1.3%, respectively. Foreign currency had an unfavorable impact of 0.3% on net sales.

Operating income for 2012 was $197.3 million, or 12.7% of net sales, a decrease of $4.9 million, or 2.4%, from $202.2 million, or 12.6% of net sales, for 2011. The 10 basis point increase in operating margin is attributable to a 20 basis point decrease in SG&A costs as a percentage of net sales due to savings realized from Project Renewal.

Tools

Net sales for 2012 were $806.1 million, an increase of $26.5 million, or 3.4%, from $779.6 million for 2011. Core sales increased 7.1%, driven by the introduction of new products in North America and continued investment in sales forces in international markets. Excluding the impacts of currency, sales at the segment’s North American and international businesses increased 6.6% and 7.8%, respectively. Foreign currency had an unfavorable impact of 3.7% on net sales.

Operating income for 2012 was $109.8 million, or 13.6% of net sales, a decrease of $9.3 million, or 7.8%, from $119.1 million, or 15.3% of net sales, for 2011. The 170 basis point decrease in operating margin is partially attributable to input cost inflation and unfavorable mix, partially offset by pricing and productivity. The decrease was also the result of a 110 basis point increase in SG&A costs as a percentage of net sales due to higher brand building and ongoing strategic SG&A spending, structural SG&A to support geographic expansion, and sustained investment in selling and marketing resources in certain businesses.

Table of Contents

Commercial Products

Net sales for 2012 were $759.7 million, an increase of $18.2 million, or 2.5%, from $741.5 million for 2011. Core sales increased 3.6%. Excluding the impacts of currency, sales at the segment’s North American businesses increased 6.2% while sales declined 10.1% at international businesses, primarily due to softness in the European markets. Foreign currency had an unfavorable impact of 1.1% on net sales.

Operating income for 2012 was $92.9 million, or 12.2% of net sales, a decrease of $15.4 million, or 14.2%, from $108.3 million, or 14.6% of net sales, for 2011. The 240 basis point decrease in operating margin is primarily attributable to a 280 basis point increase in SG&A costs as a percentage of net sales due to higher brand building and ongoing strategic SG&A spending, structural SG&A to support geographic expansion primarily in Latin America, and sustained investments in selling and marketing resources, partially offset by gross margin expansion.

Baby & Parenting

Net sales for 2012 were $736.1 million, an increase of $55.7 million, or 8.2%, from $680.4 million for 2011. Core sales increased 9.8%, which was primarily attributable to improvements in sales at the retail level in North America and sustained growth momentum in the Asia Pacific markets attributable to new products. Excluding the impacts of currency, sales at the segment’s North American and international businesses increased 10.5% and 8.9%, respectively. Foreign currency had an unfavorable impact of 1.6% on net sales.

Operating income for 2012 was $72.7 million, or 9.9% of net sales, an increase of $21.1 million, or 40.9%, from $51.6 million, or 7.6% of net sales, for 2011. The 230 basis point increase in operating margin is attributable to productivity, favorable mix and better leverage of SG&A costs on the net sales increase, partially offset by input cost inflation.

Non-GAAP Financial Measures

The Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K contains non-GAAP financial measures. The Company uses certain non-GAAP financial measures in explaining its results and in its internal evaluation and management of its businesses. The Company’s management believes these non-GAAP financial measures are useful since these measures (a) permit users of the financial information to view the Company’s performance using the same tools that management uses to evaluate the Company’s past performance, reportable business segments and prospects for future performance and (b) determine certain elements of management’s incentive compensation.

The Company’s management believes that core sales is useful because it demonstrates the effect of foreign currency on reported sales. Core sales is determined by applying a fixed exchange rate, calculated as the 12-month average in the prior year, to the current and prior year local currency sales amounts, with the difference equal to changes in core sales, and the difference between the changes in reported sales and the changes in core sales being attributable to currency. The Company uses core sales as one of the three performance criteria in its management cash bonus plan.

While the Company believes that non-GAAP financial measures are useful in evaluating performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, non-GAAP financial measures may differ from similar measures presented by other companies.

The following table provides a reconciliation of changes in core sales to changes in reported net sales by geographic region:



	Year Ended December 31, 2013
	North America		Europe, Middle East and Africa		Latin America		Asia Pacific		Total International		Total Company
Core sales	3.0	%	(3.3	)%	26.6	%	(2.4	)%	3.6	%	3.2	%
Foreign currency	(0.2	)	2.1		(9.6	)	(8.3	)	(3.7	)	(1.2	)
Total change in net sales	2.8	%	(1.2	)%	17.0	%	(10.7	)%	(0.1	)%	2.0	%

Table of Contents



	Year Ended December 31, 2012
	North America		Europe, Middle East and Africa		Latin America		Asia Pacific		Total International		Total Company
Core sales	2.6	%	(4.9	)%	14.8	%	11.0	%	3.5	%	2.9	%
Foreign currency	(0.1	)	(7.2	)	(8.4	)	(0.1	)	(5.5	)	(1.7	)
Total change in net sales	2.5	%	(12.1	)%	6.4	%	10.9	%	(2.0	)%	1.2	%

Reconciliations of changes in core sales to changes in reported net sales on a consolidated basis and by segment are provided earlier in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity and Capital Resources

Cash Flows

Cash and cash equivalents increased as follows for the years ended Decemb